Lean for Businesses

What is Lean?

With all the benefits it provides, lean is simply creating value for business by eliminating wastes within activities.

Defining value

The term “value” is one of the core ideas that is needed to be discussed since Lean’s main goal is to create value for customers in an efficient way. Value is simply what our target customer is desiring and willing to pay for. This can be a product like washing machine or service like consultancy, so the range is really broad when it comes to defining value. We can separate values into two, tangible ones, which we can physically get the value like buying t-shirt and intangible ones, like the value you get when you hire a financial advisor. If you are familiar with tangible/intangible asset concept, you can think the same for the value categorization.

Having mentioned two categories of value, I should say that the broadness of value has been evolving day by day, especially with the developing technology. For example, digital marketing services are relatively new but also has high demand and creates great advantages to firms and individuals. However, think “Walkman” that people used to listen music, after the technologic developments in the music industry, the demand for Walkman decreased which means the value it provides decreased too. Not only by time, but also the perception of the value may differ between customers. For example, childcare services may not seem valuable to a person without a child, but valuable to working parents. Hence, it is important for companies to define who is their target customers and the value these end customers are willing to pay for. Actually, this is the reason why companies try to define their customer segmentation since for different segments the value desired may change.

Since I have defined the importance of value, now we might better understand why companies try to eliminate waste, simply because wastes do not create value and so not provide profit for them.

Eliminating wastes

When you do little research about lean, one of the most frequently term that you will encounter is going to be “waste”. This is because eliminating waste is directly related with sustaining successful business and gaining profit.

Efficiency& Effectiveness

In lean, the focus revolves around cutting wastes to increase efficiency and effectiveness. Here I should state that although these terms are used interchangeably, effectiveness and efficiency have different meaning. Effectiveness is about your capability to produce desired output while efficiency cares about to what extent you use your resources to produce the desired amount of output. For example, high quality product is a sign that you are effective, but it does not mean that you are efficient. If you are creating a lot of waste to get this high quality, you are not as efficient as you might think. An example can be this, think that there are two students who have done the same assignment, and both get same grade, but one spends 2 days while other spends 10 days. In this case, second student has lower efficiency than the other since s/he uses more resources, time in that case, than the other. From lean objective, business should design their activities to maximize both their effectiveness and efficiency. Basically, the aim is to reduce costs while maintaining the quality high.

Lean for All

Since its philosophy and methodology is general and applicable, lean provides unlimited advantages for nearly all products and services. Every industry or even company should embrace this approach by specifying their own targets, values, and wastes to get the highest benefit from it. You might think since lean approach is introduced many years ago from now, all companies should have embraced lean methodology, and all should have been operating in the most efficient way. Well, the reality is far from that. There are wastes in nearly every activity that we still do not realize.

One example this that I found interesting is toothpastes. There is outside package for toothpastes and you immediately throw this package to the garbage. What a waste! Of course, these packages have advantages to companies since they enable to easily stock the products, but still the plastic packages are not eco-friendly. I saw one alternative design to traditional toothpaste packaging design which offers eco-friendly solution to that problem, Coolpaste. It is an academic project which shows that the design of toothpastes, one of the most popular everyday products, can be improved to solve environmental waste come with traditional design.

Therefore, it can be seen as an example that even though we know we must eliminate waste, by following lean principles, improving or redesigning operations is challenging. However, every day, we are encountering with different developments, especially in technology, to solve these problems. This is the logic behind lean, always improve your operations by following up-to-date trends and developments. So, we shouldn’t think lean as a done and dusted process because it is against its main philosophy.

By its nature, lean aims to conduct “continuous improvement” which means lean never ends but always strives for better. Especially in this rapidly changing world, there is no limit for improvement.