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What is Lean Management?

ESG / CSRESG Initiatives

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Stephanie Safdie

updated 17 Mar 2025

US Copywriter at Greenly

When starting a business in the midst of climate change, it can be confusing to determine which approach to management is the best way to ensure ultimate efficiency and waste reduction to adhere with various standards, stakeholder expectations, and ensure customer satisfaction – and luckily, lean management could be the answer.

Initially developed by Toyota, lean management offers a way for business to improve upon business efficiency – which can lead to long-term success.

In this article, we’ll explain what lean management is, the five principles, and how your company can get started with lean management.

What is the definition of lean management?

Lean management is a systematic approach to boosting efficiency and avoiding waste in business practices.

The ideals of lean management originated from Toyota’s Production System (TPS) in the 1940s, and now serves as an applicable method across various industries to help encourage business efficiency and waste reduction.

“ You must have long-range goals to keep you from being frustrated by short-term failures. – (Charles C. Noble). ”

Key Principles of Lean Management

Customer Focus – Lean management strives to prioritise what customers value most, which can help businesses to refocus and rearrange their production models as necessary.
Value Stream Mapping – This part of lean management can help businesses to improve upon their current flow of processes.
Reduce Waste – One of the hallmark qualities of lean management is focusing on identifying and removing additional steps from the process of developing your products, which can also help to reduce their LCA impact.
Employing the Kaizen Method – Recognised by the EPA as the “building block” for all lean management, the Kaizen method can help companies to strive for continuous improvement – as it recognises that small, but effective improvements over time can create substantial and effective change.
Empower Employees – Lean management encourages businesses to pool their team efforts together and inspire new creativity and problem-solving amongst employees.
Utilise a Pull System – Making use of a pull system incentivises businesses to only produce what is compulsory as an attempt to avoid excessive production and in turn – mitigate the ongoing issue of consumerism in society.

Overall, a lean management system allows companies to reevaluate their current business model and determine which practices are currently serving them towards business growth – or which processes are creating inefficiencies and need to be improved or eliminated to maximise productivity and long-term success.

Why is lean management important and how does it work?

Lean management is important as it helps businesses to enhance their overall productivity and potentially elicit long-term lucrative success moving forward.

This is because lean management helps companies to zone in on improvement such as by looking to cut back on business operations, streamline processes, and deliver higher quality products and services.

Importance of Lean Management

Here are some of the reasons why lean management is important:

Work Smarter, Not Harder – As one of the quintessential qualities of lean management, employing the ideals of lean management can help companies to identify and eschew non-essential tasks and work towards their goals with less redundancy or unnecessary steps.
Boost Productivity – Since lean management can help to make business practices more direct, it can also help to optimise workflows and boost employee productivity.
Improves Quality – Incorporating the use of lean management can allow a company to improve upon the quality of their products and services. This can also help to improve customer satisfaction and loyalty and in turn, help to cultivate greater business success.
Reduce Operational Costs – Think of when you’re going through your credit card statement to notice any unnecessary purchases or subscriptions. Lean management encourages companies to do the same by cutting down on unnecessary expenses by improving resource allocation.
Encourages Flexibility – Especially in the midst of climate change, where changing insurance policies and natural disasters, implementing efforts such as lean management can help businesses adapt more quickly as market demands change amidst the climate crisis.

How does lean management work?

Lean management works when companies adhere to the following set of principles:

Identify Customer Value – This refers to deciding what customers truly need or want from your product or service.
Mapping the Value Stream – After this step is complete, a business should see where their time and resources are inefficient, could be optimised, or removed altogether.
Remove Unnecessary Steps – Focusing on the 8 types of waste, such as excess inventory, transportation, or excess production – can help companies to create smoother business processes.
Improve Workflow – This includes recognising which waste must be eliminated in addition to implement a pull system to ensure that only what is needed gets completed.
Continuous Improvement (Kaizen) – Lean management doesn’t have a clear start and end, meaning that you never simply "achieve" lean management – it’s an ongoing process where companies strive to continuously improve their efficiency as their business continues to expand.

Examples of Lean Management Tools & Methods

5S Methodology – This lean management method can help companies looking to improve upon efficiency under five main ideals: clear, tidy, clean, order and rigor.
Kanban System – This is a type of visual workflow management to help companies optimise their production.
Value Stream Mapping (VSM) – This lean management method allows companies to analyze both their current and future processes to optimise waste removal.
PDCA Cycle – Referring to the acronym for, Plan, Do, Check, Act – this lean management model allows for continuous improvement under the ideals of Kaizen.

The table below will compare and contrast these lean management methods and tools to help you decide which one is best for your business:

Method/Tool	Description	Best For	Key Benefits	Potential Limitations
5S Methodology	A workplace organisation system focusing on Sort, Set in order, Shine, Standardise, and Sustain.	Manufacturing, offices, warehouses, healthcare	- Improves workplace efficiency - Reduces waste - Enhances safety and organisation	- Requires ongoing discipline - Can be time-consuming to implement initially
Kanban System	A visual workflow tracking system that manages work-in-progress and optimises flow.	Software development, project management, production lines	- Reduces bottlenecks - Improves task visibility - Enhances team collaboration	- Requires continuous updates - Can become ineffective if overloaded
Value Stream Mapping (VSM)	A process analysis tool that maps current and future workflows to identify inefficiencies.	Manufacturing, logistics, service industries	- Identifies areas for process improvement - Reduces lead times - Enhances overall efficiency	- Can be complex and time-consuming - Requires detailed data collection
PDCA Cycle	A four-step continuous improvement model: Plan, Do, Check, Act.	Any industry seeking ongoing improvements	- Encourages problem-solving - Ensures continuous improvement - Works in all business areas	- Can be slow to show results - Needs commitment for sustained impact

What are the 5 Main Principles of Lean Management?

There are five main principles of lean management: which is to identify customer values, map the value chain, create a continuous flow, establish a pull-based system, and to pursue continuous improvement.

Here’s a breakdown of the five main principles of lean management:

1. Identify Value

As we’ve already established, this first principle of lean management focuses on the product and service the business provides to its customers – and how it can adjust the product or service it offers to better fit the needs of their consumers.

This helps businesses to determine where their workflow and business processes can be improved.

2. Map the Value Chain

This is when companies will then adjust the workflow of their business to improve upon product or service value.

As a result, this will include reviewing all of the areas of the development of a product or service – from the various suppliers, stakeholders, and transportation services used to deliver the end product to the customer.

In lean management, companies will determine which steps and processes can be deemed as no longer necessary.

3. Create a Continuous Workflow

Once your company’s value chain has been assessed, it will then be necessary to adjust each team’s workflow – which can be done by breaking down larger tasks into smaller ones to aid in the transition to improved workflow.

4. Establish a Pull System

Ensuring that an effective pull system is intact can help your business to guarantee it continues to value its customers and map its value stream accordingly.

As a whole, employing a pull system will help companies to provide the customer-focused products and services they are striving to – as depicted in the first principle of lean management.

5. Continuous Improvement

One the first four principles have been implemented, your company is now operating under a lean management system – but the fifth and perhaps most crucial element of a lean management system is striving for continuous improvement.

This includes holding periodic meetings with your staff to ensure all of the essential components to ensure lean management remains intact, or even something simpler such as offering a “suggestion box” for employees to share new ways to keep optimising business practices.

Overall, the principles of lean management help a company to improve upon its current business model and ensure continuous consistency and customer satisfaction – all of which can help a business to achieve long-term growth and sustainability.

What are the benefits of lean management?

There are several benefits of lean management, such as greater efficiency, cost reduction, improved team management, and better quality products.

Lean management allows for faster workflows, fewer delays, reduced operational costs, and dedication to improving products and processes for increased customer satisfaction and employee productivity.

Here are some of the additional benefits of lean management:

Improved Concentration for Managers & Staff – Lean management allows for waste reduction and eliminating tedious steps or processes, which will help your employees and managers to stay better focused.
Boost Productivity – When employees feel more engaged and a part of developing the solution to make producing a product more efficient, they will inherently feel more productive and willing to contribute.
Improved Resource Use – Since lean management encourages only producing what’s necessary, your company will learn to only make use of what it needs – and also help to avoid waste.

Ultimately, the principles of lean management will allow for a long-term sustainable production process and will also benefit your employees and customers.

How can your company implement lean management?

It may be intimidating to employ a method as seemingly complex as lean management, but the truth is – lean management can be incorporated into via small, but effective steps.

Remember, implementing lean management with manageable steps helps to ensure that all of your employees will be committed to long-term, continuous improvement.

Steps to Get Started with Lean Management

Adopt a Customer Value Mindset – Try to redesign your company to make its main focus on delivering the best products and services to your customers. After all, they are one of the most important facets of financial success in your business.
Map Your Value Stream – Make an effort to analyze your current processes and determine potential inefficiencies.
Eliminate Non-Essential Steps & Processes – Reduce the need for non-value-adding activities such as long waiting times or excess inventory.
Develop a Pull System – Don’t let your company be subject to the current crisis of excess consumerism, and make a genuine effort to only produce what is necessary.
Standardise Workflows – Establishing clear, standardised processes can help to ensure consistent product and service quality.
Strive Towards Continuous Improvement – Promoting a work culture where employees are able to share their ideas for new improvements can help to foster a positive and productive environment under lean management.
Utilise Lean Management Tools – Making use of methods and tools such as 5S, Kanban, and Value Stream Mapping can help your company to continue adhering to lean management principles.

Overall, by following these steps – your businesses can create a more efficient, cost-effective, and adaptable work environment, where its management will fall under the umbrella of lean management.

It may seem overwhelming, but remember – starting small and engaging your team members are integral to success, and you’ll always have third-party companies like Greenly here to help you implement tactics like lean management and other sustainable initiatives along the way.

What About Greenly?

If reading this article about lean management has inspired you to consider your company’s own carbon footprint, Greenly can help.

At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance on how to reduce emissions, optimise energy efficiency, and more to help you get started on your climate journey.

Learn more about Greenly’s carbon management platform here.