Entrepreneurs are like captains on a ship. They are responsible for directing their business to attain the growth and expansion they desire. There are more than one ways in which they can do this. A good example of this is a productive and sustainable management. 

The confusing part of managing a business is that so many different methods exist. Unfortunately, implementing a method that is unfit for your business model or environment could mean the end of what you’ve worked so hard to build. This article expands on lean principles which makes for an effective business management method. 

Lean management dates back to the 1450s. It was used extensively by founders like Henry Ford of Ford Motors, and Sakichi Toyoda of the Toyota Production System. Their actions gave rise to the term “lean manufacturing.” The popularity of lean management increased exponentially around the 1900s due to the success of Ford's production line. Having said that, we will now look at the 5 principles of lean management to understand what makes it stand out. 

5 Principles of Lean Management 

1. Identifying Value

The first principle of lean management is to identify value. And what exactly is value? It is the relative worth of a product, service, process, an organizational or social entity in terms of people’s (customer’s) preference and/or their willingness to own or purchase these products, services, processes, or organizational or social entities. In simple words, something is valuable if customers need it. 

The process of identifying value involves finding out what customers need. It also continues further down to understanding how they want these things (in terms of size, quality, and so on), and how much they are willing to pay to get these things. But it is not so easy to figure out customers' needs. This is because while some customers have a clear and precise description of their needs, others do not know precisely what they need and some others simply do not understand how to explain, express or conceptualize their needs. To go around this, businesses analyze data from customer surveys, interviews, and even social media posts. 

2. Mapping Out Value Streams

Once a value has been identified, the next step in line with lean principles is to map out value streams. This entails carefully considering all the activities involved in producing what the customer needs. The actual purpose, however, is to eliminate, bypass or at least reduce wasteful production activities. So if your customer needs a service, you would have to identify all the steps you would take in providing that service and then filter out unnecessary or wasteful steps to arrive at a productive approach. Getting this done right will significantly reduce production time, minimize cost, and ensure that the end product is fine-tuned to satisfy the customer. 

3. Creating a Continuous Workflow

After mapping out value streams and concluding on the most efficient approach, it is time to get to work developing what the customer needs. Using the principles of lean management, this would be done by creating a continuous workflow. The idea here is to have a smooth transition between tasks. It involves breaking down activities into sub-tasks that are understandable and easy to perform. There would also be a division of labor, interoperability, coordination, and proper time management. 

4. Establishing a Pull System

The fourth principle of lean management is the establishment of a pull system. It works by encouraging on-the-spot production of items that are relevant to a development process. By implementing this, companies will be able to remove wasteful activities and lessen friction in their processes. The reasoning behind a pull system is that there would be no need for an inventory which is considered to be a huge waste, so production materials are developed only in the quantities in which they are needed and at the time when they are needed. This helps businesses focus on their product, cut production costs, and reach high efficiency. 

5. Facilitating Continuous Improvement

The fifth and final lean principle borders on facilitating continuous improvements. Businesses evolve and new trends emerge so it is important to frequently update work processes. This applies both to managerial and operational activities, and it concerns every aspect of an organization. Moreover, the principle of facilitating continuous improvements can be utilized when applying all the other lean management principles. By doing so, the lean management method becomes optimized and further productive for any organization using it. 

Conclusion 

Facilitating continuous improvements and eliminating waste are the two most important goals of lean principles. They serve as the backbone of this approach. And you might be asking, “is lean management great for a new startup?” 

The answer is yes. Lean management offers a simple approach that is best to implement right from the start. With this, introducing improvements becomes easier and the business does not have to pause operations as with a total overhaul. If you are unable to decide how to structure your business using this method of management, you are welcome to approach Epirus Venture for consultation.