What Is Lean
Run a business?
I bet you have a lot of priorities.
You have aims.
You have goals.
And you probably have a strategy to match.
But we can all agree there are two things you really want:
To make your customer happy
To limit the amount you spend trying to do that
It sounds straightforward.
You know that it isn’t.
Increasing sales and lowering costs is a conundrum many have yet to solve.
However, there is a solution.
It’s called ‘lean thinking’.
Lean thinking was created by manufacturers.
But any process, department and organisation can apply it.
In fact, our last client to use lean thinking wasn’t in manufacturing.
Not even close!
They were a retail firm based in Edinburgh.
They had set up an eCommerce store to keep up with shifting demand.
But they stumbled across a problem: they were struggling to compete.
Their competitors were streaks beyond them.
They were fulfilling orders twice as fast.
So, their customers were switching!
They knew they needed to speed up their processes and improve their customer value.
“Have you ever heard of the 8 wastes?”
We were able to map out their processes in a process workshop and detected two wastes:
Overproduction and defects.
All we had to do was talk them through the principles of lean thinking…
And they were off.
Three months after implementing the lean thinking mindset, we had saved them $7,000.
Do you want to cut costs?
Do you want to streamline business processes?
Do you want higher customer satisfaction?
Then keep reading.
I’m going to go through what lean thinking is, whether your business needs it and how to apply it to your operations.
Talk to the Automation Experts!
What Is ‘Lean’?
Where Does Lean Thinking Come From?
The Benefits Of Making Your Business Lean
3 Case Studies Of Successful Lean Thinking
3 Different Ways To Make Your Business Lean
How To Lead A Lean Business
Let’s start with some definitions.
‘Lean’ is a customer-focused methodology used to improve processes by eliminating waste.
Lean organisations focus on increasing customer value in their key processes.
“What is customer value?”
It is what a product or service is worth to a customer.
Transform the product or service
Be worth them paying for it
Be done correctly the first time
It will also optimise these processes to hack back at waste.
‘Lean thinking’ is a much broader outlook.
It is a framework for change that provides a new way of organising human activities.
It delivers more benefits to society and value to individuals whilst eliminating waste.
Lean thinking changes the management’s focus.
It makes them focus on optimising the flow of their value streams.
Therefore, processes require less human effort, less space, less time and less capital.
That means you save time, money and have fewer defects.
It also allows a business to respond to changing customer demand quicker.
Remember that eCommerce business I mentioned?
Well, they can now shift with consumer trends without missing a beat.
And this has in turn created an in-house culture of continuous improvement.
From interns to executives, the entire team mucks in with new ideas!
The aim of lean thinking is to create a culture that aligns customer and employee satisfaction but minimises costs.
It’s all about introducing lean thinking to the entire organisation.
That way, every employee is trained in identifying waste...
And then eliminating it.
Lean businesses are defined by several core principles:
Focus on delivering value to the customer
Respect and engage people
Improve the value stream by eliminating waste
Pull through the system
Aim for perfection
These are the 3 types of waste lean thinking aims to cut out:
Waste due to variation
Waste due to overburdening employees and systems
And the 7 forms of waste (for example, unnecessary transportation, defects, and extra processing)
Lean businesses originate from lean thinking.
It’s when the ideology of cutting waste is put into practice.
But what’s the history of lean thinking?
It started with a man called Henry Ford.
You’ve probably heard of him.
(He started a pretty successful car company.)
In 1913, he created something called ‘flow production’.
He created a moving assembly line.
This process sequence meant components would be assembled within minutes from sub-assembly to final assembly.
But Ford had a problem.
His customers wanted variety. He could only produce Model T’s.
They wanted different styles, features and colours.
So, Ford’s competitors stepped up to the plate.
They didn’t just satisfy the consumer’s widening demand.
They could do it with bigger, better and faster machinery that automated processes.
It also meant the cost of producing the cars was dropping over time.
This is when Toyota stepped in.
Toyota is pretty famous amongst efficiency-buffs.
In fact, their adoption of Kaizen was revolutionary!
So revolutionary, it created a new way of working.
James P Womack and Daniel T Jones coined the term ‘lean thinking’ whilst studying the Toyota Production System.
They were fascinated by how it transformed from a bankrupt car manufacturer into one of the biggest on the planet.
Toyota had a knack for taking over new markets with rather unexciting products.
But they were all produced at low costs.
And they didn’t follow typically management styles, either.
How did they do it?
Well, in 1930, the executives at Toyota revisited Ford’s original thinking.
They thought they could provide both continuity in process flow whilst meeting the diverse needs of the consumer.
They used this to draw up the Toyota Production System.
In their operations, they had a unique structure split into elders and coordinators.
Their aim was to train people to develop their reasoning abilities instead of just making them do their jobs.
The training emphasised line managers look at their jobs in different ways.
They encouraged them to look at work conditions in practice instead of reading reports.
Their employees were real people making real value.
They made them understand that customer satisfaction can be built into a product at every stage of the business process.
They helped them calculate the ‘takt’ rhythm - the ratio of open production time to average customer demand to generate a healthy flow of products.
They guided them to reduce batch size and therefore limit the need for warehouses and transport etc.
They showed them how to introduce kaizen to their entire workforce.
Toyota knew what they were doing.
Why do you think they’re still a household name?
Why do you think they’re worth $18bn?
Aren’t they obvious?
You cut back waste.
The stuff that eats away at your revenue.
And you boost sales.
The stuff that increases your revenue.
It’s simple math!
But there are some advantages you probably didn’t know about:
Better customer service
Better goods quality
Better company culture
#1 - It lowers your costs
Who doesn’t want to maximise their profits?
Firstly, it speeds up your operations.
Secondly, it limits your spending on time-wasting or correcting defects.
The subsequent surge in profits for lean businesses is an unrivaled advantage.
So much so, this is one of the main ways we advertise lean thinking.
3 months back we were in talks with a marketing agency.
They were strategising how best to pull out of the COVID-19 economic recovery.
Their customer demand was starting to increase but this was putting pressure on their systems.
That meant mistakes were being made.
On one occasion, one of their clients got the wrong advertising copy and videos sent to them.
Someone had screwed up the deadlines and muddled the briefs!
They lost two clients in one day.
Here’s what we did:
We created an automation tool that their clients and staff could directly login to.
They could communicate through here.
Briefs, content and messages could be found in one succinct place.
No more chasing up email threads or missing important information.
It streamlined core processes and cut away at defects.
Not bad, right?
Within 3 months they’d reported a steep hike in profits.
Like, a 23% increase in profits!
#2 - Improved customer relations
Do you produce goods for a lower price faster?
If so, your customers are going to be happy.
Lean businesses are always driven by the customer’s point of view.
It’s all about moving with their changing demand.
By introducing lean management across your entire staff, you can be sure the customer is in mind from production to sale.
Plus, you’ll start to see customer service improve, too.
But cutting out waste, your employees can limit the amount of time they spend on mundane, repetitive tasks.
They can turn to more valuable jobs, like customer service.
#3 - Higher quality goods
When you pay attention to detail, the work you produce is better, right?
This is what lean thinking does.
By decreasing the number of defects and errors, your customers get better goods and services.
And that’s the first rule in running a profitable business.
#4 - Better company culture
Lean business practices rely on the entire enterprise.
(I’ll take you through lean management later on in this article.)
Individual employees have a stake in optimising the business.
Improving a business is not restricted to an executive.
Everyone can be encouraged to find new ways to optimise their processes.
This reinforces that the entire team has a stake in the company and does impactful work.
Sounds like a good company culture to me!
#5 - Increased employee morale
Communication is king.
Try a 9-to-5 where your management doesn’t talk to their team.
It always goes south.
Lean management can correct that.
Lean thinking enforces an approach where managers regularly check in with employees about their work and how they think they could improve it.
Who doesn’t want the opportunity to drive better decisions?
Stuck for inspiration?
I get it.
Change is scary.
Especially if you’re not sure making such a big change will be worth it!
Lucky for you, lots of businesses have successfully implemented it.
I reckon you’ll recognise some of their names...
Want to join their ranks?
Then listen up.
Who knew gardening could be so profitable?
This manufacturing firm is nearly 150 years old, but they’re always looking for new ways to work.
So when their executives found out they could cut waste with automation…
They couldn’t say ‘no’.
Their lean thinking revolves around their quality control mechanisms.
They’re fully automated - that means defects are checked thoroughly and quickly.
Products get put on the shelves faster.
They’re offered at a lower price.
And they never produce more than they need.
They’ve overhauled manufacturing to put them back in control with monitoring technology.
This technology firm knows all about efficiency.
It’s what they sell to their customers, after all!
They use lean thinking to reduce the time the microchips they produce are put to market.
But it’s not as simple as that.
Intel is a unique case study.
They can’t just produce more at a lower quality.
(If you buy a cheap microchip, you’ll know about it!)
So here’s what they did:
They implemented quality control factors
And they introduced waste reduction techniques
As a company that produces high-tech solutions, lean thinking was essential to stay agile in a fast-changing industry.
They’re the biggest sports brand on the planet.
And they’re lean.
Just like other lean businesses, they saw higher quality goods and lower levels of waste.
But it also managed to cut back poor labour practices in overseas manufacturing.
This had the effect of boosting employee morale, too.
Employees in these manufacturing plants were able to contribute to improving operations.
This renewed company culture.
And in such a large company (over 75,000 employees), that isn’t easy.
So - I’ve managed to convince you then?
You want lower costs.
You want higher customer satisfaction.
And you need better employee morale.
Well, now it’s time to go through how to make your business a lean one.
It’s pretty simple to introduce lean thinking.
Just study up on the principles and put ‘em into practice!
But there are a few tools and tricks of the trade to help you get started.
#1 - Continuous Improvement
Ready to get your Kaizen on?
The principles mentioned in this article all lead to continuously improving a business.
Highlighting defects, confronting them and then correcting them.
One of the most effective ways to do this is with something called the PDCA cycle:
Establish your objectives and end goals for improving the business process.
Complete your objectives outlined in the previous planning phase.
Results are measured and data produced. It is then compared to the expected outcomes to work out if objectives were met or if the change went to plan.
This is where you improve a process.
The data measured from ‘do’ and ‘check’ help a business identify the issues within processes.
Any errors can be eliminated.
Any opportunities can be fed back into the cycle.
Once the PDCA cycle is complete, the process now follows better instructions and has higher standards and goals.
#2 - Value Stream Mapping
Value streams are pretty important in Lean thinking.
A value stream includes all the steps that deliver a product or good.
What you want to do is identify the non-value-added activities and remove them.
This is a bit like the PDCA cycle.
It helps businesses visualise the steps of a process so each can be evaluated and then improved.
If a process has repeatable steps and multiple handoffs, you need to use this.
This is a flowchart method that illustrates, analyses and improves the steps.
It uses various symbols to map out where value is and is not added.
To get you started, here are the steps of a value stream analysis:
Identify the product to be analysed
Determine the problem in the value stream
Bound the process
Walk through the process steps and information flow
Collect process data for each step
Evaluate each step
Map the movement of product and information flows
Reflect on the map
Create a future state value stream map
#3 - Measuring With Metrics And KPIs
If you want to go lean, you need to get measuring.
Analysing copious volumes of data regarding processes is essential.
How else are you going to detect waste?
There are several different metrics that need to be measured to analyse quality and efficiency.
Customer satisfaction scores
You want these metrics and the corresponding KPIs open to the whole team.
All employees and stakeholders should understand and contribute to meeting objectives.
Transparency might not seem so essential in a business.
But if you want to see your organisation through to the future, keep things crystal clear.
Looking lean is looking good, isn’t it?
But applying the principles is only the beginning.
How you lead and manage a lean organisation is essential, too.
Let’s start with being a lean leader.
Firstly, if you want to lead a lean business, you have to introduce a few new behaviours to your repertoire:
Understand how to satisfy the customer
Encourage problem-solving amongst your employees
Emphasise a cultural mindset of continuous improvement
Focus on data obtained from process analysis
Have an understanding of the value stream
To become a lean organization, you need to become a lean leader.
This is one of the biggest challenges our clients have faced.
Last year, we started working with an agricultural firm up in Glasgow.
We brought them in for a process workshop.
And they were pretty pleased with the results.
(They did save $42,000 that year thanks to our admin automation software!)
But then they heard about lean thinking.
So, we helped set them up with value stream mapping…
Then we talked them through implementing the principles for their core processes…
And then we went through their entire management team.
We focused on instilling principles and metrics right at the top.
This would in-turn introduce employees to being a part of a lean business.
The rest is history.
Oh, and an increase in profitability of 17%!
Secondly, lean leaders have to perform their duties in a specific way.
In simple terms, you have to lead from the ‘gemba’.
Okay, it doesn’t sound that simple.
But it actually is.
Allow me to explain:
Lean leaders have to go to the place the process is taking place (also known as ‘gemba’ in Japanese).
They have to observe the process or product.
They then have to gather the facts and data surrounding the process.
It’s all pretty straightforward, isn’t it?
Ready to get started?
There’s a lot to chew on there.
You should now know:
What lean thinking really is
Why your business needs to get lean
And how to do so
Question is, are you ready to trim the waste?
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