What is Lean? What Does a Lean Approach Mean?

Why Lean?

By adopting lean principles, and applying lean concepts and techniques, we focus on a flow of activities and processes where waste (disruption in value contributing activities) is minimized for the benefit of all stakeholders. The focus is primarily on flow efficiency, the transformation from raw materials to a manufactured product. Triumph of the lean production system (Krafcik, 1988) was the first article mentioning lean and described Toyota’s manufacturing practices.

Lean gained traction through the book The machine that changed the world (Womack et al., 1990) that was based on a joint research project across car manufacturing plants and car manufacturers around the world. These insights and ideas have since been applied in organizations ranging from educational services to production of canned goods. The ideas have also been further refined and repurposed in forthcoming research and case studies, resulting in an even larger body of knowledge and ideas within the domain of manufacturing and service delivery.

Toyota Production System (TPS), the Foundation and Inspiration for Lean

The underlying lean ideas traces back to the auto manufacturing industry in the 1930s (Liker, 2020) and post-war Japan when Toyota attempted to compete with and outperform the mass production approach prevalent primarily in the United States. Resources were scarce and the liquidity challenges of the company forced the Toyoda family to rethink how to produce and deliver products to the company’s customers (Ohno, 1988). The mitigation was to provide for and strive for the shortest sustainable lead time for the creation of a vehicle, meeting the highest quality standards, from the order placement to the reception of payment.

Toyota has publicly kept a low profile in the lean world and many have put forward books, making it sound like the true source of lean concepts developed by Toyota. We don’t know how much of that traces back to the actual practices within Toyota but the first solid resource outlining the Toyota approach was the book the Toyota Production System released in 1988 where the main architect behind the system Taichii Ohno presented the core ideas and concepts. He described the basis for TPS as: “the absolute elimination of waste” (Ohno, 1988 p.4). Two pillars are central:

• Just-in-time – How can we create an environment where everything is done, and can be done, at just the right point in time?
• Autonomation (automation with a human touch) – How can we develop an efficient high-quality system where continuous learning and shared understanding make us better and better?

According to Modig et al. (2012) these are also internally referred to as principles. A principle defines how an organization should think, a guiding beacon for the members of an organization. These are realized through methods and tools within the organization.

What Lean is

What is lean more precisely? It’s not a prescribed set of tools or a particular procedure, nor a tangible structure. Often the word lean is followed by notions such as mindset or approach or production. This gives clarity about the intent of using the notion.

What we can conclude, regardless of the exact addition of a succeeding notion, is that:

• Lean is based on ideas and perspectives observed in manufacturing of vehicles introduced by Toyota and popularized by several influential books such as The machine that changed the world (Womack et al., 1990) and The Toyota Way (Liker, 2020).

• Lean highlights waste elimination and start-to-end flow given defined system borders (Liker, 2020; Modig, 2012).

• Lean emphasizes on flow in production settings. A sign of flow is that everything required is done and handled just in time. The physical parts for a production unit ideally should arrive exactly when needed for a particular car (Ohno, 1988; Womack et al., 1990).

• Lean focuses on quality and the idea that defects and irregularities should be dealt with as soon as possible. This is realized by jidoka, or autonomation which is an English translation of the Japanese intent of highlighting the perspective of automation as involving human participation, labor and innovation, one pillar in both lean and TPS. Visualization and shared understanding are crucial aspects of this.

Defining lean isn’t easy. It can be viewed as an approach that relies on a set of principles, ideas, and guardrails that we can choose to summarize as:

Lean implies an approach, or mindset, that emphasizes on flow towards outcomes and values from an appropriate ever improving flow, contributing to expected values and outcomes, creating the desired impact.

Lean is a means to an end in order to create value with a focus on flow efficiency. Your organization must find its own way to shape a lean culture with an appropriate set of tools, methods, organization and principles based on purpose and mission.

What is Flow in Lean?

Flow is something we experience in our lives from time to time. Everything just seems to go right and you are accomplishing everything you want when you want it. The tools and information you need are in place and within direct reach whenever you need it. In some sense, flow in lean is just about this, but from the perspective of reaching a particular set of goals regarding value and outcomes. When producing goods, the value stream revolves around the stream, from raw materials to the finished product. The focus is on the journey not primarily on the utilization of resources, e.g., workers or tools, but on the actual flow of the product or service.

When producing a mobile phone, the subject of analysis should be on the phone and the efficiency should revolve around how the phone reaches a completed stage. The scope for the journey is defined by a set of system boundaries describing the start and end of a transition towards the completed product, or even when the product first is deployed and giving the intended value it was designed for. During the production journey, the product will be in two primary states, the first being where value is added towards the goal of a complete phone, and waste, that is activities, behaviors and contexts where no value is added towards the delivery of a fully functioning phone. Consider the following example of a value stream flow:

The red color describes time where activities not contributing to the value creation. Typically, this could be a worker waiting for a machine to be available, transporting the phone within or between production facilities, but it could also be by practices or routines not needed, for instance, the phone may be put through a diagnosis test testing for features not used for that model. In a flow-efficient context, we aim to remove the red areas. Example of “red” areas belong to one or more waste categories (non-value-adding activities) and should be understood and assessed from such a perspective. The ideal state for the flow above would look like this:

The goal is to remove the wasteful activities from the flow. By doing so, we have a higher flow density (Modig, 2012). However, the most recent changes within the value stream or its context may pose new opportunities or make us reflect differently on what is possible. This means that there are always new opportunities arising when changes are made. By collaborating on and continuously improve our practices and understanding of a value stream, we should continue or journey in order to:

• Sustain the current level of flow
• Improve the flow based on new insights
• Avoid backlashes in areas where improvements have taken place by, e.g. creating a shared understanding of how and why certain practices add value to a product or value proposition.

Lean Flow Density and Lean Flow Time

It is important to distinguish between a pure flow without waste and the calendar time it takes to reach the intended state. Modig et al. (2012) argue for the distinction between flow time (calendar time) and flow density. With density, they argue, the focus is on avoiding ques building inventory of parts, or wait times in a flow. Ques and inventories cause much more costs than is accounted for (Reinertsen, 2009). When unnecessary activities are removed, we need to analyze how we can further optimize our flow.

Flow time is the time it takes from the start of the value stream until the unit leaves the final stage. Faster is often considered better, but we want to find the right speed, given the circumstances and context. If relying on Modig et al. we should not sacrifice flow density for flow time.

What is the right flow time? It depends on multiple aspects and how well our organization can cope with the speed as well as the expectations and ability of customers. We don’t want to wait too long for our food at a restaurant, but if the food arrives too fast, we may raise concerns about its origins. Was it rejected by another visitor or ready-made rather than prepared at the restaurant?

The flow time has to be seen in relationship to what we want to achieve and what is feasible given the current technology, culture, expectations and ideas regarding value.

Consider the value stream “travelling around the world”. In the 19th century, a reasonable suggested flow time was suggested by Jules Verne in the famous book Around the World in 80 Days. That was expected as a reasonable target without unnecessary waiting times with a maintained flow. Today, the expected flow time for a trip around the world can be expressed in hours.

Time may in itself by value adding, e.g., cognac and whisky stored will contribute to the value and perception of the product, or a retreat where time for reflection is important.

Waste (Muda)

Everything not contributing to the creation of value in a value stream is waste and flow efficiency is not optimal as long as non-value contributing activities take place. Liker (2020) describes seven types of waste in production settings:

1. Overproduction beyond current demand.

2. Waiting for missing items or resources, e.g., a machine.

3. Unnecessary transport or conveyance. The need to transport or move goods during the production.

4. Over-processing or incorrect processing. The product isn’t manufactured optimally because of poor tools or by error prone design of components for assembly.

5. Excess inventory of both components and produced goods.

6. Unnecessary movement by employees to look for tools, or reach out for components.

7. Defects. A product that doesn’t meet the specification is defect and can take a lot of time to rectify. Since all items may have their unique defects, it can be a time-consuming endeavor to handle and administrate the defect items.

Continuous improvement and learning are through the jidoka pillar central in addressing the elimination and working towards a context with better flow. In an organization, we have to continuously learn more and keep identifying potential waste in value streams. One change in a value stream can open up for new opportunities elsewhere, contributing to an improved value creation.

Applying Lean in Your Organization

Ideally, the lean approach is recognized as an interesting way forward by the entire organization. Regardless, it’s a good idea to start small and scale up in order to gain insights and learn more through experimentation and gradual implementation. I suggest to reason about the value and mission of the whole or a determinable portion of your organization. The value should have its roots in a product or service of importance. Try setting a scope where you and your colleagues can deploy practices and ideas on lean thinking. Then sketch and describe the value stream within those boundaries, as it looks today, and collectively reflect on how to improve the flow by identifying waste, address just-in-time issues, quality, learning and shared understanding. It will take you towards an approach where the lean components in isolation show their strength in context supporting flow efficiency. Many organizations today want to become more agile, and lean is helping toward that end. Lean and agile ideas complement each other and are both intended to give your organization the ability to respond to change, and at the same time, be efficient and effective. We have a blog post on agile see the article What is Agile? What does agile mean? where we highlight some qualities of agile approaches.

Final Thoughts on Lean

Lean isn’t primarily tools and isolated processes. It’s a culture where the way we view ourselves, the work and the value we create for our customers, users and other stakeholders. Lean thinking may sound like management fluff with no actual substance. This softer nature of the approach, where incremental advancements are the goal, contrasts the perception of many successful transformations or changes within an organization. As Ohno (1988) stated it, it is scary, with small continuous improvements instead of large directly quantifiable results.

This article has only scratched the surface of lean and TPS. I want to stress the cultural aspects of the lean approach, and the shift towards flow efficiency in value streams. Resource efficiency should be considered, but in the context of flow efficiency, when possible. If we focus on the flow value, resources may adapt to and be adjusted to the value stream itself, at least we can highlight the need for adaptation.

One aspect where I think improvement is needed concerns that of value. The initial versions of TPS and ideas concerning lean imply that the value is more or less fixed. We strive towards the delivery of e.g., a car given the specification, and the emphasis is on the flow efficient wasteless delivery of such value. However, in today's changing business environment and increased competitiveness, the ability to grasp and adjust to not yet known value for customers and users is a key to success.

An organization where the whole organization continuously reframes, adapts and contributes to the value proposition will have advantages. Lean approaches stress a value focus, but this is an area where there is room for further improvement.

List of references

• Krafcik, J. F. (1988). Triumph of the lean production system.Sloan Management Review, 30(1), 41–52.
• Liker, J. (2020). The Toyota Way, Second Edition: 14 Management Principles from the World’s Greatest Manufacturer (2nd edition). McGraw-Hill Education.
• Modig, N., Ahlström, P. (2012). This is Lean: Resolving the Efficiency Paradox. Rheologica Publishing.
• Ohno, T. (1988). Toyota production system: Beyond large-scale production. Productivity Press.
• Reinertsen, D. G. (2009). The principles of product development flow: Second generation lean product development. Celeritas Publishing.
• Womack, J. P., Jones, D. T., & Roos, D. (1990). The machine that changed the world: [Based on the Massachusetts Institute of Technology 5-million-dollar 5-year study on the future of the automobile]. Rawson Associates.