Many consultants, “black belts” and business leaders would like us to believe that Lean is some mystical state of mind, something which takes years of experience and astute business know-how to understand or implement. But I don't believe this is true, the evidence is all around us that Lean is a natural way of working for us, not something we have to study and practise devoutly for decades to understand. This one issue, the common belief that Lean is somehow magic, is the biggest blocker to progress in my opinion, the main reason it takes so long sometimes for the light bulb to come on. I've heard time and time again, “It can't be that simple” but yes it is, really it is.
To prove the point, let's take an everyday example, and on the way introduce some Lean jargon.
The shopping trip
All of us have done it – been to the supermarket for the food shopping. OK, so what, you might say, not much to think about there is there, and what has food shopping got to do with running a Lean business? But let's take a step back and think about the process a bit more.
What's the objective? To use scarce resources, your money and your time, to get all you need to run a house and feed a family for a few days.
Any parallels so far? Well, consider the resources: money and people; businesses use those, and both are always in short supply. Stuff to run a house and feed the family can be considered as buying supplies and raw materials, to be made into products for your family, sorry, customers. OK, it seems to work so far.
Now for the process. Most people going food shopping do some checking first to see what's needed before setting off, then create a list, either literally or subconsciously. The trick is getting the right amount. Too little and the kids start complaining about the lack of dinner, too much and the stuff won't fit in the fridge or goes off before you can use it. How do you do this? You look in the cupboards and the fridge and, based on what's there and your knowledge of how much you generally use in the periods between shopping trips, figure out what needs to be bought to last you through to the next time you go shopping. Oh, by the way, you just remembered that Granny is coming to stay for the weekend so you will need some extra milk, eggs and a larger piece of meat.
This is all so obvious and natural that most people can do it, and for the seasoned food shopper, it happens even without thinking about it. But we have introduced some very important Lean concepts here, so let's go over it again from a business point of view: Understanding the right level of inventory to support demand but avoid write-off, slow-moving and obsolete stock, based on historical demand. That's all about the core Lean concept of the Inventory Control Point (ICP) or Strategic Buffer Replenishment model of supply, where you periodically look at your current inventory and replenish back to the top of the buffer. The buffer is calculated based on historical demand and trends: a forecast. Just like when we go shopping, we might know that, on average, we use four litres of milk between shopping trips (the forecast) but that doesn't mean that we blindly go out and buy four litres every time we go shopping: we take a look in the fridge and realise that we ought to top up to five litres (four on average, plus one so we don't run out if we overuse); see there are two left and only buy three. The forecast is a guide, not something we execute blindly. Oh, and the Granny visit? That's adjusting the buffer for known events as part of the Event Management Process. No known events, just maintain the status quo, no need for a complicated planning session.
Now let's take a closer look at what the fridge does. The fridge is the buffer between the supply of food and the family, allowing periodic shopping trips and absorbing variability in the consumption of food. It's also a visible trigger that a shopping trip is necessary as the supply of critical foods gets low. In Lean terms, the fridge is a very effective kanban.
These simple mechanisms allow shopping trips to be made at regular intervals, the right amounts of food to be bought on each trip and avoid wasting food. The key thing here, though, is that this works perfectly without having to know in advance exactly what everyone is going to eat over the next week. In other words, the forecast does not have to be accurate at a detailed level, only at a macro demand level. The kanban (fridge), real time shopping list and relatively frequent shopping trips handle the day-to-day variability automatically.
However, just one cautionary footnote before we delve into more detail. As I'm sure everyone has experienced, sometimes this can all go wrong. The fridge is full with food all close to the use-by date and the things you want are just not there, or buried under this pile of soon-to-be-trashed food. Why did this happen, if it's such an effective Lean tool? Does this mean that everything said so far is just mumbo-jumbo and doesn't work in the real world? Well, let's take a look at what probably happened here.
When you take a closer look at what that expired stuff is before you chuck it all in the bin and reflect on all the wasted cash, we see a couple of recurring themes.
Firstly, a lot of it is the dreaded “impulse buy”, in other words, a lot of stuff you never really needed in the first place. Secondly, you'll find several packs of the same thing and if you cast your mind back you'll probably remember the “three for the price of two” deal on at the time, persuading you to part with your money to get something free. In reality it's not as free as you first thought, as you end up paying for two when you really needed one and end up throwing at least one away. All of these problems are as a result of caving in to the devious antics of the supermarket marketing ploys, which waste your money and fridge space but keep them in business.
Yes, but this is just silly shoppers being duped, right? Real business people don't fall for this do they? Really? Never heard of instances where Purchasing get a good deal by buying larger quantities of something that sits on the shelf for the next three years?
The bottom line here is discipline. This is at the heart of Lean thinking and good shopping or business management. If you don't stick to the rules, all the best ideas and processes in the world won't save you.
So there you have it. We all do some Lean in our everyday lives and we don't even think about it. Basic common sense, I hear you say, and indeed it is. This is just one example of Lean concepts showing up in everyday life – there are many more if you stop and think about it. So why do businesses have so much trouble and employ armies of people to do something that simple? In my experience, small entrepreneurial companies don't have this problem; they run their businesses like families and employ Lean concepts naturally, just like you and me. It's the bigger guys who...
