How LEAN can help you save time and money (part 1)
You want your company to run efficiently—it’s every business owner’s ideal goal. (And in our work with clients, it’s a topic that frequently comes up!)
But efficiency is not always easy to achieve. Improving processes takes time, patience, know-how, and often some trial and error. It can seem like an overwhelming task, especially in the beginning, when you are trying to figure out where to start and how to proceed.
So, how do you go about streamlining your own company’s processes? One popular method is LEAN. So in today’s article, we’ll provide you with an overview of that approach and give you a few tips for using it in your own business.
What is LEAN?
LEAN is a process for providing increased value to customers. There are 2 main ways it does this.
It makes processes more efficient (thereby lowering costs, which can be passed on to the consumer; it also benefits consumers by bringing them products/services more quickly.)
It makes the product/service more relevant to the consumer (better design, minimized superfluous details, etc.)
The LEAN process was developed by Toyota in its early years (the 1950s). Eager to build cars that could compete with American models, Toyota invested heavily in learning as much as they could about what makes for tighter manufacturing processes and better quality products. (They even visited Ford’s assembly plant to learn what they could there.)
As Toyota’s success grew, others became interested in the manufacturing process they developed, and began adopting some of its features. LEAN is now being used in a wide variety of industries, including those that offer services as opposed to products.
The end goal of the LEAN process is to develop quality products that people want, at the lowest possible cost. But much of the buzz is on the latter aspect: lowering costs. To achieve that, all aspects of the entire manufacturing process are made as efficient as possible. This is largely achieved by eliminating any “waste” or wasteful activities (hence the name “lean”) and it’s what we will focus on in this article.
What does “waste” look like?
Waste comes in many forms. It’s not just about materials: it can be time, money, energy, or event talent.
LEAN identifies several areas where waste typically occurs.
Transportation – Excess or unnecessary transportation of products or people costs both time and money. An example is moving inventory from one storage location to another—is the move really necessary? Another example is having employees travel from one branch to another. Is the visit truly needed, or can the work be done by staying at one office location?
Motion – Whether it’s an employee or customer moving, there are often wasted minutes in every day. For example, an employee uses a certain tool several times a day, but that tool is stored in a corner 5 steps away. LEAN would suggest that having that tool handy at the work station where the employee only needs to reach for it, without walking, eliminates those wasteful 5 steps to the corner, and the 5 steps back. Another example: customers having to go to one desk to place an order, then walk to another desk to pick up their purchase.
Inventory – According to LEAN, too many products sitting in inventory is not efficient. Those items may not sell for months. The labour and resources put into making them could instead have been used for other aspects of the business that are more urgent. The LEAN approach would say: wait, and make products only when there are customers ready to purchase them. (A good example of that is publishing on-demand: a book isn’t printed until someone orders it). Having employees work on what is needed now, rather than what might be needed in the future, is considered a better strategy.
Waiting – Waiting comes in many forms. Customers wait in line, employees wait for computers to process information or for printers to print. Workers wait for the next item to roll onto the assembly line, or for answers to emails. People wait in traffic, or in line for lunch. Much of this waiting is considered waste by LEAN.
Overprocessing – The design aspect of LEAN focusses on attention to, or addition of, features that add value to the customer’s experience. But it also favours the elimination of features that don’t add value. For example, if you make smart phones, you may want to have various apps preloaded onto them. If these apps are seen as valuable by purchasers, great. But loading apps that aren’t wanted/used by purchaser is considered a waste of time and doesn’t add value to the consumer’s experience. It also costs the manufacturer extra money in resources and labour, which leads to higher costs for the consumer.
Errors – Every time an error occurs, it takes time, materials, and money to fix things. So LEAN puts emphasis on developing processes that help minimize errors. This may involve automation, double checking, quality control, or even simply having well thought-out, and ordered steps.
Employee Skill – Employees often have skills or knowledge that their company isn’t taking full advantage of. As a result, LEAN focusses on finding ways to make sure employees have opportunities to contribute knowledge and input into discussions and planning. They know their job inside out, and so are an ideal resource for identifying waste and recommending better processes.
How the LEAN process works
The LEAN process for identifying waste works something like this.
Some or all employees in a section gather together, with a LEAN facilitator, to map out, step by step, the entire production process they are involved in. They also list who is responsible for each step and how long each step typically takes. The process is typically drawn on a large canvas or whiteboard, with boxes and arrows to indicate direction of flow. This step can take hours or days, and may take place over several sessions.
Once the map is complete, it is carefully analyzed to see if there are any bottlenecks, repetitions, redundancies etc. Here’s an example of what that might look like.
A friend of mine once took part in a LEAN process. Several employees met once a week, with a LEAN facilitator, for a couple of hours to map out the section’s entire process flow. The main thing that soon became evident was that the same file crossed 3 different people’s desks, with a time delay between each. From the time the file was first created, to the time it was completed, was about 3 days. And if there was any problem, and the client called, that call was directed to a 4th person (a call centre agent) who had never handled the file at all and therefore had difficulty answering the client’s questions.
Even though all the employees technically already knew that the files were handled by several people, it wasn’t until they went through the LEAN process that it became obvious how much of a “waste” that approach was.
Summary
The end goal of LEAN is to deliver the greatest value to the customer. It does this largely by identifying and eliminating waste in all its forms. This ideally leads to the shortest possible production cycle and the maximum quality of product.
But LEAN also focusses on improving product design and involving employees in decisions. All in all, LEAN can lead to a number of benefits.
Improved efficiency
Cost savings
Higher quality products
Shorter production timelines
Increased employee engagement and ownership
More highly satisfied customers
Now that we’ve taken a look at what LEAN is, it’s time to talk about how you can use it in your own business.
We’ll help you do that in next week’s article, in which we’ll take you through an example so you can see how the LEAN process works in detail, and how you can implement it with your team.
See you then!
Tim
[ This article is intended as general information only and is not meant as professional advice. ]