Even small companies can trim the fat with 'Lean' initiatives
Scott Clark
It is difficult to read business success stories today and not see the terms "Lean manufacturing," "Lean re-engineering," or "Lean thinking." These Lean initiatives had their start in large manufacturing corporations and were focused on assembly lines.
Subsequently, other corporations adopted these principles for non-manufacturing environments because their processes and policies had caused them to become mired in inefficiencies that significantly increased their overhead costs. These corporations used Lean thinking to wring out unnecessary costs and transform themselves into fast, efficient and customer-focused businesses.
In today's highly competitive environment, even smaller companies can use Lean thinking principles to become more agile and productive. Here are three fundamental Lean concepts you can apply in your business to get you started.
Work
In the world of Lean, when you move paperwork or products in your business and in the
process add value to it, this is defined as work. When you move these items and do not add value, this is called waste. Both work and waste add cost, but the cost added by waste is usually unnecessary.
Based on a limited study of 120 businesses, when the average employee puts in 100 hours on the job, only 5 percent is work; the other 95 percent is spent on moving, waiting, searching or redundant actions, all activities that fall under the broad category of waste.
Customers are willing to pay for work but not for waste; therefore, to remain competitive, businesses should maximize work and minimize waste. You can start your own analysis by evaluating your basic office processes step by step. Involve some of your employees in the process.
Analyze each step of each process to determine where waste occurs and how it can be eliminated. Can steps involving waste be combined, performed in a different order, or eliminated?
Hard decisions need to be made, and some employees may consider certain wasteful steps to be essential, which is why you need a cross-functional team to review the steps and then develop a team consensus regarding how to best eliminate waste in your processes.
Once your team has completed its analysis, implement the recommendations immediately. When you do this there will initially be a short period of regression, because you are changing from a wasteful, but familiar flow, to a streamlined, more efficient flow, and changes always require time to adapt.
Within Lean, the analysis process is never complete. Within a year, have another team analyze this new flow. Chances are that after the initial waste has been eliminated, this team will come up with additional ways to lean-down the process.
Visual control
When just one or two people know where things such as tools, manuals, job orders and purchase orders belong, this can be a recipe for disaster. Companies committed to Lean have a place for everything so that every worker in the area knows when something is out of place.
By keeping all material in its proper place, waste is minimized because employees need not spend valuable time looking for a needed item; they know where it is and they can secure it rapidly. Visual control also uses color codes or placement to allow employees through these visual cues to assess the current status of an item.
For example, if a special order is in-process, visual cues allow employees to see its current status.
Flow
To understand the concept on flow in the Lean environment, envision a mountain stream meandering down the mountain from top to bottom in a straight line. The water delivered at the bottom of the mountain is maximized in terms of the volume of water delivered and the time it took to get there. Thus the flow is predictable and maximized.
Now envision a typical mountain stream with many sharp curves, boulders, tree roots, beaver dams and sandbars, periodically slowing the current and creating many stagnant pools and eddies. Now the flow rate at the bottom is constantly changing, unpredictable and considerably diminished.
If we envision the flow in your business (for example the process of a customer making a purchase, or an employee placing an inventory order, or a product being fabricated), there are probably a number of stagnant pools and eddies. These equate to waste, increased cost and decreased customer satisfaction.
Some of the ways Lean thinking can resolve these issues include:
Co-locating employees who have functional responsibility for sequential steps in a process
Decreasing inventory and batch sizes so flow is continuous rather than sporadic
Focusing on higher quality at the source rather than quick problem identification or quality issue detection later in the process
Using multi-skilled work teams rather than a series of employees each with a single skill
You should focus on these three inter-related concepts to launch your company's Lean journey.
Scott Clark is a Cedar Rapids, Iowa-based columnist. He can be reached by e-mail at mail@saclark.com.© 2005 American City Business Journals Inc.
© 2005 American City Business Journals Inc.
