In today’s competitive economy maximizing customer value and minimizing operational waste is a necessity. The working term for this is lean. Organizations that are lean recognize what customers value and the ways in which to increase that value. Whether a product or service provider, they aim to do this with zero waste.
Rather than focusing on optimizing separate functional departments, lean thinking focuses on improving the organization in a more holistic manner: how products and services flow through the the entire value stream. Consequently, an organization that undergoes lean transformation eliminates the waste of unnecessary labor and space within that stream. Beyond the savings achieved with such changes, organizations are subsequently much more flexible in meeting changing customer desires.
Lean thinking found initial success in many manufacturing organizations during the late 1980s (most notably through the Toyota production system). Unlike a new technology or cost reduction program, lean thinking focus is long-term, strategic and operational. As such, eventually service organizations (even governments) started to translate lean thinking for their own processes.
Getting rid of waste requires discerning what is essential and nonessential work with regard to running a viable business. Obviously, eliminating nonessential waste should be the first priority. It constitutes work that the customer does not value and what the business does not require to remain viable. Necessary essential work, the non-value adding work that is required for a company to remain viable, should be reduced when necessary. How do lean businesses do this?
Initiating lean thinking involves a process called value stream mapping. A value stream (as referenced above) is simply the sequence of activities involved to produce or deliver a good or service. Examples include order processing, design, and raw material conversion. In contrast to viewing an organization as a series of function-based silos (Human Resources, Purchasing, Finance, etc), value stream mapping creates a bird’s-eye view of the organization’s entire work system. In all, value stream mapping reveals the organization’s information flow and workflow alongside a summary timeline. The mapping reveals what is in place with respect to these three components, not how they work.
By mapping an organization’s current state operations, opportunities to operationalize lean thinking become readily apparent. Ideally, a team of department leaders from across the organization meet to generate ideas for improvements. Eventually, a “future state” map of operations takes place. Once lean thinking ideas are agreed upon, a company's transformation plan is produced in league with a leadership sponsor. Such a plan is the first step toward creating a culture of continuous improvement.