The core idea is to maximise customer value while minimising waste. Simply, lean means creating more value for customers with fewer resources. Waste is defined as anything which adds cost without adding any value.
Value: Define what is of value to the customer
Value Stream: Identify the value stream / eliminate waste
Flow: Create a constant flow
Pull: Produce based on demand
Perfection: Continuous improvement
A key initial premise is to recognise that only a small fraction of the total time and effort when producing a product or delivering a service actually adds value for the end customer. It is therefore critical to clearly define value for a specific product or service from the end customer’s perspective, so that all the non-value activities - or waste - can be targeted for removal step by step.
Removing wasted time and effort represents the biggest opportunity for performance improvement and enabling a greater focus on creating value. Creating flow and pull starts with radically reorganising individual process steps, but the gains become truly significant as all the steps link together. As this happens, more and more layers of waste become visible and the process continues towards the theoretical end point of perfection, where every asset and every action adds value for the end customer. In this way, lean thinking represents a path of sustained performance improvement - and not a one off programme.
A lean organisation understands customer value and focuses its key processes to continuously increase it. To accomplish this, lean thinking changes the focus of management from optimising separate technologies, assets, and vertical departments to optimising the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.