Why Lean should be central to your ERP and corporate culture

In our new series about the value of Lean Management we will discuss how our Attivo ERP architects leverage this powerful approach in our Attivo-All-in-One solutions.

What is Lean?

Based on the Continuous Improvement model developed in Japan immediately following WWII, the goal of Lean is to improve every process within an organization. This is accomplished by pursuing two fundamental objectives:

  1. Enhancing processes centered on delivering the greatest value-benefit for the customer, and
  2. Identifying wasteful activities and eliminating them as much as possible.

The effectiveness of continuous improvement was proven with the success of Toyota, both in competing against Detroit automakers in the decades after the rebuilding of the Japanese economy and industrial base. For decades Toyota has ranked among the world’s largest automakers.

So, what is Lean and how is it defined? There are five foundational principles of Lean Management:

Define Value: Understanding and defining what the customer wants and is willing to pay for is foundational to implementing. There are a number of qualitative and quantitative techniques to discover the value wanted by your customers. These include focus groups, surveys, industrial and demographic information, and customer interactions such as web analytics.

Map the Value Stream: Using the customer’s value as a reference point, the next step is to identify activities that contribute to these values. Activities that do not create value for the customer are waste. Waste is categorized as either not adding value but necessary, or not adding value and unnecessary. By reducing and eliminating unnecessary processes, efficiencies can be created which ensure customers are getting what they want, and at the same time costs reducing costs.

Create Flow: While seeking to remove wasteful practices from the value stream, it is crucial to create ‘flow’. By defining the steps used in production and creating cross-functional teams and activities, this ensures processes run smoothly, avoiding delays and interruptions in the process. Adding more value by encouraging employees to be adaptive and multi-skilled.

Establish Pull: In virtually all manufacturing environments, Inventory is typically considered to be the single largest source of waste. The “pull-based” approach is to limit of much as possible inventory and work in process (WIP) components. The goal is to strike a balance between having enough materials for production but to avoid overshooting the mark. The needs of the customer almost entirely determine the parameters of a pull-based system.

Pursue Perfection: The first four steps described above all work in unison to prevent waste.

The final element of Lean is the most critical because it embeds Lean into the DNA of the organization, ensuring Lean thinking and continuous process improvement are foundational to the company’s culture. It both empowers and holds every manager, employee, and supplier accountable to make perfection based on the customers’ needs.

These principles form the framework for achieving a multitude of goals and intersecting motivations to optimize an organization to be as efficient and competitive as possible:

  • Empowers managers to discover inefficiencies
  • Includes all stakeholders in delivering better value to the customer
  • Encourages and enforces processes for a better flow
  • Fosters a continuous improvement culture
  • Drives greater value for each customer and their needs
  • Removes waste, decreasing the cost of doing business
  • Increase efficiencies and therefore profitability.

Implemented and maintained, these Lean practices will not only change your culture, but inspire everyone on your team and pay dividends for years to come.

Lean as a way of doing business

To benefit from Lean, we must know what Lean seeks to accomplish. As we’ve discussed in the article, the overarching objectives are eliminating waste and wasteful activities (Non-Value Added Time). In this ongoing Lean Management series we’ll dive into more detail about how to apply the Lean Principles and the many ways we use them to support the processes, modules, and functionality of our Attivo All-in-One ERP solutions.

Attivo All-In-One, powered by SAP Business One has the most powerful and fully integrated analytic and reporting tools in the ERP software sector for small to mid-sized businesses. This makes it easier and more efficient to design and implement customized quality control processes and methods across your organization.