How does lean improve operations?

The LEAN inventory management process focuses on producing enough products to fulfill customer orders. Companies won't have to manage and store excess inventory, which improves waste reduction, minimizes labor costs and frees up floor space for more productive uses. Lean operations are a business strategy driven by the principle of doing more with less. It's a minimalist approach to managing a business and improving day-to-day operations.

Although it originated in the automotive industry, lean management has now been widely adopted, regardless of the sector or company size. The Japanese car manufacturer could be the most famous lean operations case study in existence, driven by the principle of kaizen, the belief in continuous improvement. However, the last principle, continuous improvement, is the most important step in the efficient management method. Operations based on efficient thinking and practice also continuously strive to achieve a flow, in which material and information move through the value stream without stopping.

The term “lean operations” is well known in manufacturing; the concept of “lean” originated in the automotive industry. Since then, companies have adopted that strategy to achieve higher quality production with a simpler and more efficient lean system operations management approach. Efficient management benefits organizations by focusing on improving all parts of the work process at all levels of the company hierarchy. The definition of lean operations is consistent across all industries, but the way in which a company incorporates a lean operations strategy is specific to the needs of the company.

Inspired by the Toyota production system, Lean Management is a method of managing and organizing work aimed at improving the performance of a company and, more specifically, the quality and profitability of its production. Efficient operations management is often backed by digital transformations that streamline communication and automate internal tasks. Adopting a simplified approach to managing operations makes business agility a necessary attribute to prepare for and survive a crisis such as the COVID-19 pandemic. Thanks to its lean operations, Nike has created long-term market stability and reduced product defects by 50%.

The growing popularity of Lean principles is due to the fact that they focus on improving all aspects of a work process and involve all the hierarchical levels of a company. In this way, leaders achieved significant improvements in terms of productivity, efficiency, cycle time and profitability. Toyota has become so well known for its TPS approach that it created the Toyota Production System Support Center, a non-profit organization that helps small businesses benefit from the same optimization principles they operate on. The efficient management system is not isolated or immutable and, therefore, problems can arise in any of the other four steps.