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Lean Management: Beyond Cost Savings

29 September 2016 by National Bank
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Inspired by Toyota's lean manufacturing method, Lean Management aims to improve business performance, thereby creating value for customers. How can it benefit small and medium-sized businesses, and how can they implement it?

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“Lean Management isn’t a program or a set of tools or a miracle solution,” says Sylvain Landry, a professor in the Department of Logistics and Operations Management at HEC Montréal. According to Landry, the approach is too often associated with an advanced process optimization solution designed to reduce waste—and not much else. But Lean Management isn’t just about “doing more with less.” If the approach only leads to job cuts, it hasn’t been successfully applied. “It’s not about optimization through staff reduction, it's a daily management system,” says Landry.

A Cultural Shift

When properly implemented, Lean Management helps cut down on production delays and overall production costs while increasing production capacity at no additional expense. Ultimately, solutions are implemented more quickly, reducing project costs. “Lean Management improves overall business performance, which needs to be geared towards client satisfaction. It helps businesses stay competitive through continuous improvement,” says Nathalie Guillemette, Director of National Bank’s Continuous Improvement Expertise Centre.

To make it happen, managers need to roll up their sleeves and set in motion a profound change in organizational culture, notes Sylvain Landry. “Bosses have a tendency to call all the shots, to give orders, to dictate behaviour. Lean Management is about giving employees room to be proactive and “unlock their potential,” with everyone moving together towards the same goal. That means providing our people with coaching and training to develop their problem‑solving abilities,” he says. It’s as much about employees as it is about managers, who will need to learn a new management style that involves letting their teams come up with solutions to problems.

For the approach to work, the will to implement Lean Management needs to come from the top, and the whole executive team needs to be engaged in the process. “Leadership is a key factor. Everyone should be motivated and inspired to take responsibility,” adds Nathalie Guillemette.

A Daily Management System

There is a strategic component to Lean Management known as True North. The idea is to have a company vision that guides every decision, like the Northern Star. Key performance indicators are also tied in. All this is applied using a daily management system made up of a number of elements.

One key element is the use of short daily department or sector meetings. These are usually stand-up affairs where people gather around a visual station displaying company objectives, the actions meant to achieve them, and progress to date. Up and down communication is the norm. Managers also need to get out into the workplace on a regular basis to observe, coach, and bring strategy and operations into greater alignment.

Tips for Success

Sylvain Landry points out the whole process requires rigour and a clear agenda. “It’s important not to set too many goals at once and overload the visual stations with projects. That just makes teams less effective. Experience shows that when you reduce the number of active projects at any given time, people actually get more done.”

Properly informing and training upper management also makes success more likely. “We hold workshops for managers to help them understand what continuous improvement is and how it can make their business more competitive. They also receive training to help them manage employees differently—to make the switch from ‘command and control’ to delegation mode,” says Nathalie Guillemette. At the same time, employees receive coaching and training to help them develop their creative thinking and problem‑solving abilities.

Guillemette adds that the organization itself needs to demonstrate agility and ensure priorities are re-evaluated regularly, while staying focused on the main goal: client satisfaction.

“Lean isn’t just another management fad; it’s a holistic management system and culture, an adventure that companies embrace and pursue,” says Sylvain Landry. An adventure with significant benefits for the companies who choose to go that route.

Lean Management: Definition and Overarching Principles

Lean Management aims to improve business performance in order to create value for customers. It is based on a set of principles that include:

  • Continuous improvement of processes using a scientific problem-solving method
  • Process-based management and flow management
  • Interruption of human or machine activities as soon as a problem is detected
  • Standardization
  • Presence of managers and executives on the ground
  • Respect for people
  • Involvement of all employees in solving problems

Source:

Lean, kata et système de gestion au quotidien. Sylvain Landry, Martin Beaulieu, Éditions JFD, 2016.

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