Malik Firoz Khan

Noon Business School

Assignment topic:

Lean Operation

Submitted by:

Muhammad Zakaria (BUSB51F20S050)

Muhammad Ehtisham Ashraf (BUSB51F20R035)
Mubashar Imtiaz (BUSB51F20R046)

Submitted to:

Mam. Adeela

Subject:

Operation Management
What is Lean Operations Management?

Lean operations is a business strategy driven by the principle of doing more with less. It
is a minimalist approach to running a business and improving day-to-day operations.
Putting lean operation principles into practice begins with an in-depth analysis of your
organization’s processes and finding alternative, more efficient ways to achieve your business
goals. It also includes optimizing the tangible elements of a business, such as a workforce and
physical environment, to improve overall output and performance.

The ultimate goal of creating a lean environment is to cut costs and eliminate wasted
energy, resources, and time, and improve operational excellence. This is usually achieved
through building a deliberate workforce structure, an optimized facility, and refined processes.
Lean operations management is often supported by digital transformations that streamline
communication and automate internal tasks.

Lean Operations Management is focused on the following:

● Value definition from the perspective of the customer.

● All waste must be eliminated from business processes.
● Continuous improvement of all work processes, goals, and people.
Lean management encourages collaboration and accountability; continuous improvement
ensures everyone contributes to the improvement process. This management method is a guide
for building a solid, successful organization. It identifies real problems and solves them.

Many companies have made changes to improve their operations and make customers happy.
This lesson will focus on the benefits of lean operations management for organizations.

Organisations are now focused on how to make money and spend little or no money. The
lean operation management style is a new way of managing an organization. It focuses on
efficiency across all areas. This type of management is a great way to grow your business.
Simpler Organisation

I n lean management, the concept of simpler organisation refers to structuring an

organisation in a way that minimises complexity, bureaucracy, and unnecessary layers of
management. A simpler organisation is one that is streamlined, agile, and able to respond quickly
to customer needs and market changes.
There are many ways to simplify an organisation.
● A lean organisational structure focuses on essential roles and functions, emphasising
simplicity, agility, and cost-effectiveness.
● It eliminates unnecessary layers of management and decision-making, encouraging direct
communication and quicker decision-making.
● Lean organisations often have cross-functional teams, flexible job roles, and a strong
commitment to continuous improvement, rather than the rigid job classifications and
siloed departments of traditional organisations.
● This flatter, more flexible structure empowers employees to identify and solve problems
in day-to-day operations, rather than a top-down, bureaucratic approach.
● Inventory reductions: A company that keeps less inventory ensures they have enough
stock to satisfy customers’ demands while ensuring that products don’t sit or are over-
ordered. This prevents an organisation from wasting money.
● Production Time Reductions: Companies try to reduce production times by eliminating
all waste. Waste is anything that slows down production and costs the organisation more
than it’s worth.

Five Principles of Lean Management

1. Identify the Value

The first principle of lean management is to define value from the customer's perspective.
This means thoroughly understanding what the customer values and designing processes to deliver
that value efficiently. Value is what the customer is willing to pay for. It is paramount to discover
the actual or latent needs of the customer. Sometimes customers may not know what they want or
are unable to articulate it. This is especially common when it comes to novel products or
technologies. There are many techniques such as interviews, surveys, demographic information,
and web analytics that can help you decipher and discover what customers find valuable. By using
these qualitative and quantitative techniques you can uncover what customers want, how they want
the product or service to be delivered, and the price that they afford. By focusing on customer
value, organizations can eliminate waste and improve the overall customer experience.

Example: A furniture manufacturer may define value as producing high-quality, customizable

furniture that is delivered quickly and at a reasonable price. The company would then design its
manufacturing and delivery processes to optimize for these customer-defined value drivers, rather
than focusing solely on internal efficiency metrics.

2. Value Stream Mapping

Value stream mapping is the process of identifying and visualizing all the steps required to
deliver a product or service to the customer. This helps organizations identify and eliminate non-
value-added activities, streamline processes, and improve flow.

Managers can use value stream mapping to identify which teams are responsible for leading the
processes and who is responsible for measuring, evaluating, and improving them. This
visualization allows managers to determine which system components are not adding value.

Example: A software development team may create a value stream map to visualize the entire
process of taking a new feature from ideation to deployment. This may include steps like
requirements gathering, design, coding, testing, and release.

3. Establish a continuous workflow

The third principle of lean management is to ensure a smooth, continuous flow of work
through the value stream. This involves eliminating bottlenecks, reducing batch sizes, and
implementing just-in-time production to minimize inventory and waiting times.

Example: A manufacturing plant may reorganize its production line to create a more continuous
flow of work, rather than producing in large batches. This may involve implementing pull-based
production, where each workstation only produces what is needed by the next station, rather than
pushing work through the system.

4. Set up a pull system

Lean management emphasizes a "pull" system, where products and services are only
produced in response to customer demand, rather than a "push" system where products are
produced based on forecasts. This helps to reduce overproduction and ensure that resources are
used efficiently.

Example: A retail clothing store may implement a pull-based inventory system, where new
inventory is only ordered when customer demand depletes existing stock. This helps the store
avoid holding excess inventory and ensures that the products on the shelves are aligned with
customer preferences.

5. Continuous Improvement

The final principle of lean management is continuous improvement, or "kaizen." This

involves constantly seeking ways to improve processes, eliminate waste, and enhance customer
value. Lean organizations encourage employees to identify and implement small, incremental
improvements on an ongoing basis.

Example: A healthcare organization may implement a continuous improvement program where

frontline staff are empowered to identify and address inefficiencies in patient care processes. This
could involve something as simple as reorganizing supply closets or as complex as redesigning
patient flow through the hospital.

Lean Management: Examples

• Amazon's Fulfilment Centres: Amazon uses the Pick-to-Belt Process, 5S System, Kaizen,
and Just-in-Time Inventory to ensure efficient and cost-effective operations in its fulfilment
centres.
 • Nike's Manufacturing and Operations: Nike utilizes Just-In-Time Inventory, Defects
Elimination, streamlined Product Development Process, and improvements to its Core
Functions like supply chain, customer service, R&D, and office operations.
• Coca-Cola's Operations: Coca-Cola has implemented Waste Elimination, Energy
Conservation, Improved Manufacturing Process, and Customer Service Operations
Improvements.
• Truck Manufacturing Company: The truck manufacturer installed a Kanban system to
reduce inventory levels and increase just-in-time manufacturing, leading to a 20% increase
in revenue and 5% increase in productivity.
• Printing Industry: A printing company used value stream mapping to optimize workflow
and reduce waste, addressing issues with on-time delivery and excessive inventory buildup.
• FedEx Express: FedEx Express, a global leader in transportation and logistics, applies lean
management principles to enhance processes like package consolidation, aircraft
maintenance, customer service, and supply chain costs.

Why lean operation management

This management style allows organizations to focus on their clients and customers,
regardless of what. They must ensure that they do not overlook the small details but also keep the
main focus on simplicity and being among the best. Although this type of management can
simplify production, it will still do everything in its power to ensure high quality and efficiency.
This management style can save money for both the organization and its customers.

Benefits of lean management

Lean operations management offers several benefits to organizations, including:

• Improved Efficiency: Lean operations management focuses on reducing waste and

maximizing value, leading to increased efficiency in processes and operations.
• Cost Reduction: By streamlining processes and eliminating waste, lean operations
management can significantly reduce costs, which can lead to increased profitability.
• Enhanced Customer Satisfaction: Lean operations management prioritizes meeting
customer needs and expectations, ensuring that customers are always satisfied and likely
to return.
• Increased Productivity: Lean operations management encourages continuous
improvement and simplification of processes, leading to increased productivity and better
use of resources.
• Better Quality: Lean operations management emphasizes quality and value creation,
resulting in higher-quality products and services.
• Improved Visibility and Predictability: Lean operations management provides better
visibility into processes and operations, allowing for more accurate predictions and
planning.
• Enhanced Agility: Lean operations management enables organizations to adapt quickly
to changes in the market or customer needs, ensuring they remain competitive.
• Reduced Inventory and Lead Times: Lean operations management's focus on just-in-
time production and inventory management leads to reduced inventory levels and shorter
lead times.
• Increased Employee Engagement: Lean operations management encourages employee
involvement and empowerment, leading to higher employee satisfaction and engagement.
• Long-term Operational Viability: Lean operations management's emphasis on
continuous improvement and efficiency ensures that organizations are better equipped to
withstand sudden changes and maintain long-term operational viability.