Episode B.001 Principles of Lean Thinking

Lean is about defining the value of a product or service from the customers perspective. They do not care how hard you worked or the technology used to create the product or service being sold. Customers evaluate your product or service by looking at how well this is going to fulfill their requirements; B2B = Competitive Advantage, B2C = Lifestyle.

Customers will not willingly pay for quality defects or huge amounts of overhead costs, they are only willing to pay for the fulfillment of their requirements with the product or service you are providing to them.

The 3 Pillars of Lean: Remove Unevenness, Remove Overburden, Remove Waste.

• Unevenness - Any variation leading to unbalanced situations; inconsistent, irregular, etc. It exists when workflow is out of balance, workload is inconsistent, and not in compliance with a standard.
• Overburden - Any activity asking for unreasonable stress or effort from personnel, material or equipment. It exists when the organization expects more than a machine was designed for or too heavy a mental or physical burden is placed on people.
• Waste - Any activity in your process that does not add value; not creating value for the customer. It exists when processes are not under control or when processes are not aligned with customer demand.

​The Essentials

1. Horizontal Alignment - processes aligned with customers. This about removing all non-value added steps and activities.
2. Everything is Demand Based - never build on spec or based on the calendar, make it after selling it! This is about a JIT (Just In Time) mindset and how to run an efficient operation. Everything you (or the company) does is about making production simple and quick.
3. 80% of Gross Margin is Scheduling - how quickly can you deliver, how much can you get done in a day (management). This is about creating an aggressive work schedule that gets as much done in a day and on the day it is due with breaking things or people.
4. 15% of Gross Margin is Execution - meet or exceed the budget on every job or task (supervision). This is about being as efficient as possible without doing more that is needed (and hopefully promised).
5. 5% of Gross Margin is Quality - every individual builds quality into their work by reducing waste (individual contributors). This is about individual responsibility and looking for ways to do it right the first time.

Next Episode we will build on these principles and discuss what it looks like when you turn it into a management discipline.