The answer is…yes. In fact, the lean approach is the greatest strategic weapon in running any type of business that you will ever see. The strategy for any business starts with the conditions it is facing in its marketplace, and looks at the best approach on how to overcome these issues in order to be successful. When Taiichi Ohno was helping to create the Toyota Production System as we know it today, Toyota faced the challenge of how to produce a high variety of models with short runs at low cost without having access to big capital spending. Your company will have other issues. Perhaps you have quality or customer service issues; you might be lagging behind the competition in new product introductions. Whatever the situation you need a strategy that enables you to deliver more value to your customers than your competitors over long periods of time.
How lean fits with this is very simple. All we are trying to do is to teach our people how to see and remove the waste from all our processes, in order to deliver more value to our customers. The focus of a lean company is always on the customer. The daily work of the lean company is all about removing the waste that exists in every one of its processes. As waste is removed the time and cost required to do any type of value adding work is reduced. At the same time, the quality of what is produced is vastly improved and creates a noticeable strategic advantage versus the competition. As a result, the lean company also competes on time.
For example, as waste is removed, lead times that used to be 6-8 weeks, and still are for the competitors, can be reduced to 1-2 days. This allows the lean company to conform to the wants of the customer as opposed to having to come up with ways, often through some form of price concession, to get the customer to put up with the 6-8 week lead times. Whenever the competitor stumbles and is out of stock, the lean company can respond instantly and grab the business and do it without having to discount. In addition, as more waste is removed the lean company will be able to introduce more new products faster than the competition. Over time the lean company can put itself in the position where its competitors are forced to follow its product introductions but can never quite keep up. This product leadership will be noted by the customers and the lean company will gain market share.
So, when I say lean is the strategy it doesn’t mean that you have to give up all the things that you see as strategic now. You can still open new markets, introduce new products, improve your quality and customer service in order to be easier to do business with, or pursue selected acquisitions. None of that changes. It is just that by focusing on lean, i.e. removing the waste on a daily basis, as the core strategic approach, all of the things you consider strategic now will just become a whole lot easier to do. In addition, new opportunities that you can’t even conceive of now, like having a 1-2 day lead time vs. your current 6-8 weeks will open up for you.
Unfortunately, most companies still see lean as primarily a cost reduction program and not something strategic. As a result they will suboptimize their lean efforts. It is easy to see where this thinking comes from as removing the waste from all of your processes and focusing on delivering value to your customers has the big side benefit of delivering significant cost reduction. Even so, it is just that, a side benefit, you need to think of lean as strategic.
Let me give you an example. Two companies—A and B—buy the same equipment from an outside vendor. The only difference is that company B has used its lean approach to cut the setup time on the machine to 1 minute while its competitor, company A, takes one hour to change over the machines. Now say that each company can only allow one hour per day of downtime for set up. Who has the lower cost: A or B? And who has the better customer service (keep in mind that A can only make two different products per day while B can make 61)? Now, if B has the lowest cost and best customer service is this a strategic advantage or just some manufacturing thing? After all we are only talking about setup here yet we created significant strategic advantage.
Think about it. I think you can start to see lean in a much more strategic light.
