Lean Thinking for Organizational Survival

Pandemic! Yes, now is the best time to examine, as a business unit, what we are doing and how we are doing it. Nothing will ever be the same as before; we need to improve and doing so will enable us to survive and grow competitively and profitably in the near and immediate future. The key? Implementing lean thinking.

Current market conditions are ideal for awakening our companies’ core skills. Imagine that you can redesign the status quo of your organization, assuring a high level of product and service reliability and variety, with reduced delivery times, assuming lower costs but without affecting quality, safety, the environment and occupational health, with a focus on excellence.

This isn’t science fiction: many companies have already seen the benefits of the lean philosophy. Given the pressures to reduce costs in a highly competitive market, numerous boards of directors and corporations are becoming extremely interested in this philosophy for the development, application and achievement of world-class operations in order to ensure business sustainability.

The foundations of lean thinking

Lean thinking is based on the principle of cost reduction through the identification and elimination of waste. Waste is usually related to physical waste; however, consumers buy a product or service because it has a certain worth that represents everything that makes them value and pay for it. In the lean philosophy, waste is any activity that consumes (human, machinery or financial) resources and does not add value to the product or service from the perspective of the end customer. In other words, waste (muda or wastefulness) is anything that consumes cost or time without adding value.

Lean fosters the operational transformation in organizations by identifying and removing/reducing waste associated with defects, transportation, motion, inventory, waiting, extra-processing and overproduction through the comprehensive application of the principles of lean thinking - value, stream, flow, pull and perfection– and, above all, a strategic transformation through the valuation of human talent, thereby efficiently and economically maximizing added value for the customer.

Regarding its adoption in industrial and service sectors, it is important to highlight that, despite having evolved and expanded beyond its origins in the automotive industry, lean thinking is universally applicable as long as its scope[1] is fully understood, the current modus operandi is analyzed, and the rationale behind lean tools is comprehended –which will allow us to understand how to use them efficiently and according to the characteristics of the business-.

The lean model

Latin America has implemented the lean philosophy, but to a lesser degree than developed countries. Due to the lack of a systemic work culture based on continuous improvement, in which lean techniques are applied independently to achieve low-impact improvements, our book Estrategia y operaciones esbeltas: Camino directo a la sobrevivencia y desarrollo de nuestras empresas proposes the following six-stage methodology focused on the lean principles[2]:

Under the principle of value

1. Customer/Market Stage: All entrepreneurs and directors must always guide the business according to value, which is based on certain critical characteristics defined by the customer or market, as a starting point to design the product or service subject to a target cost that considers variables to fulfill that value in our value stream.
2. Operational Excellence Stage:Under the principle of stream:

Select the value stream to be mapped, use genchi-genbutsu to make the current-state map of the operations, determine and calculate appropriate lean measurements, and identify opportunity areas and their respective improvement projects and actions based on the combined application of lean techniques and tools.

Under the principle of flow:

Design the future-state map of the operations considering a focus on demand by adapting the installed production capacity, a focus on flow by creating a regulated and continuous flow, and a focus on leveling and standardization by ensuring an uniform production mix. Generate a Lean Project Program by contemplating improvement projects and actions prioritized as implementable and challenging, and project the results to be achieved on the future value stream.

Under the principle of pull:

Start an extended company comprised of strategic partners who act as key links (such as suppliers and customers) and define a joint competitive strategy according to the interests of each market. The key links adopt it and create an internal synergy oriented towards its fulfillment. Trigger the process coordination between each link and develop them by collaboratively improving their operations in order to synchronize the interfaces between links, ensure a high level of service, and drive internal operational efficiency and external flexibility across the integrated value streams.

Under the principle of perfection:

3. Continuous Improvement Stage: Schedule and implement the Lean Project Program to transform the future-state map into reality, control real progress, and communicate the benefits accomplished and to be achieved by the improvement projects and actions to foster a sense of belonging and motivation in those involved. Celebrate opportunities for success by means of an intrinsic and extrinsic recognition system to reward the efforts of the assigned work teams and thus inspire other divisions, plants and corporate personnel to participate in similar projects. Continuous improvement through hansei reveals that there is always at least one additional improvement opportunity, since the more a specific process is analyzed, the more waste will be found.

The creation of a lean environment must emerge and be developed through systematic experiences and on-going application results so that it will be lasting and sustained through the personnel’s behavior and conduct:

4. Planning Stage: Establish Lean as a mechanism for long-term excellence assurance, given its strategic impact on business processes, and establish a Lean vision to generate a model for how the company should look and behave under a lean mindset that is cemented over time.
5. Leadership Stage: Deploy, with the support of change agents, management-driven transformational leadership, align and deploy guidelines operationally, and strengthen communication channels and inter-departmental relationships to generate an optimal capacity for decision-making, prompt actions, and continuous feedback.
6. Human talent engagement Stage: Develop and train home talent, form work teams by integrating diverse internal departments with external personnel from suppliers and customers, and foment empowerment that will eventually become automatic self-sufficiency. Tolerate error as a source of learning.

In order to promulgate lean thinking in all Latin American SMEs, the proposed methodology represents a practical roadmap aimed at establishing a system of excellence that will maximize overall organizational effectiveness. The implementation of these six stages will make it possible to consolidate a strong culture by generating a proactive, sustainable company as a result of a constant organization-wide participation and maturity towards the perfection principle.

REFERENCES

1. Abdulmalek, F. A., & Rajgopal, J. (2007). Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A process sector case study. International Journal of production economics, 107(1), 223-236.
2. Novau, A., & Suárez, A. (2020). Estrategia y operaciones esbeltas: Camino directo a la sobrevivencia y desarrollo de nuestras empresas. Digital Publisher, Tecnológico de Monterrey.