Five Major Advantages of Going Lean
By Pragya Gupta
Mumbai, Oct 19, 2007

'Waste', a word with the adverb 'not' usually attached to it, presuming everyone on this planet would yearn not to waste anything even if it's in abundance. Ohno, an engineer at Toyota, who is credited with developing the principles of Lean production, discovered that in addition to eliminating waste, this methodology leads to improved production flow and better quality.

To cite an intriguing example, once when Henry Ford, founder of Ford Motor Company, spotted some rust in the slag that was dumped from their furnaces, immediately identified that there was some iron in the slag and instructed that it be taken back to the plant to extract further iron for effective utilization. So, essentially Ford had identified the incomplete utilization of resources.

Lean Management is associated with "Toyota Productions System (TPS)" as they originally developed it. Toyota focused on reducing system response time so that the production system was capable of immediately changing and adapting to market demands. This system relates to the principle of Six Sigma that focuses on minimum defects through mathematical and logical application of fundamentals.

1. The principle primarily focuses on "Elimination of waste." It cuts on overproduction or piling up of inventory and aims to improve the 'flow' or smoothness of work. The core element in "Waste management" is step-by-step planning and maintaining the quality standards against the benchmarks. Further, quality control needs to be implemented at every step instead of check at the end so as to eliminate wastage. It facilitates streamlining of people and the processes.

2. The lean methodology involves increased capacity, cycle time reduction and hence increased customer satisfaction. Demand and supply analysis is implemented beforehand and production is conducted in accordance with the same.

3. Application of the concept leads to increase in productivity and quality as the system forecasts the difference between projected sales and the actual sales volume. The key reasons for the difference can be deciphered in advance to figure out qualitative and quantitative analysis. The principle enables a company to maximize efficiency with minimum resources i.e. effective utilization of resources by focusing on reduction of waste, time lag in between different processes, production time and eventually the costs. Successful example of the same is Toyota itself among many others.

4. There are various concepts and management practices that organizations follow to enhance Brand Equity. Lean management comprises of two pillar concepts: Just In Time (JIT flow) and Autonomation. It allows an organization to focus on its core areas instead of non-critical areas; as once the source of tenacious delays, downtime and complete problem areas are identified, it is easier to implement the Standard Operating Procedures. Thereafter, concepts like Total Quality Management, Cost-Benefit analysis automatically come into picture. However, an important pillar in implementation of any concept is 'Human Resource' that has to be focused upon. People who are actually at the operational level will need to understand and implement these features.

5. It controls high labor turnover as a result of overall efficiency in policies and procedures. Lean management can be applied not only in production, but also in areas such as office processes, software development and many more, as this is not a technology but a management philosophy.

TESCO, a UK-based retailer has effectively implemented Lean management solutions in its supply chain. Systems like point of sale scanning, centralized ordering, centralized distribution, automated warehouse control and electronic data interchange were deployed to maximize the organization's efficiency.

Although, a few companies have successfully implemented the Lean management concept, an in-depth analysis before implementation could fetch enormous results, for those who have not achieved the desired results.

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