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Lean Management Systems
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Lean Management SystemsLean Management Strategies and Systems originated at Toyota Motor Corporation and have been described many ways. They prescribe a way to manage all business processes to eliminate waste, to improve speed and responsiveness, and to enhance customer satisfaction
Lean operational competence complements and makes all the other elements of well-managed business more effective: strategy and vision, marketing, product design and engineering, sales management, information technology, and financial management
Why Lean?
It is a proven way to create significant value that benefits the company, its customers and its employees
Lean Management Systems are superior to other Operational Improvement Strategies:
| Lean Systems are: |
Traditional Programs are: |
| Customer Oriented |
Internally focused |
| Permanent and ongoing |
Temporary |
| Process-oriented and sustainable |
“Crash diets” (cost reduction efforts that do not meaningfully change the way business is conducted) |
| Company-wide (all processes) |
Focused on the non-performers |
| Led from the top |
Led by special teams that ultimately disband |
| Founded in the philosophy of continuous improvement |
Finite in time |
| Not Capital Expenditure driven |
Capital Expenditure intensive |
| Reinforced by appropriate financial and operating metrics (cash flow; customer focused measures; time-based measures, inventory turns) |
Discouraged by traditional measurements (standard costs; EPS; project return-on-investment) |
Lean Management Systems Deliver Superior Performance
Effective implementation of a company-wide lean management system will deliver substantial improvements in business performance
Productivity
- 5-15% annual improvement in output per employee
Asset Utilization
- Increasing inventory turnover rate
- 50% reduction of manufacturing floor space requirements in 3-5 years
- Lower ongoing capital expenditures
Customer Satisfaction
- 30-50% annual reduction in mistakes or defects
- 75-90% reduction in order-to-delivery times
- 50-75% reduction in new product development times to market (from concept to market)
Growth
- Market share gains
- Ability to maintain/raise prices
- Effective integration of acquired businesses
Valuation
- Industry leadership in profitability and/or rate of revenue growth usually commands a premium exit multiple at the time of sale or merger
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