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Measuring the value of Lean

value of Lean

March 1, 2018

Those with little or no understanding of Lean can be prone to thinking of it as just another euphemism for cost cutting. Sometimes even people working for Lean organisations place too much focus on the potential for saving money from waste reduction, honing in on financial benefits rather than looking at the broader, longer-term picture. In my view, there’s so much more to measuring the value of Lean.

Give it time

The first variable to consider is timeframe. Lean is a significant investment for a business to make and it’s understandable that the board will be looking for some fairly swift return on that investment.  When planning Lean implementation, ideally you should build in some quick wins which help validate the decision, but it’s vital for everyone to understand that the true benefit of Lean lies in long-term improvement.

Set out short-, medium- and long-term goals and be clear on how progress will be measured. Some of these metrics will be financial, but others could be focused on softer measures such as feedback from customers and suppliers, improved team dynamics or staff training and development gains.

People improvements

With many years in Lean recruitment under my belt, I’m particularly interested in looking at the value of Lean in terms of people development. A successful Lean enterprise will almost certainly find that one of the most powerful benefits of the programme is the positive impact on the staff, their behaviour and their skills.

Lean empowers people at all levels of an organisation to perfect a wide variety of skills, from problem solving and project management to innovative thinking and process planning. Lean teams tend to be more committed, more focused and more productive and, in my experience, will be more invested in their current employer and be less likely to leave.

Cultural benefits

Such gains in people development go hand-in-hand with broader benefits related to improved company culture too. A happy and fulfilled workforce, where there is a strong team dynamic, engenders a better corporate culture, which in turn has a positive effect on corporate reputation and performance. There is nothing more powerful for building a successful brand than an enviable culture and working environment as it enables you to attract and keep the best people.

Drill down into the data

Returning to the number-crunching aspects of measuring the value of Lean, it’s also important to mine the data effectively to measure the full impact of what you’re doing.

For instance, it may be the case that your production costs have gone up because you’re spending more on better quality materials, or you’ve invested in new plant equipment, but have you also seen a reduction in product defects, customer returns and wastage? Have you made efficiency savings in your supply chain, reduced your stock holdings or shortened the production cycle?

Too much focus on basic cost cutting disguises the myriad of financial benefits which can be produced by Lean, particularly in the long term. Put simply, when weighing up the value of Lean, think about all aspects of waste reduction (e.g. time, materials, elimination of errors, recycling, energy use, staff turnover) rather than taking a simplistic approach.

Whether you’re struggling to evaluate the benefits of Lean or need help persuading sceptical colleagues of the value it’s creating, we may be able to help you. Contact me for more information about our affordable Lean consultancy services.

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