We should step back and start from the beginning. Lean Blitz has already looked at the lean wastes, started to review some of the lean tools, and touched on the 14 lean principles as outlined by The Toyota Way.
But let’s really get to the root of all of this – what is Lean, anyway? Why do Lean?
The Lean Enterprise Institute defines lean as “maximiz(ing) customer value while minimizing waste” and “creating more value for customers with fewer resources.”
Okay, what does that look like? First, let’s examine a couple of those terms.
“Customer value” is based on giving the customer what they want, when they want it, in the quantity and form they want it. Value is derived from the gain the customer receives relative to the resources the customer is investing (time, money, etc).
For example, if someone invests $10,000 to buy a car that ends up providing $8,000 in value, this someone is probably not going to be pleased. However, that same someone might be delighted to invest $10,000 into a car that brings about $12,000 in value (maybe the car has a long life or the car is immediately resold to someone else for the $12,000, etc).
“Waste” refers to the lean wastes and non-value-added activities. Customers aren’t willing to pay for non-value-added activities, so it is in the best interest of the supplier to minimize or eliminate those non-value-added activities.
“Resources” are the time, money, personnel, and thought that is invested in providing customer value. If you can fulfill customer value while reducing the amount of resources invested in doing so, you’re heading in the right direction.
Another way to define lean? Reducing the amount of time it takes to turn customer requests into cash, and shortening how long it takes to get paid.
Now we’ve got the definition down…but what does that look like, really?
The ideal transactional scenario will have customer value being produced by the supplier with absolutely zero wasteful activity present. Here’s a timeline of what that might look like:
There is no time wasted between the three steps – the customer essentially receives the order and pays for it right when it’s requested.
So what actually happens in transactional processes? Here’s another, more realistic timeline:
The large red ovals are the combination of processes between the major steps. Those processes will be a combination of value-added and non-value-added activities.
Using a concession stand order as an example, the customer orders a burger, some chips, and a pop. In the ideal scenario, the customer immediately receives the entire order to his/her specifications with zero time elapsed and also immediately pays.
But what really happens? The customer waits in line before even placing the order. When stating the order, the cashier punches buttons into the cash register. The cashier walks to the back table to pick up the chips. You wanted a regular pop but the worker filling the cups provided you with a diet, so the worker had to fill a new one. Both you and the cashier are waiting for the burger to finish cooking. And so on and so on.
The extra effort and extra steps taken to complete processes cost time and cost money. The longer it takes to cycle through an order delays the arrival of payment, and delays the arrival of payment from subsequent customers. Unfortunately, waste activities are inherent in every process and the best one can hope to do is minimize those wastes.
The less impact those waste activities have, the faster you get paid and the faster you can move onto the next customer order.
The lean tools will help reduce defects, reduce walking around, minimize excess motion and transportation, and thusly cut back on waiting times for the people in line behind the front-and-center customer.
Lean has its roots in manufacturing, but the lean principles are applicable and transferable to any process in any situation in any industry in any setting.
Can you spot wastes in your processes, wherever you are? Imagine how much time and other resources can be saved by doing exactly what the customer needs and only what the customer needs!
(Side note: there already is a page about what lean is, but hopefully this provides a little better visual understanding at a very high level.)