What is Lean Thinking?

John Krafcik, an MIT MBA student coined the term “Lean Manufacturing” to identify the Toyota methods, because the production system achieved more results with less resources. TPS, or lean production, was an after-effect of the competition in the Japanese automobile industry after World War II. The mass production techniques pioneered by Henry Ford were unsuitable for low volume production, so Toyota found it necessary to develop its own production system to build cars more cheaply with inbuilt quality. In essence, Lean production is the elimination of waste to produce more flexible and adaptable manufacturing processes. Lean Thinking extends lean production to go beyond manufacturing and to include the entire enterprise. Lean thinking extended the elimination of waste to include the creation of value at enterprise level.

This business philosophy goes by different names. Agile Philosphy, Just-In-Time (JIT), Synchronous Manufacturing and Continuous Flow are all terms that are used in parallel with lean thinking.The basic components and tools of the Toyota Production System (TPS) and lean production existed in literature much before publication of The Machine That Changed The World (Womack, et al., 1990). However advent of this book popularized the Lean concept and brought the ideas to masses. The key idea in the book (and one that is absent in earlier literature) is that of “Value.” Specifying value from customer's perspective (whether internal or external) is an important step in lean thinking. Lean thinking focuses on abolishing or reducing waste (or “muda”, the Japanese word for waste) on maximizing or fully utilizing activities that add value from customer’s perspective.

Value-Added: An activity that changes the size, shape, fit, form, of function of material or information to meet the customer requirement. The customer is willing to pay for it.

Non-Value-Added: Activities that take time and resources but do not add to customer requirements.

The value stream represents the end to end processes through the entire enterprise. The lean thinking focuses on every facet of the value stream by eliminating waste in order to reduce cost, generate capital, bring in more sales, and remain competitive in growing global market.