Lean is never sustainable: it always depends on people!

18 November 2015 / article

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…
Read on here.

Tags: cash, improvements, Lean results

Leading author, speaker and researcher, I work on both the "hard" (improve quality, reduce lead-time, eliminate waste) and "soft" (engage people in problem-solving and improvement to develop them to the fullest of their abilities) dimensions of Lean transformation.

I started studying improvement initiatives twenty years ago as part of my PhD. research on Mental Models. I was persuaded by Toyota engineers that to understand lean you had to practice it firsthand and I have been working with supervisors, site managers and now CEOs to leverage their lean efforts into market share, people engagement and bottom line results. You don't know what you don't know and the most surprising thing I've learned as a cognitive sociologist is the value of: see with your feet and think with your hands!

I co-founded the Projet Lean Entreprise and the Institut Lean France. I have written several books and articles about the links between knowledge and management (Managing With Systems Thinking, The Effective Organization, Les Modèles Mentaux), and more recently, co-authored three business novels published by the Lean Enterprise Institute, one about lean turnaround, The Gold Mine, one about lean transformation, The Lean Manager, and a novel about Lean practice, Lead with Respect as well as a Lean manual in French, Le Management Lean.