What is Lean Transformation and How Does It Help?

Every company wants a smart factory that takes its business to the ‘next level’ and to creates transparency on the shop floor. When a company is trying to move from the old way of doing things, it can be said that they’re going through a ‘lean transformation.’

Lean transformation covers all the strategic, tactical, and operational improvements that organizations undertake to create more value for their customers. The improvements can be seen as a paradigm shift from conventional practices. It is generally understood that lean transformations involve eliminating ‘waste.’ However, this doesn’t cover the full picture.

Lean transformation in the 4.0 industry represents a fundamental or holistic shift from traditional or conventional business mentalities or practices toward a more value-oriented approach. This involves changing the work culture, work ethics, or work plan. As an all-inclusive approach, the lean transformation also necessitates a change of relationship with your customers and business partners. All in all, it can be said that what lean transformations stands for is the sustainable development of value-oriented products for your customers.

Why is lean transformation important?

Businesses are getting more competitive every day. Organizations are continuously looking for more ways of providing more and more quality products for lesser costs. The ability to deliver better products at a lesser price to consumers is becoming more important than ever. That explains the reason you need lean manufacturing. With lean manufacturing, you’ll be able to eliminate the organizational structures, practices, or business mentality that hinder the efficient delivery of value-oriented services or products.

The lean transformation model

If lean manufacturing is what your business needs, how do you go about it then? Different firms or organizations have developed various principles that work best for them. These principles have sometimes been codenamed kanban, kaizen, 5S, total productive maintenance, and so on.

One thing remains certain: there is no single path or approach to lean transformation.

There’s another fact that should be known: lean transformation is a lengthy and strenuous process for any organization. But the end much justifies the means, though.

Even though it has been said that different organizations have various approaches to lean transformation, five critical principles cut across all methods. These five (5) principles include:

1) Lean thinking and mindset

If the goal is to implement new methods, it requires changing the old way of thinking. It can no longer be business as usual. A fully effective lean transformation necessitates a massive changeover in thinking, mindset, and work culture. The change in the organization requires time and cannot be done overnight. It requires the systemic and consistent implementation of the other lean transformation principles.

2) A value-driven purpose

As identified, lean transformation is required because organizations want to consistently create and deliver more value – at a lesser cost. The value here refers to all the activities, processes, or products that serve your consumers’ or customers’ interests. This first principle is the fundamental purpose of lean transformations. As such, as a business owner, you have to apply this principle in your organization. If a thing doesn’t add value to your business or customers, it is considered a waste. And it has to go!

3) Continuous process improvement

Your business requires continuous improvement. It will most likely not happen if you don’t implement the ‘continuous process improvement’ principle of lean manufacturing. This involves what is now known as a Plan-Do-Check-Act (PDCA) cycle. The PDCA cycle, like the scientific method, involves:

Plan: In the first stage, it is vital to hypothesize what should be improved.
Do: After that, it is about creating a plan to test that hypothesis. The change is not yet firmly implemented, and the effects on the processes are closely measured and documented.
Check: The documentation helps analyze the actual results and guides the decision if the planned test is rolled-out.
Act: If the test has positive results, the change will become the new standard or implemented firmly. So it is about implementing the outcomes.

4) Sustainable capability development

Lean transformation is not just about ‘theoretical strategies.’ Building sustainable capacities is one of the major ways you can add more value to your organization. Some identifiable popular strategies include:

Hiring an enthusiastic or diverse workforce
Promoting good values within the organization
Creating opportunities for professional development within the organization
Promoting diversity of thinking
Promoting healthy competition within the organization.

5) Lean management system

The importance of good leadership to any organization cannot be overstated. If lean transformation should show its maximum effectiveness, the management must show good lean leadership examples. Lean transformation follows a principle called ‘lean leadership.’ Lean leadership is about workable ‘servant leadership. Getting the most out of lean transformation objectives requires that the leadership doesn’t just give orders or follow instructions. It requires the management to roll up its sleeves and join the employee “in the trenches.” It means that the management system must make time to get itself directly involved in the business. It will boost the workforce’s morale, but it’ll also help create and deliver real business value.

The roadmap to lean transformation

What lean transformation is about has already been discussed. Equally, we have also highlighted the basic principles that form the basis of lean transformation. But how exactly do you, as a business owner, implement lean transformation? What are the necessary processes or boxes to tick?

The essential steps that an organization needs to follow to initiate lean transformation include evaluation, initiation, training, tooling, value stream mapping, and continuous improvement.

Evaluation: The first step to take is to assess your organization. Going about this would require evaluating your business’s needs, taking inventory of your organizational structures, and considering the right approach to go about lean transformation.

The evaluation process should answer the following questions:

What are the fundamental problems in your organization that need to be solved?
Why do you need to go lean to solve the problems?
What are your goals and objectives or expectations for going lean?

Initiation: After the evaluation process, the next step is to take proactive actions. The initiation stage involves:

Securing executive buy-in.
Identifying lean champions.
Launching sensitization programs to get all hands on deck.

Training: Adequate training of the workforce is essential to tapping the full potential of lean transformation. The purpose of going lean is because your current workforce does not already utilize the principles of lean transformations. The training should be able to address managerial aspects of your organization. For one, it’ll help to highlight and address what, where, and how lean transformation is going to affect the day-to-day operation of the business. For training, it is best to choose what works best for you. In most cases, organizations look outward to bring in specialists in lean methods. Whatever mode is employed, the training must cover principal sections of your organization.

Tooling: There’s less one can do without the right tools or infrastructure. For example, if an organization wants to move away from time-wasting manual machines to fast and cheaper automated technology, the right tools must be provided. Without the right tools, the implementation of lean transformation becomes difficult.

Value stream-mapping: If the goal of going lean is to attain more value, it will create value. The right way to go about this is to:

Identify how value flows (or fails to flow) in the organization.
Determine how to channel all industry efforts towards creating value or blocking the impediments.

Continuous improvement: As described earlier, lean transformation is not a ‘definite’ journey. It is a continuous process. As such, constant analysis and optimization of the new value streams are required. This requires always exploring ways to adapt, improve upon, and evolve existing practices, processes, and structures to enable more value creation. In all, learning the essentials of a lean transformation is very important if you’re thinking of significantly improving the efficiency of your production line.

Three criteria for a successful lean transformation

1) The Lean Transformation must be Strategy-Driven

The question facing all companies is not which processes can be improved (the answer is: all), but which methods need to be improved. Therefore the question for Lean Transformation is: Where are the performance gaps that are important for achieving competitive advantages? These must be identified and analyzed and must be the focus of improvement. When managers delegate “Lean” to employees, the process is no longer strategy-driven and is often only used for improvement for the sake of the will to improve. Therefore, the central issue in the process setup should be how managers are involved in the Lean Transformation on a long-term basis.

2) Take Managers to Task

A real transformation comes not only from Kaizen Events, Six Sigma training, or the use of lean tools. Instead, it is the responsibility of managers to ensure that all activities promote the lean strategy. Therefore, only a leader who exemplifies the Lean philosophy can convince other employees of the common goals.

3) Engage Managers in their Responsibilities

Improvements must be made by the people who are directly involved in the production. After all, the people who carry out the activities know best. We can achieve better results in the long term if we support employees in understanding the overall system (value stream) and the impact of their activities on it. This is the only way they can identify opportunities for improvement. This means taking time for people and not promptly imposing on them any measures that are only mere action. Hand on heart: Most of us are only too happy to take a shortcut to achieve any changes quickly and then to be able to check the matter off. But such changes are not successful in the long run. The important thing is to give all employees involved the feeling that their ideas support the changes through well-planned change management and active involvement in the overall process.

Q&A – Lean Transformation

Lean management describes a holistic approach to the further development of an organization. Lean transformation leads the way to a waste-free company. To achieve this vision, various lean goals are pursued based on the aspects of quality, costs, time, and employees. These concern production but go beyond this and should lead to the transformation of the entire company. The lean goals are based on quality, cost, time, and people. In terms of quality, there should be zero defects. Thus, the goal of zero defect manufacturing is pursued. The costs are to be used by efficient use of the resources to 100% increase in value. Thus a zero waste in processes of the enterprise is aimed at. Time is to be reduced to a one-piece flow so that the throughput time in production is shortened. In addition, safety is to be offered to the employees. Based on these goals, the Lean transformation can be initiated in the company, improving manufacturing, processes, and operations. Lean is a philosophy, which can be followed by each company in its own way. The entry into the Lean Transformation is possible at various points. These include supply chains, product design, production planning, digitization, key performance indicators, change management, and so on. Each of these starting points offers the company the opportunity to initiate the lean process. The prerequisite, however, is internal acceptance.
Redundant motion, transportation, inventory, waiting time, defects (rejects and rework), overproduction, and overprocessing.
- Redundant motion: arises from poor movement patterns of the workers or machines and assets.
- Transportation: movement from one process to the next is considered waste as well as empty runs.
- Inventory: stocks of raw materials, consumables, and supplies in warehouses and semi-finished products before the next process step are also considered waste.
- Waiting time results by waiting for processes, materials, colleagues, and machines.
- Defects: produced parts that do not meet the expected quality and are rejected by customers.
- Overproduction: comes from producing goods without an order of the customer. It creates waste in the form of transportation, handling, and storage.
- Overprocessing: processes above and beyond customer expectations and the procedure to achieve the required quality are considered waste.
However, some of the wastes are not avoidable, yet it should be the goal to improve each of the aspects. KPIs such as the OEE can help to identify wastes on the shop floor.
Various lean management principles emerge from the Toyota Production System and Japanese culture. The Jidoka principle is one of the main pillars of the Toyota production system. This states that in case of errors, processes are stopped by an automatic machine stop with a corresponding error message. An Andonboard informs the appropriate persons about the machine stop and they are informed about the output signal of the machine. The Poka-Yoke principle is subordinate to the Jidoka. The aim is to prevent errors and to design processes in such a way that they are prevented. This is divided into the contact principle, fixed value principle, and process step principle. By the contact principle, a design is to be selected, which does not permit confusion. Workpieces are checked with predefined shapes or dimensions and sorted out of the process in the event of quality defects. In the first-value principle, predefined process parameters are used to detect deviations. These can be predefined, for example, on the basis of piece numbers or weight. The process flow principle states that no subsequent processes are started before the preceding process has been completed.