LEAN PRINCIPLES FOR SME’s Principle 1 – The Lean Value Stream

 

Are your manual processes a barrier towards greater productivity?  Do you engage and empower your teams to strip away waste & inefficiency?  Do your staff embrace continuous improvement as the norm?

My 5 blog series for business owners and leaders, will focus your efforts to emerge renewed and reenergized after lockdown

Principle 1 – The Lean Value Stream

As a business owner or manager, have you ever created a tangible, real life map of how you deliver your product or service to your consumers?  The impact of seeing the A-Z of your business in one place can be hugely powerful, and it’s the only way to get into the detail, and examine where the value lies in your delivery.

You may be shocked at the reaction of the team when they see how their own role actually drives one small cog in the larger engine.  They can see the importance of what they do in the greater scheme of things.  It’s a motivational exercise if nothing else.

Process Mapping – Do it the old fashioned Way

Charles Handy, a guru and thought leader in the field of management, recently wrote that the old fashioned business process mapping on brown paper is a thing of the past.  I tend to disagree, despite Mr. Handy’s prominence in the field of business.  I’ve successfully used brown paper mapping to engage the whole team in identifying how they deliver their product or service to their client.

Lots of brain storming and critiquing with big red marker pens, can break down the barriers between teams or departments.  When presented and managed in the right way,  it gets the business juices flowing, opens up discussion, and gets ideas out in the open, that may otherwise never have come to light.

One of my key mantras is “The price of light, is greater than the cost of darkness” (Arthur Nielsen!).  You’ll never know if there is a better, less costly way of doing things, if you don’t give the people working in the detail, the opportunity to say how things could be better.  The existing method could be costing you a lot of money if left unchallenged.

Lean environments are created by first looking at the big picture, your A-Z of delivering to your customers. That is all the steps involved from the time you receive an order to the point of delivery – the end to end timeline. This is called the Value Stream – as the characteristics of each step of your service, or part of your product, should make it worth paying for by the customer.  Each step in the value stream must contribute to the final product.

There may be different functional groups, departments and administration teams involved, but the performance measurements you choose should be based on the end-to-end performance of the entire value stream.  Not compartmentalized, which invariably contributes to waste and inefficiencies creeping into your overall value.

 

The biggest challenge in managing the value stream, is confronting and reviewing the “island” mentality between departments, each of which will probably have their own manager, employees, budget and KPI’s.  The people working at different stages of your existing process may have little or no interaction with those involved in the next stage, even though they have a shared role in creating the customer satisfaction.  

The consequence of this structure often manifests itself in a blame culture, as the work becomes imbalanced between the departments.  Backlogs may build up at one stage, if there are inadequate resources in the next.  This makes it difficult to visualize and manage the value stream as a whole.

Focus on the client journey

To be Lean, your business steps and stages would be better grouped around delivering service or product families, geared towards a particular type of customer need.  Each family would have a value stream manager, responsible for the entire A-Z of that service from order to delivery.  Often this may have a dedicated team, equipment or even physical or geographical location within the business.

To give an analogy, the company streams would be organised horizontally by product or service type (off the shelf, hybrid, bespoke), rather than vertically by function type (sales, operations, finance, logistics).

This model certainly requires a massive shift in the mindset of the business owner, management and front line teams, but as the Japanese giants that originally developed the Lean principles have proven, a Value Stream based organisation, can make significant improvements in its profitability, and client satisfaction.   

So, roll out the brown paper, get your highlighter pens, get a team day in the diary and get the ball rolling.  Once you’ve got your Value Streams mapped out, in my next blog we’ll move onto how to eliminate waste – the ongoing effort to eradicate those activities and costs that don’t contribute value that customers would be willing to pay for.