The lean enterprise: A business tool for waste elimination

In the first of this two-part series, we introduced the organisational waste elimination concept called lean enterprise. We also established that cost efficiency is an important goal of many organisations as it ultimately translates to a value-add for customers and other stakeholders.

A business organisation is an embodiment of structures and processes that direct the actions of people to deliver value to the customer and stakeholders. The relevance of any business is hinged on its ability to consistently deliver value to its customers; value in terms of its competitive priorities regarding cost, quality, flexibility, speedy delivery, innovation, and waste-free operations.

Unfortunately, some organisations in Nigeria still struggle with inefficient operations in product or service delivery and as a result are afflicted with high cost, poor quality, huge inventory, and lack of innovation.

These organisations attribute their inability to deliver to the harsh operating environment in the country; however, closer scrutiny of their operations reveal high incidents of waste that could be eliminated or reduced via the application of lean enterprise techniques.

Waste is any activity or process that attracts cost but adds no value to the customer. Organisations need to understand that the customer is only willing to pay for value being consistently offered in a cost-efficient and innovative manner.

An organisation’s ability to deliver innovative and cost-efficient value is hinged on a culture of continuous improvement (Kaizen), pull-production /service delivery, JIT, optimal inventory, value-based mapping, adaptability, flexibility, and respect for people.

Waste abounds in several aspects of a typical Nigerian business organisation, and sometimes, the situation is attributable to weak institutional and poor infrastructural frameworks; when in fact, the problem lies in the existence of an operational malaise that the application of lean enterprise could have averted.

Some Nigerian organisations have not been successful in the application of lean enterprise while others are reaping huge benefits from the determination to drive efficiency improvements using lean techniques.

The path to Lean Enterprise Implementation

Lean enterprise applies to service and manufacturing organisations, and its adoption and sustenance require total organisational commitment, a revised mindset, and a radically distinct corporate culture.

A major paradigm shift of the lean enterprise is the Kaizen method of improvement which subscribes to the notion that the most impactful changes are executed in an incremental fashion with innovation in mind.

Thus, the lean implementation roadmap can be actualised concretely as follows:

1. Robust communication channels: There is a need to establish open and robust communication channels for all organisational staff during the entire period of lean implementation.

2. Foundational training: This important aspect of lean immersion focuses on the alignment of management infrastructure, operating system, and the mindsets and behavior of employees towards change.

3. Facility analysis: Analysis of existing facilities and layouts is important in identifying the difference between the current organisational state and a lean-optimised state.

4. Value stream mapping: Map the current value stream spanning the organisational process flow from end to end and ascertain the points of waste or bottlenecks throughout the system. A typical waste point or bottleneck is the weakest or slowest link in an organisational value stream flow and at this link, an unusual amount of resources, time, and energy is deployed with no value-add to the customer. An extra determination and courage on the part of leaders is required to eliminate this waste or defect

5. Continuous improvement culture: An organisation that does not innovate and retool will eventually die or become a wasteful enterprise.

6. Management infrastructure: For an organisation to commence and sustain a lean enterprise culture, an ethically robust management framework is required. The absence of this is one of the major reasons most Nigerian organisations that have embarked on the lean enterprise have failed in its implementation.

7. Operating system: An operating system that is inherently sick cannot deliver value to its customer on a consistent basis. A good operating system takes an end-to-end view of a value stream in order to create a flow to the customer and minimizes the sources of loss inherent in such system.

8. Mindsets and Behaviors: In any organisation, employee perception determines the success of change efforts. Improvement work must be done through people rather than to people and for lean implementation to be successful in an organisation, respect for its people is essential.

The greatest challenge confronting leaders and managers globally today is how to productively and efficiently initiate change, hence the need to introduce the lean enterprise into their organisation’s operations.

Are you aware of any waste elimination measures being implemented in your organisation? Do you consider the application of lean enterprise feasible in Nigerian organisations?

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Dr Marvel Ogah teaches Operations Management at Lagos Business School