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Friday, January 23, 2009

Lean Enterprise

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Scope of Lean Concept, Lean Thinking and Practices
  • Lean concept and practices cover both manufacturing and non-manufacturing organizations (all types of services, health care, government, NGOs, non-profit organizations etc).
  • They apply to large, medium and small organizations.
  • Lean thinking gives broad perspective on effectively providing goods and services.
  • It is a human system.
  • It is customer focused and customer driven. Employees within and outside the workplace are also treated as customers.
  • It is rigorous process thinking and practices.

Various Names

Due to it's wider scope, lean thinking and practices are know by many names as given below:

  • Lean enterprise
  • Lean organization
  • Lean manufacturing
  • Lean production


  • First traces of lean manufacturing are available in the flow production system (moving assembly line) devised by Henry Ford in 1913 at Highland Park, MI. In years to come, his system did not respond too well to multi-model production requirements. Other automobile manufacturers suitably modified their system accordingly.
  • Kiichiro Toyoda, Taiichi Ohno, and others at Toyota revisited Ford’s thinking, first in 1930 and more seriously, after the second world war and designed the Toyota Production System (TPS). They invented series of simple innovations to provide both continuity in process flow and a wide variety in product offerings.
  • Now, lean concepts and practices are continuing to spread to every country in the world.
  • Professionals are now using the principles and tools of lean not only in manufacturing but also in logistics/distribution, services of all kinds, retail, health care, construction, education and government.
  • "Lean" is meant for all the functional processes as well as for cross-functional processes.

Essence of Lean

More value with less work and therefore, with minimum expenditure of overall resources and associated costs.

Meaning of Value for Money (VFM)

Value to customer (VFM) = (Total quality "Q" X Total service inclusive of pre, during and post customer service "S" X Relationship with customers "R") divided by (Price "P" X Lead times "L")

Price (P) = Overall costs (C) + profit

Objective of lean systems is to maximize the VFM as compared to the overall incurred costs. Therefore, to meet this objective, the organizations should continuously improve "Q", "S" and "R" and continuously reduce "P", "C" and "L".

Lean systems are designed to achieve these continuous improvements.

Basics of Lean Management

  • Decide upon the value for money (VFM) expected by the customers for each family of products. In highly competitive businesses, it is not good enough to meet the minimum expectations of the customers but to go beyond the minimum and provide "above customer expectations" (ACE) or provide "customer delight" and not just the "customer satisfaction".
  • Identify the supply value chains for each product family and their existing functional and cross-functional processes/sub-processes and related activities. Examine all of them to find out the non-value adding or wasteful processes/sub-processes and activities and gradually weed them out.
  • Make the products flow continuously with the now lean value chains consisting of only value adding processes/sub-processes and activities.
  • Make only that much what the customers want. It is called "pull" method as against the old "push" method. In pull method, customer requirements dictate all the up-stream factors.
  • Carry out continuous improvements in further strengthening and perfecting the supply value chains and their processes/sub-processes and activities.

Muri, Mura and Muda of Lean Management

Muri: Planning and preparation of the processes/sub-processes and related activities by proactively excluding all the non-value adding elements during their design.

Mura: Designed processes/sub-processes and activities are implemented and the fluctuations at the scheduling and operations levels related to quality and volume are identified and eliminated.

Muda: After the processes/sub-processes and activities are designed, balanced and implemented, it is still necessary to examine the wasteful or non-value adding elements during the actual working and eliminate them. It is necessary to find the root level causes for these wastes by considering the connections to the muri and mura of the system. Muda and mura faults/inconsistencies need to be fed back to muri (planning stage) for improvements in next projects.

Seven Notorious Wastes (Muda)

  1. Waste from over production
  2. Waste of waiting time
  3. Transportation waste
  4. Processing waste
  5. Inventory waste
  6. Waste of motion
  7. Waste from production defects

Systems, Tools and Techniques of Lean Management

There are large numbers of known tools and techniques of lean management. A good list of them is given below (not in any particular order):

For More Guidance, Assistance, Training and Consultation


Training in "Lean Enterprise" or "Lean Management" and "World Class Manufacturing" is provided by Prodcons Group's Mr Shyam Bhatawdekar, high flier business executive, eminent management consultant and trainer- par excellence, with distinction of having trained over 150,000 people from around 250 organization.

Also refer: (Prodcons Group), (Training Programs by Prodcons Group), (Productivity Consultants)

Other Topics of Interest

All Management Topics (General Management, Marketing and Sales, Service, Operations/Manufacturing, Quality, Maintenance, Human Resources, Finance and Accounts, Information Technology, Life Management)

The topics are listed in alphabetic order:

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