Lean Management Definition

by Bill Faulkner; Updated September 26, 2017
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The origins of lean management, which is widely found throughout the business world, sprang from a simple concept. The core philosophy behind lean is that customers do not pay for mistakes or waste but value. As such, companies need to increase the value of their products or services in order to maximize profit. Lean management offers an opportunity to drive up value and promote continuous improvement.

Significance

Implementing lean management enables a company to establish a sense of direction and create corporate objectives. Implementing lean systems enables a company to eliminate processes that do not offer value and track improvement via a set of reliable metrics. This form of management allows company executives to have a clear picture of what is working correctly for the company and what areas are in need of changes.

Thousands of manufacturers remain profitable even during recession by using lean principles to become more cost-efficient. Lean management has proven to be an effective component to maintain a company’s sense of economic viability, even during rough financial times.

Function

Lean management eliminates waste by examining processes and striving for continual improvement. Five inherent principles are involved in the implementation of lean techniques: identifying value, value-stream mapping, creating flow, establishing pull and seeking perfection.

Personnel from a variety of departments are often brought together to examine a single process. This allows for a wide range of perspective and helps prevent a “this is the way it’s always been done” mindset.

Benefits

Lean manufacturing can help to eliminate defects. Part of the process of streamlining production involves using more “pull” than “push.” This means that later production stages dictate what is happening in earlier ones, instead of vice versa.

Without using lean, a company might generate a thousand pieces at an early stage, and then try to push them through its system. When this happens, a defective processing step might not be discovered until after the thousand pieces have been produced. In a lean system, though, it is possible to discover faulty material earlier and then halt production and fix the problem.

Considerations

The prevailing theme of lean management is waste elimination which first requires identification of areas where wasteful actions occur. There are many potential wastes, including overproduction, inventory, extra processing steps, motion, defects, waiting and transportation. Employees involved in lean management need to examine processes and look for examples of these.

Effects

Lean thinking has moved beyond the world of manufacturing and is now used by managers in a variety of disciplines. Lean management can now be found in such areas as construction, health care, government and maintenance. The companies in these industries which implement lean philosophy find greater awareness with regard to waste. Efficiency becomes a top priority and helps to maximize profit or reduce costs.

Metrics

An important part of lean management is developing a set of metrics with which employees can document their achievement. Metrics are used in business to identify trends and record progress towards the ultimate goal of eliminating waste. They are also necessary in promoting a lean system to all employees and providing a sense of purpose and pride for departments. Companies can use metrics as a basis for issuing bonus payments, and this encourages employees to be mindful of waste.

About the Author

Bill Faulkner has been a Michigan-based freelance writer since 2002. Faulkner produces advertising, marketing and Web copy for various businesses and also writes content for a variety of websites. Faulkner holds a Bachelor of Arts in English from Hope College and has been writing online instructional articles since 2009.

Photo Credits

  • business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com