Lean. A topic you increasingly hear under discussion in almost any business situation. Originally a manufacturing concept, the principals involved have seen it become increasingly relevant for any part of a company reliant on processes and their effective flow. That can obviously be in making something, but it can equally be in approving purchase invoices in the back office or in service companies.

Where did lean come from?
At the fore of ‘lean’ is the creation of value for the end customer. The origins are to be found in the philosophy of the Toyota motor company’s Taiichi Ohno and Dr Shineo Shingo. They determined that all activities not directly contributing value should be regarded as a waste of resources – and were responsible for a company that excelled in practically every department. Thanks to Womack en Jones, who decided in the 90’s to dive further into why the Japanese factories were doing so much better than their competitors, the rest of the world was able to learn about their revolutionary approach. Womack and Jones called it ‘Lean’ and introduced it into their standard work: “The machine that changed the World”.

Lean is in place, but where’s the breakthrough?
Since the publishing of ‘Lean’ as a concept, the lean principles have been accepted and adopted throughout a broad range of commercial organizations. The businesses often work with great enthusiasm, adjusting their operational processes and adopting lean tools to assist them on their journey to better flow and less waste. Improvement trajectories are started. Training and coaching is organized. The waste areas are identified, every gray cell in the organization mobilized, and the plans for improvements put on the table. But, after an initial period management come asking difficult questions. ‘Where is the breakthrough?’ ‘Where are the results of what we’ve spent time and money initiating?’. Although the goal of lean is never pure cost reduction, the results of the improvements do need to find their way onto the profit and loss report. If they haven’t, why not?

Create flow in the total value stream
The foundation of lean is the standardization of processes. In many cases, particularly for manufacturers, the 5S method will be applied, used effectively to clean up and reorganize the work floor. From “sort” to “sustain”, the methodology supports the standardization and on-going success of newly implemented lean improvements.

The real win regarding the implementation of lean principles, however, relates to the value stream and goes beyond the pure production phases. Companies busy with lean need to have a clear idea of how they create value across the entire organization. The complete value stream needs to be understood as the entire journey from raw materials to the finished product in the hands of a fully satisfied customer. All the activities that occur in between, on and away from the manufacturing operation, are the value stream. As such, the real challenge of the lean reorganization is to create a flow of activities within the entire process.

In part two, we’ll consider further why this failure to see the bigger picture is holding many businesses up on their lean journey.