How to determine if Lean practices will help your business

After 28 years of practicing Lean management, I have heard nearly all of the reasons why Lean will not work in a given business. Excuses such as “We are low volume, high mix,” “We are high volume, low mix,” “We are a custom shop,” “We are not manufacturing,” “We don’t make cars” and my favorite, “We are different.”

It is true that each business is different and the Lean approach needs to be customized to each individual company. In all of my years of experience, I have never run into a situation where Lean did not have the opportunity to drastically improve a company’s safety, quality, delivery, lead-time, cost, customer satisfaction, employee morale and shareholder value.

The origins of Lean rest with the work that was done at the Toyota Manufacturing Co. decades ago. Toyota got its inspiration from industrial leaders like Henry Ford, Fredrick Taylor, Shigeo Shingo, W. Edwards Deming and Joseph Juran to name a few. The key thought is that because each company is different, you cannot blindly adopt what works for Toyota or any other company for that matter. We have a saying: We don’t want you to become like Toyota, we want you to become “Toyota-like.”

Our favorite definition of Lean is as follows:

  • A mindset, a way of thinking with a commitment to achieve a totally waste-free operation that is focused on your customers’ success.
  • Lean is achieved by simplifying and continuously improving all processes and relationships in an environment of trust, respect and full employee involvement.
  • It is about people, simplicity, flow, visibility, partnerships and true value as perceived by the customer.

I would challenge anyone to name a business where this definition would not apply.

Some of the benefits that can be attained through the proper implementation of Lean are as follows:

  • Quality: A minimum of 50 percent improvement in quality defects per year
  • Delivery: 99 percent On-Time Delivery to Customer Request Date
  • Lead-time: Reduction in customer lead-time of 50 percent per year
  • Productivity: 15-20 percent improvement in productivity per year
  • Inventory: Double digit inventory turns within the first two years
  • Significant improvement in market share as a result of better service and quality

There are other benefits as well, such as a drastic improvement in employee morale as they become more involved in designing and improving the work processes in which they operate on a day-to-day basis. Customer satisfaction greatly improves as your quality and lead-times improve. Finally, the shareholder sees the benefit through higher quality earnings and a solid balance sheet.

In the final analysis, any business has the potential to prosper from Lean. I have never seen a situation where Lean would not have a significant impact. In order to realize the full benefits of Lean, Leadership needs to be fully committed and resist the tendency to revert to traditional management practices. Remember the old Chinese proverb: “The fish rots from the head” and this is certainly the case with failed Lean transformations.

Mark DeLuzio is a thought leader in the lean industry and CEO of Lean Horizons. His many lean innovations include designing and implementing the first lean accounting system in the United States; value stream mapping for information; pioneering the linkage of strategy deployment to policy deployment; waste mapping; and the Lean Horizons Sustainability System. For more information please visit www.markdeluzio.com or contact Mark at [email protected]. His book “Turn Waste Into Wealth: How To Find Cash in Every Corner Of The Company” is available on Amazon and at all major booksellers.