“A handful of simple and implementable lean business tips for small businesses and entrepreneurs”
Lean Business Tips #49- Be a Factory Rat
Taiichi Ohno, the Chief architect of Toyota Production System, had always insisted his managers be close to the action, in touch with reality. He deployed a concept called ‘standing in a circle’ to carefully observe reality by drawing a chalk circle on the floor, telling the managers and engineers to stand in it for several hours observing reality. This practice in intensive observation helped them in ‘lean thinking’ and identifying the non-value-added activities from the customer perspective.
Lean Business Tips #48- Quality Vaccine
Philip Crosby (June 18, 1926 – August 18, 2001) has formulated a “quality vaccine” that consists of three distinct management actions- determination, education, and implementation. Top management is responsible for continually administering the “vaccine”. Determination surfaces when management sees the need to change. Education is the process of providing knowledge to prevent problems. The implementation consists of developing a plan, assignment of resource, and monitoring the progress.
Lean Business Tips #47- Push Vs. Pull
“Push” means producing even if there is no demand. The push system requires making as much as you can. Go as fast as you can. MRP is a push system. “Pull” means you pro- duce only when there is a customer order. Make only what the customer has ordered. That is, don’t make one until the downstream customer wants it. The magic of pull is in the control of work-in-process, which brings benefits to the firm.
Lean Business Tips #46- Stop production
“Stop production so that production never has to stop” is one of the concepts of Toyota Production System. If a defective part or equipment malfunction is discovered, the machine should automatically stop or operators should stop the work and correct the problem, rather than continuing to produce. An operator is empowered to take control and stop the production line if he determines that something is wrong. Because lean manufacturing dramatically increases the importance of building things right the first time.
Lean Business Tips #45- Law of Utilization
When your order flow increases, you often consider allocating more manpower or machines without looking into the utilization rate of the asset. If an asset’s utilization rate increases above 80%, without other changes, cycle times increase exponentially. utilization of a resource is equal to the product of the throughput of that resource and the average service requirement at that resource. By increasing the throughput steadily, you can improve the utilization without adding further resources.
Lean Business Tips #44- Small Wins
Small but regular tiny improvements made every day in the business can yield a cumulative increase in the profit. Even though anyone small improvement by itself might have a minor effect, that effect doesn’t disappear as longs as similar improvements keep on happening. Whether you are trying to solve a major scientific mystery or simply produce a high-quality product or service, everyday progress—even a small win—can make all the difference in how they feel and perform.
Lean Business Tips #43- What do we know?
Entrepreneurs must be willing to challenge what they think they know and ask themselves how they know it. Is this knowledge accurate and supported by data from internal assessments and market sensing?. To answer what do we know, one should review recent performances, gather essential information. As Benjamin Disraeli perspectively observed, “To be conscious that you are ignorant is a giant step to knowledge.”
Lean Business Tips #42- Spend in Prevention
A rule of thumb says that for every dollar you spend in prevention, you can save ten dollars in return. Prevention activities include, training, redesign the product, purchase new equipment, make a modification, analysis for improvement, establishing management system etc. Increasing prevention activities gradually resulting in increasing productivity and quality of your business.
Lean Business Tips #41- Make Big Impact with Few Projects
Selecting projects is crucial for business success. But, selecting multiple projects often resulted in no achievement. The key to success is choosing very few projects and align your whole team for success. When we select a project make sure that the project makes a big impact on the business. To have a big impact right away choose the project on a significant bottleneck or other major hindrances to business flow. If you are not sure what is your bottleneck, choose from the area where everything is a mess.
Lean Business Tips #40- Short-Term Vs. Long-Term
Managers are controlling people, environments, and systems to achieve the organization targets. These activities are consuming most of their time in a day. While it is critical to maintaining the short-term results, a manager must have the discipline to think and work for long term results too. Successful managers give equal importance to both quarterly results as well as their vision because they know it is interrelated.
Lean Business Tips #39- Manage Visually
It is important that everyone in an organization be able to actually see how things are going. Performance data need to be posted throughout the work area so that everyone knows how the organization is doing. Information, when transferred from a few key individuals to as many people as possible, making the organization as a whole more powerful than ever.
Lean Business Tips #38- Use Crises as an Opportunity
Two brush strokes write the word crisis in Chinese; one brush stroke stands for danger: the other for opportunity. Crises always force management to think out of the box. It provides an immense opportunity to realign an organization’s goal to meet specific customer needs. It cut shorts non-value-added activities in the business. The stability of a ship is known when the sea state level is critical, similarly, the capability of a business is known when the crisis is turned into an opportunity.
Lean Business Tips #37- Create Demand
It is always easy to fulfill a demand than creating it. Creating a new demand involves a lot of hard work in the business and the risk of failure is also considered as more. But, successful entrepreneurs today, have achieved their goals by creating a demand for their products. They were always ahead of the world and foresaw the demand for a product prior to others. So, sense the future, create a product, and create demand in the market.
Tip #36- Make Your Company Flatter
It means to reduce the level of the hierarchy, so as to eliminate the travel of information from one layer to another. Such layers slow down the performance, decision-making process, and bureaucracy. Sometimes, these layers provide a promotion to employees instead of raises. That is better than doing nothing. Jack Welch says the managers should have ten direct reports at the minimum and 30 to 50 percent more if they are experienced. This will make the organization chart more flatter and efficient.
Tip #35- Avoid Tool-Oriented Approach
“If the only tool you have is a hammer, you tend to see every problem as a nail”. So, there is a danger in taking a tool-oriented approach to quality instead of the problem-oriented or results-oriented approach. A manager must learn to understand the problems and try o resolve those problems by various means, including the choice of proper tools.
Tip #34- Invest at Constraints
Just to improve the productivity of a process alone, you cannot invest money in the new machines or manpower. The principle is that the process must be a bottleneck to the whole company. By investing in the bottleneck-process, the firm can directly increase its throughput, reduce its work in process inventory, and improve the cash-flow through sales.
Tip #33- Use Value Analysis before Purchasing
The purpose of Value Analysis (VA) or Value Engineering (VE) is to simplify products and processes. Its objective is to achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer. Typically, purchasing departments use the VA as a cost reduction technique. The VA involves brainstorming such questions as,
- Does the item have any design features that are not necessary?
- Can two or more parts be combined into one?
- How can we cut down the weight?
- Are there non-standard parts that can be eliminated
Working on the above lines would benefit an organization to reduce its direct purchase cost.
Tip #32- Say No to all other Good Ideas
Execution requires narrowing down our focus to a few good ideas. A company produces a few products with the greatest quality is completely different from a company produces a great variety of products. A person who masters one skill in his lifetime is uniquely different from a person who has knowledge of many areas. While it is important to select a few good ideas and stick to it, it is also important to say No to all other good ideas which stop us from achieving more.
Tip #31- Define the Problem
Defining a problem well is as important as solving the problem. People have a tendency to jump into a conclusion once a problem occurs. Because they think they know the answer. This leads to cognitive bias in finding the correct solution. One of the famous quotes of Albert Einstein is, “ It’s not that I’m so smart, it’s just that I stay with problems longer.” As per Charles F Kettering, “A problem well stated is a problem half solved.”. This provides us a hint that, spending more time in defining and understanding the problems helping in resolving the problems easier as well as more precise.
Tip #30- Mix Your Strategies
No one strategy can help you achieve the desired growth in a silo. What you need is to mix and balance the strategies and use them continuously. The keyword here is continuous. The moment you stop working on a piece, the strategy will fall.
Tip #29- Measure Critical to Business
“If You Can’t Measure It, You Can’t Improve It.”, But that does not mean you should measure everything. Identify a critical measurement that will speak the overall performances of a system. if you are running a small business, you cannot afford to spend more resources on monitoring and measurement. For example, you need only three measures to know whether an operation improves i.e. throughput, operational expense, and inventory. Similarly, you need to identify the critical to business parameters in each field and start measuring it.
Tip #28- Shift from Judgment to Informative Inspection
Judgment inspection simply distinguishes defective from non-defective products and issues a ‘post-mortem certificate’. Improving judgment inspection will have no effect whatever on the actual defect rate. To actually reduce the defect rate, processing must be informed, whenever a defect is discovered, so that steps can be taken to correct the processing method and prevent a recurrence. The inspection that performs this function is called informative inspection, because it feeds information back to processing.
Tip #27- Three Kinds of Objectives
The objectives for any improvement projects will lead to only three kinds. Reducing Operational Expense, Reducing Work-In-Process Inventory, Increasing Through-put. If the improvement does not satisfy these conditions, then it is not considered as an improvement.
Tip #26- Reduce Variation
Jack Welch, said in one of his books that, the customers are looking into the variation of a product than the mean. It means when you buy a product or service, you always expect that the product would perform consistently similar to what you have experienced before. But every product has variations. It is not going to be the same, though it looks like. So, an organization must follow a system to reduce variations in the products. The lesser the variation, the more customer satisfaction.
Tip #25- Think Twice, Do Once
I hope you might have heard about the proverb ‘Measure Twice, Cut Once”. It stresses the importance of planning a task before executing it. Typically, an organization spends 20% of its time in planning and 80% in execution. An ideal organization would spend at least half the time in planning the activities to the micro-level and execute it in a smart way to complete as quickly as possible which is in less than half the time available. The principle of lean management also similar to this.
‘Think Twice; Do Once.”.
Tip #24- Measurement System Saves Money
When the measurement is wrong, everything will go wrong. Many small scale industries, giving the least priority in developing infrastructure for measurement. The variation in the product dimensions is recognizable with only a good measurement system. Have your instruments always calibrated? Has it been calibrated from an international standard laboratory? Because measurement system keeps your product within specification and makes your quality counted.
Tip #23- Go and See
When a problem occurs, it is our natural tendency to provide an immediate solution based on our previous experience and the little information available with us. The ideal way of solving a problem is to go and see the area where the problems occurred. In Lean management, this activity is given the highest importance. A manager must prepare himself in going to the Gemba (workplace), identify the facts, listening to the workers, and visualizing the actual problems. There are two kinds of managers – Table managers and Gemba Managers. You have to shift your mindset to the second one.
Tip #22- Machines will Speak
If you stand in front of a machine while running, it will speak to you through noises generated by frictions, wear & tear, misalignment, poor maintenance, damages, etc. This is equivalent to how a doctor conducts a medical diagnosis to the patients before giving the treatment. He ought to listen to the patients carefully. Similarly, a maintenance person or an operator must listen to their machines to understand its problem. The machine will complain to you about how poorly it is maintained if you start listening.
Tip #21- Focus on 1% -Rule
You should identify what 1% of your processes are affecting the throughput of 99% of the processes. Put more capacity, more resources, reduce waiting time, easy the transport on the 1% area to get the free flow of products from the remaining 99%. Focus on the 1%.
Tip #20- Eliminate Waiting
If you have a service-oriented business, then the queue is nothing new to you. We often make people wait. isn’t it? , In hospitals, retail stores, ticket counters are some examples where we maintain a queue for a long time. In manufacturing terminology, the material which waits in the line for processing is considered as Work In Process (WIP) inventory. This is considered as one of the waste as it is eating their profit margin. Similarly in the service business, the effectiveness of workflow is defined as how quickly a customer is processed. This is to avoid people waiting in line. Rule – The fastest service is the best service!
Tip #19- Define Layout
Does your product or services follow an optimum layout pattern inside the unit? There are four types of layouts. i.e. Process, Product, Cellular, and Fixed Position. Each layout is suitable for a different type of industries. A ship is produced using a fixed-position layout. An automobile is produced using a product as well as cellular layouts. A hospital is using a process layout. Knowing the layouts and using it correctly would save more time and considerably reduce the non-value added activities.
Tip #18- Action Vs. Perfection
I know people who are striving to achieve perfection in whatever they do in their business. In anticipation of perfection, they even don’t mind delaying their decisions and postponing things for a better tomorrow. Statistics say the probability of success was more when the actions were taken more frequently than perfectly. Things will never be perfect at the beginning. But it doesn’t matter. Action is more important than perfection. If you want to start something, start now and make it perfect later.
Tip #17- Read the Leaders
Business management techniques have been introduced to the world through some great books written by great leaders in the respective profiles. I wish you could read all those books available in the market. Though the basic philosophy remains the same, the views of those leaders are uniquely different from other perspectives. Business can’t be learned from just books; it is an art. It requires a deep connection with those leaders through their works and practicing it in your business. Read the leaders, so you can save more lifetime by avoiding mistakes that someone has already done.
Tip #16- Identify the Constraints
If you would like to get an immediate result in terms of improving the business considerably, then you must identify and eliminate the constraints in your business. A constraint, sometimes also called a bottleneck, is a showstopper or major hurdle in executing your business smoothly. Like, for example, getting enough orders from the market may be a constraint to feed the full capacity of your operation unit, getting material on-time with acceptable quality may be a constraint in meeting your customer requirement every time and reducing the cycle time of operations to meet the market demand promptly and so on. Tackling the constraint first with all your resources, innovative ideas, and teamwork can be an effective solution to improve your business in a short time.
Tip #15- Inspection to Prevent Defects
The concept of inspection is manipulated today to check whether the product is within the specification or not. But, these inspections are not adding any value to the product. It only prevents the wrong product dispatched to customers. Our goal must be to eliminate defective products completely. Therefore, the inspection process must be designed to prevent the defects and not for detecting the defects.
Tip #14- Have Stand-up Meetings
A stand-up meeting (or simply “stand-up”) is a meeting in which attendees typically participate while standing. The discomfort of standing for long periods is intended to keep the meetings short. If all your daily meetings are changed to stand-up meetings, then the resulted time savings would be phenomenal over the months. You would be amazed to see how people are cutting short their discussions and focus on results to conclude fast.
Tip #13- Seek to Understand your Customers
An effective salesperson first seeks to understand the needs, the concerns, and the situations of the customer. The amateur salesman sells products, the professional sells solutions to needs and problems. (Stephen R Covey, from the book The 7 Habits of Highly Effective People) It requires time and a strong commitment to understanding the true needs of your customers before selling your product. Because we need to sell values, not products.
Tip #12- Benchmark others
The famous Kanban system concept in automobile manufacturing developed by Taichi Ohno, the then production manager of Toyota. The concept was developed by benchmarking of the American supermarket system where the required amount of material is replaced frequently from the stock to enable meet the capacity and flow. There are many innovations often developed by benchmarking other concepts from completely different fields. In order to benchmark good concepts from others, one needs to see the things as they are and correlate with the activities which we are doing.
Tip #11- Use Commonsense
It is highly unfortunate that using mathematical estimation for simple problems which can be resolved using our commonsense. Leaders are those who offer simple solutions to complex problems. obviously, many times, the problems may not require a detailed analysis. But, still, the engineering mind makes it difficult to resolve. Engineering is nothing but commonsense. We should use our intuition with rational thinking for resolving most of our problems.
Tip #10- Think Globally
A problem is often recognized as an individual entity where it occurs. If a machine is under break down, the conventional thinking approach assumes the machine is a problem. But, it might be possible that the problems are associated with the operator, methods of operation, improper maintenance, utilities, raw materials, organization policies, other machines nearby, and sometimes environment. Think globally means the problem needs to be understood from all the perspectives that are interconnected as a system. Any decisions taken without global or systematic thinking would affect the decision.
Tip #09- Establishing Takt Time
Takt is the time it takes to produce one piece of product. It should be synchronized with your customer demands. For example, in a food delivery chain, when your customer expects a pizza in every 10 minutes, all your upstream processes to be synchronized to meet the demand of one pizza every 10 minutes. Either producing less or over the customer demand is unacceptable. So, establish the takt time and align your processes accordingly.
Tip #08- Ask for Data
We take decisions either from the intuitive brain (based on instinct) or rational brain (based on logics), But, the best decision often arises when the rational brain evaluates the intuitive brain decisions, It means all our instincts need to be logically evaluated during the decision-making process to avoid biases. You require data to make logical decisions. sometimes, due to the unavailability of data, we tend to make decisions based on our instinct. This must be avoided. if there’s is no data available, it is our responsibility to ask for data.
Tip #07 – Remove the barriers
You need to run the business flow smoother, faster, and efficient. The barriers are some unexpected events that are occurring to reduce the business flow. It is important to prevent barriers in the business flow. The most useful tool is FMEA (Failure Mode Effective Analysis) which helps to foresee the problems and take appropriate controls in a process. FMEA tool is used as a means to eliminate or reduce the barriers in the business processes.
Tip #06 – Focus on one thing at a time
Successful entrepreneurs exhibit a great character of doing one thing at a time. We often misguided by somebody that they are enjoying multitasking. If we look at on periphery we may believe that the above statement is true. But, to the very core, they manage people who are doing different tasks. personally, they would like to finish the meeting, task, and project one by one. The success of focusing on one thing at a time always reaps the best possible outcome which inturn creates enthusiasm about the remaining.
Tip #05 – Create a Scoreboard
Can you imagine a match without a scoreboard? will it be interesting to watch? Forget about the audience, even the players would be confused about their status of progress. That is how your employees will behave if they do not see a scoreboard for their work. The team’s progress to the goal should be displayed at them for easy reference. The score will them where they are and how far the journey is. Create a goal-based scoreboard for your team.
Tip #04 – Don’t be busy
Seems interesting…we have been taught to be busy always as it is counted as being productive. But, being busy doesn’t mean being productive. Know the difference between both. You are productive, only if you work on your key goals which are adding value to your business and its goals. All other activities are just non-productive.
Tip #03 – Identify Waste
There are many activities which we are doing because it has been done for years. We do not see that as a burden at all as it has wired into our brain nerves. We must come out of this approach. So, we need a different mindset to see things differently. Start your brain to question everything you see as a wasteful activity and collect evidence to prove that it is adding value to the business. Wastes are often invisible, and they require an open-minded approach to see and accept.
Tip #02 – Listen to Employees
We often neglect the importance of listening to the inner voices of our workers, employees, managers, and some times top management too. If each one in the organization starts listening to others with open-minds then the root of the problem can be surfaced out very easily. Much lean organization reserves time for listening to workers day to day issues. Listening helps you to understand the problem and other’s views better.
Tip #01 – Respect Every Individual
Though it is widely known to all, without this basic you cannot implement lean in the organization. We must treat everyone as a customer. No more barriers based on the hierarchy. Starting from security at the gate to the CEO, everyone to be treated as our great customers. This is something you can start immediately from now. You can see the changes very quickly…
- A study of the Toyota production system – shigeo shingo
- Lean Production Simplified by Dennis Pascal
- Three Experts on Quality Management by J. Gerald Suarez