Applying Lean Principles

Copyright CFO Insight LLC. All rights reserved.


As we think of a lean business and a proactive attitude, we should identify the best activities to make lean.  Review your business strategy, and focus on the activities that will provide the most leverage to the business strategy. 

Using the Value Chain template (i.e. Logistics, Operations, Sales Marketing etc), considering the strategic plan, identify those functional areas that will provide the most benefit from being Lean.  For example, if the top priority in the company’s strategy is to increase the number of new customers, focus the lean analysis on all the steps used to obtain, register, credit approve, etc. a new customer.  An example follows:

o    Assemble the employees who now perform activities to obtain etc. new customers – sales representative, credit clerk, credit manager etc.

o    Using post-it type notes – perhaps of different colors to represent different activities such as complete an initial process, review, make a decision – describe all the steps necessary to obtain… register a customer.

o    On each note representing an activity, list the activity time, and time from the beginning of the process.  For example, completing the credit applications…

 This simple approach may surprise you when comparing the actual activity time, versus queue time.  You might also be surprised by the amount of rework required – e.g. in this case, the number of times – on average – that a credit application is rejected. When you identify all the steps required, you may discover that many of the tasks do not have up-to-date instructions that make sense in today’s environment.

In this credit application process, when comparing risk and opportunity, you may find that the credit manager will allow the credit clerk to accept applications for less than $5,000 … or perhaps, the credit clerk and the sales rep will prequalify potential customers so that the rep does not waste time trying to sell to unqualified potential customers.

When you Lean-Out a process, you eliminate non-value added activities which effectively increases your available resources to be more competitive without additional cost.