- Lean Thinking
- Lean Principles
In isolation, cost-cutting impacts negatively on the service or product the customer receives. Conversely, Lean Management principles achieve sustainable and profitable efficiencies by reducing waste and adding value for the customer.
The phrase “Lean Thinking” is telling. Far more than a mere set of management tools and strategies, it is a philosophy – a mindset whereby all employees are actively engaged in implementing zero waste and delivering optimised value to the customer. It represents a shift in the corporate psyche and, as such, can be a challenging and complex proposition for a business to undertake. Moreover, Lean must be a sustainable improvement, continuously maintained and perpetuated by the workforce – not just while our Lean Management Experts are in attendance, but on a permanent basis. At Four Principles, our experience in managing such fundamental cultural transitions enables us to help you address and resolve the many challenges you may face along the way.
Because many aspects of Lean appear to fly in the face of conventional thinking of supply chain management, for example operating without inventory or producing to order rather than for minimum stock levels, many organisations fear resistance from within their workforce. However, by piloting and implementing Lean improvements on a gradual basis, targeting quick wins first, Four Principles are able to demonstrate not only the efficacy of Lean techniques but deliver palpable, measurable results to back this up.
Moreover, by working with your workforce and targeting waste and operational issues which they have identified, the level and speed of employee engagement and buy-in are accelerated. Pulled by managemental direction, employees are empowered to push the improvements that will improve their working conditions and processes most readily, with the entire organisation moving in the same direction and sharing the same objectives. Identifying and collaborating with the organisation’s formal and informal cultural leaders, Four Principles establish ambassadors and advocates for sustainable change, motivating the organisation from within.
Lean across all sectors
Four Principles’ roots can be traced directly back to Toyota, who developed Lean Management principles in the manufacturing sector. However, whilst the tools and processes may vary, the principles of Lean Thinking can be applied to any business discipline. This is because the primary focus of Lean is not on manufacturing, process or machinery, but the one fundamental attribute that all businesses share – the customer. Improving value for the customer is a common objective to all businesses. Doing so by implementing zero waste is the universal focus of Lean Management.
The key to acquiring and keeping customers is by offering value. To do this, we must first understand our customers and what they are willing to pay for – this is what we call “value”. By definition, everything else is waste, diminishing value to the customer and reducing profitability. Put simply, Lean Thinking (or Toyota Way トヨタウェイ) is delivering value from the customer’s perspective and eliminating waste (or muda 無駄).
Lean is a suite of four complementary, interconnected principles, each geared towards increasing value to the customer by improving efficiency. By applying these simple principles, any business in any sector can not only provide a better service or product to their end users, but also make fundamental, sustainable improvements in profitability.
One Piece Flow
Avoid over-production and stockpiling, thereby saving working capital, by letting demand dictate the rate at which goods or services are delivered. In this way the customer, or the next step in the chain, “pulls” value through the process.
ONE PIECE FLOW
Value should be added in a smooth, uninterrupted flow, from the start to the end of the production process. The ultimate effect of this principle is that all process steps are focused and aligned to adding value, one piece at a time, removing all wasteful and unnecessary activities from the process.
One Piece Flow
The starting point in Toyota’s success story, Zero Defects is all about identifying errors or defects as closely as possible to where they occur. By so doing, and by neither accepting nor passing on defects, issues are resolved quickly and efficiently, avoiding subsequent re-work and quality issues.
The German word for timing, Takt refers to the rhythm at which goods or services are produced to meet customer demand. With a consistent, continuous rhythm providing a heartbeat for your production processes, it is far easier to regulate, responding flexibly and effortlessly as demand rises or falls.
LEAN DIGITAL TRANSFORMATION
WE LIVE IN AN AGE WHERE THE CHANGE AND INNOVATION RATE IS SO HIGH, THAT VALUE RESIDES INCREASINGLY IN REAL-TIME RELEVANT INFORMATION. KEEPING YOUR COMPANY AT THE TIP OF THE SPEAR REQUIRES A LOT OF FOCUSED EFFORT AND CHANGE MANAGEMENT EXPERIENCE.
Companies that embrace the digital transformation trends are disrupting their industries by becoming fast, flexible and low-cost players. They bring changes to the consumer environments/ecosystems through:
• Digital technology penetration, by proposing ways to create value that goes from human interactions to augmented reality interfaces or self-learning systems
• Digital products and services markets, which allow the consumer to define his customer journey within a controlled environment
• Very high paced digitization initiatives, where the working and interacting environments
are moving to a higher level of automation
and connectivity, where any equipment or any product can immediately feedback the user with relevant information about performance and efficiency
The top trends in any sector, from heavy industry to services and from healthcare to F&B, confirm that today it is mandatory to implement a Lean digital transformation if a company wants to keep the competition at bay.
LEAN EQUITY TRANSACTIONS
IN TODAY’S CHANGING AND CHALLENGING ECONOMIC AND POLITICAL CLIMATE ACROSS THE MIDDLE EAST, ECONOMIES ARE TRANSITIONING AWAY FROM THEIR HISTORICALLY STATE-FOCUSED ROOTS.
For this reason, privatisation projects, venture capital operations and sector consolidation of mature businesses are rapidly assuming pivotal importance as a springboard for a new breed of market economy. The resulting short-term resurgence of the equity market therefore places greater emphasis than ever before on accurate due diligence, to enable buyers and sellers of businesses to negotiate and achieve optimised value from equity transactions.
Turning conventional methodology on its head, Lean Operational Due Diligence approaches the process from bottom-up. By focusing on actual activities and processes within the workplace (or “gemba”) – rather than relying on potentially inaccurate local management reporting forecasts – due diligence becomes an objective rather than subjective process.
The result? Clear-eyed equity transactions offering increased value through a sharply focused platform for implementation of post-deal restructuring. Clarity, accuracy and confidence – Lean provides a solid foundation for optimised equity transactions in today’s rapidly changing economic landscape.
THE KEY TO SUCCESSFUL, SUSTAINABLE LEAN IMPLEMENTATION LIES IN THE CORPORATE MINDSET. AT FOUR PRINCIPLES, OUR APPROACH IS WHOLLY COLLABORATIVE – BY WORKING CLOSELY WITH YOUR TEAM WE ARE ABLE NOT ONLY TO ADDRESS REAL ISSUES WHICH YOUR ORGANISATION FACES RIGHT NOW, BUT ALSO TO EMBED AND NURTURE WORKING PRACTICES THAT WILL ENDURE INTO THE FUTURE, PAVING THE WAY FOR PROFITABLE, LONG TERM GROWTH.
At any new client we work with, there is an initial mix of scepticism and enthusiasm for Lean. Applying Lean principles to eliminate waste and achieve sustainable cost reduction within problem areas of your workflow is a profoundly powerful tool. Firstly, this approach solves pressing concerns and achieves immediate gains. Secondly, the skills learnt by your workforce are implanted far more effectively than through the abstract theory of conventional “classroom” training. Thirdly, by delivering the irrefutable evidence of tangible, measurable results, our approach establishes “lighthouse” projects which act as beacons to the rest of your organisation. Even team members who were initially resistant to Lean become fully engaged and enthusiastic proponents of the philosophy, helping promote its benefits across your business.
The first step towards this virtuous cycle of continuous improvement is understanding. This is why, at Four Principles, we invest a great deal of time in getting to know you, your organisation, your objectives and your challenges. By taking a holistic view of your business, we are able to diagnose the root causes of the key issues you face and design Lean interventions that address them. It is this synergy of our expertise and your intimate knowledge of your business that empowers Lean implementation by Four Principles.
SUSTAINABLE COST REDUCTION
INITIALLY, MANY CLIENTS CONFUSE SUSTAINABLE COST REDUCTION WITH COST CUTTING. IN REALITY, THEY COULD NOT BE MORE DIAMETRICALLY OPPOSED. THE KEY DIFFERENTIATOR IS THE WORD “SUSTAINABLE”. IN A CRISIS, COST CUTTING OFFERS ONLY SHORT TERM RELIEF, WHEREAS SUSTAINABLE COST REDUCTION ADDRESSES SYSTEMIC ISSUES, ELIMINATING WASTE TO ESTABLISH A SOLID PLATFORM FOR GRADUAL, LONG TERM GROWTH AND PROFITABILITY.
At Four Principles, our first priority is identify and eliminate waste from the biggest cost drivers. Waste is defined as any product, activity or resource that does not add value from the customer’s perspective. However, given the complex and highly evolved ecosystems of most organisations, it is not always easy to identify wastes, added to which, the biggest cost drivers may not be readily apparent and measurable. Only by thorough assessment of the organisation can the value it offers a customer be defined – once this has been established, so too can areas of waste be isolated and quantified.
The key to sustainable cost reduction is using this information to systematically eliminate all identified wastes from the biggest cost drivers. In so doing, an organisation is able to divest itself of its financial “excess baggage”, streamlining its operations and eliminating the headwinds of unnecessary costs. In this way, Lean changes not only working practices, but embarks the entire workforce on a journey of continuous improvement towards long term profitability.
Whilst it brings tangible benefits in the short term through the elimination of waste, the most compelling rewards of sustainable cost reduction continue long into the future.