Making Lean Part of the Business Strategy

Many manufacturers have dabbled with lean manufacturing, looking for that “silver bullet” to drive out cost, improve productivity, eliminate waste and put the organization on the path to continuous improvement and enterprise excellence.  Yes, many a company has braved that path only to become quickly disillusioned.  Quickly achieved improvements, just as quickly disappeared, once management looked away and became focused on other business issues.  Why weren’t those lean tools able to stick once they had been put in place?

If you have ever mapped out the sales and operations process for manufacturers, one of the boxes in the flow chart that stands out is that of inventory.  It is probably the only box in the entire flow chart where management can almost automatically give you a dollar figure.  And so it is not unreasonable that management would focus their improvement efforts against what is arguably one of the most costly and highly visible expense sources.  Diligent efforts at driving out excess inventory typically met with significant success and usually in pretty quick order. The company achieves its objectives and management declares itself lean. Ahh, the magic of lean tools!

But alas the fairy tale ends, with bottle necks in production, or unexpected customer demand, or the launch of a new product that drains production resources, or aggressive competitor initiatives, or poor supplier performance or a myriad of other scenarios that cause current high-value customer orders to be unfulfilled and customer complaints to sky rocket.  The inventory is simply not available and the company is not responsive or flexible enough to respond.  The response the company can muster, build inventories and blame lean tools.

The reason for this outcome is that the company did not look at the organization as an integrated system with many direct and indirect cause-and-effect relationships.  Liken it to your own body.  You may have a sore back but the cause of your back pain may actually be as the result of flat feet and require orthotics as a remedy.  In other words the pain manifests itself in the back but the source of the pain is the feet.  Just like the pain in the company manifests itself in excess inventory but the source of the pain may be in production or planning or supplier relationships. One cannot apply the lean tool targeted only at the pain without taking into account that the organization is an integrated system with many cause-and-effect relationships.  Therefore, a systems thinking, integrated action approach must be employed.

Now as you can already see form the above inventory scenario, improvement can be secured by applying the lean tools. Inventories can be driven down, order-to-cash cycle times reduced and wasteful non-value added activities reduced, all by simply applying the lean tool to the area of pain.  But the improvements may be short lived and the full potential benefit will never be achieved.

And the reason is, the improvement process is not part of the core business strategy.  Only when the improvement process has become an integral part of the business strategy, and has become ingrained in the DNA of the company and its employees will the full potential benefit of the lean improvement process be realized.  Lean tools in-and-of themselves do not create lean cultures with lean leadership.  To achieve the ultimate improvement benefit, lean tools must be linked with a process that benchmarks and transforms culture and leadership practices to create an organization that supports responsive decision making, flexibility and innovation. In other words, tying the lean initiatives to company results and ingraining it in the core business strategy.

Lean tools work, but work as they were intended when applied to manufacturing environments with a systems thinking, integrated action approach and when linked with a transformational process that addresses culture and leadership.