How Lean Thinking Can Benefit Your Business
OKAY, SO WHY SHOULD YOU DO LEAN?
Lean is a term you’re not familiar with. Well, there are many benefits of Lean. I’m Joe Rizzo, and I’d like to tell you what those benefits are.
1) Lean Frees up Space Some of the typical benefits of Lean is, first, it frees up space. You have more room to put in more equipment as you grow, or more cubicles if you’re a service type operation, you have or capacity, you don’t have to buy new equipment.
2) Products Are Created Faster The second thing is, products go from raw material to a finished product in a matter of days, not a matter of weeks. So you take out all the non-value-added activities and you’re down to a matter of days. So you can take an order today and ship it tomorrow or within the week.
3) Product Is Pulled Through by the Customer The third thing is that the product is pulled through the system by the customer. This allows you to make what the customer wants, when they want it, in the quantity that they want, and have minimum finished goods inventory and virtually no work in process inventory, and a small quantity of raw material inventory.
4) Improved Product Quality (Six Sigma) You also get improved product quality. Sometimes we call this the Six Sigma; it’s a statistical method of getting quality in reducing defects to 4 ppm pieces produced or less.
5) Perfect Order Rate Another thing is perfect order rate. You will be able to deliver your product on time, 100% of the time.
6) Multi Skilled Flexible Workforce In addition, you’ll have a multi-skilled, very flexible workforce. If someone’s out, its not can impact your production. All people are trained trained in four different levels. The first is Level 1, they go through training. Level 2, they can do the job with some supervision. Level 3, they can do the job on their own. At Level 4, they are experienced enough and capable enough to train other people.
7) Self-Directed Work Teams People can work on their own! These are called self-directed work teams. People know what they have to do and how to do it. They know the best way to do it.
This is how they do it at the Naval Air Station in Jacksonville Florida, when the jets come through for refurbishment. Every 14 days the jet moves from cell to cell to cell; there are nine cells. When the jet gets to the cell on the first day, the operators in the cell get together and figure out how to get the work done in the 14 days or less. They are kind of incentivized to do it in less, because then they can do it 12 days and they have two days to relax and get the work area in good shape.
8) Lean Improves Focus Lean also helps all employees get focused on the goals and objectives of the business. So one of the questions I like to ask when I go into a plant is go to a person on the floor, a value-added person and ask them: “what are the overall goals and objectives of your company?” The second question is, “how does your job help the company achieve those goals and objectives?” If the person on the floor can answer those questions, then Lean is well implemented. Everyone is involved, from the top person to the people to do the value add on the floor.
9) All Employee Skills Utilized And the last thing is, all the employees’ skills and aptitudes and knowledge are fully utilized. By involving the people, asking them, “how can we help you do your job easier and better?”
Other Benefits of Lean for Businesses Then the other benefits of lean are all the business metrics: you end up with lower product cost, improved profit margins, improved quality, improved productivity, improved service to the customer, increasing capacity with no additional equipment. Often the benefits of Lean are incremental and not measurable, but over time they add up.
Product development time at Wire Mold went from 2-3 years to 3-6 months; the number of suppliers went from 320 down to 43; the inventory turns – how faster you turn over your inventory – went from 3.4 to 17.
There are many many benefits to Lean, and a lot of them are related to morale in the plant, productivity of the people, people retention. Is it a good place to work? Do people stay up extra time before they leave work? Do they come in early? You can tell if you have a place that’s a good place to work by just looking at those things.
Join the New England Lean Consortium for an upcoming Lean Leaders Meeting. Details here