Lean management makes it possible to reduce excess inventories, minimize waiting times and errors, eliminate wasted resources, improve delivery and service quality, increase customer and employee satisfaction, and at the same time permanently reduce logistics costs. But it's not all that easy, because the process usually involves breaking up established, sometimes encrusted structures within the company. In this blog article, we would like to show you that the effort is nevertheless worthwhile. To this end, we also present various methods of lean management based on the Toyota Production System (TPS) (developed in the 1940s). In this way, you will find the most suitable solution for your company individually. The aim is to learn from problems, to streamline processes, to operate more efficiently and, quite incidentally, to prove that man does not have to be a "creature of habit" after all.
Definition of Lean Management
As mentioned above, "lean management" is a strategic approach or management philosophy that originated in Japan. Applied to warehousing, it is a continuous process aimed at making the organizational and operational structure more efficient and reducing logistics costs. Various methods are used to identify activities that do not add value, to recognize waste and to identify potential for improvement.
But lean management is not an end in itself: The focus is always on the customer. All decisions must be made from the customer's point of view, because the customer is the yardstick for determining which measures actually add value or offer added value.
"Lean management" is a management philosophy derived from the Toyota Production System (TPS) that focuses on the customer's needs. It aims to minimize waste along the entire value chain and establish lean processes.
- Increased competitiveness through increased customer satisfaction
- Cost reduction in the warehouse along the entire value stream
- Reduced lead times
- Optimized responsiveness and communication
- Improved decision-making ability through interaction
- Increased employee motivation and productivity
Lean management cannot be imposed by decree. The key to success is to involve all employees of a company at an early stage, regardless of their hierarchical position, and to get them enthusiastic about the project. Sufficient time should also be planned for the implementation of the lean management approach.
Principles of lean management
In intralogistics, there are numerous sources where waste - mostly latent - takes place. These can be the process design, employees and workplaces, the technology used, etc. From a situational point of view, it is primarily excess stock, waiting times and bottlenecks, unnecessary journeys and routes, and errors that result in costly additional expenditure.
Our tip: Involve staff or key users in the identification and problem-solving process right from the start. However, do not rely on assumptions: The focus must be exclusively on the purely objective determination of facts in the form of figures and data. The five core principles of lean management provide assistance/orientation in this context:
- First, the value of a product or service must be precisely specified from the customer's perspective. Does your offer fulfill his wishes without compromises, so that he is also prepared to pay an appropriate price for it?
- The second step is to analyze the value stream: What happens where and how long does it take? The answers/results can be used to derive a target state that has been optimized in terms of time expenditure and service quality, which eliminates superfluous tasks (waste) in the future. It often becomes apparent that the desired goal cannot be achieved with purely organizational modifications alone and that investments in new technologies are required.
- Step 3 is based on the flow principle: The aim is to create a continuous, uninterrupted flow that maps the entire target value stream. This implies that not only individual processes have to be optimized, but the entire value chain, in which one cog meshes coherently with the other.
- In the fourth step, you apply the pull principle: As a manufacturing company, you dispense with sales forecasts (push) and instead manufacture exclusively according to demand, i.e. when orders are received or when it becomes apparent that the minimum stock level will soon be undershot. This avoids excess inventories that tie up capital.
- Last but not least, processes must be standardized and made scalable so that changes can be responded to as quickly and efficiently as possible. At the same time, a culture of continuous improvement should be implemented across all areas with the aim of achieving the greatest possible perfection.
Methods of Lean Management
On the one hand, methods are instructions for action in order to find a suitable solution to a specific problem as quickly as possible. In lean management, however, it is advisable to view each individual method as a tool that must be replaced or combined with another one on a case-by-case basis. After all, it is not possible to deal with the complete range of a customer-oriented overall system with just one tool.
In the following, we present some of these tools:
- Value Stream Mapping Value Stream Mapping (VSM) is used to visualize material and information flows. This provides you with a kind of "process map" for the entire value stream, which offers an unbiased overview and simplifies the identification of waste. However, if this is made up of a large number of sub-flows, this method is only suitable to a limited extent. The same applies to a large range of articles with a large number of variants.
- PDA cycle The abbreviation PDA stands for "Plan, Do, Check & Act " - analogous to the approach. In essence, this approach is about learning with each new run and establishing a continuous improvement process. In the last phase, it is determined whether the previously identified problem was actually solved. If so, the result is implemented as a standard in the processes. The advantage of this method is that all employees can use it and the effort required is low. However, clearly defined objectives are a prerequisite.
- 5S method As preparation for the PDA cycle, the 5S method based on five steps is recommended, which is derived from five Japanese terms: 1. seiri - sorting 2. seiton - systematizing 3. seiso - cleaning 4. seiketsu - standardizing 5. shitsuke - self-discipline With this method, employees focus on the essentials and achieve better results from a qualitative perspective with improved efficiency routines. The establishment of standards is in this connection not only meaningful, but a must, if the method is to develop its full effect.
- Kanban Kanban is a consumption-oriented control principle. The production takes place quasi on call, so that excessive stocks are eliminated with secured delivery reliability. Cards" (= Kanban) are used as information carriers for work to be done, on which it is noted what has to be done, what is currently being processed and which process has been completed. Here, too, the pull principle takes effect, because each employee can decide for himself which task he wants to complete. Stagnations and bottlenecks are immediately apparent and mutual support promotes interaction. Ultimately, visualization makes a decisive contribution to improving processes in the sense of lean management and significantly increasing productivity and the quality of work performance.
- 3M model Also from Toyota comes the 3M model, whose "Ms" stand for Muda (waste), Muri (overload) and Mura (variations). It forms the basis for being able to systematically identify deviations and waste. Muda refers to activities that do not add value but are associated with costs. Muri, or overload, can be the result of an ergonomically unfavorable work routine. If this is a permanent condition, it can happen that not only employees but also entire plants break down. Muri should therefore be avoided just as much as mura. Fluctuations in performance occur when the actual process is interrupted by secondary activities, such as the procurement of loading equipment. This incorrect utilization must be corrected.
Other methods or tools include: Gemba, Hansai, Jidoka, Kaizen, Poka-Yoke, Six Sigma, Total Productive Management (TPM) and key performance indicators (KPIs).
Conclusion and outlook
Lean management takes the approach that customers should not have to pay for process costs that do not offer them direct added value when purchasing a product or using services. Consequently, it is essentially about eliminating waste that affects a company's profitability.
The methods and tools presented help to achieve this and implement a lean management-oriented continuous improvement process. As mentioned at the beginning, it may make sense to invest in new technologies in the process: For example, many problems can be solved in a quasi-automated manner by introducing a warehouse management system - such as SAP EWM (SAP Extended Warehouse Management).
Ultimately, however, lean management is also a philosophy. In order to actually "live" it, it is necessary that it is supported by all employees in the company across the hierarchy.