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Resolve to Be Lean: Efficiencies for Any Industry
By Laurie Solotorow and Sarah Banks
Planning & Operations
Universal Advisor, 2006 Issue No. 1
Lean management principles, based on the Toyota Production System (TPS), have been effectively applied in manufacturing for decades. However, they’ve only recently begun to be applied to other industries. This begs the question: Why? After all, concepts such as safety, quality, customer and staff satisfaction, and cost-effectiveness transcend industry. All organizations strive to provide value-added products or services where the stakes are very high — so high that failure to satisfy customers can have devastating consequences.
What Is Lean?
Simply put, Lean is doing more with less. It’s a philosophy that applies specific tools and methods in a consistent, disciplined, and systematic manner to eliminate waste and improve operational effectiveness. Lean emphasizes the smoothest possible flow of work. The primary focus involves determining the value of any given process by distinguishing value-added steps from non-value-added steps and eliminating waste. This can be applied to processes related to all industries, such as sales, order entry, purchasing, accounts payable, invoicing, inventory management, and distribution. The Lean approach views any process through a sequence of steps in order to identify value to the customer, remove waste, increase flow, improve quality, and reduce variation.
In contrast, Lean is not a manufacturing tactic or cost reduction program and is most assuredly not a method by which important resources (staff) and assets are reduced. It’s not a short-term solution; rather, Lean is a journey where organizations can realize improvements in many areas.
How to Approach Lean Initiatives
To successfully implement and sustain Lean, organizations must:
- Ensure full leadership involvement and support. As Lean is a long-term approach to operating a business, it’s important that management is committed to the process.
- Appoint a Lean advisor. This is someone who has experience in implementing and sustaining Lean initiatives in other organizations. Often organizations employ external consultants to play this role.
- Appoint a Lean champion. This is usually a high performer within an organization that can lead the Lean initiatives and work and learn alongside the Lean advisor.
- Educate leadership, Lean champion, and employees on Lean. It’s important for all employees to understand the Lean philosophy and related tools/techniques before embarking on any initiative. The Lean advisor can facilitate developing targeted training that will meet the needs of all levels of the organization.
- Use a solid project management approach. As with any initiative, implementing and using Lean tools and techniques requires a controlled process to initiate, plan, and execute activities that achieve the organization’s goals.
- Take a phased approach. Begin with a small initiative such as 5S, a workplace organization methodology that provides a foundation for other Lean initiatives. Starting small will provide a “learn as I do” approach for employees while delivering quick success to the organization and building momentum for future initiatives.
- Establish and evaluate key metrics. Metrics indicate how a process is performing and are critical to identify where improvement opportunities exist and to determine if a Lean initiative has resulted in improved performance.
A Lean Example: How One Industry Is Responding
Ironically, Lean thinking is not typically associated with health care, where waste (time, errors, money, supplies, and bureaucracy) is a common problem. Because Lean emphasizes the smoothest possible flow of work, it can be readily applied in an industry where caring professionals tend to accommodate daily hassles and roadblocks by simply “working around” them rather than resolving them. By applying Lean principles and tools to improve daily operations, health care organizations can reduce and remove “wasteful” activities, allowing professionals in hospitals, labs, clinics, and long-term care facilities to focus more on activities that add value to patients. The result is doing more with less — assisting more patients with the same number of staff in the same (or less) space and reduced cost of service provision.
Contrary to more traditional approaches to improve financial performance, such as purchasing new technology or shifting more costs to patients, Virginia Mason Medical Center in Seattle, Washington, decided to use Lean management concepts to embark upon a total overhaul of its business philosophy. According to the June 3, 2005 edition of the Washington Post, the 350-bed hospital has saved $6 million in planned capital investment, freed 13,000 square feet of space, cut inventory costs by $360,000, reduced staff walking by 34 miles a day, reduced the distance supplies have to travel to get where needed by 70 miles, shortened bill collection times, slashed infection rates and, most importantly, improved patient satisfactionall thanks to applying these concepts. Nowhere is the transformation more visible than its cancer center. In 5 months’ time, the center slashed preparation time for chemotherapy from 3 hours to less than 1, which means it treats an additional 50 patients a week. With the increased revenue, Virginia Mason recruited another doctor and expanded their research program.
The End Result
When applied thoroughly and correctly, lean principles can have a dramatic effect on productivity, cost, and quality, by eliminating wasted time, money, and energy. The end result? An environment that’s effective, efficient, and truly responsive to the needs of customers’ vital goals for any industry!
For Your Consideration
Lean tools and principles can benefit organizations within any industry. Lean can:
- Reduce staff or organizational stress.
- Reduce overall operating costs.
- Improve customer satisfaction.
- Improve lead times (waiting times).
- Reduce inventory levels and costs.
- Improve quality of service/product.
- Engage workers to change their behavior.
- Improve cycle times.
- Organize the workplace.
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