A lean New Year
Magazine Article, Source : The Manufacturer US
Published : 09 Jan 2006 20:37
Anand Sharma traces the phases of lean from the transactional, through transformational, to transitional
If you look back on the news of last year, a few companies were repeatedly cited for their stellar performances. Toyota’s lean culture had magazines like Business Week and Fortune touting the company and its customer connectivity as a model for success. The New York Post noted that Toyota’s growth is largely based on the fact that they give customers what they want.
A second lean company that has received its share of recognition is Dell. The computer manufacturer grew its US market share from five percent in 1994 to 33 percent in 2004—phenomenal growth, even in a growth industry.
Both Toyota’s and Dell’s vision includes demand shaping, as well as a lean supply chain and innovation in channel development. Toyota places customers first, and continues to innovate with products like the Prius. It also plans to hybridize its other models, and reinvests in itself with construction of new plants across the world. Dell relies on strong customer relationships and a culture that thrives on change.
Going forward, neither of these companies, nor any other successful lean company for that matter, will simply rest on its laurels and expect to continue to reap the rewards of this year’s lean transformation. Lean is as much the future as the past and present, and even the best of the best find ways to keep improving—so much so that the energy of the lean culture is spreading across other industry silos with quite unexpected velocity.
When the early versions of lean broke onto the manufacturing scene at the turn of last century, the main goal for most companies was to manufacture products more efficiently. The lean journey was at the transactional stage. In the 1990s, lean companies began to transform themselves from efficient manufacturers to market leaders. Now, in the first decade of the 21st century lean is becoming transitional, migrating from manufacturing to the service sector. During this transitional phase, emphasis will be on agility, value innovation, responsiveness, and delivering value across a complex and hugely customer-centric global landscape.
A core element of this transitional period will be mutually assured information chains. Lean service companies will begin to create competitive teaming and synchronous productivity as a hedge against risk and unknowns.
Why are these changes taking place? Simply because the market has changed. At the turn of the 20th century, business involved focused centers of consumption and production. Technology was proliferating. A supply economy prevailed, resources were plentiful, and consumers were grateful for the products. The future was predictable and competition was limited.
Today’s market features disparate centers of consumption and production; a proliferation of knowledge (via the Internet); market leaders who are lean, agile and innovative; a demand economy; limited resources, and impatient consumers. Consumers also place greater emphasis on the buying experience rather than on just the quality of the product. On top of that, the future is full of risk, and competitors are emerging every day!
As the migration to the service sector gains momentum, lean’s advantage as a business system will gain greater transparency and acceptance as lean service companies begin to dominate their markets. Other companies will follow their lead, and Wall Street will reward their courage. As these companies emerge, don’t expect Toyota and Dell to leave the picture—they will continue to dominate their markets thanks to their commitment to a culture of continuous improvement. In this New Year, smart companies will make going lean their number-one resolution and lean companies will keep getting better.
