How to be a lean leader

There is no shortage of failed fads (“business process re-engineering”, anyone?) in the management world. One approach has, however, stood the test of time.

While the term “lean management” was coined only 25 years ago, the concept is almost a century old. It was first deployed in 1918 by the Japanese entrepreneur Sakichi Toyoda, who established a very successful weaving enterprise.

His company started building cars under the name Toyota in 1935 and its continued manufacturing success during the oil crisis in the 1970s encouraged other Japanese companies to adopt the company’s approach.

Soon, its “lean” processes reached other countries and the world’s top business schools.

So, what is lean management?

“In essence, it is aimed at improving operational performance in companies and organisations. It focuses on maximising value for the customer and minimising waste of any resource, including physical resources or people’s time,” says Glen Tyler of the Lean Institute Africa.

The institute is a not-for-profit company, based at the UCT Graduate School of Business, which advises public and private sector companies on how to improve the efficiency of their operations.

Adopting the lean approach involves a couple of steps:

Step 1: Determine what your customers really want from you. What specific service or product will meet their needs, and what specific price and at what specific time?

Step 2: Map each step of all your business processes to deliver a service or product. Get rid of all those activities that do not create value for your customer.

These activities are defined as muda (Japanese for waste) and typically include overproduction, excessive inventories, mistakes and defects, unnecessary movement and transport, overprocessing and waiting.

For example, overproduction could be printing documents that nobody reads, and unnecessary movement can include constant email communication (or walking long distances) between departments that should actually be closer to each other if the office space was designed better.

Step 3: Make sure that all the remaining activities follow on each other in a very tight sequence so that your product or service reaches the customer as quickly as possible. All barriers, inter-company bureaucracy and bottlenecks should be removed.

Step 4: Repeat steps one to three until all waste has been eliminated. 

The benefits of lean management are pretty self-evident: your customers get exactly what they want, and you deliver what is needed, at exactly the right time, and in exactly the amount needed.

Meanwhile, you save costs by getting rid of unnecessary activities and overheads that don’t add value for your clients. Your profitability and competitiveness will increase. And as the focus of your organisation shifts to what is really important, the quality of your products and services is enhanced, and customer satisfaction improves.

This, along with better workplace organisation, bolsters employee morale. Lean management also forces various departments in a business to work much closer together to optimise processes.

“Firefighting problems as they arise is often the default position of many South African organisations,” says Tyler. “Instead, lean management encourages analysing the process, searching for bottlenecks and finding countermeasures.”

The natural enemies of lean management are bureaucracy and “single skilling” (where employees are encouraged to specialise in one very narrow field). Also, a resistance to change.

Lean management may require upending the status quo completely. And repeatedly. It will take some convincing to get employees, already jumpy amid continuing restructuring processes and job threats, to embrace such a radical approach.

Get your team on your side by clearly communicating the reasons why waste needs to be eliminated. (There is no shortage of alarming scenarios and threats at the moment, with many industries becoming hyper-competitive, and threatened by disruption.)

Along with your sober assessment of the situation, present the lean approach as a clear strategy to gain ground by assisting customers and improving profitability.

Other tools that support lean management:

• Meticulous workplace organisation. Your offices and shop floor need to be arranged and maintained so that employees always have easy access to reliable tools and other inputs. In lean management, this is referred to as the “5S requirements”: sort (remove all unnecessary items and inputs), set in order/straighten (arrange all inputs in a logical way), shine (a strict cleaning regime), standardise (a thorough set of best practices for every action) and sustain (regular maintenance and audits).
• Integrating suppliers. Include all your service providers and suppliers in your lean systems and work together to achieve greater efficiencies throughout your supply chain.
• Customer pull. You need to understand how your customers’ demand cycles work and when they will need products from you. Your processes need to fit in with the customer so you only produce when the customer needs it.
• Visual signs. Make sure that the key messages of your strategy are displayed throughout the workplace in a way that makes them easy to understand at a glance. Publish targets and achievements regularly.
• Embrace kaizen. This means “change for the better” in Japanese, and is integral to the lean philosophy, which requires continuous improvement to standardise activities, increase productivity and get rid of waste.

The Lean Summit Africa, a regular event, which features some of the world’s top productivity experts, takes place from 19 to 21 October in Cape Town this year. More details can be found at www.lean.org.za/Summit2016.

This article originally appeared in the 9 June 2016 edition of finweek. Buy and download the magazine here.