What is the definition of lean? If you were to ask 12 people, you would almost certainly get 12 different answers. Consider the following statements I have encountered when exploring the definition of lean:
- “Lean is an emerging leadership philosophy at odds with the existing command-and-control structure. Many leaders and business schools feel threatened by its radically different approach.”
- “Everybody has a customer and receives signals from those customers. It’s how you respond to those signals that determines if you are lean.”
- “No organization is lean; it is an unreachable goal. Even Toyota’s leaders admitted the company was only about 30 percent lean.”
- “It is an autonomous process that strives to satisfy customer demand by producing one-piece flow to takt time via a pull system.”
- “Lean is about creating wealth, and perhaps only the banking industry can create wealth out of thin air. It is the banks we should be studying instead of the car industry.”
- “In its purest form, lean is free market economics. The customer dictates quality and production, and everything else is waste.”
These viewpoints represent a vast spectrum of opinions and demonstrate that it’s not at easy to come to an agreement on the subject. Part of the problem is the tremendous scope of the word. Lean encompasses many different concepts, including minimizing waste, resources, costs, and lead times; embracing continuous improvement; the Toyota Production System; and improving quality, speed, and value to the customer while maximizing throughput. It also suggests a manufacturing philosophy, one that brings sweeping changes to company culture as employees are empowered to seek out improvements. It is, in short, a different way to think about manufacturing, but it is especially difficult to pin down.
At the very least, however, it’s necessary to have a common framework so that two people can be sure they’re talking about the same thing. Certainly, within a single company, a single definition is essential for getting everyone on the same page and avoiding misunderstandings. To achieve this objective, the following five steps are essential.
1. Perform an annual company performance review. This should consist of a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. Additionally, examine the success or failure of last year’s review. The object of this process is to determine the company’s current competitive position, as well as its growth potential in old and new markets.
2. Determine the company’s goals. This includes survival goals such as correcting specific weaknesses and countering specific threats. It also includes performance goals, such as stronger growth in profitability or earnings. Finding success in performance goals may be contingent upon meeting survival goals.
3. Decide what steps must be taken to achieve the company’s goals. This requires evaluating your customers’ needs, desires, and expectations. Also look closely at your competitors and their products to see how well they satisfy their own customers. The capability to perform rapid innovation or product design and development is essential to meet ever-changing customer and market requirements.
4. Use lean techniques to meet goals. At this phase, agility and flexibility should be emphasized in company operations. Recognize what can be augmented or streamlined to improve sales and attain sustainable competitive advantage. Specific objectives should be set to enhance product design and development, such as better features, heightened performance, lower costs, or higher quality. The same goes for company and supply chain processes in areas such as lead time, cost, quality, and efficiency. Train and educate workers on lean and six sigma tools and techniques so they can take active roles in reducing variability, increasing efficiency, and innovating unique solutions.
5. Write a company statement on lean. This includes a definition and the benefits the company seeks from its application. It should be broadcast to all employees.
Michael Sears, former executive and chief financial officer at Boeing, said, “Our entire enterprise will be a lean operation, characterized by the efficient use of assets, high inventory turns, excellent supplier management, short cycle times, high quality, and low transaction costs.” Based on this statement, it’s clear that Boeing is focused intensely on company growth and creating value for its stakeholders, including customers, shareholders, and employees.
Michael Walters, vice president of materials management at Lockheed Martin, provides another example of the lean statement: “Lean manufacturing is a strategic choice for enterprises facing serious competition. It is now widely recognized that enterprises who have mastered lean methods will enjoy substantial cost and quality advantages over those that are still practicing large-scale production. The choice for enterprises today is simple: Improve or die.”
The companies had different goals at the time of those statements. Boeing was looking for a total enterprise solution to meet its goal of company growth, while Lockheed Martin prioritized cost and quality as improvement targets. As such, each company’s definition of lean was unique.
Based on this plan, it is most appropriate to think of lean as having a definition only in the context of a particular environment. Developing a common language is useful for an organization so that its members can communicate with each other and avoid ambiguity, but doing so also reinforces the company’s strategy and goals. Figuring out what lean means is the journey of figuring out what matters to your business.
Sam Tomas, CFPIM, CIRM, is a retired supply chain and operations management professional with more than 35 years experience at Motorola. He developed and taught courses in supply chain and operations management for corporate customers and at the University of Phoenix. Tomas may be contacted at firstname.lastname@example.org.
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