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Being Lean worked for Toyota – could it work for you? National LEAN Service Line Leader, Chris Foster, explains the five basic principles of the Lean system and how doing less work can create more customer value.

NAB Business View

Developed by Toyota to streamline its production line, the Lean system is now used globally by manufacturers and service providers to increase customer value while reducing effort and cost.

“The basic premise is that resources used for anything other than creating customer value are wasteful,” says Chris Foster, KPMG Director, National LEAN Service Line Leader.

Lean now incorporates best-practice improvement methodologies from around the world but it’s still based on the five key principles applied by Toyota and identified by James P. Womack and Daniel T. Jones in their 1996 book Lean Thinking.

The five Lean principles

1. Be clear about what your customers value.

“In order to understand value from your customers’ perspective you must engage with them and listen to what they have to say,” says Foster. “If you have a number of customers, you can’t assume they all want the same thing.”

2. Identify the value stream.

“Understand the individual steps to delivering the customer value,” says Foster. “You can then challenge each one and eliminate those which aren’t adding value.”

3. Establish flow.

“If yours is a manufacturing organisation, your product should be moving along the production line in the most cost-effective way and delivering exactly what your customers want,” says Foster. “If it’s a service organisation, information should be flowing effectively through the business, creating value for your clients.”

4. Implement pull.

“Don’t do anything unless your customer wants it,” says Foster. “For example, non-Lean organisations tend to produce far more non-value-adding reports than Lean ones, and most of them are of no benefit to the customer.”

5. Work to perfection.

“What customers value is constantly changing and, as your product or service improves, they learn to expect more,” says Foster. “Lean is about building structured problem-solving and continuous improvement into the mindset of the organisation and making it part of everyone’s role.”

Busy versus productive

Lean gets to the heart of a common mistake – confusing being busy with being productive.

“Many business owners reward their employees for being busy and give them credit for activities such as conducting meetings or writing reports that aren’t contributing to customer value,” says Foster.

“When we’re doing a productivity analysis we spend time with individual workers, breaking down the tasks they’re asked to perform and the time they take to do them. We often find that the tasks they least enjoy are the ones which add no value. When these are reduced or removed they have more time for productive and satisfying work.”

If a business is to stay Lean the leaders must be committed to driving continuous change.

“Lean principles need to be embedded into the culture,” says Foster. “The people who are doing the work need to feel engaged and empowered. And everyone in the organisation needs to understand the importance of engaging with customers at every opportunity so you’re aware of their changing needs.”

This article was first published on NAB Business View. Republished with permission 2013.