By now everybody has heard about lean and what it can do for your company if you practice lean management or lean manufacturing. There are many stories of success to be read. Results in all industries are spoken about by pundits, and the last few lean years have certainly fostered an ever increasing need to do more with less. In spite of many success stories pertaining to lean practices, however there are just as many where such a story is not spoken about or best forgotten.

Barriers to lean

Some of the problems with pursuing lean practices are the perceived lack of dedicated individuals available to actually do so. Perhaps because the company is too small to warrant a dedicated individual to pursue such an objective. Perhaps because the budget does not include such persons for accounting practices, or simply because the “bean counters” don’t see the light.

In the first instance where a company appears to be too small to have a dedicated individual to initiate lean practices, I suggest such a practice should itself be lean. Bearing in mind the old adage that 1000-mile journey starts with one step, simply look at this statement: “The value which we deliver is as seen through your customer’s eyes only.” The rest of the activities which are performed by you are defined as “muda” (Japanese for waste). So the question becomes, how do we get rid of the waste by taking a hard look at what we do other than the prime requirement. You will then find that not only is that pursuit of eliminating waste never ending, but inevitably leads to the bar rising; and then you are well on the way to “Practicing Lean.”

Opportunity cost

The definition of the word practice is “to perform or do habitually or usually: to practice a strict regimen”. Persistence is the crux of the matter. Change and continuous practice. As such the pursuit of lean practices could be lean itself by simply expressing a new attitude toward what we are doing all the time. In addition to the customary accounting tool which tells us where we are, we should have some simple tool to measure the performance and improvement of our organization in small time slots.

For this purpose I like opportunity cost as a measure. Simply expressed this is the output per worker in sales dollars for a given period. For example: 1 worker works 2000 hours per year and sales are $1 million; then the opportunity cost for that worker is $500 per hour. This measure becomes far more interesting if you have several workers and departments, allowing you readily to ascertain by comparison where muda can be eliminated.

I have seen several instances over the years where such practices are initiated and then over a surprisingly short period neglected or even abandoned. The reasons could be many, but often because the initiative was too burdened with measurement and endless data collection, which nobody identified with.
“Keep it simple, stupid” comes to mind.

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