Chapter 1: Lean Concepts
Lean (Lean management) is an organizational culture based on the management philosophy, values, and methods, which strives “to contribute to the sustainable development of society and the earth through the manufacturing and provision of high-quality and innovative products and services” . Lean results in a significant increase in production efficiency and product quality.
Lean, as modeled on the Toyota Way values, has two pillars and five principles :
- Continuous Improvement, which includes Challenge, Kaizen and Genchi Genbutsu
- Respect for People, which includes Respect and Teamwork
“Being satisfied with the status quo means you are not making progress”
- Katsuaki Watanabe, CEO of Toyota Motor Corporation
Processes, products and services are never perfect, and they must be relentlessly improved, indefinitely. Organization’s continuous improvement is based on building and continuously improving people’s capabilities, and thus the two pillars of Lean are interconnected.
To achieve their long-term vision, lean organizations take up challenges with courage and creativity. They teach people ways to overcome obstacles and empower them to attain more, in a better way. They embrace change and challenge the status quo, as this is the only way to make progress.
Kaizen translates as change for good or improvement (kai – “change” and zen – “good”). This is a mindset and practice of continuous improvement through innovation and evolution.
Kaizen requires continuous small improvements initiated by employees. All employees should continually seek ways to improve their individual performance and should team up with others to improve team performance. Kaizen encourages employees to take ownership for their work and improves their motivation. As a practice, kaizen is a bottom-up approach for incremental improvement that is complemented by the top-down approaches of kaikaku (radical change) and kakushin (radical innovation).
But the most important aspect of kaizen is that it is a way of thinking that helps everyone in the organization to challenge everything and see opportunities for improvement everywhere.
“The spirit of kaizen [is] reaching higher and challenging ourselves to find a better way in everything we do, every single day”
Genchi Genbutsu (onsite hands-on experience, or "go and see") is a principle to make correct decisions, based on the facts found at the source – where work is actually performed. Also, this principle requires building consensus on the decisions to achieve goals at the best speed.
Good understanding of the situation on the site where value is added and waste is visible is crucial to problem-solving and improvement. In a broader sense, Genchi Genbutsu requires decisions to be based on facts and good understanding, not on assumptions and untested hypotheses. (An example of Genchi Genbutsu in project management is the need to convert critical project assumptions to hypotheses that need to be tested.)
Respect for People
“Lean isn’t lean if it doesn’t involve everyone”
Respect and building people are the heart of Lean. Toyota “makes” people first, and then people make cars.
Respect for people applies equally to employees, customers and partners. In a broader sense, it also applies to society. The lean organization respects others, builds and encourages mutual understanding, responsibility-taking and trust. The organization encourages personal and professional growth and shares the opportunities for development.
Respect for people is widely reflected in the philosophy and values of Toyota.
“Foster a corporate culture that enhances both individual creativity and the value of teamwork, while honoring mutual trust and respect between labor and management”- Guiding Principles at Toyota 
The House of Lean
The Lean culture of the Toyota Way can be presented as a House of Lean:
Lean manufacturing is a system “based on the philosophy of the complete elimination of all waste in pursuit of the most efficient methods” . Toyota Production System (TPS) is the source and model for lean manufacturing. Many lean concepts that are now being applied in a variety of sectors and areas, including in project management, originate from TPS .
TPS is a product of many years of innovation and continuous improvement with the goal of achieving:
- short lead time
- high efficiency
- ability to produce a variety of cars, one at a time
- sound quality and full customer satisfaction
TPS is based on the concepts of jidoka (automation with a human touch) and Just-in-Time.
Jidoka is a principle which requires that, when a problem is detected, the equipment should come to a safe stop immediately, to prevent the production of defective products.Conventional automated equipment is complemented by human intelligence functionalities which enable it to check quality, stop and signal when it detects a problem. The machines are linked to synchronize the upstream operation with the downstream operation (pull system), instead of pushing items to the next machine on the production line (push system) .
It all starts with manual work and people’s skills and craftsmanship.
First, the engineers carefully build the line components in compliance with the standards. This is done by hand. Second, they apply kaizen to simplify the line’s operations in an incremental way. The goal is that any line operator can consistently achieve the same result (when human operators cannot add value to the operations) and then the created and improved components are embedded into the operational production line.
This process is repeated continuously in order to:
- simplify the equipment and reduce its cost
- reduce equipment maintenance cost and time
- create simple, compact and flexible lines that adapt to fluctuations in production
The core of jidoka is the interdependence and the continuous improvement of both technology and the skills of the people, based on human wisdom and talent. Machines and technologies advance as people transfer their skills and workmanship to them, and this transfer is done through manual work.
Here's how jidoka is applied to prevent quality problems and to facilitate daily improvements:
- When a machine detects a problem, it communicates an abnormality (the machine is engaged in autonomation). The operator must also self-inspect their work, as well as the previously produced work, and take action when a defect is found. A visual and/or audio alert is activated by the operator or by the machine itself.
- The operator stops the line.
- The supervisor immediately attends to the problem, identifies the root cause and removes it.
- The process is improved to eliminate the possibility of the problem occurring again.
The concept underpinning the Just-in-Time process is based on making only "what is needed, when it is needed, and in the amount needed" .
The goal is to achieve a continuous flow and fill a customer’s order in the shortest possible time by doing only what is needed to perform the next process. For vehicle production, Just-in-Time entails the following:
- When an order is received, instructions to start production are issued to the assembly line as soon as possible.
- The assembly line must have a minimal inventory of parts to enable the production of any kind of vehicle.
- Once an order is filled, the assembly line orders replenishment parts from the parts-producing processes.
- The parts-producing processes must keep a small inventory of all types of parts, and produce only the quantities needed to replace what is pulled for the next process.
Just-in-Time aims to ensure efficient production of quality products with short lead time. This is made possible by elimination of muda, mura and muri.
Muda (waste) is any activity or step that does not add customer value but absorbs resources.
Mura translates as unevenness or lack of uniformity. When customer demand fluctuates, production cannot be carried out at a constant rate. Uneven production generates waste. Leveled production is more efficient and allows continuous flow. Production leveling is achieved through mixing small batches of different car models on the assembly line. Each model has a different production lead time, which makes it possible to have various combinations of sequenced models (in various but always small batch sizes) resulting in the same level of production.
Muri (unreasonable requirements; beyond one's power) is another source of waste. Muri is pushing people or machines to work beyond their natural limits, which creates safety and quality problems, causes breakdowns and constrains flow .
The 14 Principles of the Toyota Way
Lean is a system whose elements must be practiced consistently.
Based on his 20 years of studying Toyota, Jeffrey K. Liker describes 14 principles of the “Toyota Way” which reinforce the principles documented by the company and provide a wider system framework for Lean :
Note: we need to clarify two common misunderstandings:
The true meaning of “slow decisions” is to decide at the last possible moment, without being irresponsible, instead of making (and locking in) decisions too early with poorly tested solutions. However, this does not mean that decisions should be delayed (and the morale of the team ruined), but that various options should be explored, studied, tested and evaluated until it is absolutely necessary to take a decision in order to proceed further. This is a manifestation of the genchi genbutsu principle to base decisions on good understanding.
Nevertheless, in this framework we prefer to use the concept of the "most responsible moment" - the moment that maximizes the net benefit of the decision.
Management does not mandate the work standards. It is the team that should develop and adopt them. Standards do not describe the best way to do the work always, but the best way known to the team at present. The team follows the standards, knowing that there are better approaches which they have to discover. After the team defines the standard, they master it to explore its full potential and to reveal its shortcomings – and they constantly challenge and improve it through kaizen. They measure the improvement against the standard, which serves as a baseline. Without such a baseline, improvement is not possible. The team introduces the improvement into the standard to create a new baseline and repeats the kaizen cycle, ad infinitum.
Lean Thinking is a term coined by James P. Womack and Daniel T. Jones, and it represents the essence of the Toyota Production System. They summarize Lean Thinking in five principles : 1) specify value by specific product or service, 2) identify the value stream, 3) make value flow, 4) let the customer pull value, and 5) pursue perfection.Let’s illustrate these principles with an example. "John Barleycorn" is a British folk song in which the main character is a personification of barley – the main ingredient in the production of beer and whiskey. This is Robert Burns' version of the poem (we have omitted the last three stanzas and added an accent in bold):
John Barleycorn: A Ballad
Robert Burns, 1782
There was three kings into the east,
They've taen a weapon, long and sharp,
And cut him by the knee;
Then tied him fast upon a cart,
Like a rogue for forgerie.
They took a plough and plough'd him down,
Put clods upon his head,
And they hae sworn a solemn oath
John Barleycorn was dead.
They laid him down upon his back,
And cudgell'd him full sore;
They hung him up before the storm,
And turned him o'er and o'er.
But the cheerful Spring came kindly on,
And show'rs began to fall;
John Barleycorn got up again,
And sore surpris'd them all.
They filled up a darksome pit
With water to the brim;
They heaved in John Barleycorn,
There let him sink or swim.
The sultry suns of Summer came,
And he grew thick and strong;
His head weel arm'd wi' pointed spears,
That no one should him wrong.
They laid him out upon the floor,
To work him farther woe;
And still, as signs of life appear'd,
They toss'd him to and fro.
The sober Autumn enter'd mild,
When he grew wan and pale;
His bending joints and drooping head
Show'd he began to fail.
They wasted, o'er a scorching flame,
The marrow of his bones;
But a miller us'd him worst of all,
For he crush'd him between two stones.
His colour sicken'd more and more,
He faded into age;
And then his enemies began
To show their deadly rage.
And they hae taen his very heart's blood,
And drank it round and round;
And still the more and more they drank,
Their joy did more abound.
Specify value by specific product
In the poem, value is defined from the perspective of the ultimate customer who uses a specific product – John Barleycorn’s brand of beer or whiskey. The value to the customer is the achieved (subjective) state of joy. Here, the more units a customer consumes, the more value they extract (“and still the more and more they drank, their joy did more abound”). But the value is customer-perceived, subjective, and highly contextual. For many people, this product would have no value or might even have a negative value for anyone who prefers a non-alcoholic drink.
Identify the value stream
The value stream is the sequence of all the steps necessary to create and use a product or service that brings value from concept to realization. In the poem, it includes all the steps from having the product idea and sowing barley (“plough'd him down”) to brewing or distilling the drink (“have taken his very heart's blood”) and drinking it. There are two types of activities in the value stream:
- Value-added – activities that add value to the product or service from the point of view of the customer.
- Non value-added – activities that absorb resources (including time and space) but, from the point of view of the customer, do not add value to the product or the service. Lean regards these activities (or steps) as muda, or waste.
Womack and Jones define two types of muda :
- Type One muda: steps that create no value but are unavoidable with the technology used.
- Type Two muda: steps that create no value and are avoidable.
In the poem, we have showed the value-added activities in bold, for example “he grew thick and strong”, “[they] cut him by the knee” and “he crush'd him between two stones”. Omitting any of these activities will interrupt the value stream.
The following activities are examples of Type One muda - they do not add value to the product but we need them for creating the product because of the specific production technology we use: “[they] tied him fast upon a cart”, “they laid him down upon his back” and “they hung him up before the storm”.
Also, there are examples of Type Two muda - wasteful activities that we could avoid:
- “they hae sworn a solemn oath John Barleycorn should die” (though this is a good example of teaming up to achieve a common goal)
- “they took a plough“ and ”they've taen a weapon“ (unnecessary movement of a tool)
- ”they filled up a darksome pit with water” is likely a wasteful activity (unnecessary transportation of materials)
Repeating “they toss'd him to and fro“ ”as signs of life appear'd“ too many times is also a muda (rework).
Type One muda is relative. On the one hand, these activities are necessary, but we can do them with fewer resources. Therefore, we reduce this kind of waste through refinement and simplification.
Type Two muda is absolute. It is pure waste, and we could eliminate it.
Make value flow
The goal is to eliminate the apparently wasteful steps and achieve an uninterrupted value creating flow, without delays and rework.
Two important factors affect the flow:
- The way we organize work – by function or by value flow
- The process of production – batch production or one-piece flow
In the poem, when the work is organized by function, there are “three kings” – the farmer, the miller and the brewer (or the distillery owner) – each one with their autonomous feudal domain. They strive to improve their own efficiency and effectiveness and therefore prefer to work in large batches of products. In this way, people and tools are fully utilized and constantly employed.
However, the inventories of raw material, work-in-process and finished goods are accumulated and put on hold until we use them in the next steps of the process. This interrupts the flow and the lead time increases. The inventory generates costs (waste) and hides quality problems – until we discover them in the downstream steps.
The alternative is to organize the work, not by functions, but by a continuous value flow and have the “three kings” and their teams collaborate within a single enterprise to achieve an uninterrupted process of creating value. The whole value-creation process becomes visible and transparent to all, and it can be improved.
To avoid the problems with large batch production, a one-piece flow can be introduced. One piece, or a small batch at a time, is moved through the steps of the process. In the poem, this small batch is John Barleycorn himself, representing the quantity of drink ordered by the customer. This is preferable to moving John Barleycorn together with his six brothers (or the whole Barleycorn family) through the process to create a large inventory and push finished goods sales.
For each step, large batches require a longer processing time than single units do. The next processing step cannot start until the whole batch is complete and quality problems get hidden within the batch. In contrast, single units move faster through the process and ensure a better flow of value. This results in reduced lead time and cost and improved quality.
Let the customer pull value
Pulling value means producing a product or providing a service which the customer derives value from, only when they order it. This “just-in-time” model is an alternative to the “just-in-case” model where organizations are overproducing in anticipation of higher demand – and then try to push sales.
The pull model avoids problems (and costs) associated with overproduction. Inventory and lead time are reduced and this improves efficiency.
Here's how the pull system works. The customer orders a bottle of beer at the pub. This triggers the whole process of production and delivery of beer. The bartender takes the bottle from the shelf and hands it to the customer. As the items run low on the shelf, the bartender replenishes them from the pub's small inventory. Once or twice a day, the pub owner orders new items from the wholesaler to replenish their inventory. The wholesaler delivers the items by the end of the day or by noon the next day.
At the end of each day, the wholesaler places an order with the brewery to replenish the products it has supplied to retailers throughout the day. The brewery filters and bottles the beer from their stock of conditioned beer and delivers the ordered quantity to the wholesaler by noon the next day. Thus, the pub, the wholesaler and the brewery keep only a small inventory buffer of bottled beer. Only what customers order is produced and delivered just-in-time.
Similarly, the brewery pulls empty bottles, labels and caps from its suppliers once or several times a day, but only for the quantity of bottled beer ordered by the wholesalers. Regarding plant-based raw materials, like barley and hops, the pull system will work with bigger quantities than actual real-time orders require, because of the long biotechnological cycle of beer production.
Perfection involves continuous improvement of the value creation system: improving value definition, designing better value streams, eliminating waste, improving value flow and developing better pull systems.
Lean Thinking in a summary
Lean Thinking is a mindset to deliver value efficiently to the clients when they need it, ensuring a continuous flow of value and constantly improving the value creation and realization system.
The Forms of Waste
Taiichi Ohno, creator of the Toyota Production System, defined seven types of muda (waste) :
- Waste of overproduction
- Waste of time on hand (waiting)
- Waste in transportation
- Waste of processing itself
- Waste of stock on hand (inventory)
- Waste of movement
- Waste of making defective products
Overproduction is producing more – and earlier – than needed. It is producing “just-in-case“ instead of ”just-in-time“. Ohno considers this the worst type of waste, which contributes to and helps hide other forms of waste . Typically, we associate this waste with production in large batches, which creates costly inventory, increases waiting time, requires unnecessary transportation, and hides quality problems.
Waiting prevents flow. A product is waiting when we do not work on it. A typical case is waiting in queues for the next step in the operation.
The movement of products, materials or people between processes is a waste if it is not directly associated with value-adding activities. Besides transportation costs, excessive movement can cause damaged or lost products or materials, delays and stress, and may require additional space and equipment.
Over-processing (waste of processing itself)
Over-processing is adding more features to a product than the customer will use or requires. These features do not add value but cost more and take longer. It also refers to using high-capacity equipment that can create bottlenecks and extend lead time.
Inventory of raw material, work-in-progress and finished goods generates warehousing, depreciation, shrinkage, insurance and lost opportunity costs. Inventory impedes the rapid identification of quality problems and extends the lead time.
Motion (waste of movement)
This waste occurs when employees or equipment unnecessarily move within a workspace. A typical example is looking for and reaching for a tool. Waste of movement is a productivity, quality, health and safety issue.
We associate this waste with the cost of poor quality, which has many components, from rework to lost business.
Examples of project waste
In the table below are examples of how the original seven forms of waste can happen in manufacturing, which we can translate into project waste. The idea is not to find direct correlation, but to illustrate the general concept. In the next chapters, we will discuss specific project wastes.
Waste in manufacturing
Waste in projects
Working on projects which are not aligned with the value stream system or the organizational strategy
Working on unnecessary deliverables
Working on unnecessary features
Waiting for resources, information, approval, decision, feedback
Waiting for an upstream activity to finish
Distant information flows
Extended communication lines
Providing the customer higher quality than necessary
Creating more iterations of a deliverable than needed
Working in large batches / Excessive work-in-process
Inventory of projects on the waiting list
Extra efforts to find information
Extra efforts to get a feedback
Cost of defective project outputs
Several other types of waste were added to the original seven. Womack and Jones added the waste of goods and services which don't meet the needs of the customer . Liker added the waste of unused employee creativity which leads to losing “time, ideas, skills, improvements, and learning opportunities” .
Bicheno and Holweg described the following “new” wastes :
- The waste of untapped human potential
- Excessive information and communication
- The waste of time
- The waste of inappropriate systems (e.g., order processing system)
- Wasted energy and water
- Wasted natural resources
- The waste of “No Follow Through” (when the resources and time saved are not used)
- Waste of knowledge
- The waste of empty labor (e.g., work time not used for doing work)
In various forms, all these and other types of waste are present in projects, and are discussed in more detail in the Project Waste chapter. We will not attempt to map the above wastes (especially manufacturing wastes) onto a project context, but will rather define project-specific forms of waste.
 Toyota Code of Conduct (March 2006), TOYOTA MOTOR CORPORATION (https://www.toyota-global.com/company/history_of_toyota/75years/common/pdf/code_of_conduct.pdf)
 Toyota Way 2001; Toyota Way 2001 / Toyota Code of Conduct, TOYOTA MOTOR CORPORATION (https://www.toyota-global.com/company/history_of_toyota/75years/data/conditions/philosophy/toyotaway2001.html; https://global.toyota/en/company/vision-and-philosophy/toyotaway_code-of-conduct/)
 Toyota Global Vision, TOYOTA MOTOR CORPORATION (https://global.toyota/en/company/vision-and-philosophy/global-vision/)
 Guiding Principles at Toyota, TOYOTA MOTOR CORPORATION (https://global.toyota/en/company/vision-and-philosophy/guiding-principles/)
 Toyota Production System, TOYOTA MOTOR CORPORATION (https://global.toyota/en/company/vision-and-philosophy/production-system/)
 This section (Lean Manufacturing) is based on Toyota Production System, TOYOTA MOTOR CORPORATION (the link is as above)
 Koichi Shimokawa and Takahiro Fujimoto, Editors (March 2009). The Birth of Lean, Chapter II What I Learned from Taiichi Ohno: A talk by Michikazu Tanaka. Lean Enterprise Institute
 Toyota Production System, TOYOTA MOTOR CORPORATION (the link is as above)
 Liker, Jeffrey K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill
 Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press; 2nd edition
 Ohno, Taiichi (1988). Toyota Production System: Beyond Large-Scale Production. Productivity Press
 Womack, James P. and Jones, Daniel T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press; 2nd edition
 Liker, Jeffrey K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill
 Bicheno, John and Holweg, Matthias (2016). The Lean Toolbox, 5th edition. A handbook for lean transformation. PICSIE Books