Creating a Lean Business System
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In this paper Professor Peter Hines gives an overview of the Lean Business Model (LBM)®, how it was developed and how organisations can use it to help them create a Lean Business System. Professor Hines argues that the LBM should be distinguished from the traditional Womack and Jones (1996) lean principles. While the principles describe what it is for an organisation to be lean, the LBM provides a framework for organisations to create their own Lean Business System.
The LBM is derived from original research conducted in Toyota in Japan. LBM is a distillation of what made Toyota so successful both internally but also across their wider supply chain. LBM consists of five interrelated elements: Strategy deployment (to align and engage everyone); value stream management (to focus on important business processes); tools and techniques (to ensure systematic application of continuous improvement); people enabled processes (to ensure engagement and the realisation of potential); and, extended enterprise (to ensure alignment across the wider supply chain).
Professor Hines goes onto to explain how many conventional lean implementation fall short of the profit potential they should realise. This is because they focus too heavily on the order fulfilment process and fail to utilise the spare capacity created. Finally he goes on to examine how the LBM may be used in conjunction with a maturity assessment in order to help organisations envision where they want to be in the future and a realistic mechanism for getting there.