The Principles of Lean Thinking

The principles behind the widely adopted Japanese manufacturing concepts known as ‘lean production’ or ‘just-in-time’ have been applied to many aspects of business. In operations, the Six Sigma program has been adopted as a way to improve process efficiencies and reduce costs.

Lean principles have been applied to many other aspects of business including product development, thinking and decision making. Lean principles have resulted in reduced lead times for medical treatments, parcel logistics, airline seat assignment, computer assembly and home construction. Regardless of the industry or product, lean thinking is about maximising the value added in every process, with each step being completed as quickly as possible, and eliminating non-value adding intermediate steps.

Mass-production created a tremendous amount of work that did not directly add value. By contrast, the lean producer combines the advantages of customisation and mass production, but without the high cost of the former and the rigidity of the latter. Lean production uses less human effort, less manufacturing space, less investment in tools, less engineering hours and requires much less inventory on site, with significantly fewer defects, and producing a far greater variety of products. For instance, Dell ships computers with factory-installed, customer-specific hardware and software. eBay eliminated all the unnecessary steps in the trading value chain.

The Four Basic Principles of Lean Development

There are four basic principles of lean thinking which are most relevant to software development:

1. Add Nothing But Value - understand what value is and which activities and resources are absolutely essential to creating that value. Everything else is seen as waste and eliminated as much as possible.

The seven wastes of manufacturing include:

• Overproduction – e.g. adding extra features
• Inventory - e.g. requirements
• Extra Processing Steps – e.g. extra steps
• Motion – e.g. finding information
• Defects – e.g. defects not caught by tests
• Waiting – e.g. customers
• Transportation - e.g. handoffs

2. Center On The People Who Add Value – encourage workers to feel responsible for the products moving down the line, and to stop the line and troubleshoot problems when and where they occur. This transfers more tasks and responsibilities to those workers actually adding value and proves a better system for detecting defects and its ultimate cause.

The people doing the work are recognised as the center of:

• Resources
• Information
• Process Design Authority
• Decision Making Authority
• Organizational Energy

3. Flow Value From Demand – commitment to manufacture a product is delayed until a committed order is received from the customer. This is a pull strategy as opposed to a push strategy based on forecasting.

4. Optimize Across Organizations – a major barrier to adopting lean practices is organizational transfer of a product or service from one department to another. If each department operates in isolation with their own set of performance measurements, sub-optimization of performance measurement occurs. Instead, an organizational performance measure of ‘earned value’ provides a consistent measurement stream throughout the organization.

Lean thinking requires a paradigm shift that is often impeded if the organization is not structured around the flow of value and focused on helping the customer pull value from the enterprise. Each internal team should be structured around delivering increments of business value, and external suppliers need to be included in the lean production program to build trust and collaboration, achieving competitive advantage by sharing resources, knowledge, and assets.

Many believe that competition today occurs between value chains and not simply between companies.

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