Crisis-Proofing your business ? Embracing Lean’s transformational power
In the world of business, navigating through turbulent times requires a strategic shift.
Sustainable growth often faces threats, and organizations can find themselves challenged by stagnation or even a decline in competitiveness. During these periods, societal tensions may rise, and it becomes crucial to adapt strategies for sustainable success.
Lean Management, coupled with performance financial control, emerges as a vital solution for companies of all sizes in such circumstances. But the question arises:
“Can the tools of Lean management and Financial control be effectively applied in small and medium-sized enterprises ?”
In the face of intensifying international competition and complexity, SMEs have no choice but to structure themselves and expand their horizons.
We posit that, to meet the demands of increasingly discerning customers, Lean Management is the right strategy for managing SMEs during crises and challenges.
Case studies of how lean management has helped SMEs overcome challenges
- A Greek SME used lean management to cope with the crisis and lower demand. The lean project led to impressive results: the company cut its lead time by 50%, its inventory by 30%, its scrap rate by 20%, and its energy consumption by 15%. The company also boosted its sales by 10%, its profit margin by 25%, and its customer loyalty by 35%. (1)
- An Indian SME adopted lean management to improve its competitiveness and profitability. The lean initiative led to remarkable outcomes: the company slashed its rejection rate by 80%, its cycle time by 40%, its inventory by 60%, and its space requirement by 30%. The company also increased its productivity by 70%, its quality by 90%, and its customer satisfaction by 100%. (2)
- A Brazilian SME implemented lean management to enhance its efficiency and quality. The lean intervention led to significant results: the company reduced its lead time by 75%, its rework rate by 50%, its customer complaints by 80%, and its operational costs by 20%. The company also increased its capacity utilization by 50%, its quality by 60%, and its market share by 30%. (3)
Unleashing the true potential of Lean in SMEs
However, the implementation of Lean in SMEs is often inconsistent or even absent.
Maturity levels are typically low, and Lean is sometimes oversimplified, focusing solely on cost reduction and waste elimination. Such a simplified approach can lead to discomfort and disengagement among teams.
Embracing the original Lean philosophy, emphasizing continuous improvement, team learning, and environmental performance, is a more holistic approach.
SMEs often face resource constraints, especially during crises, and must navigate demand fluctuations.
We propose that Lean, primarily rooted in individuals, may not have a minimum company size requirement for implementing a Kaizen system. Commitment from teams and quality exchanges, both vertically and horizontally, are essential for strategic reorientation and achieving excellence.
Reimagining Leadership and Culture
Furthermore, Lean’s philosophy, based on individual empowerment, challenges traditional power structures within organizations. The shift in power dynamics raises questions about whether governance is ready to accept and encourage this transformation.
“Lean’s Japanese origin, with its focus on excellence, self-learning, respect, simplification, and attention to detail, presents a cultural challenge for SMEs worldwide.”
Can the concept of Lean training dojos, as seen in Toyota factories, be adapted and thrive in SMEs?
Two hypotheses guide our exploration
- Lean tools from the Toyota TPS production system can be effectively applied in companies of all sizes, including small and medium-sized enterprises, even in times of crisis.
In times of crisis, it is imperative to align Lean tools with the company’s internal and external context to adapt strategies successfully. By modifying the organization’s industrialization process, Lean can reshape market conquest. We aim to apply the Toyota philosophy to our market. - The combination of Lean with Financial control is essential to prioritize and manage actions effectively, especially in resource-constrained SMEs. This integration can mitigate the negative effects of Lean while fostering a culture of well-being and financial accountability.
Our second hypothesis emphasizes that without the integration of Financial control, achieving optimal organization and addressing market and customer needs can be challenging, particularly in SMEs.
Excessive Lean, solely focused on cost reduction, can negatively impact team well-being. Thus, a balanced approach combining Lean and Financial control becomes crucial.
Financial Control acts as a central tool for structuring a company’s system and supporting employees through change. It allows teams to act pragmatically while fostering a culture of well-being and financial accountability, ultimately contributing to long-term growth and development.
Challenges and strategies for Lean Management implementation in SMEs
Implementing lean management in SMEs can be challenging due to potential resistance when implementing new processes :
- Cultural barriers:
Lean management needs a cultural shift in the SMEs, which may clash with their current values, beliefs, and norms. For example, some SMEs may have rigid structures, centralized decisions, or low employee empowerment, which can block lean principles like teamwork, improvement, or customer focus. Also, some SMEs may work in different cultural settings, such as different countries or regions, which can influence their view and adoption of lean management. - Lack of resources:
Lean management needs a lot of time, money, and human resources, which may be scarce or insufficient for SMEs. For example, some SMEs may not have enough money to buy the needed equipment, tools, or software for lean implementation. Some SMEs may also not have enough human resources to train, coach, or consult their staff or managers on lean concepts and methods. Besides, some SMEs may struggle to spare time and resources for change management, as they may have to deal with pressing operational issues or customer demands. - Resistance to change:
Lean management involves a drastic change of the existing processes, systems, and behaviors of the SMEs, which may face resistance from different stakeholders. For example, some managers may resist lean implementation because they fear losing their power, status, or control over their subordinates or departments. Some employees may resist lean implementation because they fear losing their jobs, skills, or autonomy. Some customers or suppliers may resist lean implementation because they are not aware of or persuaded by the benefits of lean management.
To overcome these barriers or resistance, some of the possible strategies are:
- Commitment and participation of management
- Development of organizational learning culture
- Adoption of simple measurement and KPIs
Fostering Growth, Empowerment, and Well-Being
As we navigate this path toward business resilience, we’re not just embracing Lean’s transformational power, we’re igniting a cultural shift. We’re redefining power dynamics, fostering a culture of well-being and financial prudence, and sowing the seeds of prosperity. It’s a journey where Lean and financial control aren’t just tools; they’re the catalysts for growth, empowerment, and a brighter future.
In summary ; Lean Management : navigating crises for growth
- Navigating Turbulent Times: Sustainable growth faces threats during crises, demanding strategic adaptations.
- Lean and Financial Control: Lean Management, combined with financial control, aids companies in turbulent times.
- Lean’s Role in SMEs:
- Lean’s inconsistent SME implementation often oversimplifies, focusing on cost reduction.
- Embracing original Lean principles is essential.
- Overcoming Resource Constraints: Lean doesn’t require a minimum company size; commitment and quality are vital.
- Reimagining Leadership and Culture: Lean challenges traditional power structures, but cultural adaptation is necessary.
- Guiding Hypotheses:
- Lean tools apply to all companies, even in crises.
- Integrating Lean with Financial Control is essential, especially in SMEs.
- Achieving Optimal Organization: Balancing Lean with Financial Control is crucial for addressing needs and well-being.
- Financial Control’s Role: It structures companies and fosters a culture of well-being and financial accountability.
- Fostering Growth and Empowerment: Embracing Lean’s power ignites a cultural shift, redefining power dynamics and promoting growth and well-being.
“In times of crisis, the wise build bridges, while the foolish build barriers.”
T’Challa, Black Panther
References :
1- Importance of first-line employees in lean implementation in SMEs
2- Lean Management Implementation in Small and Medium Sized Companies
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