Part 1

Well, once you’ve laid out the foundations for a Lean culture, it’s time for you to start improving your operations! Are you ready to go down the Lean road?

In Lean, the first and most crucial step of any change is planning.

Why? Because if you rush in this step and fail to conduct slow and thorough planning, you will end up taking a long time to solve the problems you are trying to solve.

Why? Because during the implementation step, you’ll probably face many roadblocks that could have been forecasted during the planning phase. These unforeseen challenges will require many adjustments, extending the Check and Act phases.


As  highlighted by the thirteenth principle of the Toyota Way, planning decisions is vital:

“Make decisions slowly by consensus, thoroughly considering all options and implement them rapidly.”

So, in this section of the guide, we’ll make sure you are best prepared to carry out this planning thoroughly and ready to implement it.

Here’s what you’ll learn:

  1. Understand the challenge and state the problem
  2. Map the current state of a process
  3. Analyze the problem’s root causes
  4. Establish a target state
  5. Design a plan to close this gap


Before we dig into stating your problem, let’s understand what “problem” means in Lean. Keep in mind that problems should always be seen as opportunities to improve your processes and services. In Lean, no problem is a problem!

A problem can simply
be defined as:

  1. A deviation from a standard
  2. A gap between the actual and the desired condition

Taking it a bit further, according to Art Smalley, Lean expert and one of the first Americans to work at Toyota, problems can be classified into 4 types:


1. Troubleshooting:
a quick and palliative measure

A reactive process of rapidly fixing abnormal conditions by returning things to familiar standards, without really solving its root causes. For example, an Andon in a factory, or a ticket opened to a support team that needs a fast solution.

2. Gap-from-standard: 
when the standard is not achieved

For example, if your target is to have 90% customer satisfaction, and you are experiencing a quarter of 82% customer satisfaction, your current performance doesn’t meet the standard or the goal, generating an execution gap.

3. Target-state: when the standard is achieved,
but a higher standard is now required

For example, a procurement department is currently performing at 100% on time processed purchase requests under an SLA of two weeks. However, looking for efficiency, the company decided to reduce the SLA to one week while still maintaining 100% on-time delivery.

4. Open-ended and innovation oriented: 
when the future state is not known

This type of problem is based on creativity, synthesis and opportunity. It looks for new problems, solutions and opportunities previously unidentified. It often achieves radical improvements translated into new products, processes, systems or values for the customer.


To help you get there, ask yourself:

  • Where do we want to be?
  • What is preventing us from getting there?
  • How can we be more competitive?
  • What is our next breakthrough? optimize performance?

The answers generally are around:

  • Improving productivity
  • Reducing delivery times
  • Eliminating project delays
  • Increasing profit
  • Increasing customer
  • Improving quality


Could you picture your problem or gap? Right now it is probably broad and vague, right? Don’t worry. What we will do now is to break it down into smaller and more tangible problems.

There are many ways to do this, but an excellent way to start is to ask questions such as:

  • What is the problem?
  • Where is it happening?
  • When does it occur?
  • Who is being impacted?

* Don’t ask why or jump towards causes or solutions yet. We will get there in the next sections.

By doing this, you’ll find that a given problem can be stratified into other minor problems. Repeat the questions, and you’ll be able to break the process into more manageable pieces and efficiently move forward by focusing on key issues.



Now that you have more manageable and concrete problems, your next step is to prioritize them, understanding what should be attacked first, second, and so on.

 What criteria should you follow in this step? 


  1. How long has this problem been happening?
  2. What is it impacting?


  1. Whom does it affect?
  2. Does it impact your key metrics?


  1. What happens if you ignore this problem?
  2. Does it stay the same or get worse?

A Lean tool that can help you make all of this visual and your decision-making process more efficient is the Pareto Analysis:

Pareto Analysis

The Pareto Analysis is a decision-making methodology that helps you narrow down the factors that produce the most significant effects in a given operation. Use this tool to help you focus on what matters!

Here’s how you use it:

  1. List all the minor and broken-down problems
  2. Select two variables related to your big problem and common to all the minor problems
  3. Plot the Pareto Chart using this variables and problems
  4. Start with the problems that generate the highest impact

For example, let’s suppose that Acme, Inc. determined their biggest problem was “Increase Customer Satisfaction.” They broke this problem into different product complaint categories. When plotting the graph, they used the complaint categories, the volume of each registered complaint in the last year and the percentage representation of each one. With this, they produced the following graph:


In this example, we notice that the vast majority of the complaints (80%) at Acme were generated by only two types, P1 and P2. This helped them focus on what was important, since all the other complaints (P3, P4, P5 and P4) represented only 20% of the total. Thus, they could be solved later.

Keep in mind

Start with the problems that generate the highest impact, affect your KPIs and will get worse if you don’t act soon.


Now that you’ve prioritized your problems and know where to start, you must state your problem. Writing a strong problem statement is an extremely important part of your Lean journey since it’ll guide your team throughout the whole process improvement cycle.

When writing a problem statement, make sure they follow these guidelines:


  • Be focused on the current situation while clearly identifying the gap
  • Be measurable and clear. Get to the numbers, “a lot” or “not enough” is not sufficient
  • Be factual, within scope and make it short – ideally one sentence long


  • Don’t contain a cause or a suspected cause
  • Don’t include a solution

Go ahead now and put your problem statement on the first box of your A3 template: Problem Statement.


“You can’t hit a target if you don’t know what it is.”

To know your target, you must first know where you stand. So, now that you know what problem you are attacking first, it’s time for you to dig deeper and carefully understand its current state.

To grasp your current condition and follow these steps:

  • Share responsibility: it’s essential that you delegate tasks. This is an opportunity for the people in your team to improve their problem-solving skills
  • Go and see: get to the Gemba, the place where things happen, and make sure you thoroughly capture the current state with your own eyes
  • Listen to your customer: make sure you listen to the impacted people and understand the problem from their perspectives
  • Describe the operation: huddle up with your team and briefly describe the main processes and steps
  • Make it visual: remember, Lean is about visual management.  To understand a problem, you must see it. The Value Stream Mapping can provide you a clear picture of where the improvement opportunities are in your operation
  • Be data-driven: data provides you a legitimate image of your current state, as well as a baseline for you to project your target and make sure you are progressing

CASE: Purchase Process at Acme

Context: Acme was looking to improve internal efficiency, so they rolled out a Lean Office initiative. The company mapped out many improvements that could be made at its back-office operations and prioritized them using the importance-urgency-aggravation criteria. They decided to start with the procurement department, focusing first on the purchase process. This process was consuming a lot of time and wasn’t delivering good results, compromising customer satisfaction.

Problem Statement: For the past six months, the lead time of the purchase process went up 50% (from 6 to 9 days), leading us to miss our yearly customer satisfaction goal.

Process description: Currently, the purchase process starts with a requester, from any business area, filling up a request in a  spreadsheet and submitting it to the finance team via email. The request goes through a budget analysis and a set of reviews and approvals with the team leader and general manager via email. When approved, an analyst entries the request information on the ERP, which then goes through another approval by the purchasing team, and finally, the Purchase Order is issued to the supplier.

Process mapping: Utilizing Value Stream Mapping, the description became more visual and understandable.

Adding data: collecting data makes it possible to see where are our main bottlenecks, points of causes and improvement opportunities. In this case, we used metrics that were key indicators for Acme.

Acme’s Key Metrics

Cycle Time: value-added time spent in a given process.

Lead Time: total time spent to actually deliver value to the customer.

Percent C&A: % of processes completed and accurate – done right the first time.

After collecting the data, add it to the Value Stream Map:


With that, Acme was able to have their key indicators: Total Lead Time, Total Cycle Time, being able to calculate the Efficiency Rate of the process – cycle time/lead time or total output/total input – at a process and step level.

Key metrics overview.

Keep in mind

Total Lead Time: 9 days
Total Cycle Time: 120 min
%C&A: 0,5%

When it comes to data, bear in mind:

  • Standardize metrics: how you measure something is as important as what you measure. Make sure you are collecting and calculating data accurately and consistently
  • Make metrics easy to read: make data accessible to people who need it and understand your audience before reporting it
  • Make metrics visual: turn data into information. Make it easy to understand!

Through a thorough analysis, Acme will be able to find leading indicators, or points of causes of problems their operation is facing. Remember when you were breaking down your problem and we told you not to jump toward causes yet? Well, now is the time to jump. Our next step is to dig deeper on the problem and find their root causes, leading us to our next section.

Before you go, don’t forget to fill out the Current State box of your A3 template: Problem Statement.