Lean Fundamentals:
The Foundation for Success
If you look in any dictionary, the typical definition of Lean is something that contains little fat, or something that is severely curtailed or reduced. Translating this definition to the business world, Lean means producing what is needed, when it is needed, with the minimum amount of materials, equipment, labor, and space.
So what is the objective of a company that wants to be Lean and employ a Lean process for product development? Essentially, the goal for a company adopting the Lean philosophy is to make each process as efficient and effective as possible, and then to connect those processes in a stream or continuous chain focused on flow and maximizing customer value.
What do we mean by “flow” and maximizing “customer value”? Let’s examine each term in more detail.
Flow
Everyone can relate to the concept of flow if we use the example of water flowing continuously through a stream or river. Similar to this example, flow in the business world refers to the continuous movement of products and information through the various processes to create a product. The goal here is to minimize idle time between all of the processes, which represents inefficiency and waste.
The elimination of waste is a key tenet of Lean. It is the basis upon which companies can improve productivity and maximize customer value.
Customer Value
Simply stated, customer value refers to specific activities that add value to the products and services that customers buy. The determination of what adds value is made from the customer’s perspective - in other words, the customer’s point of view, not the company’s.
Under the Lean philosophy, for an activity to be value-added, it must meet the following three criteria:
1. The customer must be willing to pay for the activity
2. The part or object must change
3. It must be done right the first time
For an activity to be considered value-added, all three criteria must be satisfied. Any action that does not meet all three criteria is considered a non-value-added activity and represents waste.
Identifying and eliminating waste is the key enabler to maximizing customer value and
establishing flow. Once this is accomplished, a company is well on its way towards transforming itself into a lean enterprise.
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