It’s hard to believe in this day and age how many businesses still choose not to take advantage of the benefits of adopting a Lean culture.
As a business owner or officer, you are free, of course, to make a decision not to implement Lean – after all it’s your company. Maybe you’re already making more money than you can count, customers can only buy from you, and your workforce is engaged and stable. If that’s the case, you can surely ignore Lean. On the other hand, if that isn’t your company, not implementing Lean can leave you with a competitive disadvantage. While you sit still, your competitors are moving forward, always seeking new ways to eat your lunch.
What is Lean? In a nutshell it is a mindset to maximize customer value while minimizing wastes. It’s a mindset, not a one & done event. It is always being mindful of sources of waste that are taking away from increasing value delivery to the customer.
Most people have heard of Lean Manufacturing but Lean applies to many other areas within the business. There are disciplines of Lean Design, Lean Accounting, Lean Supply Chain, and Lean Construction to name a few. While they are functionally specific to their respective areas, they are all common in the relentless pursuit of wastes elimination.
What Wastes? There are 8, identified by the acronym DOWNTIME: Defects, Overproduction, Waiting, Non-utilized talent, Transportation, Inventory, Motion, Extra-processing. A brief explanation of each may be helpful.
Defects – a part or process that doesn’t meet customer expectations. If you rework it, you incur the cost twice.
Overproduction – making or doing more than is needed. If you can’t ship it, you build inventory and tie up cash.
Waiting – time spent waiting for the next step in the process. Increases required floor space, increasing rent and utility costs.
Non-utilized talent – not fully using people’s skills, talents or knowledge. Increased risk of employee turnover results in recurring training costs.
Transportation – unnecessary movement of products and materials. This cost adds no value to the customer, and the customer doesn’t want to pay for this.
Inventory – excess materials not being processed. Ties up cash.
Motion – unnecessary movement of people. Cost that is not adding customer value.
Extra-processing – more work than is required to meet expectations. And again, cost not adding customer value and the customer doesn’t want to pay for this.
Every business has some of these wastes. The ability to see, reduce or eliminate them is a learnable skill. Each area of improvement can deliver additional value to your customers, e.g. shorter lead times, lower price (if you choose), and lower customer inventories (positively impacts their cash flow).
Your business also benefits in multiple ways, e.g. lower inventories (frees your cash flow), reduced costs, improved margins, happy customers, and an engaged workforce.
Progressive companies have embraced Lean to help their business grow. Like Quality systems, Lean is no longer an option if you want to remain competitive.
In a future blog I will talk about Lean Design. This discipline may hold the potential for your company to develop a truly unique competitive advantage.
GLTAAC clients often use their TAAF matching funds to implement Lean practices. You can find some success stories here:
- Yoder Lumber – increased capacity due to improved efficiencies
- Bay Motor – embraced Lean for production and the front office
- Champion Bus – where Lean increased productivity and employee involvement
If you want to learn more about implementing a Lean discipline, please feel free to contact the Great Lakes Trade Adjustment Center or visit the web site at www.gltacc.org.
Everything in its place – sorting is part of 5S, a Lean manufacturing tool. (Image: “Ford Rouge Factory Tour” by Nicole Yeary is licensed under CC BY 2.0 / cropped from the original.)
Suggested readings:
Lean Thinking, James Womack
The Goal, Eliyahu Goldratt
All I Need to Know About Manufacturing I Learned in Joe’s Garage, William Miller
2 Second Lean, Paul Akers
