Lean is never sustainable: it always depends on people!
Where do Lean results come from?
Increased Sales are supported by a firm understanding of PROTECT THE CUSTOMER within the company. Delivering products without defects on time has a remarkably rapid effect on sales. Sales are further developed by improving the engineering of the product or service in order to better satisfy customers, but the first step is to teach the organization to protect the final customer by protecting each internal customer.
Secondly, cash improvements come from the inventory reduction resulting from stabilizing and leveling customer demand and pulling the process. Both techniques are about the second big step in the company: STABILIZING THE LEAD TIME, and then, later, through flexibilizing the resource REDUCING THE LEAD TIME. These two actions deliver tens of millions of euros in Cash as well as supporting the first process protecting on time delivery for customers.
Thirdly, where do EBIT improvements come from? The first cost improvement comes from direct labor productivity, which is inherent in stabilizing logistics through pull and creating balanced cells. This usually accounts for about 10% productivity increase per year, every year one continues to put tension on the pull system. Overall this delivers between 5% to 10% Sales per person increases per year over years. The second cost which is directly impacted by REDUCE COSTS BY ELIMINATING WASTE is capital expenditures, as machines become simpler, better utilized and more adapted to a Lean flow. As the company learns to develop autonomy in problem solving, CORPORATE OVERHEADS can also be reduced quite drastically, thus leaning the company further. Finally, as the Lean approach comes together across functions, engineering, manufacturing engineering, production and purchasing can pull their efforts to reduce the cost of the products, whilst continuing to improve their use to customers. At this stage, yes, some Lean improvements will be lasting as they will be inbedded in the products and equipment themselves. Even so…
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