Operational excellence. Toyota Production System. Six Sigma. All of these are different names for the same methodology: Lean process improvement. Widely adopted by companies across many industries, Lean methods have helped businesses improve financial and operational performance.
Maintaining Lean standards over time, however, can be a challenge. Often times Lean efforts backslide, stall or consume resources without generating the desired results or return on investment. If your company finds itself in this situation with its Lean process, here are two ways to reignite Lean momentum and reroute toward profitability.
1. Readjust Key Performance Measures
In any business, the only constant is change, so it is important to make sure your operational Key Performance Measures (KPM) are regularly reviewed and updated to adapt to changes. Readjusting KPM helps to ensure your team is managing with a relevant set of metrics to accurately reflect recent changes in important areas like customer expectations, competition, product or service offerings and company strategy. Updated KPM will also shed light on new gaps in performance that should be targeted for improvement.
You should consider annually revisiting KPM to ensure top-line metrics are aligned throughout the business, from front office to shop floor. Consistent KPM review and fine-tuning is key to ensuring Lean has the largest impact on financial and operating performance and helps demonstrate Lean’s value to your business.
2. Tackle that High Profile Improvement
Another way to inject new energy into your Lean efforts is to take a step back and look at the big picture. Every organization has at least one problem or opportunity that everyone (even customers and suppliers) knows about but has never addressed. Find one that impacts the entire value stream or supply chain and expand the scope of your Lean efforts to address it. Think about your order to cash process or whether your lead time provides a competitive advantage. What are your results for on time deliveries? What would happen if you could increase capacity by a third without capital investment? Focusing your team around solving a single, large problem or taking advantage of a significant opportunity brings attention, resets focus and creates a rallying point for the company.
Effective execution of Lean has many benefits, including higher EBITDA, improved cash, shorter lead times, reduced operating costs and better delivery performance. These benefits are too great to sacrifice by letting your Lean efforts flounder.
If your company isn’t getting the expected results from Lean, try the above tactics to reignite momentum and enthusiasm. RKL’s Operations Consulting team is here to help – contact me at firstname.lastname@example.org or 717.394.5666.
Contributed by Robert E. Pozesky, manager in RKL’s Business Consulting Services Group. Bob specializes in operational consulting, with extensive experience working with clients to execute Six Sigma, lean and organizational development strategies to support growth and performance improvement.
Don’t miss the latest RKL business analysis and insights. Sign up for the monthly Working Capital e-news.