When it comes to manufacturing, determining the right process is everything. But developing the right process for each element of your small business is something that takes a lot of time and constant editing. Many people are familiar with the brand Toyota, but not many people know all of the changes the company’s manufacturing process had to undergo before it could become what it is today. The strategies employed by the Toyota Production System have become the foundation of what is now called lean management.
Lean management is the principle of eliminating waste to further improve the quality and efficiency of a business. It places strategic focus on things that add value and reduces the things that don’t. Following are two of the most important guiding principles in lean management:
1. Eliminating waste
Waste refers to anything that does not add value for the customers. There are seven basic kinds of waste in manufacturing that may also be applicable to small businesses: over production, waiting, transport, motion, over processing, inventory and defects. Lean management in small businesses provides countermeasures to eliminate each of these types of waste.
2. Continuous improvement
This concept focuses on finding better ways to do certain processes in order to provide quality work and save more time. What is key here is that the efforts of improvement are ongoing. As new technology, resources, and methods become available, businesses should be implementing them as often as possible to achieve greater efficiency. What works for your business one year may not work as well the following year.
Advantages of Lean Management in Small Businesses
Now, let’s take a look at some of the biggest advantages of lean management in small businesses!
Lean management creates a productive working environment
By utilizing the 5s method, a process of maintaining a clean and organized workspace, small businesses can deal with waste and increase profitability and efficiency. This method consists of a list of five words that all start with the letter “s”:
- Sort: go through items and separate what you need from what you don’t need in a given area. Get rid of the items you no longer need in order to reduce clutter.
- Straighten: for the items that are needed, organize them in a manner that they are easily accessible. Be sure to label the new locations for each item so as to reduce confusion about where the items belong.
- Shine: ensure that the work environment and your equipment are regularly clean and safe to use.
- Standardize: create a standard procedure for employees based off of the first three steps.
- Sustain: continue to maintain the standard for as long as it works for your business.
Generally speaking, the 5s method is all about simplification. When you can simplify your work space, the work that must be done within that space also becomes simplified.
Lean management allows for more efficient production
The pull system is a lean technique that basically requires that a business only produce products when there are actual orders/demand from the customers. With this system, a small business would only produce enough products to be sold immediately, thus minimizing the waste of over production. Producing in small quantities also makes it easier to identify any quality issues, which will increase customer satisfaction.
Lean management provides better inventory management by reducing inventory costs
Another strategy in lean philosophy is the just-in-time inventory strategy, which is beneficial for both large and small manufacturing businesses. It is basically the strategy of balancing the inventory to avoid stock outages while minimizing the inventory costs. Some small businesses only order raw materials upon the receipt of a customer’s order, but problems like late delivery of raw materials can greatly affect the production of the finished products. This is where automation comes in handy. By automating inventory management, the small business can easily track whether or not any raw materials might soon be out of stock. With the just-in-time strategy, no raw materials or finished products will be wasted, resulting in minimal inventory costs.
Lean management increases employee engagement
Since lean management’s effectiveness hinges on continuous improvement, small business employees are set up to continuously learn as well. Actively encouraging employees to seek out ways to improve business processes and to give their opinion and feedback about the current processes is a great way to keep them engaged. Collaboration with the whole team will help employees grow both professionally and personally, which is always great for business considering that a business is only as strong as its employees.
Achieving Customer and Employee Satisfaction
Any small business can implement lean management to reduce waste and encourage best practices. By streamlining business processes, businesses will be able to focus on the value of their customers without sacrificing productivity.
~ Jamara Wilson, Team Tuxedo Impressions LLC