The fundamental principle of lean is "to maximize customer value while minimizing resource utilization".
A lean organization understands that customer value is prime and therefore focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.
To accomplish this, lean thinking changes the focus of management:
- away from optimizing separate technologies, assets, and other resources which are traditionally organized and managed in vertical departments
- towards optimizing a flow of products and services through complete value streams that flow horizontally across technologies, assets, and departments to customers
In their book The Goal, Eldratt & Cox, Routledge (1984, 2004) demonstrated how to convert a vertically organized manufacturing company into a horizontally managed 'value adding' process. In their example, this process succeeded in removing constraints and delays from the process and thus saved resources such as time and finance (working capital) and therefore reduced the cost of manufacturing and increased the effective value added to the end product. Maintaining this flow process through to the customer ensured that the added value is delivered to the customer.
The Lean Enterprise Institute makes an important point in its introduction to Lean:
"Lean is for both production and services."
A popular misconception is that lean is suited only for manufacturing. This is not true. Lean applies in every business and every process. It is not a tactic or a cost reduction program, but a way of thinking and acting for an entire organization. Organizations in all industries and services, including healthcare and governments, are using lean principles as the way they think and do.
Many organizations choose not to use the word lean, but to label what they do as their own system, such as the Toyota Production System or the Danaher Business System. Why? To drive home the point that lean is not a program or short term cost reduction project, but that it is the way the enterprise operates.
In many case. the word transformation or lean transformation is often used to characterize an organization that is moving from an old way of thinking to lean thinking. It does require a complete transformation on how the enterprise conducts its business. This is not a quick and easy input; it takes a long-term perspective and perseverance.
Marshall Gurney Institute recognizes the contribution Lean has made, is making, and will continue to make for many organizations and is therefore developing a suite of learning programmes to help managers acquire an understanding of Lean and how it can be embedded in the way their enterprise operates and becomes a part of the enterprise culture. Through setting up this Lean Process Learning Centre, the Institute will make these programmes available gradually over the academic year 2016/7. For further information just click on the programme titles below.