Benefits of Lean

Key Concept – Explanation

According to Meredith and Shafer (2010), by efficiently and effectively using their resources an organization can realize many benefits leading to cost savings, increased revenues, investment savings, workforce improvements, as well as uncover unforeseen process problems. These benefits can be achieved through process improvements that reduce inventories, increase customer response time, decrease lead times, decrease process scrap, increase communication and teamwork in problem solving, and increased output quality.

Rajenthirakumar and Shankar (2011) describe lean as a philosophy that focuses on cost reduction through the elimination of any process or activity that does not add value. This is achieved by implementing lean tools and techniques developed by Toyota such as just-in-time (JIT) inventory management which reduces inventories, 5S’s used to increase efficiencies of activities, total productive maintenance which helps eliminate waste through the effective use of equipment, single minute exchange of dies where setup and change over times are reduced, and Kanban which is similar to JIT, by reducing inventories through the withholding of material authorizations until they are needed.

Thus, through the implementation of well-established tools and techniques an organization can achieve cost savings, increased revenues, investment savings, and workforce improvements. “Lean thinking” as it has become known in the lexicon starts with a definition of value from the customer’s perspective (Melton, 2005). Melton describes the process as identifying value, eliminating waste, and generating a value flow to the customer (Melton, 2005). Mader (2005) defines value simply; “If a customer is willing to pay for it, it’s value. If not, it’s waste” (para. 6). Thus, a firm must be able to define what the customer values and eliminate any process or activity that does not contribute to that value proposition unless it is critical to the...