Lean Is Much More Than a Cost Savings Program

Lean Is Much More Than a Cost Savings Program

Organizations of all sizes and types are struggling to find ways to become more efficient and effective.  Cost reduction is the mantra everywhere and “Lean” is the word of the day.  Unfortunately, much of what is being done under the umbrella of Lean is not actually Lean in practice.

What many don’t understand – or perhaps lose sight of – is that Lean is about a different way of doing business that results in cost savings.  Lean systematically focuses on comprehensive, continuous improvement processes that deliver more customer value through eliminating waste to increase flow and reduce variability.  While one of the secondary outcomes of these processes happens to be cost savings, the primary objective we must focus on is increased customer value.  If you are just doing isolated programs and projects that cut back on supplies or eliminate employees, then you are not acting Lean.  You are merely conducting one-dimensional, short-term cost savings programs.

Organizations need to think bigger and strive to become High Performance Enterprises that employ truly Lean methods.  HPEs are organizations that are more predictable, controllable, innovative, flexible, and able to grow profitably in both good and bad times.  This demands that you align all organizational elements to deliver more customer value to outperform your competition.  Entire organizations, and all employees within them, need to be engaged in innovation and improvement every day, not just specialized groups.

Instead of thinking and operating linearly, Lean demands that organizations think and operate on a multi-dimensional level.  For instance, enterprises typically are organized into departmental silos with independent departmental objectives.  Operational Excellence strategy replaces this linear path with comprehensive departmental objectives, Action Plans and metrics that align with the organization’s unique singular vision/mission.  Individual objectives, Action Plans and metrics are synchronized with other departments to achieve the organization’s mission.  This encourages both intra- and inter-departmental cooperation and collaboration.  New management methods are employed that change the relationship between workers and management and how they view and engage in their work.

Lean management builds capability and capacity, increases quality, and reduces costs by changing the fundamental relationship between management and employees.  Rather than the typical Command/Control method, Lean Management uses a top-down/bottom-up approach.  One of the benefits of this new approach is that it encourages those doing the work to identify and solve problems every day, as they occur.  Problems become visible instead of remaining hidden within the process.  A systematic, scientific method of discovery and experimentation (PDCA) to find and implement effective solutions is employed by everyone, on a daily basis, in all departments, which results in effective solutions that streamline operations. This strategy reveals and discourages pervasive practices that result in inefficient workarounds.  Problems actually become opportunities for improvement that are acted on as they occur.

Importantly, we can view these problems through a different lens. Lean reduces chaotic problem solving (firefighting).  Focusing on the ultimate outcome (vision) helps keep problem solving concentrated on key issues.  There is a recognition that small steps toward achieving interim outcomes must be taken successively to achieve the goal.  Understanding that processes are interrelated, Operational Excellence does not tackle every single problems at the same time. This allows time for cause-and-effect relationships to fully manifest and provides us with a more complete picture of the problem before we begin assigning resources to solve the problem.  The knowledge we gain from each step then serves as benchmarks to get to the next level.

Lean is more than just cost savings: It is a comprehensive method for increasing customer value, and requires new ways of thinking and operating, which result in cost savings as a great secondary benefit from the process as a whole.

Charles Shillingburg CLSSBB, Lean Sensei is an expert in Continuous Improvement in the service area. He developed the Interim Outcomes, Total Brand Approach and offers education on What Customers Value and Everyday Lean that helps organizations focus their efforts on increasing customer value and engage everyone in Lean delivery, everyday.

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