If you have followed my blog for awhile you know that my wife started a hand-poured soap and bath and body business a few years ago. One of her suppliers sends out a monthly newsletter with different kinds of articles: how to make new products, different recipes and in the most recent newsletter an article on lean for the small business.
Though turning to “lean” operation processes may sound like a complicated undertaking best left to large corporations, small businesses are actually ideally equipped to leverage the advantages of a lean business model.
The author is correct. Being a small business makes it easier to create change more quickly as long as you are dedicated to it.
There are some good points in the article and some that are not even close. I know lean is a the en vogue thing to discuss but that doesn’t mean everything is always a good point of view. Better to have it mentioned and start a discussion though.
Some of the good.
You probably spend a lot of time in a day communicating with your clients, vendors, and staff. But have you ever taken a close look at why you have so many of those conversations? If the topics of your business conversations tend to involve a lot of the same questions, standardizing your operations could present a huge opportunity to save time, and eliminate such redundancies. Take detailed notes of the email and phone conversations
…get creative about how you might develop a standardized system for addressing such recurring issues. If customers tend to email or instant chat with similar questions, develop various email templates that you can send to them in a matter of seconds could prove a real time saver. Better yet, incorporate clear language onto your website that answers the questions so they donʼt even have to contact you.
I am more of the thought about trying to get to the root cause and better incorporate the clear language onto your website. This is a clear way to help eliminate waste and create more time to serving your customers specific needs.
Dave Kerpin suggests that you can improve the efficiency of every [meeting] (and save 900 hours a year) with a simple shift: Donʼt end the discussion until everyone clearly understands their next steps, and you actually begin your own. Kerpin insists this eliminates the odds that miscommunication and confusion linger (which will only lead to further conversation), and reduces the amount of time youʼll spend trying to fi gure out how you need to move forward.
Dave is talking about getting high agreement on what will be done and how it will be done. This is one of the core lean principles. He is right. It helps reduce confusion and communication that comes later from it so the work can be done more quickly.
Some of the not so good.
To adopt the common principles of lean management known as the 5 sʼs (Sort, Straighten, Sweep, Standardize, and Sustain), start by taking a look at your business routine…
This is a smaller issue in that 5S isn’t really a principle but more of a concept or tool to help highlight quickly when something is abnormal. The author never mentions this. Just that it can help “clean up” and organize your routine.
This is the one comment that truly gives me heartburn. It shows the engrained misunderstanding of economies of scale.
If you find yourself ordering inventory frequently, could you forecast more appropriately, to reduce the frequency and possibly, realize cost savings from placing one larger order?
Oh where to start with this one. First off, you can’t forecast “more appropriately”. Overcomplicated MRP systems have shown that repeatedly. If you are a small business and growing this is no way to forecast more appropriately. Understand your lead times and put in a visual reordering system that will trigger with enough time to get your orders in. You may need to adjust over time as you grow, but it is more efficient and cost effective.
More importantly, don’t just order in bulk to get savings. This is not a smart move. You need to understand what your demand is, how much space you have, how much materials cost and how long the inventory would sit around. If you order a larger quantity to get the savings but it takes 8 months to go through the inventory, you have tied up your cash so you can use it to grow in another area. As a small business, cash flow is extremely important. Another factor is the space you have. If the material is going to take up a lot of space that you don’t have, it is better to not have it spilling over in your work area. This is something to consider the long term savings in space and cash availability versus the immediate savings of a one time buy.
It was good to see lean talked about in a different arena besides manufacturing. The message may not always be perfect but it is better to start the conversation than not have it at all.
At the end of the year, John Hunter does a great job of facilitating an annual roundup of business and lean blogs at Curious Cat Management. The roundup is a review of blogs by other bloggers. This year I have the honor of participating in the Blog Carnival Annual Roundup.
A blog that I discovered this year was Lean Blitz written by Chad Walters. Chad is a student of the Toyota Principles and he does a great job of explaining each principle in a separate blog post. Each post has an example of the principle that can be seen in everyday life. If you are not familiar with the Toyota Principles I would suggest checking out Chad’s posts on the all 14 Toyota Principles.
Chad uses his business background to write about lean in business like the overproduction Domino’s Pizza has in their stores with all the pre-built pizza boxes. He also points out how Domino’s can use standardized work toe fold the boxes in the most efficient way like the worker in the TV advertisement.
Chad also shows how the Toyota Principles can help small businesses in a practical way.
A unique perspective that Chad brings is his experience in working with professional sports teams and organizations. He does a great job of relating the Toyota Principles to happenings in the sporting world. The Miami Marlins inability to think long-term in order to achieve their goals is a fantastic post about Toyota Principle #1.
Being a very large St. Louis Cardinals fan, I really enjoyed the post about the filth at Wrigley Field (home of the Chicago Cubs). Chad uses data sited from studies and then relates it to having a good 5S program in place and using visual management. The morale increases everyone is happier. Is this the reason the Cubs can’t win?
Chad talks about other lean concepts such as long lead times and how sporting organizations are losing revenue due to long lead times. Texas A&M got off to a great start in football this past season and their quarterback, Johnny Manziel played well enough to be in the discussion as a Heisman finalist as the best college football player. The university had long lead times on the jerseys for Manziel and ended up leaving a lot of cash on the table and fans unhappy when they couldn’t get one.
Chad has created a unique blog at Lean Blitz. It is a fun and different way to demonstrate lean principles in action in any environment.
BizTimes.com which is an online magazine focusing on business in Milwaukee and Southeastern Wisconsin had a great article about small businesses that are growing during the economic downturn.
The overall article is good and highlights several companies. The first company highlighted was Bradley Corp. which makes commercial bathroom fixtures and equipment. The article mentions the expansion to a new facility with a lean design. In fact, that is the only mention of lean in the three page article.
What I liked was the approach and and strategy the company took to growth and planning. Brian Mullet is the president of Bradley Corp.
“As a company, one of our foundations is we don’t look to make changes on a quarterly basis, we look more towards a long-term vision,” Mullett said. “There’s no better time than now, than today, to build a new building.”
In an example of Bradley’s forward-looking investment plan, the company purchased the 32-acre property for its new lean manufacturing plant in 1997, knowing it would allow for flexible use in future expansions.
More from the article…
The key to Bradley’s success, Mullett said, is a family focus on planning far ahead for growth. There are always five-year, three-year and current year plans in place.
“I’m the fifth generation here in the business, so I think that’s been distilled into our family,” he said. “It allows us to plan and be more effective in our business.”
This is more evidence of how thinking long-term has helped a company grow even during uneasy times instead of changing directions several times because of short-term thinking. It sounds like they may not be a publicly held company which can make it easier sometimes, but it sounds like the family values planning long-term. The family bought land in the 1990s and held onto it for over a decade waiting for the right time to build on it. It would have been way to easy to think short-term and build immediately on the land so they were paying for two pieces of property or sell it to get more cash during hard economic times.
I can’t say if they are a lean company or not, but thinking long-term is a good quality to have to build a foundation of lean thinking. Small businesses are going to be where more jobs come are going to come from to help with the employment rate. I hope more of them are thinking long-term.
I don’t know what is in the cheese in Wisconsin but I hope it spreads to other states and if it has how do we advertise it more.
Most organizations that I have worked with are reactive to most of their capital investments. The organizations realizes it needs equipment or needs to move equipment now (or this year). Organizations like this usually have a small capital budget, relatively speaking. Justification becomes a daunting gauntlet that must be run each and every time capital is needed.
The contrast is an organization that sets a 3-5 year vision, including layout and growth opportunities. When working with these organizations, they plan capital investments a few years out based on a larger plan. This allows the organization not to rush research on what the best or most appropriate equipment needed is.
Also, when looking forward to the next 3-5 years the organization only presents one proposal that gets reviewed for capital expenditures. When results are shown in the first year, the subsequent years become an easier review to make sure everything is still on track and make any tweaks that may be needed to the longer term plan based on what happened in the previous year.
My personal experience has shown it is much easier to get larger amounts of capital, if needed, than is usually planned. It also helps in selling the growth ideas the organization has. It becomes a lot more realistic and achievable when there is a longer term, proactive plan to point to.
If you are struggling to get the capital you need, my suggestion would be to try and be proactive through a longer term vision and execution plan.
When testing a product, I was taught to test it until it failed. When it fails, learn why it failed and make the product better. Instead, we test the bare minimum. What are the specs we need to pass? When we pass those minimum requirements, stop testing. The product is consider a success at this point. There is no need to go any further. Then it is used in the field in a way that was not anticipated and it fails. Whereas, if we tested the product to failure, we might have seen this and prevented it from happening. Then the product is used in the field in the unanticipated manner but it is still successful.
Why isn’t that approach taken more often with our processes or our thinking? Push our process or thinking until it fails. When it does fail, use it as a learning opportunity to improve. Looking back, the failures I had were some of the best lessons I have learned.
When I was in the auto industry, two of us were tasked with training and implementing a plant wide pull system in about 6 weeks. Neither of us had ever implemented a pull system. We had to develop the training, and then train 550 employees 6 at a time. We got to check the box, but we had some big issues with the system itself. We fixed the system as we went and it ended up working well. That initial system failure and learning has been invaluable as I have helped implement other pull systems at other companies.
This way of thinking ties in with Toyota Principle #1: “Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.” If we are practicing this principle, then a failure now that causes significant learning for the future will help us develop processes that are more efficient, robust, or just plain better for the future.
I believe that more than ever we need to pushing our processes and thinking all the way to failure. The ones who do this best will be big winners coming out of the economic downturn as well as receive more business that is returning from overseas. Why? Because the companies pushing the limits on their processes and thinking will better understand their capabilities, processes, and people more than the ones who didn’t push themselves.
Why don’t we push our processes and our thinking to the point of failure? Are we afraid of people perceiving us failures, instead of innovators? There is a lot of pressure put on us to succeed and succeed quickly. But are we getting the opportunities we need to push the limits? How do we overcome the fear of failing……….and the perception of being a failure? How do we get our companies to embrace failure as good thing? If and only if we use that failure to learn and improve so we can push our limits further.