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1.

Lean management is an approach to running an organization that supports the concept of continuous
improvement, a long-term approach to work that systematically seeks to achieve small, incremental changes in
processes in order to improve efficiency and quality.

Lean management seeks to eliminate any waste of time, effort or money by identifying each step in a
business process and then revising or cutting out steps that do not create value.
History

To become globally competitive modern manufacturing companies apply Toyota


Production System (TPS). A pioneer in the application of the concept of lean is the
Toyota Motor Corporation. It is designed as a set of tools and methods to eliminate
waste and inefficiency in the production system and it is known as the Toyota
Production System (TPS). Elements of lean thinking are: defining value
identification of value streams and the removal of waste organizing around flow
responding to pull through the supply chain the pursuit of perfection (Piercy &
Morgan, 1997). Toyota Production System is now applied not only in the
manufacturing industry but in other industries too, including insurance companies,
hospitals, airline maintenance organizations, state agencies, the retail industry and
many others
Lean has its roots from Japanese manufacturing industry
This philosophy derived mostly from the Toyota Production System (TPS) (hence the term Toyotism is also prevalent) and identified
as "lean" only in the 1990s. For many, lean is the set of "tools" that assist in the identification and steady elimination of waste
(muda). As waste is eliminated quality improves while production time and cost are reduced. A non exhaustive list of such tools
would include: SMED, value stream mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), total productive
maintenance, elimination of time batching, mixed model processing, rank order clustering, single point scheduling, redesigning
working cells, multi-process handling and control charts (for checking mura).
There is a second approach to lean manufacturing, which is promoted by Toyota, called The Toyota Way, in which the focus is upon
improving the "flow" or smoothness of work, thereby steadily eliminating mura ("unevenness") through the system and not upon
'waste reduction' per se. Techniques to improve flow include production leveling, "pull" production (by means of kanban) and
the Heijunka box. This is a fundamentally different approach from most improvement methodologies, which may partially account for
its lack of popularity.[citation needed]
Lean implementation is therefore focused on getting the right things to the right place at the right time in the right quantity to achieve
perfect work flow, while minimizing waste and being flexible and able to change

The original seven muda are:

Transport (moving products that are not actually required to perform the processing)

Inventory (all components, work in process, and finished product not being processed)

Motion (people or equipment moving or walking more than is required to perform the processing)

Waiting (waiting for the next production step, interruptions of production during shift change)

Overproduction (production ahead of demand)

Over Processing (resulting from poor tool or product design creating activity)

Defects (the effort involved in inspecting for and fixing defects)[18]

Lean services[edit]
Main article: Lean services
Lean, as a concept or brand, has captured the imagination of many in different spheres of activity. Examples of these from many
sectors are listed below.
Lean principles have been successfully applied to call center services to improve live agent call handling. By combining Agentassisted Automation and lean's waste reduction practices, a company reduced handle time, reduced between agent variability,
reduced accent barriers, and attained near perfect process adherence.[25]
Lean principles have also found application in software application development and maintenance and other areas of information
technology (IT).[26] More generally, the use of lean in information technology has become known as Lean IT.
A study conducted on behalf of the Scottish Executive, by Warwick University, in 2005/06 found that lean methods were applicable
to the public sector, but that most results had been achieved using a much more restricted range of techniques than lean provides. [27]
A study completed in 2010 identified that lean was beginning to embed in Higher Education in the UK (see Lean Higher Education).
[28]

In addition, Bolton Hospitals NHS Trust published an article reporting to have successfully lowered their mortality rates after

implementing Lean.[29]
The challenge in moving lean to services is the lack of widely available reference implementations to allow people to see how
directly applying lean manufacturing tools and practices can work and the impact it does have. This makes it more difficult to build
the level of belief seen as necessary for strong implementation. However, some research does relate widely recognized examples of
success in retail and even airlines to the underlying principles of lean.[15] Despite this, it remains the case that the direct
manufacturing examples of 'techniques' or 'tools' need to be better 'translated' into a service context to support the more prominent
approaches of implementation, which has not yet received the level of work or publicity that would give starting points for
implementors. The upshot of this is that each implementation often 'feels its way' along as must the early industrial
engineering practices of Toyota. This places huge importance upon sponsorship to encourage and protect these experimental
developments.
Lean management is nowadays implemented also in non-manufacturing processes and administrative processes. In nonmanufacturing processes is still huge potential for optimization and efficiency increase.[30]

Lean services is the application of the lean manufacturing concept to service operations. It is distinct in that Lean services are not
concerned with the making of hard products.
To date, Lean principles of Continuous Improvement and Respect for People have been applied to all manner of services including
call center services, health care, higher education, software development, and public and professional services. Conceptually, these
implementations follow very similar routes to those in manufacturing settings, and often use some of the same tools and techniques.
There are, however, many significant distinctions and the same tools can be applied in different ways
Service in this context is not limited to the office or administration that have been the focus of several publications, but also wider
service situations that are not necessarily repetitive, where task time is not applicable, and where task times may be both long and

variable. Service in this context could mean anything from a hospital to a university, from an office process to a consultancy, and
from a warehouse to field service maintenance.
The original seven wastes (muda) were defined by Taiichi Ohno, the father of the Toyota Production System. These wastes have
been often redefined to better fit new organisations, industries, or external pressures.
One redefinition of these wastes for service

1. Delay on the part of customers waiting for service, for delivery, in queues, for response, not arriving as promised. The
customers time may seem free to the provider, but when she takes custom elsewhere the pain begins.

2. Duplication. Having to re-enter data, repeat details on forms, copy information across, answer queries from several
sources within the same organisation.

3. Unnecessary Movement. Queuing several times, lack of one-stop, poor ergonomics in the service encounter.

4. Unclear communication, and the wastes of seeking clarification, confusion over product or service use, wasting time
finding a location that may result in misuse or duplication.

5. Incorrect inventory. Being out-of-stock, unable to get exactly what was required, substitute products or services.

6. An opportunity lost to retain or win customers, a failure to establish rapport, ignoring customers, unfriendliness, and
rudeness.

7. Errors in the service transaction, product defects in the product-service bundle, lost or damaged goods.

8. Service quality errors, lack of quality in service processes.

Lean IT
lean services principles to the development and management of information technology (IT) products and services. Its central
concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.
implementing Lean IT is a continuing and long-term process that may take years before lean principles become intrinsic to
an organizations culture. Lean IT promises to identify and eradicate waste that otherwise contributes to poor customer service, lost
business, higher than necessary business costs, and lost employee productivity.

Waste Element

Defects

Examples

Unauthorized system and


application changes.

Business Outcome

Poor customer service, increased costs.

Substandard project execution.

Overproduction
(Overprovisioning)

Unnecessary delivery of lowvalue applications and services.

Business and IT misalignment, Increased costs and


overheads: energy, data center space, maintenance.

Waiting

Slow application response times.

Lost revenue, poor customer service, reduced


productivity.

Manual service escalation


procedures.

Reporting technology metrics to


business managers.

Miscommunication.

On-site visits to resolve hardware


and software issues.

Higher capital and operational expenses.

Physical software, security and


compliance audits.

Server sprawl, underutilized


hardware.

Multiple repositories to handle


risks and control.

Benched application
development teams.

Fire-fighting repeat problems


within the IT infrastructure and
applications.

Lost productivity.

Failing to capture
ideas/innovation.

Talent leakage, low job satisfaction, increased support

Non-Value Added
Processing

Transportation

Inventory (Excess)
Increased costs: data center, energy; lost productivity.

Motion (Excess)

Employee Knowledge
(Unused)

Knowledge and experience


retention issues.

Employees spend time on


repetitive or mundane tasks.

and maintenance costs.

Whereas each element in the table can be a significant source of waste in itself, linkages between elements sometimes create a
cascade of waste (the so-called domino effect). For example, a faulty load balancer (waste element: Defects) that increases web
server response time may cause a lengthy wait for users of a web application (waste element: Waiting), resulting in excessive
demand on the customer support call center (waste element: Excess Motion) and, potentially, subsequent visits by account
representatives to key customers sites to quell concerns about the service availability (waste element: Transportation). In the
meantime, the companys most likely responses to this problem for example, introducing additional server capacity and/or

redundant load balancing software), and hiring extra customer support agents may contribute yet more waste elements
(Overprovisioning and Excess Inventory).

WIPRO GAINS EFFICIENCY


in 2004 with a core team of managers. The small group visited lean manufacturing companies and
discussed the concept's basic principles before each manager adopted a project in order to implement
this new approach to software services. Of the projects, 8 out of 10 showed greater than 10 percent
improvement in efficiency. With those results in hand, the core team decided to roll out the approach
across the firm. By the end of 2006, Wipro had 603 lean projects completed or in the works (the company
typically had 1,100 projects under way at any one time). lean principles affected the workflow at Wipro.
The concept of "kaizen," or continuous improvement, for example, resulted in a more iterative approach to
software development projects versus a sequential, "waterfall" method in which each step of the process
is completed in turn by a separate worker.
By sharing mistakes across the process, the customer and project team members benefit individually and
collectively from increased opportunities to learn from their errors; the project also moves along more
quickly because bugs are discovered in the system earlier in the development process.
Wipro also uses tools specific to the software development process based on lean principles. The DSM
(design structure matrix), for example, defines connections and pathways for a project's workflow and
suggests an order of tasks. The company also employs the more familiar lean technique of value stream
mapping (VSM) to identify and decrease wasted time and effort throughout the software development
process.

The Effects of Application of Lean Concept in Retail


Similar to the concept of lean manufacturing, the concept of lean retail is known by
many names and variations in the literature: lean logistics, lean distribution and
lean consumption. Attempt to apply lean concept in retail is recent - it dates from
90s of the last century. In this regard, a number of retailers such as Wall Mart, Tesco
and IKEA are wellknown.
Lean is a modern retail operating strategy which requires maximum efficiency
coupled with identification and elimination of waste. It requires simple workflow,
eliminating the loss of effort, time, materials Myths about retail operations Lean
retailing perspectives
It is impossible to provide better customer service without increasing labor costs
We cannot predict customer demand, so we must be ready for anything
Product avalability can only be improved through increased amounts of inventory on
hand
We would need a lot of capital to invest because this program may not pay back for
years

By giving stores more control. I lose network-wide consistency and standardization


"We can improve customer service and frontline employee satisfaction without
increasing labor costs" "Overall demand may be highly variable, but many parts of it
are quite predictable"
"We can simultaneously reduce inventory leveles and out-of-stocks"
"We can develop an integrated performance improvement program that delivers
results in the same year and is self funding"
"We can increase consistency and standardization while empowering local
management"
http://www.management.ase.ro/reveconomia/2012-1/7.pdf
The core of lean retail is primarily a commitment to eliminating waste. Similar to the
manufacturing sector and following the model of lean approach, the main types of
waste in retail are: excess inventory, product defects, unnecessary motion,
redundant employees and a waste of time. Managers in retail can use similar tools
and principles for identifying all types of waste to improve their operational
efficiency. Lean techniques include: (1) simplifying the design of work (organization
of individual work process should be such as to provide a high degree of feasibility
and possible control, so that it has clear start and finish), (2) the use of withdrawal
(pull) to create a replenishment (provided that the supply of goods is fuelled with
actual demand of customers, as opposed to forecasts or anticipated demand, so to
keep inventory levels low and free space), (3) removing the bottlenecks through the
supply chain (by eliminating inefficiency with shorter delivery time, lower transport
costs and defects, and improving the flow of goods and operational performance)
and (4) elimination of waste of effort, time, materials and movement (by identifying
the core business values, with the elimination of excess movement, time, materials
and labor used in the process).
"Pushing Starbuck's drive is Scott Heydon, the company's "vice president of lean thinking," and a student of the
Toyota production system, where lean manufacturing got its start. He and a 10-person "lean team" have been going
from region to region armed with a stopwatch and a Mr. Potato Head toy that they challenge managers to put together
and re-box in less than 45 seconds. If Starbucks can reduce the time each employee spends making a drink, he says,
the company could make more drinks with the same number of workers or have fewer workers." Starbucks is even
doing all kinds of "motion studies," where they analyze how baristas move and where ingredients are located, to see if
they can save a few seconds here and there, in order to make their coffee-making process more efficient. The lean
retail experts are also analyzing the total time spent at Starbucks drive-in windows, to get that number down as much
as possible. Around the cafe, they are utilizing timers, to make sure that fresh coffee gets brewed every eight minutes.

Lean Innovation at Amazon

he Amazons CEO knew that customers would not pay for waste and that focus on waste prevention is a fundamental concept of lean. Jeff Bezos,
always had the spirit of lean management, since the day that he created Amazon. He has been totally customer-centric . Amazon is a natural place that
applies lean principles.
1.

the selection of the transportation method for a given package is driven, first, by the promised delivery date to the customer. Lower-cost

2.

options enter the equation only if they provide an equal probability of on-time delivery.
Amazon has more people working in the fulfillment centers and customer-service centers than it does computer-science engineers. They
needed the engagement of all workers on continuous improvement from the Gemba (the physical, frontline place of value work) to
succeed, since they are the ones who are actually receiving, stowing, picking, packing, and sending packages or responding to customers
by phone, chat, or e-mail.

3.

Given the business evolution of Amazon from a bookstore to the store for everything, they had to reinvent automation, following the lean
principle of autonomation: keep the humans for high-value, complex work and use machines to support those tasks. Autonomation helps
human beings perform tasks in a defect-free and safe way by only automating the basic, repetitive, low-value steps in a process. The result
is the best of both worlds: a very flexible human being assisted by a machine that brings the process up from Three Sigma to Six Sigma.

4.

Another major dimension of the deployment of lean at Amazon was the enforcement of standard work: combines the elements of a job
into the most effective sequence, without waste, to achieve the most efficient level of production.

5. Kaizen and the whole process of continuous improvement was, and


continues to be, a powerful tool at Amazon.

Nike On A Winning Streak