What is Lean Management?
Define
Lean management is a method of optimizing business operations, by utilizing resources to get the best performance at the lowest cost. The goal of this method is to cut all redundant factors such as time, money, and labor so that the organization can operate compactly, fully exploit resources to help high work quality but low costs, leading to higher costs increase profits for the company.
History begin
The lean management method was originated by the Toyota car manufacturer. In the 1950s, Toyota was just a small company, struggling after World War II, so the company invented a method called lean manufacturing. Accordingly, the company creates a more efficient operating system by saving raw materials, cutting redundant steps and working staff with a focus on high performance.
By this method, Toyota has produced more, faster and, importantly, cheaper. From a company that came up from the dead, Toyota has become one of the big brands and resonates in the global auto market.
Toyota's approach has also influenced many different companies and sectors. So it originated from manufacturing but now it is known as lean management, which covers many aspects of the company and can be applied to many fields.
2 core elements of lean management
According to Toyota's lean management approach, two key pillars are promoting human values and continuous improvement. People are the focus of business development, each employee is cared for, empowered, created conditions to promote capacity and complete work in the best conditions. And companies are constantly updating ways of organizing and working processes more effectively to optimize costs and maximize outputs.
Lean management puts managers to view the company from two perspectives - personnel and operation. Managers must strike a balance between retaining talented people and continuously optimizing the way they work. Human resources must be attached, companies must update to create a competitive advantage in the market. Because the product can be copied, but the internal resources are not and this is the sustainable value for the development of the company.
The foundation is production but lean management is a higher development ladder and is applied in many different fields. But how do companies balance and apply lean management successfully?
5 key principles in lean management
It is important when implementing lean management, companies must determine which parts should be kept, reduced and which should be completely eliminated. Here are 5 principles to determine the right job, the right function so that the business can be streamlined and still effective:
1. Determine the value the business wants to provide to customers
Companies need to clarify the value of the product / service compared to what customers pay. That is, businesses must identify the current needs of customers to create products/services capable of addressing these needs. The level of satisfaction will be based on the cost paid by the customer, the higher the cost, the more complex the product is able to satisfy the complete need, and the lower cost is vice versa.
For example, company A has determined to provide European cookbooks to people who want to learn how to cook. This company decided that the price would be relatively high because their books are in the premium line, including various recipes from easy to difficult, detailed instructions, pictures printed on high quality paper… And this is the price. company A's value and the specific factors to create their value.
2. Work system according to the defined value system
Next, the company must list all the work that needs to be done for the product to achieve the value as defined. The process of systematizing the jobs will help businesses see the necessary work and the redundant work, which is wasteful but does not contribute to the creation of product/service value.
However, companies should carefully consider all hidden work to ensure that when cutting will not affect the final product/service.
If the product is a high-end cookbook, besides recipe compilation, photography, design and layout, it is also extremely important to check the manuscript. Although, testing is not the main factor on the content of the book to be published, but it will impact the user experience. Because a book with correct content and form but with spelling errors will no longer be worth the value originally determined.
3. Work flow design
All tasks should be arranged in a clear order, with appropriate time and personnel allocation. When the company balances and arranges each part sequentially, it will create a smooth operating flow, the departments understand their responsibilities and work together smoothly. In addition, the operator also understands the entire working process of the organization and easily recognizes bottlenecks if problems arise.
For example, in the book production process, the editing and content editing department has 3 months to work, the design department has 3 months to complete the image stage, and the producer needs 1 month to print and print. Thus, at the right time, the departments must complete and hand over to other departments so that the project progress is carried out as planned.
4. Use the principle of pulling
Enterprises should only produce based on the actual needs of customers instead of "preparing" in advance, leading to waste of human resources and excess compared to the market. Inventory is a typical phenomenon of not applying lean management properly. Enterprises need to survey the market or poll customers about products/services in advance to provide just enough, avoiding inventory loss of additional storage and liquidation costs later.
5. Constantly updating to find the perfect method
Lean management is about continuous innovation, in order to maximize the efficiency possible for the business. Therefore, after each operation cycle, even in the process of implementation, companies need to find the most optimal plan before implementation and re-evaluate after each deployment. Through the conclusions and updating of new trends, companies can both improve performance and increase product/service quality.
The company environment operates continuously with increasingly unpredictable variables. Therefore, enterprises cannot keep a "static" state with a single working process. Lean management orients the business to continuous optimization because even if a good operating method is found, there will still be a better method.
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