Operational excellence methods: the example of Lean management

Operational excellence is the goal companies pursue to optimise their productivity and quality. But as long as there are hidden costs, sources of waste, too much or too little inventory, this goal remains out of reach. Lean management provides tools to remove unnecessary costs and waste by involving all employees. Applying its principles, deploying its tools and building continuous improvement into daily work bring the company step by step closer to operational excellence.

What is Lean management?

Lean management is a method for managing an organisation and its production. It is derived from the Toyota Production System (TPS), developed in Toyota's factories after the Second World War. The term "lean" became widespread in the West at the end of the 1980s and in the 1990s, notably through the MIT research on the automotive industry published in the book The Machine That Changed the World (Womack, Jones and Roos, 1990). Originally designed for car manufacturing, the method has since been adapted to many sectors: industry, healthcare, services, public administration.

"Lean" means thin, without excess. Lean management seeks to reduce costs and lead times by removing everything that does not create value for the customer. It would be wrong, however, to reduce it to a hunt for costs. Unlike purely top-down methods, Lean is close to the field and involves all employees. Those who do the work every day have the knowledge and inventiveness to eliminate waste, streamline flows, solve problems and ultimately improve the company's performance.

The 7 wastes Lean aims to eliminate

Lean distinguishes activities that add value (those the customer is willing to pay for) from those that do not. Among the latter, it traditionally identifies seven types of waste, or "muda":

1. Overproduction: producing more, or earlier, than needed.
2. Waiting: people or machines idle while waiting for information, materials or a decision.
3. Transport: unnecessary movement of products or documents, for example between distant premises.
4. Overprocessing: doing more than the customer requires, such as redundant checks or approvals.
5. Inventory: stocks that tie up money and space and hide problems.
6. Motion: unnecessary movements of people, caused by poorly organised workstations.
7. Defects: errors that require rework, sorting or handling complaints.

Many organisations add an eighth waste: the unused skills of employees, whose ideas are not heard.

Lean management tools

To eliminate these wastes, Lean relies on a set of tools. They are simple to understand; the difficulty lies in applying them consistently over time.

5S

The 5S correspond to five Japanese words: Seiri (sort), Seiton (set in order), Seiso (shine), Seiketsu (standardise) and Shitsuke (sustain). The method is usually the first to be implemented in teams. It improves efficiency by changing habits: a tidy, organised workspace makes small problems visible and speeds up their resolution. It applies just as well to shared folders and digital tools as to a workshop.

Visual management

Results and productivity must be visible to everyone, in real time. Boards, indicators and status displays make it easier to detect deviations from objectives and to solve problems quickly. Every deviation must be analysed, explained and followed by an appropriate corrective action.

Kaizen

Kaizen, or the strategy of small steps, consists of solving identified problems with simple solutions, validated in the field and implemented quickly. Rather than waiting for a large project, teams improve their work a little every day. Our article on the Kaizen method describes it in more detail.

Kanban

Kanban ("signboard" or "card" in Japanese) was designed to manage inventory but is used in many fields. Cards or labels make containers and flows visible. Production is triggered by actual consumption, so that only useful stocks are built up. In offices, the Kanban board (to do, in progress, done) applies the same principle to tasks.

Value Stream Mapping (VSM)

VSM maps a process from start to finish: physical flows, information flows, processing and waiting times. It shows where value is created and where it is lost, so that obstacles to productivity can be identified and removed.

Single Minute Exchange of Die (SMED)

SMED aims to reduce production changeover times, and therefore the size of the batches manufactured. The objective is twofold: produce quickly according to customer needs and reduce inventory, which represents a significant cost.

Lean and the other operational excellence methods

Lean is often combined with other methods:

• Six Sigma, developed at Motorola in the 1980s, aims to reduce process variability and defects using statistical analysis. It applies to industrial processes as well as administrative, logistics or sales processes. Combined with Lean, it gives Lean Six Sigma, presented in our article on operational excellence to improve quality.
• Lean office applies Lean principles to administrative processes: approvals, purchasing, invoicing, HR. See Lean office: continuous improvement applied to administrative processes.
• The PDCA cycle (plan, do, check, act) structures each improvement and checks its effect before standardising it.

How to deploy Lean step by step

1. Start with a pilot area. Choose a team or a process where the problems are visible and the manager is willing. A quick, visible result convinces more than a presentation.
2. Train the teams in the basics. Value, waste, the main tools. Everyone should be able to recognise a waste in their own work.
3. Map the current situation. Observe the work in the field and measure lead times, stocks and errors before changing anything.
4. Turn each problem into an action. Every improvement idea becomes an action with an owner and a deadline, recorded in a shared action plan.
5. Hold short, regular meetings. A weekly or daily meeting around the indicators and the action plan keeps the approach alive.
6. Standardise and spread. When a solution works, make it the new standard and share it with other teams.

A continuous improvement approach

Lean management aims at operational excellence through continuous improvement. Every employee, from top management to field operators, must be involved. The objective is not only to reduce unnecessary costs and waste but to eliminate them.

Each person, at their workstation and at their level, looks for what does not add real value to their work: unsuitable equipment, poorly organised or distant premises that add transport time, waiting times that slow production, overproduction that creates unnecessary stock. When a problem is identified, the aim is not to invest heavily but to find the simplest and fastest solution to implement. That is why involving employees matters so much: those who know their job, whether it is industrial production, administrative procedures or information flows, are best placed to find solutions.

Once a solution is deployed, its effects are measured and the search for improvement continues. In industry as in services, this is how a company progresses towards operational excellence. To structure the actions that result, see our article on the action plan for operational excellence and our 5 best practices for a continuous improvement process.