5 Principles to Characterize a Lean enterprise

The spotlight of any new concept is often on its application and results. In almost all successful concepts some fundamental assumptions and basic principles underlie the results. This holds true for Lean concept too. A copycat mentality without understanding the fundamentals behind lean can lead to phony gains and such a strategy will be ineffective. So this blog is focused on understanding the fundamental principles of a lean enterprise.

A set of five basic principles that characterize a lean enterprise are (as defined by Womack and Jones in their 1996 book Lean Thinking):

1. Define value precisely from the perspective of the end customer. The value should be defined in terms of a specific product, with specific capabilities, offered at a specific price and time.


2. Identify the entire value stream for each service, product or product family and eliminate waste. The value stream is all the specific actions required to bring a specific service or product through three critical activities in any business: Product/Service definition – from concept through detailed planning through launch Information management – from order taking through detailed scheduling to delivery Physical transformation – initial concept, to the receipt of the service/product by the customer Identifying the value stream almost always exposes enormous amounts of waste in the form of unnecessary steps, backtracking, and scrap, as the throughput travels from department to department and from company to company.


3. Make the remaining value-creating steps flow. Making steps flow means working on each design, order, and product continuously from beginning to end so that there is no waiting, downtime, or waste, within or between the steps. This usually requires introducing new types of organizations or technologies and getting rid of “monuments” – obstructions whose large scale or complex technology necessitates operating in a batch mode.


4. As flow is introduced let the customer pull i.e., to provide what the customer wants only when the customer wants it. Letting the customer pull the product/service from the value stream eliminates the following types of waste: designs that are obsolete before the product is completed, finished goods, inventories, elaborate inventory/information tracking systems, and “left overs” no one wants.


5. Pursue perfection. A lean thinking enterprise sets their sights on perfection. The idea of total quality management is to systematically and continuously remove the root causes of poor quality – with the ultimate goal of achieving Zero defects.