What is Lean Thinking? Five Principles

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What is Lean Thinking?

Lean thinking is a management philosophy and approach that originated from manufacturing practices, particularly at Toyota, and has since been applied across various industries and sectors. It is based on the core principle of eliminating waste (muda) and optimizing value-added activities to achieve efficiency, quality, and customer satisfaction.

Lean thinking is often associated with the Toyota Production System (TPS) and has been a key driver of lean manufacturing, but its principles have been extended to other areas, including healthcare, software development, and services.

Toyota Motor Corporation is undoubtedly the most comprehensive proponent of lean thinking, as evidenced by the Toyota Production System (TPS). Nike, a famous shoe and clothing giant, has adopted lean manufacturing techniques. As a result, the company reduced waste to a great extent and generated higher customer value. Their definition of quality is summed up in the following equation:

Quality = appropriateness × (outcomes + service)/waste

Five Principles of Lean Thinking

The creators of the Lean Enterprise Institute (LEI), James P. Womack and Daniel T. Jones, put forth the five basic principles for any lean deployment. Value, Value Stream, Flow, Pull, and Perfection are the terms used. Let us take a look at each one and see how, when used together, these principles form the foundation for teams to strive for continual development.


Organisations must strive to comprehend what customer value entails. They will only be able to create products and services that meet the wants of their clients after that. Organisations miss the point if they do not have a strong knowledge of what customers want and need. This does not just imply that you will not be able to give your customers what they want. It also suggests that they have invested time, effort, and resources into something that is not worth anything.

It is not by chance that value is the first premise of Lean Thinking. Organisations can build their processes to efficiently offer that value by correctly identifying consumer value. This eliminates rework and, as a result, waste. In a nutshell, it can be said that a product/service that is liked by customers create value. On the other hand, something that is not liked is considered to be waste. For example, for a manufacturing organisation, added value includes extra product features, shorter lead times and convenient deliveries in smaller batches.

On the contrary, excessive inventories, unnecessary transportation, waiting time and reprocessing are considered waste. For a service organisation, common sources of wastes are long customer waiting times, reprocessing of applications, incorrect automatic charges and excessive paperwork. Organisations must engage with their consumers, understand their thought processes, and get to the bottom of their pain issues to get to the bottom of their customers’ requirements. These will enable businesses to bring the needs and aspirations of their customers to the surface.

Value Stream

After determining what value means to customers, businesses must determine how to deliver that value. This entails defining all of the procedures and activities involved in transforming raw resources or ideas into usable products for customers. As a lean thinking principle, the value stream signifies the same thing. Value stream mapping is a lean technique for identifying the steps involved in creating and delivering products and services.

The purpose of value stream mapping is to identify any process steps that do not add value to the end product and then seek to eliminate those wastes. For example, the value stream for a manufacturing organisation starts from receiving of order, procuring materials, managing inventory, arranging subassemblies, assembling the final product, validating the product, packaging, shipping and deliveries the product to the customer.


It is now time for work to flow through the value stream once the wastes discovered earlier in the process have been eliminated. Work is neither hampered nor blocked when a smooth flow is established. Creating a smooth workflow is not as simple as it may appear. This may entail bringing about changes in the organisation, which may be met with resistance initially. For example, to maintain the value stream, a flow of certain activities need to be maintained. These activities include hiring and retention, supplier contracting, executing the annual budget process, and completing a sales cycle.


Time to market is greatly reduced when waste is removed and work flows smoothly. This creates a pleasant environment for clients to pull products as needed. Businesses do not have to develop things just to store them as inventory, waiting to be sold to customers.


When a company undergoes a Lean transformation, they understand that it is more than just a project. The identification of value, the refinement of the value stream, the establishment of a smooth flow, and the ongoing effort to ensure that only what is needed and in what quantity is produced are all part of a continuous improvement drive that the entire business must rally behind. This necessitates the incorporation of lean thinking into the company’s culture.

The search for the ideal product and procedure never ends. As a result, the business must have a framework in place that encourages everyone in the organisation to work together to incrementally improve their processes. This is where Kaizen and other process improvement techniques come into play. Kaizen is a business philosophy that aims to develop a culture of continual improvement in a company.

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