What is Lean Management?

Last week when I said “it can be tricky to answer the question, what is lean management?” This is an explanation I got some time back to the same question from one of our contributors. I thought of sharing it with you now since it might make more sense with my last week’s post.

Lean manufacturing has been a business “household” name for quite some time, but what exactly does it mean? Lean manufacturing is really a way of managing, so lean management is really probably what you would want to refer to it as. It simply means a system for organizing and managing all aspects of a business’ function by creating a principles, practices and tools in order to develop goods and services with higher quality and fewer defects. The general outcome is to do this by using less effort, space, capital and time than the mass production system of yesteryear.

I’ll be you didn’t know that it was actually Henry Ford that developed the first production system? He coined it “flow production”. The Japanese took Ford’s ideas and further developed the principles due to their constraints on limited human, financial and material resources—this was largely due to the effects that WWII had on the country. However, through their persistence and determination, the Japanese developed the Toyota Production System (TPS).
So how do people actually manage their resources in a lean manufacturing environment? Of course this will depend on what your thoughts are for what resources consist of. In a lean manufacturing environment, the focus will be the products and the resources needed to make the products.

One such resource is the inventory. Controlling inventory will determine the overall efficiency within your organization. High inventories results in low inventory turns—this means that efficiency is low or the process is not working. For instance, if there is a lot of inventory in raw materials not being used for making the customer-ordered product, then there is an issue with the supplier, which needs to be dealt with in order for lean manufacturing to work in by eliminating waste and reducing costs.

Production is not the only place that management of the resources must occur. It also needs to occur within the other departments, as they all affect the production of the product in some way, whether it is managing the human resources, or managing the materials, it all goes together. For instance, if there is a lot of inventory sitting around, then there is a problem within the marketing and/or sales team’s efficiency.

When you have a consistent focus on all aspects of the supply chain, then there is more focus on the areas where inefficiencies occur within the process. The true way to manage resources with a lean management focus is to lower your margins by having higher inventory turns—knowing how each area affects the other will help you to move to managing the resources effectively and efficiently.