By Terry Corbell
The Biz Coach
Study: Why Lean Manufacturing Principles Often Don’t Work
Many businesses love cutting waste and costs for profits by using lean manufacturing principles, but many global manufacturers aren’t getting lean results, according to a 2011 study by the consulting firm, AlixPartners in New York.
The companies used the popular Six Sigma, Kaizen and Value Stream Mapping. The industries were principally aerospace, automotive, consumer products, chemicals, electronics and industrial. Most companies made $500 million or more in revenue. About 66 percent are in the U.S.
Here are the surprising results:
- The majority of respondents reported cutting 1 to 4 percent in costs, which is generally believed substandard.
- Thirty percent of respondents realized 5 percent or more in savings.
- About 14 percent didn’t know how much they saved.
- About 60 percent aren’t optimistic – they forecast their failure to continue to achieve at least 50 percent of their attained saving
Lean programs have been used widely in the past four decades, as a catalyst for cost-cutting and continuous improvement. Original adopters included General Electric, Motorola and Toyota.
So what’s the problem?
Apparently, the answer is rudimentary. The companies weren’t fully applying the principles to achieve a strong return, according to AlixPartners Managing Director Steve Maurer.
In essence, he suggested:
Businesses need to establish vigorous goals.
They should apply the lean principles culturally companywide, not just as a narrow list of tactics in a limited fashion.
My sense is that he’s right.
Don’t be dissuaded by the results of the study. In an uncertain 24/7 global economy, lean methods are needed more than ever. They do work if fully implemented.
When properly implemented, historically, lean programs have led to increased profitability and market share. But a company’s entire culture must be changed for a customer-based focus. And that takes a strong administrator or outside participant to coordinate and implement the cultural makeover.
AlixPartners’ site: www.alixpartners.com
From the Coach’s Corner, you might wish to consider these links:
Leadership Strategies to Profit from Employee Respect
20 Tell-Tale Signs – If You’re Under-Performing as a Manager
If Mergers & Acquisitions Tempt You, Consult HR Pros
“There is nothing so useless as doing efficiently that which should not be done at all.”
-Peter F. Drucker
_________
Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Excellent post Terry. Lean isn’t just about a few tools and daylong trainings – it’s an entire culture and way of thinking. It’s difficult to get much result from implementing lean half-heartedly. Even companies that have demonstrated a strong commitment to reducing waste for five or ten years are just starting to see the real results of such efforts. When many may think, “we are almost there,” in reality, they are just beginning. This can be discouraging, especially with the pressure of quarterly earnings reports. Nevertheless, creating a culture of continuous improvement will pay back dividends for decades to come.