What is Lean Management? Definition and Benefits

By Indeed Editorial Team

Published December 14, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

There are several approaches that management teams from various fields use when developing their workplace procedures, nearly all of which have the intention of boosting company profits and productivity. Lean management refers to the management model that assesses work procedures in order to streamline company operations for efficiency. If you're interested in pursuing a career in management, it can be helpful to learn a variety of management frameworks, including lean management.

In this article, we discuss what lean management involves, including its primary principles and benefits, and provide several lean management tools for improving the management model of your workplace.

Related: What Is Profit and Loss Management? (With Steps for Managing P&L)

What is lean management?

Lean management is a method of of organization managers can use to improve the procedures and overall operations of their work environment. The concept of "continuous improvement" is the cornerstone of the lean management framework, and it involves a company's long-term efforts to improve their goods, services and processes in order to ensure their venture's success. Managers often use lean management techniques when trying to streamline work procedures with the goal of increasing efficiency and profit. They do this by evaluating current workplace procedures and changing components that don't contribute to increased company success.

Related: 12 Management Tools for a More Productive Workplace (With Tips)

5 principles of lean management

Here are the five principles companies follow when instilling lean management into the workplace:

1. Define value

The first principle in incorporating a lean management framework is to identify customer value. This involves using analytic techniques such as surveys, interviews and demographics to create a well-rounded understanding of who the customer is and what they want from the company. Some insights you can gain from this include the price ranges customers are willing to pay and the types of goods and services they want or need.

2. Identify waste

The second principle of lean management involves streamlining company operations by reducing waste, or elements of the production process that don't contribute to the overall customer value. Managers do this by evaluating each stage of the sales process, from development, to production, to the eventual purchase and delivery of the product to the consumer. They identify any procedures that don't contribute to the values of their clientele and eliminate or reduce any production elements that can cost valuable time and funds.

3. Create flow

Once management eliminates wasteful procedures, they can move on to the next principle of lean management, which involves creating an efficient and profitable flow of work operations. It's important to create a method for continuous monitoring of workplace processes, in order to ensure that all remaining components of the production process are running smoothly and yielding the desired results, which are typically increased profits. Managers can often accomplish this steady monitoring through an equal division of work responsibilities among employees. It's also helpful to provide ample resources and training.

4. Establish a pull-based system

Using a pull-based system, companies create specific goods according to exact orders. This type of system attempts to discontinue the overproduction that causes overaccumulation of inventory, wasted resources and unnecessary work. A pull-based system optimizes resource capacity and only delivers in response to need. For example, a clothing manufacturer that accurately estimates the amount of inventory necessary for specific times of year and customers can avoid producing excess goods, which can save them time and money. This type of system ensures that the company uses funds for activities that directly benefit them.

5. Repeat

The final principle of lean management is to repeat the first four principles continually in order to achieve perfection in your business operations. Repeating these steps may help you find wasteful processes you missed or inefficiencies that restarted. Streamlining your workplace procedures can ensure they're in line with the company's customer value and can contribute to an increase in profits. This principle also emphasizes the importance of persistence in the lean management model, as it encourages managers and employees alike to strive for perfection in their daily workplace duties.

Related: Guide to Project Management Framework

Benefits of lean management

Here are some of the main benefits of incorporating a lean management framework into your work environment:

Efficiency

One of the main reasons for using lean management is the increased efficiency that can result from streamlining the production process. By eliminating any unnecessary or wasteful daily workplace operations, management and employees can focus their efforts on completing their duties quickly and accurately. They can then dedicate the saved time to other work activities or projects. Increased efficiency can directly contribute to a company's growth in profits and market influence.

Economy

Another benefit of a lean management system is its ability to reduce company costs and save money. By identifying and eliminating wasteful production processes that aren't necessary for customer satisfaction, managers can either cut costs or apply the saved funds to other important projects. Lean management can also help a company save money when it makes work processes more efficient and reduces the need for employee overtime, which is expensive if used consistently.

Time management

The ability to save valuable time and effort is a major advantage of using a lean management framework. Management can avoid wasting time on activities that are unnecessary to their customer satisfaction goals. Instead, they can focus on continual improvement and new ventures, which can further increase the company's profits.

Related: Project Management Terms and How To Use Them

Lean management tools

Here are three of the most common lean management tools:

  • Bottleneck analysis: A bottleneck analysis refers to a detailed evaluation of a company's workflow that has a purpose of refining production operations.

  • Just-in-time (JIT): The just-in-time inventory system is a strategy that produces goods and services at a rate that directly meets the demand of customers at a specific time to avoid an accumulation of inventory.

  • Root cause analysis: A root cause analysis is a method of evaluation in which managers attempt to identify the primary cause of a production issue so they can solve it as efficiently as possible.

Explore more articles