Small Companies Need to Get Lean to Survive

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Small Companies Need to Get Lean to Survive

Factory worker checking quality

Empowered Employee

I have spent quite a bit of time helping small manufacturing companies improve their processes during the past three years. Many of these companies are struggling to make a profit or deliver on time because there is too much waste in the system. I have concluded that they need to get lean to be more competitive and survive.

Why don’t they embrace the lean philosophy? Many smaller companies are overwhelmed by such revolutionary changes in thinking about production. They are struggling just to get their products out the door. Some need to cut costs because their customers are demanding price reductions and are threatening to take their business elsewhere. Others need a less-expensive way to make more of their products. And still others are pressured by larger companies they work with to get lean.

 

Flip the Organization on its Ear

To do lean effectively, you basically flip the company on its ear. It’s no longer command and control. It requires the empowerment of all employees to start thinking, “This is my business.'” The genius of lean manufacturing is its simplicity. Lean is a way for small companies to save money by making the most of their skilled-labor force especially with the shortage of qualified manufacturing labor.

The doctrine appears to preach the obvious: limit waste, keep a clean work space and encourage your employees to seek efficiencies. The concept asks companies to cut waste across the production process, from material ordering to packing and shipping as well as throughout every department, from human resources to sales.

Some of its tenets, such as allowing employees to shut down machines and reducing inventory to nearly zero, are polar shifts for small manufacturing companies. Small companies need to drive down waste to reduce manufacturing costs. These cost savings can be used to reduce prices or delay price increases.

Begin the Journey to Change

Lean takes a certain amount of patience, and some people would argue a lot of patience. Typically, you are talking about a journey of four to five years before you see dramatic changes. Start small by implementing Kaizen events. Kaizen is the basis for much of lean manufacturing. It’s a Japanese term that means continuous improvement to eliminate waste. Kaizen events are active sessions on how to get rid of waste.

I know it’s tough to persuade small company management to keep investing resources in lean manufacturing when the business is losing money, but it is time to cut the fat or cease to exist. The cash flow will become better. And eventually, the balance sheet will be better.

Today, manufacturers of all sizes need to be more efficient to survive and lean is a great tool to help companies achieve greater efficiency and prepare them to compete.

 

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