I’ve spent much of the last few weeks working on process improvement, productivity and efficiency savings. One of the topics that has come up time and time again is ‘lean thinking’. However, it is often held up as a panacea for all kinds of ills, with little in the way of explanation or justification. So here, in a nutshell, is my beginners guide.
Like many process improvement concepts, lean thinking started its life in manufacturing. Its emphasis is on developing systems that produce exactly what the customer wants at the lowest cost and with no waste. Having been used successfully in this environment, it is now making an appearance in the delivery of services, including increasingly those in the public sector.
Womack and Jones* explain that the basic idea of lean is that an organisation should focus ‘obsessively’ on the most effective means of producing value for their customers. These could include external customers such as service recipients, or internal customers of a particular process such as financial services.
They go on to identify five principles of lean thinking:
1. Determine what your customers value. Find out what they want and what their specific needs are. All of your effort should go on meeting these needs.
2. Understand the ‘value stream’. The value stream is the series of activities that, when done correctly and in the right order, produce the product or service that meets the customer’s needs. Activities that do not form part of this value stream should be eliminated.
3. Improve the flow. Work should not be ‘batched’ or held up in bottlenecks. Instead, it should flow steadily and without interruption from one element of the value stream to the next.
4. Pull, don’t push. A lean system should be responsive to customer demand, so that work is ‘pulled’ through by customer needs, rather than ‘pushed’ by the capability, capacity and availability of the operator.
5. Strive for perfection. As the first four principles become embedded in a lean system, you will understand the system better and find more ways to improve it. Lean systems, therefore, get leaner over time. Value is increased and waste is reduced.
Such is the importance of waste in lean thinking that it is worth dwelling on it in a little more detail. Bicheno and Holweg** have researched the different types of waste in a service environment and define them as follows:
- Delay on the part of customers waiting for service, for delivery, in queues, for response or not arriving as promised. The customer’s time may seem free to the provider, but when he or she takes their custom elsewhere the pain begins.
- Duplication. Having to re-enter data, repeat details on forms, copy information across or answer queries from several sources within the same organisation. (Is this starting to sound familiar yet?)
- Unnecessary movement. Queuing several times, lack of one-stop facilities or poor ergonomics in the service encounter.
- Unclear communication and the wastes of seeking clarification, confusion over product or service use and wasting time finding a location that may result in misuse or duplication.
- Incorrect inventory. Being out-of-stock, unable to get exactly what was required, substitute products or services.
- An opportunity lost to retain or win customers, a failure to establish rapport, ignoring customers, unfriendliness and rudeness.
- Errors in the service transaction, product defects in the product-service bundle and lost or damaged goods.
A perfect system, in the eyes of lean thinking, delivers just the right amount of value to the customer (i.e. just what they want, no more and no less) in the right place and at the right time. Each step in the process works effectively and adds value to the final product or service. And critically, waste or inefficiency is eliminated.
While much has been written about lean thinking and its application to the service environment, it remains an evolving concept with no central authority or structured approach. Like many performance improvement concepts, it has its fans and it has its critics. And again like many such systems, it has spawned a plethora of consultants, models and accreditations.
In my view, lean thinking – like other concepts such as six-sigma – is not the be all and end all of organisational improvement. But it does ask some very pertinent questions about what we do and why we do it. And it provides some very powerful ideas for improving efficiency and reducing waste. While it may not be the solution for every problem, it is an idea from which every organisation can at least learn something useful.
* Womack, J. and Jones, D. (2005) Lean Consumption, Harvard Business Review, 83, (3).
** Bicheno, J. and Holweg, M. (2009) The Lean Toolbox: The Essential Guide to Lean Transformation,4th edition, Buckingham: PICSIE Books.