All around the world, businesses are facing a challenge to keep up with the changes happening in their markets.
Some of them are more proactive and planning better for those changes and some of them are more reactive to them. In both cases Lean Operations implementation has been the answer for many companies to survive. When Lean Operations are implemented in the right way for the right reasons it can save a business. When applied in a proactive planned manner, it places the business ahead of the competition. When applied in a reactive manner it can save the business from going under.
All of the implementations start with good intentions and planning but why many of them fail. We will cover different reasons for failure in a series of articles.
by Sami Caglar, International Trade Matters Ltd Global Lean Sigma Specialist
What are the reasons for Lean Operations failure?
There are many areas that specialists, consultants, continuous improvement professionals and business owners keep talking about. In no particular order;
- Bad implementation
- Resisting change
- Slow implementation… etc.
However, the most important reason – and the one that is least mentioned by professionals – is;
- The Purpose of the implementation
How many professionals have you heard talking about the purpose when it comes to implementation? How many actually talk about the philosophy of Lean rather than tools and techniques.
The most misunderstood part is the reason for going Lean. The purpose of the implementation.
We have visited and worked in so many businesses and the senior management or owners are always talking about the head count. Over the years, Lean Operations has brought results for reducing headcount and reducing the cost per unit of product or the cost of a service offering. Real Lean is not about cost cutting. Although cost savings are often an inevitable benefit of lean, it should definitely not be the purpose for an implementation.
Can you imagine trying to change people’s minds and hearts for a new way of working which may result in them losing their job? How can that be sustainable?
When you reduce the cost of your product or service, does the competition walk away?
We are going to talk about these in more detail in the coming articles. Let’s Focus on the purpose.
The purpose of the lean implementation is capacity creation while increasing the customer satisfaction.
The simple test for that is to asking the following question;
“Did we make more sales and gain more customers as a result of our lean implementation?”
If the answer is “No” you didn’t implement it for the right purpose.
We can be asked by good companies why they are not seeing the results of their implementations. If you look at businesses with successful implementations of lean operations, you will see profitable growth and more satisfied customers year on year.
We often face the challenge of market conditions and use a shrinking market as an explanation. If the business is shrinking less than the market we see that as an achievement.
If your current market is becoming mature and your main domestic markets are shrinking then it makes sense to focus more on Export.
Overseas markets and opportunities can often be overlooked by UK companies. Businesses moan about the cheap imports coming from Europe or the Far East, but they don’t aim to get Lean and start exporting or exporting more to different countries.
10 years ago, we were advising customers to look at ways for growth after becoming a Lean Enterprise. This is why we have integrated a Global Lean Sigma Specialism within the International Trade Matters team, for one reason and one reason only: GROWTH for our customers.
Even the most effectively implemented Lean can only save you for a year or two if your only purpose is saving costs.
If your purpose is not capacity creation and not filling that capacity with more sales as a result of better customer satisfaction, then you are setting your Lean Operations implementation to fail from the start.
If and when you become Lean you have all the results for being able to sell more. Lean is Great, Britain is Great and Exporting is Great!
Sami Caglar is Global Lean Sigma Specialist at International Trade Matters Ltd. He is an award-winning corporate leader and strategist with experience spanning myriad industries.