Sunday, September 29, 2013

Productivity: Why We Love Lean

I can remember listening with my mouth open to our accountant years ago when he was trying to convince me that the only benefit of "doing lean" was less people to pay. He said that if you haven't reduced the number of people, then how can you say we were "better off" as a company?  I also chuckle when I think about being asked by one of our state senators, as he was touring our company ask, "how many jobs have you been able to add since you've been doing lean?"

Oh boy. Both are way, way off base. 

I think we all understand that there are many things about being in business that we have no control over. The economy, Wall Street, the weather, our competitors, commodity pricing. Also the need to grow. Growth is not an option. In business, if you're not growing, you're dying.

The real benefit of The Toyota Production System is the ability to GROW without throwing bodies at increased demand or at problems. We learn how to do exactly what our customer wants without as much blood, sweat and tears. The all important lean metric is "number of dollars shipped divided by the number of hours worked."  I promise that if you develop a culture of continuous improvement, you will be able to ship lots more with the same number of people. 

Back to our accountant. Even though we had ZERO interest in reducing body count, we did, in fact, reduce "hour count". In the form of overtime. Over time, overtime becomes part of people's way to make ends meet. It gets figured into people's budget. When you constantly and steadily go after the 8 wastes in all of your processes, the need for overtime is the first thing to go. You ship more with the same effort. The people in your company who rely on overtime to pay the bills need to trust you. They need to trust that they will see an increase in their compensation if they "buy in" to lean and do their part as we continue to grow, and don't add new people. Our people costs are usually our single biggest expense. It makes sense that if you don't need to add lots of people, the people who help you accomplish this should make more. 

Back to our Senator. Lean does not create jobs. Lean protects the jobs you have now, and it will help you grow sales by making you an easier, faster company to do business with. Lean is not about making improvements. It is about developing people.

2 comments:

  1. Your post emphasizes such an important message [Company should consider their people who rely on overtime to pay the bills, and financially compensate them when their lean efforts eliminate their overtime.]
    I thank you for this post. I wish more would emphasize this and other examples that Lean is supposed to be about the people first, then profits. (and educate them bean counters too, lol)

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  2. Thank you so much for taking the time and to add to the value of my post. Best regards!!

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