Lean Management Principles

Wait – Are there five or seven lean management principles?

There are seven modern tenets of Lean management that, at their essence, are people-oriented (more on that later). In contrast, the five Lean principles, first described in 1997 by Lean Enterprise Institute founders James P. Womack and Daniel T. Jones, are conceptually similar but are more process-oriented.

Each of the five principles of Lean thinking build on each other and then begin again to create a continuous cycle of improvement. Those 5 key Lean principles are:

• Value
• Value stream
• Flow
• Pull
• Perfection

Identify value

Lean teams constantly review their product and service from the eyes of the customer. How does the product help the customer:

• do their job
• accomplish their mission
• improve their position?

This helps them determine the unique value their product or service provides.

Guiding questions:

• What does our customer need?
• Why and when do they need it?
• What are we producing that fulfills that need?
• How and when are we getting it to them?

Map the value stream

Once you determine the unique value they provide (what you’re making, why, and for whom), your can team evaluate each process that leads toward that end goal, moving into the next of the 5 principles of Lean: Map the Value Stream.

Value stream mapping enables Lean teams to understand how value flows through the organization, and more importantly, where it gets stuck. The product of a value stream mapping exercise is a physical “map” of the organization, which outlines every step of the process for each part of the business:

• Production
• Research and development
• Marketing
• Human resources

Value Stream Mapping: An Example

Imagine you are producing child-sized tables for classrooms. You work with your team to identify every step it takes to go from a stack of raw materials, to a table ready to be used in a classroom.

For materials, you’d ask questions such as:

• Where does the wood go when it is delivered by the supplier?
• What happens next? Does it come to the factory pre-cut or do we cut it to specifications? Who does that?
• Where do we get wood glue, nails, and finishing seal?

For production:

• Where do we keep the tools needed?
• What happens next? Does it change if the order is for 50 tables or for 5,000?

For sales and customer service, you’d ask:

• Do we know who the decision maker is in each childcare center, or school, or school district?
• Do we know what their current inventory looks like or if they plan to build more schools or install more portable classrooms in the coming years?
• When a customer needs to order a table (or 20,000), what happens next?

For this Lean principle, the guiding question is: What happens next and who does it?

Create flow

With the value stream map in hand, you can then move into the third of the 5 Lean principles: Creating flow by analyzing each step in the process, finding ways to maximize efficiencies, and reducing waste. Returning to our table manufacturing example, a Lean manager might ask her team:

• What tools do we need for each step and are each of these tools needed every day for production to run smoothly?
• Can we abandon the traditional assembly line model and approach the production process in a new way that reduces the lag time between steps?

Lean teams optimize flow in all aspects of the business, not just the production arm.

Following every value stream to the customer, the Lean team evaluates the steps with her team to determine if each is necessary and, if so, if there are areas to reduce friction, inefficiencies, or stalls in the flow of the value to the customer.

The guiding question for this Lean principle is: How can we think in a smart, streamlined way to reduce the steps needed to provide the most value to our customer?

Establish pull

In the fourth of the 5 principles of Lean thinking, Lean teams consider the customer’s perspective on the final product, effectively looking at the operations of the business in reverse on the value stream maps. When does the customer actually need the product in hand?

The idea of the customer being able to “pull” the value as needed is what truly revolutionized the manufacturing industry when Toyota brought it to market. Instead of investing in materials, production, and then storage to be ready for a customer’s order, Lean teams can use the customer’s true needs to direct a more sensible model, saving cost, space, time, and resources.

Guiding question: How can we transform our approach so that we have exactly the quantity the customer needs, exactly when she needs it?

Seek perfection

Finally, the Lean team identifies areas of improvement and implements meaningful change, seeking the most efficient processes to bring the greatest value to the customer. In practice, these key 5 Lean principles are cyclical.

As the Lean teams seeks perfection, they constantly analyze each process for the increase in value (reduced cost, time, resources used, space, etc.). They focus on the elements that add value and eliminate those that do not. They tighten the flow and deliver the value as the customer needs.

Ultimately, the goal is not perfection (which is unattainable), but rather, the pursuit of it, a concept otherwise known as continuous improvement.

Guiding questions: Did we execute our plan and realize gains in efficiency? Where else can we improve our approach to bringing value to our customers?

The 5 Lean principles have guided the engineering and manufacturing industries to success for decades. So why might we assert that modern Lean relies on seven principles Instead of five? Read The New Lean to find out.