Becoming Lean in 2005

by Lavon R. Winkler

As you begin the New Year, consider the adoption of “lean” in your organization. Each day the marketplace raises the competitive bar. Your ability not to just survive but to prosper will be a function of your company’s readiness to make the most out of every opportunity.

This is the time of the year when many are thinking about trimming those waistlines and becoming more lean and fit. While this is a worthy objective, there is also a significant opportunity for businesses to work toward becoming leaner. As with our personal health, however, business leaders sometimes ignore the opportunity to adopt a more healthy business style that will better assure their longevity and profitability. That opportunity is a production philosophy called “lean” or “lean manufacturing.” Lean involves the removal of waste from processes and operating at a pace that equals the customer’s need.

The missed opportunity is that lean principles are not being embraced by many thus resulting in underperformance and in some cases business failure. The good news is that all businesses can reap the benefits of lean. Lean can be applied to everything from quilt shops to operating rooms. In fact, 85 percent of the waste in most companies occurs in the front office processes.

Developed by Toyota, the term “lean” was adopted because these methods used less human effort, capital investment, floor space, materials and time. It wasn’t until the early 1980s that American manufacturers began exploring the application of this new philosophy. For those that have embraced lean, the results have been astounding.

Some of the benefits of lean are: eliminating waste, eliminating batch processing, less inventory, defect reduction and lead time reduction, to name a few. Using lean, companies have realized seemingly impossible improvements. Lead time reductions of 75 percent and floor space reductions of 50 percent are very common. Other benefits include: improved safety and quality, greater employee and customer satisfaction and improved earnings.

While much has been written about the efficacy of lean as it applies to manufacturing, very few practitioners understand the power of applying lean to back office functions, service companies, or even design-to-order engineering operations. Lean has been applied to companies as diverse in size and type from small retail stores to large distribution centers. In addition, lean is beginning to be embraced by the medical community as it relates to the operation of hospitals, emergency rooms and trauma centers.

While these benefits seem almost too good to be true, lean has not proven to be the panacea for everyone that has attempted a lean transformation. As proven by Toyota and many others, lean is a philosophy that must become the foundation of the organization’s culture. In order to be successful, lean must be embraced at the top of the organization and flow down through each and every person and process.

A factor that causes many to struggle with this approach is that lean and one piece flow is counterintuitive. Contrary to what was believed for years, production in large batches is much more costly than making a product (or processing an office transaction) one at a time. Hence, lean is not a “push” system where components are made in batch and forced on the processes downstream. In contrast, lean is a “pull” system where production responds to the “pull” or demand/need of the customer. Thus, lean businesses design their services and operations to respond to the ever-changing requirements of the customer.

Lean is not an event – its’ not a one-time quick fix. Lean is a series of events that, in the spirit of continuous improvement, are never ending. The astounding results from lean require a long-term commitment. Lean is a journey—a journey toward becoming more nimble and having the agility to move with the ever-changing tides of today’s marketplace.

As you begin the new year, consider the adoption of lean in your organization. Each day the marketplace raises the competitive bar. Your ability not just to survive but to prosper will be a function of your company’s readiness to make the most out of every opportunity. In 2005, put your company on the lean treadmill and begin enjoying a healthier and more profitable future.

Lavon R. Winkler is the President & CEO of Mid-America Manufacturing Technology Center. For more info. please call 913.967.1213 or visit www.mamtc.com