Lean comprises a collection of improvement tools built on five principles: value, value stream, pull, flow, and strive. It is a systematic approach that identifies and eliminates waste through continuous improvement, directing the product to the pull of the customer, aiming perfection. A lean organization is a systematic approach to improvement and a comprehensive approach to running an organization. Understanding the five principles of a lean organization is important to improve operations in the business.
Value creation is achieved when consumers perceive the quality of services rendered to them being higher than their cost. It doesn’t matter how good business or its products and services are, but rather how good customers view the business, products, services and are willing to pay for them( Pakdil, and Leonard pp.4). Various factors need to be considered during production, such as costs, but the most important factor is the customer. There’s the tendency to want to keep doing what we’ve always done, making the same or similar products. Under pressure, businesses tend to focus on cost-cutting. Sometimes cost-cutting is necessary, but it’s not likely to will cut through to prosperity. Instead, Lean suggests better use of all the resources
to produce and sell more while minimizing costs. Value is about what your customer wants and how can a business can provide it better, faster, cheaper.
The next step in Lean thinking is an identification of the entire value stream. It is essential to identify that step which firms have rarely attempted but which mostly exposes enormous amounts of waste. The value stream consists of all of the activities necessary to deliver your product or service to the customer (Do). It extends from raw material to customer service and does not begin or end at the walls of your organization. It also includes suppliers, business distribution systems, and direct and indirect customers. Specialized process maps are used in identifying these steps in the value stream. The most commonly used is the value stream map. It is fundamentally the same as the process maps, but value stream maps contain much
more information. Once the workflow of the process is established, the step that fails to create value for the customer directly is singled out. The process flow should be managed, improved, and smoothed to remove any non-value-added activity.
After specifying value from the customer’s perspective, and mapped the entire value string, the flow is then implemented. For flow, we must shift from a batch and queue mentality to continue as flow (Chavez). The idea behind flow is that products should continually move. They should not sit and wait to be processed. Flow is generally a fundamental shift in the way that we think. Often companies change their focus and their physical layout to shift from an emphasis on functions to an emphasis on products or product families.
As a result of implementing the first three principles, a significant shift in our approach to production is possible. Instead of building to forecast, we can build based on what customers buy. In a Lean system, you produce to customer demand. It is the essence of a pull system. Pull is a major difference between lean and traditional American manufacturing. (Chavez). In a traditional system, an organization forecasts demand and then produces it to the forecast. Orders enter at the beginning of the production process and are pushed through usually with large lot sizes. When demand is low, you build inventory. In a Lean system, forecasts are used only for planning purposes. We produce only what customers are buying. If there is no customer demand, nothing is produced. That is a simplified visual comparison of pull and push manufacturing systems. In this graphic, the pull system works from right to left. In a pull system, when a customer buys a product, it triggers final assembly to produce another. When final assembly
produces one, they pull components from the prior process, triggering them to replace what was used. The pull cascades back to the beginning of the process.
The concepts presented in a lean organization are elements of lean thinking, a mindset necessary for successful lean implementation. Each of the concepts is important, but they do not stand alone. It’s important to think about how ideas and approaches work together since Lean is a system. In the end, every manager and every employee should have at least one item on their performance plan that is aligned with a corporate objective. Jidoka means automation. That is sometimes called intelligent automation. The idea is to have machines do the things that they can do better than people. Particularly repetitive and tedious tasks that are prone to human error and can cause injury. The approach does not suggest that we should automate everything, but many should probably have some level of automation. The result is a system of human-machine interaction where each does what it does best.
In the 1980s, American automobile manufacturers embraced automation with a fervor, thinking it would give them an advantage over the Japanese. They were mistaken. They saw automation as a way to cut costs, rather than to do the work better. (Skhmot). Today, there is once again a lot of public discussion about automation, this time in the service industry. An approach such as this may make sense where automation is introduced, one element at a time, and humans are left to do what they do best.
Businesses can use value to ensure effectiveness by making sure the customer needs are always met. They can order more quantity of a certain item that is popular with the customers. Value stream can play into the business by ensuring whatever products are sold; the product is done. Do not put an unfinished product into the customer’s hands. Flow can be incorporated through guaranteeing a product is produced on time. The pull method can be incorporated by improving the flow with products and the delivery process. Lastly, a business will have to maintain the process by checking it because nothing runs perfectly. Changes can occur that will demand changes in the process.