Surviving the recession: Lean thinking

During a recession, most organizations focus on reducing costs. Much of this focus is broadly based, looking at cutting costs, where the numbers are really big. In many cases, the approach is to cut staff, because fewer staff are needed to handle the volume of sales.

Many of these cost reductions cut to the bone. That is, they cut costs in areas which hurt them and make recovery of the business more difficult during a recovering economy.

All businesses waste their resources during peak times. The focus is on sales and growing and not on saving money. Work is done in the most "responsive" way to support customers, without proper planning. This waste builds up and a recession is an opportune time to focus on this waste.

In an article "Surviving the Recession: It's back to basics", the writer recommends the following:

• Develop a deeper understanding of your current and prospective customers (Don't cancel your CRM project!).
• Work to improve operational clarity (document your business processes and ensure all your staff have an end-to-end view!).
• As clarity improves, look at ways to reduce waste.
• As the economy recovers, look at your business strategy.

You will come out of the recession with an improved operation, better able to compete. The quoted article is based on Lean thinking.

Lean is the way for business startups

We have seen many articles about the Lean manufacturing process started by Toyota.

What is just starting to gain traction is using the Lean priciples in non-manufacturing processes. Think of a business process in the same fashion as you would a manufacturing process. It is simply a bunch of activities put together to create a defined result.

There are two major differences between a manufacturing process and an office process.

1. A manufacturing process uses machines to perform the activities. An office process typically uses people, supported by software.
2. Waste is typically obvious in a manufacturing process. You find it in poor quality products, in wasted materials, etc. In an office environment, you find it in two places: Wasted time and bad data. You don't see wasted time; it doesn't accumulate. You don't see bad data until you try to make decisions; you end up with wasted time.

While some large companies are staring to use Lean principles in the office, it is seldom looked at in small businesses.

I thought the following article was interesting because it talked about Lean in new business startups.