Lean Is About Growth

I found a great article about growth.  I thought the author, Mike Collins, had a lot of very good information.  What caught my attention was the title of the article, “Lean Manufacturing Isn’t Enough.”

I had no idea the article was about growth from the title.  The article started out:

Top line growth will require a different kind of plan that should be developed in parallel with any process improvement projects. If not, the company will get to the end of its lean journey with plenty of new capacity and no new sales.

This right on.  As a company improves and becomes more efficient, then space, people, and equipment start to free up.  A company practicing good lean thinking does not lay off people due to improvements.  The company asks the question, “What value added things can I do with the freed up equipment, space, and people?”

This is a growth question.  It allows the company to produce more product which will generate more revenue using the same amount of people, equipment, and space.

More from Mike:

Several years ago I was doing a seminar in Orlando on growth planning. The audience was comprised mostly of consultants who sold lean manufacturing and Six Sigma services to manufacturing companies. At the end of the seminar, I asked them what measurements they used to tell if their clients had become lean. They told me that they were lean if the manufacturing company had excess capacity for more sales.

I am a little worried that “Lean Consultants” had such a narrow definition of whether their clients were “lean” or not.  I really like Mike’s question back to them:

I then asked them: If they had created this excess capacity, how did they ensure there would be more sales?

Mike’s explanation of the importance of a growth strategy was a great one:

My response to these people is that a marketing plan should be part of the CI process. Increasing top line sales and overall growth are not going to automatically happen because you are Six Sigma certified. Top line growth will require a different kind of plan that should be developed in parallel with any process improvement projects. If not, the company will get to the end of its lean journey with plenty of new capacity and no new sales.

I couldn’t agree more with Mike’s view on this.  Improvement and growth should be thought of in parallel.  That is what I talk about with the facilities I am working with.  The improvement part is fantastic, but now what are you going to do with the freed up people, space, and equipment?

I don’t know Mike’s understanding of lean, but when he mentions coming to the end of the lean journey.  I think he is referring to becoming efficient but having nothing to do with the freed up people, space, and equipment.  So now where does the company go?

Mike comes from a perspective of wanting to save American manufacturing.  The rest of the article goes on to explain some growth strategies.

It was a very good article.  The title does not convey the true message and makes me wonder if the person writing the title knew that Lean is about growth.

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Posted on November 1, 2010, in Customer Focus, Growth, Manufacturing and tagged , , , , , , . Bookmark the permalink. 3 Comments.

  1. Matt,

    Thanks for sharing this post. There isn’t enough discussion about growing the top line in Lean circles. I have seen where a companies entire focus seems to be to improve their margin through Continuos Improvement while the top line erodes. The top line needs to grow sooner or later to stay healthy.

    Chris

  2. Hi Matt,

    Planning to financially realize the operational gains made through lean should certainly be part of the continuous improvement cycle. The earlier this is done and at a higher strategic level of thinking the better. However growth isn’t always the way. Operating at a smaller scale and divesting of assets, when possible, can be a better answer for some organizations. This freee them to face the reality that their market and/or their management capability can only sustainably support a smaller enterprise. When open capacity must be used and top line growth is not available, we recommend in-sourcing as much as possible. This is highly counter intuitive to many leaders who have succeeded through outsourcing. To people accustomed to making decisions on piece price and other localized metrics, it may not make sense. Anything from janitorial services to the manufacture of sub components can brought back in house with some creativity, retraining and a commitment to keeping jobs local, even if the nature and pay scale of these jobs change radically. When growth is the answer the best way to pursue it is not as a single company but as a group of complementary firms who can offer a more complete supply chain solution together. This is value stream thinking for business development, which prevents future over-investment and suboptimization of the types that lead to the excess capacity that got them in trouble in the first place. There is a local manufacturing excellence consortium in the Puget Sound that is doing some innovative things in this area http://www.camps-us.com/

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