Why Lean Works in Smaller Businesses

If you manage a small business, you might feel that large automotive assembly plants and civilian jet aircraft production facilities are working environments that have very little in common with your business. However, the reality is that the underlying principles of Lean manufacturing which were initially developed in this context are based on common sense and can be applied in every business, no matter how small.

Here are 5 of the many reasons why Lean Manufacturing works in small-run job shops

  1. The failure of many smaller companies to standardise practices is one of the key reasons why they don’t grow: Often critical technical and managerial knowledge is possessed by just a few individuals in the business and is not shared with the rest of the organisation. Documenting key knowledge and standardising work in a small or medium sized business environment can lead to breakthrough improvements in productivity, quality and employee engagement.
  2. One of the most common elements missing from small businesses is an effective production system: The “Production System” refers to all the processes, systems, and procedures needed to ensure that you can deliver the right product to your customer at the right cost at the right time, every time, every day. Small and medium sized enterprises such as job shops often have to deal with a workload that is low in volume with a high mix of different components. Product variety and highly customised production can lead to excessively long lead times, complex production flow and scheduling, highly variable setup times, and a host of other inefficiencies and unnecessarily high production costs. Lean Manufacturing allows smaller businesses and jobbing shops to identify waste in their processes and build a platform for the rapid and sustainable future growth of the business.
  3. Staff roles in smaller enterprises are often not clearly defined: This means that responsibilities may not be clear and employees often don’t know where they stand or have a clear career development path. By using Lean tools and methods to provide structure and better define roles and responsibilities growing enterprises can benefit from reduced turnover, increased employee engagement and major improvements in productivity.
  4. Smaller businesses often have difficulty in managing inventory and other forms of working capital: This translates into higher debt and lower returns. By implementing a Lean manufacturing approach, smaller business operations can create breakthrough reductions in inventory and increase the productivity of fixed assets.
  5. Smaller enterprises often lack effective planning tools: Smaller enterprises often live day to day and don’t take time out to assess the direction of their business with regards to finance, HR, marketing and operations. No company, however big or small can afford not to plan. Lean Manufacturing equips your business with simple and consistent planning tools based upon solid policy deployment with a commitment to continuous improvement. Such plans ensure that your business keeps moving in the right direction and paves the way for a truly lean enterprise to begin taking shape.