Why Lean Alone Won’t Fix Your Business

January 4, 2024 | by Keith Yeater

Imagine a small distribution company, with an annual revenue of $12 million. A plant branch of a multimillion-dollar organization, it has 15 employees and a glaring issue: only 40% of shipments reach their customers on time. This means that 6 out of 10 customers aren’t receiving their orders as expected. The CEO recognizes the problem and calls in consultants to help fix the process.

This situation isn’t uncommon in the manufacturing industry. Organizations often look to Lean methodologies as the solution to their operational woes. Lean is undeniably a valuable tool, beneficial across a variety of contexts. If there is a process in place, Lean and continuous improvement opportunities can certainly add value to your organization.

Making Lean Work

However, for Lean to work effectively in a manufacturing company, solid foundational processes need to be in place. If the basics are overlooked, such as managing inventory transactions, consistently moving inventory, managing people, and developing processes, then Lean methodologies won’t be able to deliver the desired results.

In our example, the consultants didn’t dive straight into Lean methodologies. Instead, they first established good manufacturing practices. Some of these might seem like common sense, but they weren’t present in the company. They implemented consistent starting and stopping times for all employees, prioritized order shipments based on efficiency and location, and established good safety practices, procedures, and policies. They also set clear expectations for employees.

The Unvarnished Truth

CEOs, like the one in our story, might not always have a clear picture of the day-to-day operations within their company. Middle management might filter messages sent up the ranks, leaving executives unaware of underlying issues. CEOs often lack the time to deep dive into these issues, making it more practical to engage consultants who can identify, fix, and improve basic processes while providing an unfiltered view of what’s happening on the ground.

Establishing these foundational tools doesn’t have to be a lengthy process. They can be devised and implemented within a short period, but this requires experts who understand your organization’s critical needs and are capable of establishing and managing these processes.

Key performance indicators (KPIs) like customer on-time delivery, employee productivity, inventory turnover, and safety measures serve as leading indicators in determining what needs to be done. It’s not about the starting point but the trend that these KPIs reveal.

It’s sometimes a hard lesson to learn: Lean methodologies can undoubtedly enhance your manufacturing operations, but only if the basic business practices are solidly in place. 

Before diving into Lean, ensure that your company excels at the basics. This will set the stage for Lean to do what it does best: streamline your processes and add value to your organization.