If you’re like many Kiwis right now, your household budget might be feeling a little stretched. The grocery bill doesn’t go as far as it used to, you wince when you fill the car up with fuel, and those rising mortgage rates have you pondering which teenage kid you could kick out of home so you can get a paying student in… So what do we do? We tighten our belts. Maybe instead of having all the streaming channels on demand you choose just two. Instead of dumping leftovers each night, you turn them into tomorrow’s lunch. You finally cancel that unused gym membership you’ve been donating to for the past few years.
What you’re doing in this instance is what we call in business ‘lean thinking’. You’re dropping the waste and costs but in a way that doesn’t really affect your overall life. You’re just reassessing areas of your budget that you’ve just become a bit loose with and refining them.
Lean thinking, in business terms, is about running your business with the least amount of resources as possible — from actual materials to human hours and effort. It’s about limiting your resources… without dropping in quality.
At times where business is booming and budgets are fat and healthy, costs and nice-to-haves can slyly enter a business. Lean thinking helps you to observe how your business operates and look for areas where something isn’t adding any value to a customer. It’s about using what you have and thinking twice before adding something unnecessary. Lean thinking is no filler, no fluff, and no waste.
That goes for overproduction, waiting time, unnecessary transportation, overprocessing, excess inventory, unnecessary movement (say, a worker walking across the room to drill each product when they could have one plugged in on their bench), and defects.
Here’s an example of lean thinking. A few years ago, McDonalds touted that from that day on, they’d only make burgers to order. No more burgers sitting in the heating racks waiting for a customer to buy them. McDonald’s promise to the customer was that their burger would be fresh and hot and made just for them. It was a great marketing ploy and customers felt happy waiting just a little longer, knowing they’d be getting a burger made specifically for them.
The cynic in me would say that McDonald’s actual motive for doing this was to reduce the number of pre-made burgers that had to get binned because they’d sat there for too long. Biffing burgers hourly was clear waste and a cost to the business. Making to order creates far less waste. This is an example of lean thinking.
Lean thinking was originally credited to Toyota. In the eighties, the car manufacturer noticed American supermarket Piggly Wiggly (true story!) only reordered and restocked goods once those items had been bought by customers. By purchasing just-in-time, they had less capital invested in that waiting stock. Inspired by this, Toyota changed their in-house inventory method, holding only what their employees would need for a small period of time and reordering when necessary. They used this same attention to detail throughout the rest of their manufacturing, to cut back on unnecessary resources.
At the heart of it, lean thinking is a problem-solving approach that emphasises the importance of creating value for the customer while reducing non-value-added activities. Remember: customers will pay for a better product or service but they won’t pay for waste.
Why should you consider lean thinking in your business? Because there’s a ton of benefits, including:
1. Increased efficiency
By identifying and eliminating waste in business processes, companies can streamline operations and reduce the time it takes to produce products or services. This results in faster delivery times and improved customer satisfaction.
2. Reduced costs
By minimising or eliminating waste, companies can reduce the amount of time, energy, and resources needed to produce products or services. This can result in cost savings and increased profitability, particularly welcome right now.
3. Improved quality
Lean thinking focuses on improving quality by reducing defects and errors in business processes. By identifying and addressing the root causes of problems, you can improve the quality of your products or services and reduce the likelihood of defects or errors occurring in the future.
4. Increased customer satisfaction
This methodology is customer-centric, and the primary goal is to create value for customers. By reducing lead times, improving quality, and streamlining processes, you’ll automatically improve customer satisfaction and loyalty. Look at that McDonald’s example!
Here’s how you can incorporate lean thinking into your business:
1. Identify value-added activities
Value-added activities are those activities that add value to the customer and are essential to the production process. Once you have identified these activities, you can focus on improving them. You can also consider what your non-value-added activities are and eliminate them.
2. Map your processes
Process-mapping involves creating a visual representation of the steps involved in producing a product or service. You might not even be aware of some of them until you map them out! Process mapping can help businesses identify waste and inefficiencies in their processes and develop strategies to eliminate them.
3. Implement continuous improvement
This part is essential. It involves continually identifying areas for improvement and making changes to improve efficiency, quality, and customer satisfaction. You should implement a culture of continuous improvement and encourage employees to identify and solve problems in business processes. Better never stops!
4. Standardize processes
Standardizing processes is critical in lean thinking. It involves creating standard operating procedures (SOPs) for each process to ensure consistency and reduce variation. SOPs can help companies improve efficiency, reduce waste, and improve quality. This can start to veer a little into Six Sigma, which I covered HERE.
Lean thinking is a powerful methodology that can help your business improve efficiency, reduce costs, improve quality and improve customer satisfaction. Make an effort to focus on creating value for customers and minimizing any waste as you create your product or service, and it will go a long way to helping you achieve sustainable growth and success.
Start with process mapping and let me know where you end up — I’d love to hear if you find any McDonald’s burger moments!
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