Maximilian Tündermann - Lean Management for Beginners: Fundamentals of Lean Management for Small and Medium-Sized Enterprises--With many Practical Examples

Lean Management for Beginners

Fundamentals of Lean Management for Small and Medium-Sized Enterprises

- with many practical examples

Maximilian Tndermann

1. Introduction

W hen the founder of an Indian bank wondered why fewer and fewer customers were applying for credit, he looked at the process that regulated the mortgage application. President Jairam Sridharan found out that such a request went through a total of 30 hands. No wonder no one wanted to wait that long. Axis Bank was looking for solutions and ultimately found them not through technology but through philosophy: Lean Management. This Japanese production method is now also used in management and the service industry. The core is that nothing should be wasted. The word lean means slim, and in most cases companies and enterprises are actually slimmed down.

Size doesn't matter, for small and medium-sized companies it may even be easier to slim down because you're not that big. However, streamlining does not necessarily mean saving costs, dismissing or outsourcing personnel, or closing business areas. The difference between the classic lean approach and the lean approach is that it is process oriented. Leaning is only done where it is necessary to improve the process. It is also possible that only the processes themselves may be changed, without really incurring costs.

If you run a company today, you'll soon find that two or three years after its foundation, some sort of routine becomes apparent. Business is going wellhopefullycustomers are satisfied, sales are growing, and so is profit. It is precisely at this stage that many companies begin to expand their organization, build up bureaucratic hurdles and, pampered by success, no longer reflect on themselves. With Lean Management, conversely, this danger is minimized because it involves a constant improvement, with which there is no leaning back.

This book is intended to give you insights into Lean Management and help you understand it. Examples from other companies can help you to think about the introduction of Lean Management yourself or to first analyze how and where it can be used in your company.

2. History of Lean Manufacturing

Y ou can only understand Lean Management if you know where it comes from. The origins lie in lean manufacturing, which was mainly developed by Japanese car manufacturers. The Toyota production system, which is primarily concerned with avoiding and minimizing waste, is still being used worldwide today and has been copied by many competitors. Toyoda Sackichi developed the system back in 1902, but it was constantly improved. His son Kiichiro then formed the just-in-time idea, which was only produced according to demand. This was also necessary because there were hardly any raw materials at that time and some markets were not accessible to the Japanese because of war. The carmakers had no choice but to save resources if they wanted to boost the economy again. It was the engineer Taiichi Ohno who developed a production method based on these considerations, whose main goal was to avoid waste: The starting concept of the Toyota production system was, as I have emphasized several times, a thorough elimination of waste. [1]

The ultimate goal is to increase productivity without compromising quality and delivery times. The Jidoka principle is one of the pillars that ensures quality through a process whereby errors are detected and eliminated at an early stage. This includes

Stop production

Make manuals

Error message

The second pillar is just-in-time production : it is only done when it is needed, in the quantity that is needed and as required by the customer. On the one hand, this establishes the principle of customer focus but on the other it also avoids waste. Components of this pillar are:

Produce only for customers, not for stock (Build to Order)

Pull instead of Push

Continuous flow of materials and resources

Suitable and flexibly deployable employees

Avoiding waste was the main concern of car manufacturers, particularly because it directly affected value creation. For this reason, they formulated the most important types of waste:

Overproduction

Material stocks

Transports and routes

Cumbersome processing

Cumbersome movements

Waiting times

Rework

So Lean Manufacturing ultimately means nothing more than avoiding waste and delivering the products the customer wants. There are various techniques that we will briefly explain later because they can also be used in management.

3. Lean Philosophy

T he success of lean manufacturing has extended the principle to many other areas, such as corporate management, accounting, maintenance and business processes in general. Corporate management is all about learning to look at your company from two perspectives:

The customer's point of view and desires

The company's vision and ambition to be profitable

Both perspectives have equal importance and will only lead to success if they are combined. Strict customer orientation is the most difficult task for many managers: you will have to learn to adapt your products to the customer's needs, not only in terms of quality but also in terms of price and availability. This is not so much a task in the production processes because it is a task in the setup of the company. Too often, companies are so convinced of their products that they forget what the customer wants. Incidentally, this does not contradict approaches by Apple or some start-ups that have developed products and services for which there has been no demand because they do not exist. Demand is not the same as need, rather needs create demand. Whoever creates products and services that satisfy a demand will also find a market and thus also make profits.

Dominique Keith of Dr. Kraus & Partner, in a specialist article for business-wissen.de, described very well what importance philosophy and its acceptance in management have:

The American Mike Rother, a guru of the lean scene and author of the book The Kata of the World Market Leader: Toyota's Methods of Success , describes the connection between lean tools or methods and Lean Management with an iceberg analogy. Lean tools and methods represent the visible part of the iceberg and Lean Management the larger, invisible part of the iceberg that is below the water surface. Many companies either completely disregard the invisible part of the iceberg when introducing a lean program or reschedule its processing.