LEAN FOR BUSINESS: What? Why? How?
What is LEAN?
The sole purpose of a lean methodology is to increase the value for the customer while decreasing waste or cost within your company.
To achieve this, companies will adjust the way their workforce, processes, management, systems, procedures, and even how they fulfill orders or services to maximize efficiency.
The goal is to eliminate erroneous waste (or unnecessary obstacles that hinder the workflow) from the organization on a horizontal scale. Meaning, there is no one focal point when implementing lean in a business.
Every aspect of the organization—including the people—are evaluated to enhance their effectiveness. A lean business enables you to adjust to the needs and trends of the customer with speed and low cost.
In his book 2 Seconds Lean (Link to the free PDF version on Paul’s website) author Paul Akers explains that there are 8 wastes that plague every company:
- Excess Inventory
- Wasted Motion
- Waiting Time
- Unused Employee Genius
Here is a gross screenshot of Paul’s book. You will find it page 25:
At the heart of lean is a simpler and more efficient business model cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.
Main concepts of LEAN
There are twelve key concepts for lean.
- Cellular Manufacturing — A method of grouping equipment or processes to reduce cycle time to meet market needs.
- Takt Time — This represents the average time a business must produce a product or service to fulfill a customer’s needs and expectations. Here is an image from lean.org that illustrates it:
- Standardized Work — A documented approach to fulfill the Takt time requirements.
- One-Piece Flow (Continuous Flow) — A process of fulfillment that reduces batch size to produce products or services one-value at a time.
- Pull Systems (Kanban) — A process where a customer lets the business know what they want and then the business produces it as it’s needed. Print-On-Demand publishing is an example of this.
- Five Why’s — A way of thinking to ask “why” until the team or business is able to determine the best course of action and solve a problem.
- Quick Changeover (SMED) — Three-stage method to reduce the time when equipment or person are being rotated or changed. It keeps the process flowing smoothly with little delay.
- Mistake Proofing — A design within the production stage that safeguards human error from occurring.
- Leveling the Workload — A process of streamlining and building workload or process over time to ensure the workload is evenly distributed, regardless of the customer variables.
- Total Productive Maintenance (TPM) — A system to improve equipment effectiveness and boost morale.
- Five S’s — According to Manufacturing Success, this methodology is a “process is based on improving production as well as enhancing quality of work and decreasing the frequency of workplace accidents”. What is 5s?
- Problem Solving (PDCA or PDSA cycles) — Different cycles to determine the root cause of a problem and then fix it. The site Creative Safety Supply develops: “In many ways, the PDCA cycle is a great introduction to Lean manufacturing. Like all Lean methodologies, The PDCA cycle pushes production toward efficiency and strives to make processes better”.
History of LEAN
Henry Ford was arguably the first person to implement what he called a flow production. This enabled him to produce automobiles at a rapid rate and streamline the process. However, while Ford could pump out numerous cars every few days, his drawback was an inability of variety.
This bled over to another car manufacturer, Toyota, who tweaked the process and came up with their own process shortly after World War II, called the Toyota Production System.
Their basic approach shifted the focus from individual machines to the total flow of the process. They implemented new machines to monitor other machines that could make large volumes of parts but in a new assembly format.
This allowed Toyota to produce cars at low cost, but with high variety and quality, based on the customer’s desire. Toyota is still the leading example of lean today, implementing millions of changes each year to improve.
Since then, many business have been adopting this method to their own processes.
5 principles of LEAN for Lean Manufacturing
Based around Toyota’s Production System approach to cut waste, Womack and Jones highlight the five key principles to lean manufacturing.
- Value — Determines how much a customer is willing to pay for a certain good or service. Based on this, a business can determine how much it’ll cost to produce it and what the wastes might be, then work to reduce those to increase their profit share.
- Value Stream — The entire workflow of a product’s life-cycle. This begins with the materials to make a product or service and continues to the cost a customer’s use.
- Flow — A fully synchronized process where each component of production flows smoothly to the next and never stops.
- Pull — A process where a business waits for a need then fulfills it. A good example of this is POD in publishing. ERP works like this as well, but requires flexibility and an effective approach, systems, processes, and workflow in place to master.
- Perfection — The ongoing pursuit of continuous improvement that ensures a business maintains a lean environment with flexibility and a teachable spirit.
3 pillars of LEAN
The typical view of the three pillars of lean are Elimination of Waste + Continuous Improvement = Lean.
However, Paul Akers, author of 2 Second Lean, came up with a new approach (or perspective) for the three pillars. He believes that it’s more than elimination of waste or continuous improvement, but that the focus should be on the people.
Pillar 1 — Get people to “see the waste”
It’s one thing to eliminate waste, but if no one is trained or familiar with how to recognize waste when it rears its head, no one will know to deal with it.
He teaches people to understand what he calls “the eight wastes”. These include:
- Excess Inventory.
- Wasted Motion.
- Waiting Time.
- Wasted Potential.
Here is a concrete example of the 8 “Deadly Sins of Waste” in a fast food:
Pillar 2 — Continuous improvement for everything, everyone, and everyday
This aligns with the original understanding of Continuous Improvement but bleeds over into every facet of a business. This is done through making continuous small improvements over time.
Pillar 3 — Make “before and after videos of your improvements”
These videos do not need to be perfect and should not take up much of your time. The purpose of these “before and after” videos is so you can track your improvements and put them in a visual stream so you can see the actual change.
Why you should implement LEAN
If you’re in business then chances are you’re always looking for ways to improve your workflow, lower your margins, and increase your net revenue streams.
One way to achieve this is by merely tweaking your current process to optimize it. Oftentimes, organizations and businesses already have the necessary tools, people, and ability to increase their profit shares and increase output with less effort or cost.
The trick is in understanding and knowing how to tweak your business for higher efficiency. Lean gives you the blueprint to understand how to perceive your business, the workflow, the people, the technology, the customer, and more so you can adjust where necessary.
Whether you’re a small business or a multi-billion-dollar industry, you can benefit from lean. If someone walked up to you today and said, “I have a tool bag that will revolutionize your business. If you use the tools within this bag, you will increase your business’s profit share, reduce costs and time, and improve your systems, employees, and technologies effectiveness.” Would you take it?
That’s basically what lean is. It’s one of many great business models to incorporate into your business to enhance it. It’s not a prescriptive method. It molds to your needs, not the other way around.
There are many benefits to implementing lean in your business, we’ll touch on a few of the biggest ones.
- Frees up Space —As your business grows, you’ll require additional equipment, resources, or people to fulfill that growing demand. Now you’ll have the “space” (or capacity) to grow.
- Faster Product Creation & Service Delivery — Quicker turnaround times, while eliminating erroneous activities or procedures speeds up your process, which in turn, increases your profit share capability and reduces costs. Something that might have taken weeks can now be fulfilled in a few days.
- Customer “Pulls” the Product — This reduces your inventory stockpile in warehouses and allows for a smoother and more efficient ordering & fulfillment process. You create, fulfill, and ship the desired product or service when the customer wants it. This reduces costs, frees up space, saves time, and increases fulfillment orders.
- Better Product Quality — Another term commonly used for increased quality is “Six Sigma”. This is merely a statistical method to enable quality to fall within a limited defect range of 4ppm produced pieces or less. When you create-upon-order, you’re able to ensure better quality, while also delivering it quicker.
- Enhanced (perfect) Order Rate — Having a perfect (flawless) order rate is what every business is after. When you create or produce a product or service when the customer asks for it, you’re able to deliver it on-time, every time.
- Multi-Skilled & Skilled Employees — Incorporating a skill workforce with multi-faceted abilities enables your business to run smoothly even when someone is out. This reduces bottlenecks in your production. This is broken into four categories:
Level 1 — Employee goes through training.
Level 2 — Employee requires minimum supervision to perform tasks.
Level 3 — Employee requires no supervision to perform tasks.
Level 4 — Employee can train others to perform tasks.
- Self-Managing Teams — This goes hand-in-hand with the levels above. If your workforce can self-manage, that frees up leadership for more important matters to increase the growth of the company. This reduces the necessity to micromanage and boosts morale and trust.
- Improved Focus — Everyone knows the mission, goals, or objectives of the company and is involved with the process.
- All Employee Skills Incorporated — The best businesses incorporate the skills, talents, experiences, and ideas of their employees. The best leaders surround themselves with people who are better, brighter, and more driven then they are. By utilizing your employees’ talents, skills, and passions you increase the quality of the work environment and enhance productivity and purpose.
How You Should Implement LEAN
A lean, effective, productive, and efficient business always starts at the top and works down. Leaders are the foundation of any organization. While people may see leaders, supervisors, and C-suite executives as the deciding factors and face of a company, they are not the tip of the pyramid, but the bottom.
A true leader walks by example and their employees will follow. By incorporating lean methodologies and principles into your own life—first—the people around you will follow you and learn from you.
The trick is not to point the finger at those around you or processes or production or systems and blame them for the problems or waste, but to point at “your own waste” and fix it first. As Paul Akers likes to say, “90% of our day is waste”. The trick is to removing that waste in our own lives so that we can lead by example.
The first step to a lean environment and business is with the leaders.
Culture follows what the leaders distill into its employees, processes, systems, framework, goals, missions, expectations, and even how they perceive themselves. Culture is directly linked to leadership.
The best way to implement a culture of lean is by living it out every day and seeking to improve on yourself. If each person maintains a teachable spirit and looks to improve their own processes and actions in life, the entire company will fulfill and stimulate an atmosphere of lean, which means productivity and waste management.
Here at ABIS, we believe there are best-practices to every situation in life. Why learn from your own mistakes when you can follow a proven path of success by others?
So for us, our best-practices revolve around learning, continuous tweaking, automating procedures and processes, and growing from the surplus of resources and knowledge all around us.
We can all learn from other businesses around us. As you implement a lean mindset into your daily routine, you’ll begin to see everything through the lens of “a simpler approach to solve problems”. That’s what we believe in here. Make life easier, not harder. And improve the quality of work, environment, and living through people.
ABIS ERP Software
ABIS offers consulting services to empower organizations and businesses to reach their full potential. We believe in giving and spreading the blessings to others. Just as Paul Akers says in his book 2 Second Lean, the primary purpose of lean is to give, not to take.
Over the years, we’ve grown substantially and have fostered a healthy atmosphere where employees and clients love to work. But that’s just one facet of our outlook and business strategy.
Our bread and butter is our ERP software. Just as LEAN teaches us to continue to improve and remove waste, we’ve created software that does both. Where LEAN incorporates the vision and principle of cutting the waste and getting better, our software does this on autopilot.
Read Also: What is an ERP Software?
If there was ever a better way to reduce waste, while simultaneously, improving it’s software. We’ll review your business model, pinpoint areas of waste and drawback, help you implement a strategy to remove them, and then improve your process through automation.
LEAN is whatever you make it. Why not call us today for a free consultation to see how ERP software can streamline your business, save you thousands of hours, and increase your margin? Take the first step to a LEAN enterprise and request a demo today.