Lean management for SMEs

The universal benefits of lean

Lean management is often perceived as something just for large organisations. Glyn Finney, product leader at global management consultancy firm Simpler Consulting, outlines the opportunity for small and medium enterprises (SMEs) to reduce costs, increase efficiency and improve customer service using lean.

 

With global competition combined with the economic downturn, companies are having to constantly look for ways to reduce costs and increase efficiency. As a result, more businesses—including SMEs—are turning to lean methodology and processes to maximise the use of their resources without affecting frontline services or reducing personnel.

Lean methodology derived from the Toyota Production System, which was introduced by Toyota’s Taiichi Ohno, a Toyota executive and father of the lean concept, in the 1950s as a successful response to competition from larger car manufacturers. Lean describes a set of deeply held beliefs regarding organisation culture and embedded principles that drive continuous improvement based upon customer driven values.

Lean organisations empower their members on the front lines by teaching them how to identify ‘waste’, or anything that doesn’t add value to the process. Since the early days of lean, it has been well proven that organisations of any size generally operate with around 90 per cent of process-oriented ‘waste’ leaving a mere 10 per cent of value added activity delivering services and products to their customers.

Lean improvement is recognised as one of the best methods of removing this waste, reducing costs and transforming business performance. In the past, financial restraints have often meant this has been seen as a tool purely for large organisations. While larger entities have the budget and resources to work on removing this process ‘waste’, SMEs often don’t have access to the same resources, and they feel the pinch and impact of every cost. However, by using new tools and methodologies, SMEs can now leverage lean improvement in a manner specifically tailored for their needs and within a realistic cost bracket.  

For decades, organisations have been using lean methodology to accelerate delivery performance, improve quality and reduce costs by streamlining processes to drive business-impacting results. Regardless of the size of the business, there is waste inherently built into all of the processes that we use on a day-to-day basis and our operational paradigms often stop us from seeing the waste that we constantly work with. This waste increases our lead time, drives up inventory costs, impacts quality and drives an unnecessary burden onto our employees.

Lean management is a cultural transformation that engages employees at every level to see and identify waste. By using lean, organisations can quickly identify areas where improvements can be made and then plan and implement these changes to release the benefits to the bottom line.

One of the key differences between implementing lean processes in a large organisation and how SMEs incorporate the same methodology into their business is in the delivery. Improvement projects and managing for daily improvement are skills that are typically learnt under the tutelage of a master sensei (lean management coach). While large organisations often employ a lean management sensei to physically drive and implement change, this is not in the budgets of most SMEs.

However, with the introduction of online lean courses, SMEs can benefit from external support to provide lean improvement for their business. The detailed nature and interactive elements of online training can give participants the experience of being in a workshop where they share challenges and solutions, but without the additional expenses that are usually incurred with external courses. Supplemented by hands-on improvement activity in their own business environment, which is supported by remote coaching, the theoretical and practical course can provide the opportunity for SMEs to achieve breakthrough results in improvement.

With the recent release of live interactive lean management courses, which go beyond the theory and provide ongoing coaching for real business improvement, there is a higher level of engagement and significantly better return on investment. Trainees are not just taught tools but are trained on an improvement methodology and supported through a number of improvement activities to take the results to the bottom line.

Lean is a people-focused improvement methodology. One of the advantages that SMEs have over large organisations when implementing lean is that the employees often work closer together. The ‘bottom-up approach’ captures employee job skills and insights to deliver the business improvement needs. With the right lean training, a team leader will be able to work with employees from all departments to find out what they need to do their job better and what they need to do their job faster. Wherever the ‘waste’ lies, whether in administration, operations or delivery, using lean management systems will help identify and eliminate unnecessary delays, and in doing so increase productivity in the end-to-end process.

Eight common wastes

Any process, whether it be to meet client needs or creating products, is susceptible to eight common forms of waste that are often roadblocks to optimising a process:

1.      Overproducing: making or doing something ‘just in case’ or when it’s not needed by the customer.

2.      Waiting: idle time when no value is being added to the product or service.

3.      Transportation: unnecessary movement of materials or equipment through the process.

4.      Inventory: capital investments, stock or corresponding control systems that result in too much (or sometimes too little) inventory.

5.      Unnecessary motions: movement of people, staff or customers that does not add value to the product or service.

6.      Processing waste: spending time on unnecessary processes that do not add value to the customer.

7.      Defects: wasted effort on inspection or re-doing work that was already done.

8.      Unused human potential: not fully utilising employee problem solving skills to add value to the customer or the company.

Source: Simpler Consulting www.simplertraining.co.uk