When people hear the term ‘Lean’ in the business sense, they
think of Lean Operations or Lean Supply Chain and most commonly relate ‘Lean’
as something that only manufacturing companies can utilize. Indeed, the initial
application of what we know as Lean was in manufacturing production, with the
basic goal of reducing all wasted time, movement and overhead costs. Our thinking has come a long way since then
and in the series of articles that are planned over the next twelve months,
we’ll explore how the principles of Lean can be applied to virtually all types
and sizes of business (even government…but let’s not get too hopeful).
In this article, I’ll lay the
groundwork for the series and provide some differentiation of Lean at the
Enterprise level versus Lean implementation in operations management. In future articles, we will discuss some of
the over 30 methodologies that can be applied in becoming a Lean Enterprise.
The Five Principles of Lean
The
goal of becoming a Lean Enterprise is to reduce non-value-added (NVA) time,
cost and effort in everything that your organization does. There are five basic
principles that we will relate back to over the course of the articles. However, there’s also my own principle that
runs in parallel to these: “If you don’t measure it, you cannot manage
it. If you don’t manage it, you cannot
control it.” In everything you do to
become a Lean Enterprise, there must be the understanding that there will be an
upfront investment in ensuring that you understand what you should measure, how
you should measure and when you should measure the Key Performance Indicators
(KPI) related to the Lean initiatives.
Understand Your
Value Proposition
In order to determine what is
and is not value adding to your customer, you first need to quantitatively and
qualitatively determine and document what your customer considers in terms of
the value in conducting business with you.
Therefore, the first step in the journey is to assess your current value
proposition by listening to both positive and negative information from your
current customers. Later in the journey,
you would then determine the value proposition of future product or service
offerings.
Value Stream
Mapping (VSM)
Once you understand your value
proposition, an assessment of the processes that directly contribute to your
value proposition needs to be done.
While VSM was developed to determine where NVA time, human effort and
overhead cost was present in manufacturing operations, the methodology can be
applied to any type of process whether it’s operational or a business
process. However, when we are utilizing
VSM at the Enterprise level, we need to add the element of assessing and
quantifying risk.
There are now tools on the
market that are affordable to all sizes of businesses that assist with
VSM. That’s a topic for a future
article.
Uninterrupted Flow
The goal is to not have any
process, operational or non-operational, stall at any stage. Achieving the goal of uninterrupted flow will
result in the reduction of NVA time and overhead cost which, in turn,
strengthens your value proposition.
Customer Pull
The principle of ‘Customer Pull’
is that your organization does not start any process unless it has some sort of
customer demand. At the Enterprise
level, we adjust the focus to ‘stakeholder’ demand to this principle as
stakeholders such as regulatory bodies can create risk situations that would
adversely affect your value proposition.
The Pursuit of
Perfection
Becoming a completely Lean
Enterprise is not possible until a culture of ‘impatience with imperfection’ is
achieved. Essentially, this principle is
used to reinforce the first four principles to drive out wasted time, effort
and cost, minimize the risk factors and to drive a higher value proposition to
your current and future customers. The
trick is to ensure that you don’t spend more time, effort and money than the
value added.
The Three Components
There are three primary
components that require assessment, planning and potential improvement in
becoming a Lean Enterprise: Your People;
Your Processes; and, Your Technology.
People
If you do not have the right
people taking the right action at the right time, there will be issues in
achieving the end result expected. In a
future set of articles, I’ll be exploring methods to assess this critical
component of becoming Lean and methods of correcting deficiencies and risks. We will also dive into the topics of how to
attract, hire and retain the right person for your organization for the long
term.
Processes
This is where ‘the rubber hits
the road’ in terms of reducing elapsed time, human effort, overhead costs and
controlling risks to your business. In
future articles we will discuss various methodologies that can be employed to
identify waste and increase the effectiveness and efficiencies of processes
within the business.
Technology
This is the double-edged sword
of business today. From determining what
you need to managing the cost to deciding whether keeping it in house or ‘up in
the cloud’, we’ll need to put forth some information so that you can make wise
decisions and make good use of technology to support your people and your
processes and, ultimately, drive up your value proposition.
Summary
I trust that you will find good
value-added information in the articles that come your way over the next
year. Should I fail to explain an issue
clearly, or you have a topic that you’d like explored further, please don’t
hesitate to provide feedback. After all,
if I can’t determine what is and what is not value adding to the readership,
then this column will not be very Lean.
About the author
Ken Cowman is Managing Director
of Emercomm Business Consultants Inc. of Mississauga, Ontario ( www.emercomm.com ) . Ken has over 40 years of business experience
with over 25 years in C-level positions.
He can be reached via email kcowman@emercomm.com
and his career profile can be found on LinkedIn www.linkedin.com/profile/view?id=13440900&trk=tab_pro
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