Beyond Lean Manufacturing: Value-Driven Business

For many manufacturers – particularly those well advanced on their Lean Manufacturing journey – the burning question now is: “So what do we do next?”

Manufacturers have been applying “Lean” techniques across their production operations for many years now. Most of them have reduced their costs, most of them have increased their productivity, many of them have engaged their employees and some of them have sustained a culture of Continuous Improvement (CI). So far, so good. But what do you do next?

You’ve streamlined your manufacturing operations, you’ve created a good CI system, most employees are actively engaged, Lean has become part of the day job, and you’re confident that improvement activities will be sustained.

You know that Lean Thinking works, you know that it’s a journey not a destination, and you’re wise enough to steer clear of the latest “management initiative” (fad).

So what do you do next?

To answer that question, let me offer you three “next steps” to consider:

  1. Apply Lean Thinking across all areas of the organisation, not just in Production or Operations. Train all employees (and I do mean all!) to understand the basic concept of “Lean” and how to apply it in their areas of the business. They’ll need a different approach – and some different tools and techniques – from “Lean Manufacturing” but the tools are there if you know where to find them. And the opportunities for improvement are usually much greater than in Production or Operations. Have a good look – you’ll be amazed at what you find! Some of our “World Class” clients have found rework levels of more than 90% in their “back office” and support functions – it’s not uncommon.
  2. Work on the entire Value Stream / Demand Chain. Extend beyond Operations to cover all stages of the order fulfilment process (from “Quote to Cash”). Once you’ve done that inside your own business, extend outwards to include your suppliers, customers, agents, distributors, and end-users. If you can create your own unique Value Chain (even if none of the components are unique) then you can create a very valuable business. Some of our clients have created a unique competitive advantage for themselves by doing exactly that.
  3. Focus on the “Value-Add” side of Lean – the part that most people ignore! Look for opportunities to add more value for your customers. See where you can “in-source” or “back-shore” your operations, and find out if you can do some of the things that your suppliers and customers currently do. Some of our clients have increased their turnover by more than 50% in less than a year by doing exactly that.

The three steps that I’ve just outlined are part of a much broader approach to business improvement, called Value-Driven Business. When it’s applied to manufacturing businesses – which is mainly what this blog is about – it’s called Value-Driven Manufacturing. You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. There’s enough there to take you well beyond Lean Manufacturing!

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