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Lean Management encompasses a set of principles and processes that help an
organization to create greater value for its customers in a lesser time frame by
using limited resources and minimizing waste. It is a great philosophy to
implement in any organization irrespective of its size or type. These practices also
help in innovation that is very crucial for today's business climate.
There are five Principles of Lean Management:
Specify Value: Lean Management lays a lot of emphasis on value and its
maximization. It's important to identify and specify what constitutes this value to
the customer so that your employees are clear about it too. Thereby, you can
recognize the wasteful activities and processes which then can be minimized by
your team.
Identify the Value chain: Value chain or stream is a set of activities through the
organization that work on the product from the raw material stage to the finished
good for the customer. Mapping and identifying each process in a chain helps in
figuring out the logical order, wasteful processes and in streamlining operations to
deliver greatest value in the least amount of time.
Create Flow of value: Typically only 5% of activities for a product and 50% of
activities for a service add value. This waste, if removed, creates a flow that
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ensures that the product or service smoothly reaches the customer without delays,
defects, and waiting.
Respond to Customer Demand: An organization's production and inventory
process must be closely aligned with customer demand. Remember that cost of
storing and transportation are idle costs and do not add value to the product for the
customer. Thus, understanding customer demand patterns better can help in
improved production scheduling that can eliminate the huge wastage in terms of
cost for storing excess products. Aim at producing what the customers wants when
they want.
Aim for perfection: As you define and establish value flow, wasteful processes
will begin getting eliminated. Customer pull will be better addressed. All this will
create a reorganization of processes across the organization, whereby, more
wasteful processes will become visible and the pursuit of perfection will be
attainable. The end goal is always about adding value to the customer.
These 5 principles of lean management will help you bring about change, minimize
wastage and implement policies that emphasize the right way of doing things in the
organization. Processes will get streamlined in the endeavor to consistently deliver
value to the end customer. Organizations that constantly monitor are able to handle
any changes in business environments better and more efficiently.