Lean thinking which has spread geographically from East Asia to North America over the last half century, is now rapidly developing economies dealing with wage inflation and the challenges of high growth rates.
At its beginning, lean thinking, the pursuit of perfection through continuous improvement using human ingenuity, is born of scarcity. In the industrial world where it first developed, the immediate aftermath of Word War II in Japan, technology and capital resources were lacking. Money, extra capacity, inventory could not be the answer to the challenges posed. So people focused on identifying variability, waste and inflexibility and working to eliminate them. One of the main forms of waste was that of human talent, not involved due to technocratic and hierarchical organisation. In the current age of austerity, no-one can afford to adopt lazy solutions.
Over the last half century, lean thinking has spread geographically from East Asia to North America, carried by the transplanted car factories of the Japanese manufacturers, then to European industry grappling with cost and overcapacity issues and now to rapidly developing economies dealing with wage inflation and the challenges of high growth rates. In this process, lean practice has adapted to different cultural contexts, while retaining the core values that make it effective: focus on the customer; process management; value in the front line; rigorous problem solving as a part of everyone’s daily work.
After revolutionising the otherwise mature automotive industry by dramatically increasing levels of quality and productivity, lean has been applied to many types of industrial activity, from single unit build (ships and satellites) via very high volume production (beverage cans) to process industries (oil and gas) with many in between. Each time the tools and approaches have been adapted while the essence remains.
More recently the financial services industry and healthcare sector have seen great impact from the application of lean. Many banks started with the introduction of lean process management in their high volume retail transaction activities (loan applications, account management, fiduciary etc). This required a close integration with the IT systems design of the banks. Some then moved on to less frequent events such as bond issuance, where getting it right first time, avoiding waste and rework brings advantages in market timeliness.
The healthcare sector has adopted lean to meet several major challenges that otherwise appear unresolvable: the high growth in demand; the increasing awareness of medical error and the unsustainable increase in costs, particularly in the US. Hospitals have found ways to increase patient safety and reduce the length of stay, thereby improving outcomes and increasing capacity without adding resources.
In some countries, governments have rethought their activities, recognising their citizens as customers and scrutinising what officials do through the lens of value added.
Furthermore, lean has spread from a focus on manufacturing to other functions: product development; sales; customer service; financial administration and HR management. In fact any area that seeks to create customer value and where variability, waste and inflexibility arise. As such our understanding of lean has evolved from something that front line staff do to one of the basic tasks of leaders in any organisation.
Lean thinking truly now affects us all.