Lean Management

Lean management enables companies to make their value chains more efficient, sustainable and productive. Quality gains and cost reductions are generated while customer orientation is improved. Lean management is an active approach to avoiding practices that waste time, money and material resources. Seamless coordination of every link in the value chain keeps the company constantly moving closer toward its customers and their needs.

A clear-cut value chain permanently maintains the ability to deliver and avoids wasting resources. The result is higher product quality combined with greater customer satisfaction. Five principles of lean management must be observed:

• Identify customer value
• Identify the value stream
• Create the production flow
• Implement the pull principle
• Aim for perfection

The principle of lean management originated in the manufacturing industry, specifically in the Japanese automotive industry. It was introduced there in the middle of the 20th century. Taiichi Ōno of Toyota is regarded as the father of lean management.

Globalization and digitalization are making corporate value chains and customer contacts increasingly international. Climate change demands more sustainable management and the avoidance of extensive resource wastage. Today, the latter attributes not only yield financial savings and positive publicity: They have become a question of survival for the planet and the human race. Lean management has therefore never been more important than it is today.

Lean management enables companies to improve their quality, customer orientation and sustainability. Disruptive factors such as redundancy, wasting raw materials and delivery problems are actively avoided. Ideally, lean management generates growth, strengthens a company’s market positioning and thus drives expansion.

Companies work with value chains especially in the manufacturing sector and in industrial production settings. Ideally, lean management should be applied in every area of such operations. That said, sectors such as logistics, administration, maintenance and project management also benefit from lean management, maximized customer centricity and continuous process optimization.

Simply put, the main benefits are maximized customer satisfaction and product quality coupled with minimized resource wastage and the smallest possible administrative or management footprint. This aptly summarizes the benefits of lean management for organizations. Lean processes are less error-prone and at the same time more efficient. All internal issues are oriented solely toward the needs of the customer. Dispensable processes are identified and eliminated at an early stage.

All internal material and information chains should be visualized (using special tools) at the beginning. This creates a clear overview and enables management to distinguish between processes that add value and those that do not. This keeps the production chain as lean as possible. The 5S method can be used as a rule of thumb:

The 5S method:

1 Sort: What do I have in the first place?
2 Systematize: What do I need?
3 Purge: Keep only what is really necessary.
4 Standardize: Codify and retain tried and tested processes.
5 Sustain: Consistently maintain and further develop those steps that are demonstrably useful.

The PDCA cycle expresses the same principles somewhat differently: Plan, Do, Check and Act. Processes are planned, carried out, checked and then documented as standard procedures. Other lean management methods aim at agile working, self-reflection and the avoidance of human error by creating the right technical conditions.

Before introducing lean management, all employees must be informed exactly of what it is about and what benefits it will produce. To do this, it is a good idea to hold workshops or training sessions with experts in the relevant department. Fears may arise in the face of terms such as "increasing efficiency" and "streamlining". These fears must be actively dispelled by the management. Ideally, a so-called pilot group should be formed, consisting of representatives of different teams who communicate the topic of lean management and its positive effects to the various work groups.

Lean management should not be established immediately throughout the entire company, but gradually in individual departments. Always start by separating activities that add value from those that do not. But be careful: Some activities that do not directly add value at first glance (e.g. recruiting) nevertheless contribute to the overall value of the company and are therefore absolutely indispensable.

The next step is to visualize the value streams across the individual teams. Many companies find it useful to break production steps down into the attributes "Requested", "In Progress" and "Completed". The production chain itself is streamlined and made more efficient by reducing interfaces, synchronizing process steps and responding early to impending delivery bottlenecks. After that, it is important to keep the momentum permanently in flow (following the pull principle). Whatever the case, production should only be started/ramped up when corresponding demand exists on the customer’s side and sufficient personnel capacity is available on the company’s side. This avoids overproduction and pipeline effects as well as delivery problems to the customer.

Once lean management has been implemented in the first (pilot) departments, the practice should be continued and eventually integrated in the entire organization and corporate culture. As soon as lean management is no longer perceived as a "novel concept" but as a natural part of the business, it has been successfully anchored in the company. Until this happens, the results of lean management must be communicated intensively so that the entire workforce can attribute any improvements to the new concept. However, the implementation and anchoring of lean management will only have a lasting effect if the entire team adopts continuous improvement and optimization as standard practice. Agility and interdisciplinarity are fundamental to lean management and are therefore important characteristics to fuel these dynamics. In addition, it makes sense to create positions in the company that are specifically geared toward lean management.