Inefficiencies and poor internal functions contribute to half of all businesses failing by their fifth year.
Don’t to be part of that statistic.
Lean operating principles are strategies that show you how to create an engaged and productive workforce while increasing your profits. It's an effective model for managing your teams whether you work in construction, software development, manufacturing, or any other industry.
This guide will go over the lean operating principles and how you can implement them into your business strategy to create a solid foundation for your business.
What are Lean Operations?
Lean operations apply a minimalist approach to running a business. They focus on doing more at your company with less. One of the targeted results is to improve the day-to-day operations of your company.
You want to maximize your workflow while minimizing waste. You want to create more value for your customers by using fewer resources.
Before you get started with lean operations, you'll need to conduct an in-depth analysis of your processes and procedures. You'll need to look for different, more efficient ways to achieve your business goals.
The primary goals of lean operations are to:
- Cut costs,
- Eliminate wasted energy, time, and resources,
- Refine processes,
- Optimize your facilities, and
- Create a more deliberate workforce.
Lean Operating Principles
There are five main principles that make up lean operations. The thought process helps guide the integration of lean techniques into a workplace.
1. Identify Value
What is the value of your company? What do you offer your customers that other companies don't? To get started with lean operations, you need to identify what your company and business strategy bring to the table.
Each company needs to solve a problem for its customers. The solution to their problem is something that they're willing to pay your company for.
When going through this process, you need to identify what activities bring value and which ones are wasteful. Anything that's considered a waste activity needs to be eliminated. However, keep this in perspective; there may be some departments within your company that are not giving anything of direct value to your customer, but they add to the overall value of your company's products.
Things that are considered waste under lean operations include:
- Motion (movements of machinery or employees that are unnecessary and complicated),
- Transportation, and
- Over processing.
Once you figure out what value you want to bring to your customers, you're ready to move onto the next step.
2. Map Your Value Stream
In this step, you'll need to map out your company's workflow. This includes all the people and various actions that are involved in delivering your product to your customers.
During this step, you'll be able to see what your company's value is. You'll also have the opportunity to evaluate which parts of your process don't produce any value.
Once it's all mapped out, you can see what teams are responsible for various steps in the process. You can see which team members are responsible for evaluating, improving, and measuring that process.
Getting a big-picture view of your company will help you detect and eliminate any actions that don't bring value.
3. Create a Continuous Workflow
Each team and team member's workflow needs to stay smooth once you've determined your value stream. It may take a while for this to happen, so stay patient.
Alleviating any bottlenecks that occur during your workflow is vital to ensuring you create a smooth, lean workflow. Creating teamwork across different departments will help improve communication. You can also break up work into smaller parts to help you detect and eliminate possible roadblocks.
4. Create a Pull System
A stable workflow benefits every member of your team. They'll be able to complete their tasks more efficiently with less effort. To create a stable workflow, you'll need to establish a pull system.
This means the work is only "pulled" when there is a need or demand for it. A pull system ensures that you're producing value that your customers actually need. It also helps avoid overproduction.
To help define this a bit more, let's compare it to a "push" system. With a push system, a task is created. Someone, like a manager, takes all the tasks that need to be completed and delegates them to different team members.
Tasks are pushed onto those who need to complete them. This often refers to products being produced in advance and with the anticipation of what customers will need. It doesn't wait for them to demand them.
For example, if you go to a restaurant and order a pizza, the chef pulls your order and makes the pizza. There aren't countless pizzas already prepared in advance before there is demand for them. Doing so would result in a waste of resources.
5. Seek Continuous Improvement
The previous four steps give you a solid foundation for building your lean operations system. While seeking continual improvement is the final step, it's the most vital.
Problems will occur in any of the prior steps. You need to ensure that you and all your team members are striving to make continual improvements to their processes. They need to identify where their actions can be tightened up to eliminate waste.
You can do this by conducting daily or weekly meetings where you and your team evaluate your processes. Ask people to come with questions or sticking points they've encountered so you can have a productive conversation.
How to Get Started with Lean Operations
Implementing lean operations isn't something that can happen overnight. Before you apply them, you need to speak with your team members and the entire organization to prepare them for the change. It will help avoid any confusion or conflict in the workplace.
Set Clear Goals for Your Company
Establishing clear goals will help you and your employees know what you're trying to achieve by implementing lean operations. These goals need to be communicated with your entire team.
Establish the Lean Operations Mindset
Once you know what you want the goal to be, you'll need to then implement the right mindset with your team members. To get everyone on board with the new procedures, you'll need to explain what the lean principles are. They'll need to understand the personal and professional benefits of it.
The Benefits of Lean Operations
We've gone over how lean operations can increase your revenue and reduce waste There are a few more benefits that you and your organization will reap from implementing lean operations.
Better Allocation of Resources. When you base the production of your products on customer demand, you'll only use the resources that you need. You won't waste physical products and your team member's time creating products that no one needs or has expressed a desire for yet.
Smarter Processes with the Pull System. The pull system ensures that you only deliver work or create products when there's a demand for it. If you base your product production on forecast predictions, you could end up making more products if the prediction is incorrect.
Focus. Improve the focus of your workforce. Your team members will only focus on activities that bring value to your customers and not on meaningless tasks.
Improved Efficiency and Productivity. Your team members will focus on delivering value to your customers. They'll be more efficient and productive. Unclear tasks won't get in the way of their workflow.
Implement Lean Operations in Your Business
Whether you're a business coach or a business owner looking to streamline operations, implementing the lean operating principles will improve the workflow and cut down on waste. Establishing what value you bring to the table and getting all your team members on board will ensure that implementation is a smooth process.