James Womack and Daniel T. Jones wrote this essential management book in 1996. They define lean way of thinking as something that allows companies to “specify value, line up value-creating actions in the best sequence, conduct these activities without interruption whenever someone requests them, and perform them more and more effectively."

The five principles of lean thinking:
1. Value: “capability provided to customer at the right time at an appropriate price, as defined in each case by the customer.

2. Value Stream: the set of all the “specific activities required to design, order, and provide a specific product, from concept to launch, order to delivery, and raw materials into the hands of the customer.
To create a value stream, describe what happens to a product at each step in its production, from design to order to raw material to delivery.
There are three types of activities in the value stream – one kind adds value, and the other two are “muda” (the Japanese word for waste):

Value-Added: Those activties that unambiguously create value.

Type One Muda: Activities that create no value but seem to be unavoidable with current technologies or production assets.

Type Two Muda: Activities that create no value and are immediately avoidable.

Some examples of muda are mistakes which require rectification, groups of people in a downstream activity waiting on an upstream activity, or goods which don’t meet the needs of the customer.

3. Flow: “progressive achievement of tasks along the value stream
So that a product proceeds from design to launch, order to delivery and raw materials into the hands of the customer with no stoppages, scrap or backflows. ” This translates as a directive to abandon the traditional batch-and-queue mode of thinking that seems commonsense to most. Ways to foster flow include enabling quick changes of tools in manufacturing, as well as right-sizing machines and locating sequential steps adjacent to one another.

4. Pull: a “system of cascading production
and delivery instructions from downstream to upstream in which nothing is produced by the upstream supplier until the downstream customer signals a need.6 ” This is in contrast with pushing products through a system, which is unresponsive to the customer and results in unnecessary inventory buildup.

5. Perfection: The “complete elimination of muda so that all activities along a value stream create value. ” This fifth principle makes the pursuit of lean a never-ending process, as there will always be activities that are considered muda in the value stream and the complete elimination of muda is more of a desired end-state that a truly achievable goal.

Waste: Any activity that absorbs resources but doesn’t create value.
Types of waste: Mistakes that require rectifying.
- Production of items that nobody wants.
- Processing steps that aren’t needed.
- Movement of employees & transport of goods without any purpose.
- People waiting downstream because an upstream activity has not delivered on time.
- Goods and services that don’t speak to the needs of the customer

[From the Great Books  Series. Also see The Success Manual  - Encyclopedia of Advice, which contains summaries of 100+ Most useful books.]