Strategy
Streamlining Success: How Lean Optimisation Transforms Your Business
By Shay Lynch
July 13, 2024
Key Points Summary
Lean optimisation is essential for cost management and strategic growth in business. By focusing on continuous improvement, lean principles help reduce costs, improve quality, enhance customer experience, and boost employee satisfaction. Implementing lean involves understanding value from the customer’s perspective and eliminating non-value activities. Benefits include faster delivery times, better cash flow, and increased capacity for sales without extra labour. Lean is more than tactics; it’s a culture of collaboration, value creation, and open communication. Embracing lean leads to sustainable profitability and sets the foundation for successful business scaling.
Introduction
This article was particularly interesting for me to write about. Process optimisation is a subset of Cost Management, which we discussed last week. Having grown up in a background of Lean and Lean Six Sigma, this topic is close to my heart. Regardless of the process, sector, material, or information flow, I’ve never encountered a process that can’t be optimised through lean methodologies.
Lean operates on the principle of adding as much value as possible at the lowest possible cost without taking shortcuts or cutting corners. Quality is built into the process, ensuring it’s done right the first time. Developing processes to achieve this takes time; however, the effort is worthwhile as the cost of unresolved problems over time is substantial.
Understanding Value in Lean
So, what is value? Technically, value is described as what your CUSTOMERS are willing to pay for. By definition, everything outside of that is non-value. When you add up the non-value components in your business, it’s substantial. Consider the cost of:
- Unsolved problems over time
- Inefficiencies
- Compliance requirements
- Support & processing departments
- Tax returns
- Overheads
Customers don’t care for any of these, yet they must be addressed. To ensure maximum return for your output, it’s crucial to have all areas of your business fully optimised, both functionally and cross-functionally. You are one team.
Profit Through Process Optimisation
One of my biggest lessons in business early on was that profit isn’t just about increasing prices; it’s more about managing overheads sustainably. For those who think lean is just for manufacturing industries, lean has an even greater impact on the service sector or service sides of businesses. In manufacturing, there are already constraints; in people-led processes, there are more inefficiencies and fewer standard practices, often leading to varied results and levels of efficiency.
The Mechanics of Lean
So, how does lean work? It operates on two levels:
Do things better
Do better things
Within both levels, the process is iterative. It’s about continually measuring and improving, not settling for the status quo.
Benefits of Lean Optimisation
- The benefits include:
- Cost reduction
- Improved quality – right the first time
- Enhanced customer experience
- Faster delivery times
- Better employee experience
Scaling with Lean
Lean is a strategic advantage. When you reduce costs and lead times, what happens? You get paid quicker. This means your cost of business reduces and your cash flow cycle improves –
A DOUBLE win for the business.
Additionally, capacity is created within the business, allowing for increased sales without requiring extra labour, leading to profits on top of profits
A TRIPLE win for the business.
This is actually the first and most important step in any scaling strategy:
To scale your business without scaling your costs.
Lean isn’t just about ground-level tactics or creating ad hoc initiatives. There are many tools in the Lean and Lean Six Sigma arsenal, and while they are a great starting point to get people thinking, lean is much more than that.
Lean as a Culture
Lean is a way of thinking, a culture. A lean culture embodies:
Continuous learning and improvement
Collaboration, where everyone works together to enhance processes across functions
Value creation
Empowered employees
Quality
Open communication
In Conclusion
Incorporating lean optimisation into your business processes is essential for cost management and strategic growth. By nurturing a lean culture, you not only improve efficiency and quality but also create a more empowered and engaged workforce, leading to enhanced customer satisfaction and increased profitability. Lean is more than just a set of tools or tactics; it’s a holistic approach to business that drives continuous improvement and sustainable success.
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