Benefits of Lean

As you research the decision to become Lean, you will undoubtedly consider the various benefits that you will get from implementing this philosophy. Knowing these positive aspects is important not only for your own decision making on whether to go down this path, but also for improving your odds of successfully getting your team on board.  Once you decide to pull the trigger, you will have to sell the benefits of Lean to your team.

Any change needs to be ‘sold’ to those who will be experiencing it. Continuous improvement, regardless of the philosophy you choose to use, is no different. You will have to convince people that the new system is better than the current way.

And that does not just mean good for the company. It has to be good for employees personally. In most cases, this means that you have to show them that the benefits outweigh the costs.

So, what are the benefits of a Lean system for continuous improvement?

• Morale: One of the intangible benefits of continuous improvement is that things just work better. This predictability helps reduce stress and makes people more satisfied in their job. From the company perspective, high morale has been shown to have a connection to lower turnover and to customer satisfaction. From an employee perspective, it goes without saying that high morale is a good thing.
• Lead Time: With less work-in-process, it takes less time to turn components and raw materials into finished goods. Not only does that reduce the costs tied up in inventory, but it also means that customized products can be built and shipped much faster. Plus, for employees, shorter lead times means less chance for changes that disrupt their work.
• Inventory: As flow is established and work is streamlined, there is less material sitting around in the form of WIP. That means less inventory. In addition, the kanban process means more frequent orders of smaller quantities, which further reduces inventory. This acts as an infusion of cash initially as existing inventory is consumed. Down the road, it increases inventory turns and reduces holding costs. Employees benefit because there is less inventory to search through looking for the right items. Counterintuitively, lower inventory in Lean means fewer stock outs because it has to be more closely managed, usually through kanban. That means less frustration.
• Productivity: As waste is removed, it takes fewer people to make the same product. In fairness, productivity gains benefit employers far more than they do employees. If a process is made more efficient, new work is added to the employee. What does get better for employees, though, is that when a process is highly productive, it also tends to be consistent. That means steady pace and fewer production emergencies that require working at breakneck speeds.
• Teamwork: Strong processes means people can help each other. People feel less out of control when they know they are supported, and they are more willing to reduce buffers. Most companies have a tremendous amount of waste buried in the form of people hedging against predictable problems. When people operate independently, they all have their own buffer. When they trust that they will receive support, they can use a shared buffer, which improves productivity.
• Reduced Variation: Variation is the bane of planning and productivity. It means you must add resources to a process ‘just-in-case.’ The more of this variation you can remove, the better your planning will be. For employees, the benefit is obvious. Less variation means less yo-yoing through the day.
• Flexibility: Many people assume that the focus on processes means that a company is less flexible. In truth, the structure lets people make better decisions on how to handle issues. In fact, good leaders often build ‘playbooks’ to handle the inevitable challenges and surges that occur in business operations. For employees, having a well-defined process means that they can move around more. It also means that they can participate in projects and training without worrying that their world will fall apart while they are gone.
• Openness: Lean forces abnormal conditions out into the open. For traditional companies, this is a problem because they focus on people. Nobody wants to look bad, so they hide issues and try to solve them on their own. In a continuous improvement culture, abnormal conditions are looked at as a process issue, and as an opportunity to improve. If you don’t know about a problem, you can’t solve it. This is one of the harder benefits to sell for employees. Intellectually, people can see why it is easier to address a problem that is out in the open. Emotionally, it is not fun to be the one whose process is under the microscope. It only becomes a benefit for employees after they see that openness leads to problem solving.
• Motivation to Improve: The structure of policy deployment and KPIs (Key Performance Indicators) highlights opportunities to improve. More importantly, it gets people to commit to making those opportunities a reality. Agreeing to a formal, widely publicized goal spurs people to action. Keep in mind that this is different than just assigning a person to a goal. If they have no say in its development, they will grudgingly work on it, but the outcome will be the bare minimum. Lean brings out the best in people. This benefit is a challenging one for employees because of the difference in people’s work ethic. Some people will see this as a tremendous benefit because they strive for improvement. For others, they just want to keep their head down and ‘do their job’. They struggle with this push to get better. The truth is that not all people are built for the fast pace of continuous improvement.
• Team Composition: The previous benefit leads into this one. One of the challenges of Lean is that it is not for everyone. Some people struggle with certain aspects of it. They may not be willing to follow a process the same way every time. They may not like having a steady, reasonable pace as opposed to spikes of activity followed by lulls. They may not like the openness associated with its problem-solving efforts. Lean exposes those individuals who make life harder for others they work with. Every company has a few of these people that don’t pull their weight. The transparency that Lean brings makes these people either change their habits to support their teammates, or they leave the company. Sometimes this is a management decision, but more often, people self-select to leave a culture that doesn’t suit them. This benefits the company because people that resist continuous improvement efforts tend to act as anchors. It also benefits individuals because when people don’t pull their weight, it means more work for those who do.
• Quality: Strong processes and consistency breed high quality. Not surprisingly, this is of tremendous benefit to companies. It is also, though, tremendously helpful for individuals to work in an operation with high quality. Mistakes mean more work. It means conflict with other workers, or at least hard feelings. It means schedules get disrupted, often leading to unexpected overtime. When work flows without problems, employees are just plain happier.
• Space: Strong Lean processes require far less space than comparable non-Lean processes. There is less inventory cluttering up operations, and workspaces are more organized. For employers, it means less rent. For employees, it means less running around, and an easier time finding what they need.
• Quicker Problem Resolution: Good, consistent processes are easier to improve than inconsistent ones. First of all, problems jump out. And when they are identified, the fact that the process is well-defined makes it easier to solve those problems. Companies get better processes and employees have fewer nagging issues to deal with.
• Better Machine Maintenance: Total productive maintenance is a continuous improvement tool that links machine maintenance to production. Companies get higher productivity. Employees have less frustration from getting shut down and then having to figure out how to get caught back up.
• Supplier Relationships: Suppliers need good information and timely orders. They prefer to work with competent customers. The more you make their job easier, the more they will be willing to accommodate your needs. That’s because companies don’t have relationships—people do. The better your processes support your work with your suppliers, the more likely your team is to get preferential treatment when issues arise.
• Customer Satisfaction: Customer satisfaction translates directly to profit. It also links to better employee morale in a positive feedback loop. Being hounded by angry customers all day makes people surly. Surly people perform poorly in interactions with customers. But if customers are happy and you start each new contact in a positive mental state, those interactions go better. And, of course, a strong, improvement oriented company will have fewer complaints.
• Data Driven Management: Lean is all about acting with real information instead of gut feel. Far too often, leaders make avoidable mistakes because they act on assumptions rather than facts and data. Those decisions tend to be wrong more often than those that are formed on solid information. Competent leaders tend to have stronger trust with their team, which translates into more enthusiastic support of decisions.