Lean Business Model Practices Essay

Lean Business Model Practices Essay

Lean is a business principle that developed gradually into a model utilized in business processes and activities. Began in 1913 as a simple flow production but developed and popularized by Toyota that was known as “Toyota Ways” until it has proven effective after many decades in the application. The lean principle promotes the concept of elimination of wastes through performance improvement in the pursuit of perfection seeking customer value. The principles afterwards are integrated into some aspects of the business to achieve ultimate customer value and efficiency. The tools derived from the principle came about with higher appropriateness to specific purposes.

The principle of lean is probably the latest and yet draws a lot of interest among business organizations. Its simple and dynamic approaches have developed a variety of tools and techniques that help improved the efficiency of the organizations. Debashis Sarkar provided a good definition of lean. He stated that lean is “a systematic approach to identifying and eliminating waste (non-value added activities) through continuous improvements by flowing the product only when the customer needs (called “pull”) in pursuit of perfection (p. 1). On the other hand, Wood simply defined it as “performance improvement” (p. 1). The concept of lean therefore takes the idea of customer value by eliminating waste and the theme of efficiency.

The concept of lean started with Henry Ford in 1913 but popularized by Toyota. Ford originated the idea of flow production using special-purpose machines to assemble the parts and components of a car. By means of this process, he maintained low prices in his produced cars by means of reduction of the production cycle. As variety of models of car became in demand in the market, Ford had to upbeat the demand by populating their shops with larger and bigger machines to respond to the customer demand or value. However, only Kiichiro Toyoda of Toyota stood up in the competition for manufacturing of cars with customer value. Toyota in its commitment in providing the customers with the best value they could have came up with various models with quality features for customer satisfaction at a lower price (lean.org). Lean concept therefore is about obtaining low production cost yet with high quality products. Customers get value of the products by eliminating unnecessary components that may be considered wastes. On one hand, the business organizations obtain efficiency through pursuing perfection by means of continuous improvement in their production of quality products.

Lean as a business model afterwards emerges with the most effective techniques and tools that assist many business organizations of different fields to achieve efficiency and improvement.

Description of the Model

As a technique, the lean business model evolves into many types but of similar concept and that is transformational approach towards achieving breakthrough improvements in terms of meeting customers’ need. Started as lean manufacturing, the concept was integrated in almost all fields of business activities such as accounting, engineering, healthcare, and many others. Once it is integrated into the system, the organization needs to undergo transformation or change towards meeting efficiency and customer value through elimination of wastes.

As noted from the overview of the Toyota system, lean principle reduces or eliminates wastes due to overproduction, waiting, transportation, non-value-added-processing, excess inventory, defects, excess motion, and underutilized people (Kilpatrick, p. 1,2). Overproduction is considered waste therefore lean principle focuses on producing items within the customer demands. Lean principle follows the ‘just-in-time’ policy to avoid wasting of time due to waiting. Lean principle requires that raw materials be delivered directly to the assembly line; this technique is known as ‘point-of-use-storage.’ Another technique of lean principle is known as ‘value stream mapping’ which eliminates non-value-added-processing by means of reducing the amount of inspection given to the products with the help of procedural techniques. Excess inventory as a waste refers to maximizing the warehouse space through which the company would avoid overproduction of items. Other factors that are considered waste are defects and excess motion due to poor performance of the people within the organization. Underutilized people are also considered waste and therefore eliminated from existence in the organization (Kilpatrick, p. 1&2).

Wastes are successfully eliminated in lean principle through using many tools known as ‘Lean Building Blocks.’ Kilpatrick explained that these building blocks should be implemented with great care because each building block will affect the overall impact; besides, some may be applicable to a certain type of business while other tool may be effective to another business type. According to Kilpatrick, the lean building blocks or lean tools are pull system, kanban, work cells, total productive maintenance, total quality management, point-of-use-storage, quick changeover, batch size reduction, 5S or workplace organization, visual controls, and concurrent engineering (p. 2 & 3). Each of the tools is effective; it only requires that the implementer has good understanding and sound judgment what tool is appropriate to the need of the company.


Cook presented in his article the process of lean implementation that he considered ‘opportunity.’ It is implied in the article that by simply following the five basic lean principles and techniques, the process of improvement also takes place (Cook, p. 2&3). Here, he enumerated the process as follows: (1) recognize what values the internal and external customers; internal customers refer to employees or members of an organization while external customers include buyers and other people outside of the company; (2) focus on flow of value which refers to the process improvement effort by an organization and that includes cost, quality and on-time delivery; (3) identify which among the seven wastes is committed by the company; (4) value stream mapping (5) develop people and partners into teams with commitment to the success of the company.

The process of implementation is very simple to follow as it involves evaluation of the strength and weakness of the company and assessment of future actions to take in order to assimilate the change into the system. In addition, integrating lean principle in to the business system does not necessarily begin with major project or program; rather, it can be useful in improving employees’ work habits or customer service.


Lean practically has a lot of benefits considering the reduction of wastes in the business processes including the manufacturing process. Figuring out the right strategies towards elimination of these wastes in their workflow guarantees increases in income or sales in general. Matt Henkes pointed out some of the benefits of lean business thinking when applied to an organization. First, it helps eliminates wastes or non-value-added, which refer to product or service that does not have any value to the company or customers. Second, the lean principle provides the company the right perspective of what values the customers; because what values the customers will dictate what the company must produce. Third, it reminds constant improvement on the part of the organization in terms of product and service. By this means, everyone who is a part of the organization will have the opportunity to contribute something worthwhile to the company like continuous creativity and innovation as well as personal improvement of performance (Accounting Web).

Kilpatrick also stated the advantages of incorporating lean principle that includes operational improvements, administrative improvements, and strategic improvements (p. 3, 4). As mentioned, lean is simple yet very dynamic because the steps are easy to follow however, its influence could affect the system and every aspect of it. It brings impacts to every individual, to organizational culture as well as in the organizational operation.


Since lean principle is highly valuable at this point in time where the time, effort and money is running short, organization must uphold the principle in order to gain efficiency by means of eliminating wastes. On one hand, the challenge is great nowadays that both quality and prices are the demand of the market. By integrating lean, the company will become more responsive to the current trend of the market; and there will be speedy and faster delivery of services and products to the people at a lower cost. Lowering of product costs will not adversely affect the company’s financial performance because in the first place, wastes or non-value added are eliminated in the production process.

Customers today would value quality products at a lower price because costs do not guarantee quality; rather the brand name dictates whether the product is of quality and adds value to the money. The challenge therefore is the ability or the willingness of the company to eliminate wastes that lead to customer complaints, high amount of wastes accumulated, and poor planning for the improvement of the organization and business processes.

The future of the technique (to include any issues and challenges faced or provided by the managerial method or techniques in the days ahead, as applicable)
In response to the global crisis, Keith Johnson of the Wall Street Journal argued that lean principle is very valuable today (Bernstein). This statement was made when he strongly suggested the need to use technology in reduction of pollution from imported steel. Johnson is aware that the future of business in on the application of lean principles. Not only him but many others recognize how helpful the principle is at the tough times. For Johnson, his concern was not simply the reduction of waste but also the reduction of pollution through the deploying of technology.

Besides, there are groups that encourage organizations to use the transformational model. The Shingo Prize has its Lean Education that provides education and orientations to companies having the interest to incorporate the concept to their own organizations. Right now, the Shingo Prize Organization received an award being a world class performance for more than twenty years while the impact of their effort have benefited more than 150 companies.

Lean Tools/Methodology

Furthermore, lean as a principle has been developed into many forms; each has its unique characteristics; however the basic principle remains intact in the models. The emergence of these models presents that the principle will be more valuable and useful in the future. The practicability and applicability of the techniques to many business types and activities guarantees that the techniques will be utilized further in the future. One example of a tool derived from lean principle is TRIZ Plus. Ikovenko and Bradley stated that it is “one of the most powerful inventing methodologies” (p. 1) considering its conceptual stage design. The same authors also mentioned other methodologies that were developed aside from TRIZ Plus, such as: Value Engineering Analysis, Root-Cause Analysis, and Flow Analysis.

Applicability of lean principles in many business fields

To this effect, many research studies have been conducted in order to integrate the principle in many disciplines. The attempts are made to discover the vastness of its functionality as well as to determine how the principle will help improve performance. The results of the studies have proven the applicability of the model and the usefulness of the model in future challenges.

A new concept called ‘lean construction principle’ is now emerged in engineering which focuses on reducing variability. According to the abstract of the paper, the lean principle can be very valuable in the construction in a sense that “better labor and cost performance can be achieved by reducing output variability” (Thomas, Horman Souza, & Zavinski). The findings of the study using productivity data stated that lean improvement is significant in reducing variability but requires that it is redirected to “adaptable workforce management capabilities” to ensure the desired variability.

The principle of lean is also tested if it is also applicable in improving business school courses. In a study conducted by Emiliani aimed to find out the applicability of lean principles in the delivery of graduate business course. Participated by part-time students, the findings indicated that the integration of lean principle improves the design and the delivery of the business courses and materials.

The health care industry also ventures in the applicability of lean business model in the specified discipline. Daniel argued that health care improvement necessitates innovations in all aspects be it disease prevention or detection. Again, the focus of change is performance improvement and elimination of wastes and cut costs. She noted that inefficiencies and wastes have effect on patient care, and once eliminated will enhance the needed improvement of the health care industry. Along the process of implementation, she mentioned how commitment and time are important in the endeavor to promote change in the organization.


There are still barriers that hinder many companies from achieving the desired results despite the integration of the principle in the system. Kilpatrick mentioned some of the barriers that managers should understand and be eliminated. First, it is difficult to evaluate the impact because the company “fails to tie the improvement metrics to financial statements” (p. 4). Second, the building blocks are implemented in the wrong order. Third, the company started with a “low-impact project” so the result is not visible and therefore not appreciated. Fourth, lean implementation is done too much on training and not on actual doing. Fifth, the failure to bring lean implementation to the “supply chain” the impact is less. Sixth, the change brought by the principle causes discomfort to every person in the organization. Seventh, the implementation of lean is laborious and requires longer time before it is fully understood or realized in larger organization (p. 5).


Performance improvement and customer value through elimination of wastes is the principles underlying lean. The process of implementation is easy but dynamic; once implemented, many people in the organization are affected by the project. There are many recorded success of companies that integrated the lean principles and because of that various methodologies and techniques have been developed as a separate techniques and/or tools. Furthermore, many research studies have been conducted to determine the applicability of lean principles in many disciplines. These research studies will bring the lean principles much closer to heart of business operation.


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