I was just reading an article titled “Agenda 2010” on ChiefExecutive.net, and was struck by how many of the CEOs were concerned that new government regulation, programs, spending, and tax increases could send the economy off the cliff in the coming year or two. They also commented about what they would be focusing on with their businesses in the coming year. One comment made by Mathur Kent, CEO of Coca-Cola, was “In a world of constant— not cyclical, but constant—cost pressures, our productivity efforts have never been more important.”
One of the ways to increase productivity is to focus on implementing a Lean focus. As a business broker I rarely see small companies that have adopted Lean principles so I suspect that the majority of businesses out there would benefit from learning about and implementing a Lean focus. Yet, there are many misconceptions about Lean, such as that it is solely focused on pushing employees to work harder so that you can get by with a lower level of staffing. Here are the primary principles of Lean as provided by Lean Enterprise Institute (lean.org):
1. Specify value from the standpoint of the end customer by product family.
2. Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.
3. Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer.
4. As flow is introduced, let customers pull value from the next upstream activity.
5. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.
While the Lean movement began in manufacturing, there is no reason that the principles can’t be adapted to any other type of business. Some of the benefits of Lean may include: 1, an easier to manage business; 2, higher profits; 3, less waste; 4, lower quality deviation; and 5, when you want to exit, your business broker will have a higher probability of selling the business for a good price.
