Professional Documents
Culture Documents
Rating Take-Aways
8
8 Applicability The purpose of lean management is to find problems that plague an organization and to
create solutions that increase profits.
7 Innovation
8 Style Much of a firms wealth hides in everyday waste.
Lean practices can reveal where waste occurs, such as in longstanding practices that
need rethinking.
Focus Use the Japanese kaizen production system to find new ways to improve. Create regular
kaizen events.
Leadership & Management Make sure all employees understand and apply lean tools and practices.
Strategy
Sales & Marketing
Many workers misunderstand lean strategies to mean a reduction of staff.
Finance Leans continuous flow process serves marketing because product supply always meets
Human Resources demand.
IT, Production & Logistics
Pricing-to-value means identifying your profit by subtracting the cost of production
Career & Self-Development
from your products current market price.
Small Business
Economics & Politics Lean experts estimate that storing inventory costs 20% to 40% of the inventorys value.
Industries
The lean concept requires a long-term commitment to ensure continued results.
Global Business
Concepts & Trends
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This document is restricted to the personal use of RENGASAMY Sethurajan (serengas@in.ibm.com) 1of5
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Relevance
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What You Will Learn
In this summary, you will learn:r1) What the lean approach means, 2) How to create a lean culture and 3) How to
implement lean practices.
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Review
Consultant Mark DeLuzio explains where to find hidden value in your organization as he teaches the principles of
lean management. The concept of lean calls for improving both as a person and a business. Exemplifying the lean
philosophy, DeLuzio presents its fundamental principles and processes in brief chapters that explain a new concept,
and offer an action checklist and a case study. DeLuzio covers how to use lean as a philosophy for embracing change,
increasing revenue and solving problems. getAbstract recommends this to-the-point manual to executives, managers,
consultants and small-business owners who want to know more about lean concepts.
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Summary
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Becoming a Lean Company
The purpose of lean management is to find problems that plague an organization and create
solutions that increase profits. Lean is not a fad, and it wont provide wealth if you treat it
like a passing trend. Consider 11 factors that contribute to a positive lean culture:
1. Leader participation Every manager must believe in the lean process for it to succeed.
2. External review Contract for an external assessment so you can see your overall
getabstract situation. A consultant can guide a company on the path to becoming more lean.
Problems are money- 3. Communication After accepting a lean plan for change, communicate the new
making opportunities.
getabstract strategy for success to every employee.
4. Lean language Introduce all company staff to lean terminology.
5. Fresh leadership Lean leaders help build a lean culture. Train current managers and
hire new managers who understand it.
6. Individual ownership Urge employees to take responsibility for their work so they
feel a personal sense of engagement, support each other and help your firm compete.
7. Ongoing information Provide regular updates about the lean philosophy and the
progress of implementation.
8. Procedures Establish processes and routines to create performance improvement.
getabstract 9. Measurements Regularly assess the progress of ongoing procedures. Check that your
Standard work is a processes continue to work as repeating practices over the long term.
lean tool that details
the process in each
10.Respect Acknowledge your colleagues and show respect so they will have pride in
value-adding step and their work.
ensures that each step 11. Rewards Recognize success, hard work and innovation.
is performed the best
way and exactly the
same way every single In any company that adopts lean, 10% of people support this transformation, 80% follow
time.
getabstract the leading voice and 10% reject it. Some people fear change and claim that the lean system
will eliminate employees or compel them to face wrenching, painful change. Instead of
finding solutions to problems, some opponents seem to prefer keeping the problems they
know. Because complainers are influential, leaders must be the louder and more persuasive
voice. People who refuse to cooperate may need to be moved or fired, because negativity
derails success.
As your company implements lean, evaluate each situation empirically. Seek data and
evidence. Dont disparage unsuccessful attempts at change; congratulate the attempt. Offer
incentives for creative solutions to current deficiencies. Update everyone on the companys
progress: every success, every dollar saved.
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Leadership must Using Kaizen
introduce employee-
retention policies that The term kaizen, which means continuous improvement, comes from two Japanese
are consistent with the words: kai and zen meaning change and for the better. This philosophy recognizes
people-first tenet of
lean. that problems exist and that solutions occur when change becomes part of an organizations
getabstract process. Improvement requires participation at all levels. Hold regular kaizen events
throughout your organization to ensure that employees have opportunities to share their
ideas. Follow 14 rules to make sure that your kaizen event succeeds:
Waste occurs if firms maintain established practices that no one rethinks. One box-maker
used a material that everyone thought had to cure for 48 hours. The engineers re-examined
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Lean can dramatically the process with a lean consultant and discovered that 20 minutes of curing would suffice.
reduce waste in Also, stopping production in the box factory to deplete excess inventory eliminated 70%
administrative
functions.
of wasted space and 80% of overstock. Staff could identify issues with the boxes more
getabstract quickly, enabling workers to fix problems sooner. With this simple lean change, the firm
now provides on-time delivery 98% of the time.
getabstract Lean practices should focus on seeking new ways to improve as a business and as a leader
White-collar waste
is the white whale
or employee. Explain to your staff members that they are a part of a lean solution. Offer
of opportunity for openings for them to develop new skills beyond their current roles. Create fluid work
companies that deploy structures so people can expand or refine their jobs, seek opportunities in new locations or
lean administration.
getabstract alter their schedules. When people struggle, changing their assignments might help them
make a fresh contribution.
Avoid using temporary workers who cant contribute to the companys long-range lean
efforts. Keep tasks in-house; educate employees to accomplish jobs you previously
Lean Accounting
Traditional accounting encourages buying items at the lowest possible price. However,
buying in bulk for discounts will lead to unnecessary inventory costs and possible excess
stock. Saving money by compromising on quality has long-term negative effects on the
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The expense of
success of the company. Quality matters; cheap goods create problems later. The costs of
holding inventory is a doing things badly include recalls, reduced product value and increased insurance, as well
direct hit to company as customers claiming warranties or taking business elsewhere. Add to that indirect costs
profits.
getabstract like increased customer service calls or technical support. Overproduction creates similar
problems. Making a lot of your goods all at once might be cheaper, but holding inventory
incurs costs.
Standard costs dont reflect the current value of a product. The lean philosophy reconsiders
how companies measure profits. Lean thinkers note the current market price and subtract
the cost of production to identify the profit. This pricing-to-value practice offers the best
price to customers while calling attention to how the company manages costs.
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About the Author
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Mark C. DeLuzio designed the Danaher Business System before becoming the founder and CEO of Lean Horizons
Consulting. He gives speeches worldwide about the lean system.