Lean Business Model.Business is the process of transforming resources into products or services that an end user deems beneficial. The resources may be raw materials, equipment, technology, etc., the end product or service can be any multitude of every day items. What all such businesses have in common, is that their management seek to operate as efficiently as possible, i.e. there is a desire to operate in an optimized lean fashion.
Is there a lean business model that can be applied to facilitate managers towards their goal of achieving lean operation in their respective business?
There is no single model, however, there are common approaches, tools and techniques, which can be applied and are highly successful in achieving the efficiencies associated with lean operation. It is important to note that lean does not apply to any single form of business, it is not just an approach to improved efficiency in manufacturing, lean can be applied across all industries, across all product and service sectors. The advantage of lean, is that small incremental improvements can be implemented within areas of a business, or the entire organization can be improved via implementation of a business wide lean program.
Approach to implementing lean.There are three foundations upon which lean is developed.
#1: Lean is focussed on involving everyone. It requires buy-in, acceptance and active participation by all within a business. It is not a methodology imposed by management. This requires the development and promotion of a business culture which facilitates and promotes employee involvement.
#2: Lean is orientated towards continual improvement across all aspects of a business. For example, lean will seek to improve product quality and reliability, improve process efficiency, reduce equipment downtime, will reduce administrative delays, improve the quality of report data, etc. etc.. Across the full spectrum of the business operation, lean will seek to drive continuous improvement.
#3: Lean is focussed on the identification and elimination of waste. Some waste can be readily identified, for example, scrap, rework, product returns, … other waste is less obvious, for example, time spent internally transporting in-process inventory, employee time focussed on testing and inspection, staff engaged in talking to customers explaining about delivery delays, etc.. Any activity that is not actively adding value in the eyes of the end customer can be considered waste. Here the end customer can be a person buying a product or service, alternatively the end customer may be a regulatory agency, or a government body. For example, the payment of taxes are “value added” activities from the viewpoint of the government, therefore must be performed and should be performed in the most administratively efficiently manner possible.
Therefore, when considering waste, a business needs to identify all its customers, determine their customer requirements and provide those products and services which are required. The business should only perform activities which add value to their customers. Activities which are not adding value, need to be carefully examined and minimized where possible.
The objective of the lean model.In developing a lean business model, the business needs to identify and understand its customers and involve everyone on a continuous basis towards adding customer value in the most efficient manner possible.
How does a business develop and implement a lean model?The first step is management commitment. Without active and determined management involvement, any lean project will not succeed. The second step will be to define a lean strategy. Will the strategy be to implement lean across the entire business or across specific areas of the business as a first step? What will be the timeline for implementation? What will be the strategic value to the business in achieving successful lean implementation?
The business will then need to ascertain the status between the current situation versus the end vision as defined in the strategy? A gap analysis will show the scale of the project required for successful and beneficial lean implementation.
Once the gap is defined, then a plan can be developed to move the business from the current situation towards the end vision. The plan will consider cultural change, will look at the competence of staff in terms of capabilities to implement various lean improvement tools and techniques, will examine and seek to define customer value, will seek to establish measures of value delivery. The plan to outline how the different customers perceive the value they receive currently from the business and how the customer experience can be improved. Ultimately the plan will aim to develop a roll-out strategy for integrating lean into the business
Lean can bring significant benefits to a business, however, needs to be carefully considered. As outlined previous lean can be applied to local areas of business operation or across the entire business. A necessary step, is to ensure a solid knowledge of lean among those required to be involved in lean development within the business and an ongoing commitment to the lean project(s) by management.
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