2017-12 The Five Elements of a Lean Business

If your business is doing well and you’re looking to expand, that can be a sign of success. However, moving to the next stage of business development can be a risky endeavour.

2017-12 The Five Elements of a Lean Business

The transition can cause instability and the decisions made can impact the way a business operates, for better or worse. So, there is greater demand for your business, but how do you solve it? Do you decide to invest a substantial amount of money into new equipment? Do you hire new people for the job, or do you ask your staff to take on more hours and work overtime? How you approach questions like these can make or break a business. Fortunately, that’s where “lean” comes into play.

What is a lean business?

Initially practiced by Japanese industrial giants such as Toyota, it has come to be widely adopted by British and European startups in industries as diverse as manufacturing and software development. The concept of lean is a business philosophy and framework that focuses on delivering value from a customer’s point of view, eliminating waste and continuously and actively improving a company’s processes. It prompts businesses to think about what they need to do to be an effective organisation. In turn, lean can drastically change how a company does business. The lean business model is made up of five elements. These elements help you understand what you are trying to achieve in terms of making a successful and sustainable change in a business.

Specify value from the customer’s perspective

The customer identifies values, so initially you need to revisit who the target customer is for your business. Customers know what adds values to their experience during their interaction with a business and it’s important to find out how we create value for our customers.

Value stream

The value stream is how we provide value to the customer. The value stream includes all the actions that a business takes on to deliver a specific product or service to a customer. This process can be mapped out so there is a visual representation of the flow. From there, this allows sources of waste to be identified and removed.

Flow

The flow principle means it is important to make value “flow” by eliminating delays and reducing work-in-progress inventory. By focusing on making single components flow better, it can also help with decreasing manufacturing time, process interruption, and lead and waiting time. Flow can take on board “takt.” This is a German word that means pulse and can be used to represent the pulse of a lean manufacturing system. Takt time identifies the rate at which products or services need to be finished in the manufacturing process to ensure customer demands are met. Takt gives a company a realistic idea of how fast they need to manufacture a product to maintain demands from the marketplace, thus helping with the flow.

Pull

A customer “pulls” a product or service from a business. A pull system is when a process does not start until the customer demands it. A simple example is a coffee shop, when a customer orders a hot coffee. The hot drink making process does not start until the order is received for the hot coffee. The customer “pulls” the coffee making materials through the system when they want a coffee. Hence, if no one is ordering or “pulling” coffees, no coffees are made at the shop.

Perfection

The fifth principle is perfection, which encourages the company to seek continuous improvement and eliminate waste. By aiming for perfection, you will be creating value to your customers and staying competitive in an evolving marketplace.