January 22, 2018
By Darren Dolcemascolo
We had written several newsletters throughout the "leaner" years in which we
wrote about how to think Lean in a "lean" economy. Since the economy is no longer
"lean," we are going to talk about
utilizing Lean thinking in a higher growth economy.
"But isn't Lean more useful when you need to
cut costs rather than grow?" Not at all.
Adopting a Lean strategy can help a company
grow even faster.
If a company takes a Lean approach, it
can build a distinct competitive advantage. The benefits of lean include things like
faster lead times or turnaround times,
higher productivity and lower costs, better
quality, and less inventory. As demand
increases, a Lean organization can adapt
much faster because it is constantly working
to improve its abiity to meet customer
demand. Let's look at how a growing
company might adopt a Lean strategy.
Suppose XYZ Corporation expects to grow
its sales by 20% this year. Early in
the year, they work on Strategy Deployment
(Hoshin Kanri). This is a methodology
by which the company develops specific
initiatives and goals associated with key
metrics. The goals and initiatives are
cascaded down through the organization.
In this case, sales and marketing need to
develop a plan to gain 20% in revenue.
Operations needs to determine how to meet
the growing demand largely through
productivity improvements. The
resulting plan has all parts of the
organization rowing in the same direction.
As the plan is executed through some
projects, kaizen events, and daily
continuous improvement activities; key
metrics are improving. The company is
developing new products at a faster rate
through Lean Product Development.
Manufacturing is able to produce more with
the same resources. Sales is able to
sell more through better customer engagement
strategies. Each function of the
organization is constantly improving with
the same goal in mind.
Becoming a Lean organization makes sense
in any economy. Certainly, if the
economy isn't good, a Lean Strategy can help
weather the storm and create competitive
advantages to grow market share while
keeping costs low. If the economy is
good as it is now, a Lean Strategy can be
even more beneficial.
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