A little bit about – Lean Management

During my undergraduate program, a very talented friend of mine and I have been working on an extensive case study about an imaginative company. The objective was to analyze the whole structure of that company with the purpose to identify inefficiencies. Furthermore it was part of the objective to establish a new company culture based on the premises of Lean Management. Since many people talk about Lean Management, I decided to write a short article about that topic to recall the foundational basis of that concept.

What is Lean Management?

Literally spoken Lean Management is against every type of wasting resources. The word “wasting” is equal to the Japanese term “muda”. 

But muda is a little more related to the individual worker, so muda is said to be every human activity that doesn’t provide any additional value or benefit. 

This sounds quite logic and I think everyone will now assume it isn’t that hard to ensure that there won’t be any muda. But when you look to a huge company, such as the automobile industry, you will soon realize that the magnitude of their complexity is far beyond from easy comprehension. 

Thus Lean Management tries to increase what you gain by constantly decreasing the quantity of the inputted resources. 

How come? You might ask. Virtually you should try to avoid any mistakes, errors, faults during the production of a product. Also you should look at what to produce and how to produce it in order to decrease unnecessary assembly steps. Try to keep your stock low – refereeing to this, other important and already established concepts have been developed such as the “Just in Time” concept – which virtually keep your stock low and your assembly in a constant work flow. 

Now we are going to look at the topic a little more in detail. Lean Management consists of five basic principles with which you can improve the outcome of your company. These five basic principles are closely connected to each other and it basically doesn’t make sense to take only one of them and get it implemented. But less talk, let us have a close look to them:

Five basic principles that help you avoid waste

Create value for you customers

I guess it doesn’t really matter who to ask, I bet that the majority of people will assume, that this is of course a logic thing to do. However, reality looks quite different. In fact there are plenty of companies producing stuff nobody really needs. Usually these companies follow the wrong approach. Instead of looking what you are able to manufacture, you should observe and ask the market what need it has in order to develop a product that matches with the market’s needs – here are similarities to a market orientated approach. 

Everything that is determined as value is provided by the manufacture, but you also need a customer who appreciates that value. Without him, the invested resources to create that value are a total waste. 

In a lot of cases all the company’s departments work with high intra efficiency. However they still lack inter efficiency. That is to say, each department does a great job and works highly professional but the work flow between the departments, which is to say, the whole company, operates with low efficiency. This can be due to a complex organization, huge hierarchy, long communication channels, unknown responsibilities of managers and so forth. 

A muda (waste) directed company has got a product to produce and then they literally observe the market to determine an adequate price for a product. Based on this price, they look out for suppliers and methods that meet that price and provide enough space for a satisfying profit margin. The lean company in contrast examines their whole structure in order to find areas of waste. They ask themselves, what will be the price if all waste will be eliminated. Based on that insight they fixate the targeted costs. And only if the company is able to remain below the targeted cost, they will start and produce that product. The lean company, however, will determine in advance what product the market really wants.

The Value Chain

The second principle deals with the value chain. You should also examine and understand the whole value chain of your company. Because only if gain a deep understanding of how everything is connected, you will be able to spot areas of inefficiencies. A good and widely known tool to analyze the value chain is the value chain tool by Michael Porter. He describes the value chain in terms of supportive and primary activities that should ultimately result in profit. This concept will help you to find out which department is responsible for which added value and if there is a department that doesn’t deliver any value. 

It is also very helpful to analyze the value chain in cooperation with your suppliers and retailers. Thus you shouldn’t be focused on you internal value chain only. By figuring out where waste occurs beyond your own company, you might end up improving the overall value chain and create synergies for you and your supplier.

The Flow Principle

After you know what the market wants and where the weak points are within the value chain it is best when you eliminate the weaknesses. 

Some companies work by the piles, which is to say, first they produce all blue parts and then all the red and after that, all the yellow parts. In the meantime the parts have to be stored in a warehouse. After everything is done producing, the parts are assembled. As you may assume, there is now continuous flow. Every process is done separately. 

A lean company however, implements a continuous work flow. Accordingly a whole production line must be integrated. Each part will be produced on one machine at the time (so now we have got a machine for the blue, red and yellow part), and let us say one worker will be in charge of the whole assembly of all the elements. This will decrease idle times; changeover times and it will result in less warehouse space as well. Furthermore it is important to mention, that all production machines are close to each other and the machine capacities are synchronized. However, the downside to it, it may result in a larger investment. 

Finally this leads to a higher productivity, less errors and a continuous flow even while producing small lots. 

Do not confuse this with the concept of Fordism. It might sounds alike but there are profound differences. One of the major differences is that the workers scope of responsibility is quite high. During the Fordism the tasks of the worker have been split to an atomistic level, which led to dissatisfaction and boredom. A lean staff consists of a certain number of teams, each one empowered with responsibilities and duties. They are in charge of quality control and they are encouraged to discuss problems in the production line with other teams as well.

The Pull Principle

The forth principle is connected with flexibility. The lean concept enables a company to manufacture products in a huge variety. This is important due to changes in demand. 

Whenever the market environment is changing, you should better react in a quick manner to meet the customers demand in time. 

For that reason they call it “pull” principle because whenever the customers asks for something, you are able to serve him in the same instant. 

This basically means, you as a company, should produce small lots in a continuous manner instead of producing huge lots and putting them into a warehouse. Imagine you just finished to produce a certain quantity of blue parts from our former example and now you want to start producing the green parts and the marketing departments announces that a product with blue parts are out dated. Then your company can either change the existing blue parts or manufacture new parts that meet the need of the market or you can also continue to produce your existing product. However, it will always end up in paying more, losing time, making less profit and so forth.

Strive For Perfection

Just to give you a wrap, the first principle deals with the creation of value for the customer; the second identifies and analyzes the value chain, the third improves the value chain and creates a work flow, and the forth principle however, ensures that you can deliver a product to a customer when he needs it. 

The last principle encourages the whole company with all its employees to watch out for weaknesses and to look for improvements. Now every worker is empowered and encouraged to turn in ideas for further improvements. The employees are furthermore encouraged to stop the assembly if an error occurs. This is indeed good for two reasons. The employee feels more responsible for their work and it is quite helpful to find the roots of a quality issue during the assembly.

This way of thinking is related to something the Japanese name “kaizen”, which basically stands for continuous improvements on all fronts by all involved individuals.

The 10 principles of Work

Work as a team

This has got a lot of benefits. Usually a team is more dynamic when it comes to problem solving and idea generation. Furthermore a team makes the employees stick together which results in a better team feeling and less internal competition. Aside from this, working in a team brings the employees feel more accepted and involved, thus it enables them so built confident and to identify with the company and its products. 


Self-responsibility or autonomy is important to prevent the workers from boredom, as it occurred during Fordism. Every worker is encouraged to work self-responsible within the frame of rules and standards. The role of the team leader changes from the superior to a coach, thus the company’s culture changes to a more team and employee focused culture. However they are still driving by success and results. But integrating the workers may enables them to show hidden potentials that lead to further improvements. 


Always get objective feedback in terms of numbers and facts and provide subjective feedback in terms of staff, opinions, ideas and critics. 

Customer orientated

The customer satisfaction is number one priority. Accordingly you have to come up with tools to measure and plan how to satisfy the customer. 

Value Chain Priority

Value is defined by the customer but it is created by the company. So look to your own value chain and eliminate areas were waste occurs because waste will never be defined as value by the customer. 


Formalize and standardize repetitive working steps by making them simple and easy to understand. Designate areas with colors, provide a work sheet that explains how it has to be done and use pictures instead of complicated descriptions. Every worker has to obey the rules and standards but he is encouraged to improve them. 

Improvement (kaizen)

The need to continuous improve the work flow is part of the daily thinking. 

No Errors

Errors, faults and lack of quality are followed to its roots of occurrence in order to prevent them in the future instead of just changing the product in an after quality center. Every employee is forced to double check the quality of every single piece he gets in touch with. 

Think ahead

It is desirable to avoid further problems and issues instead of only reacting to the occurred problem. 

Small Steps

Small, controllable and secure working cycles are implemented. The feedback of a previous step controls the current and the next working step. Furthermore the small steps make the whole production process more transparent.