5 Jul 2016
Lean thinking is often associated with manufacturing, and for obvious reasons. The linear nature of most manufacturing processes allows for easier identification of bottlenecks and inefficiencies - it is easy to see which process is holding up the production line. In many organisations, lean has also become a term which is associated exclusively with a reduction in physical waste such as scrap or rejections.
We all know the cliché. A manufacturing business (let’s call them Bob’s Widgets) makes 500 widgets a week at a cost of £5,000 and scraps 50 widgets. A ‘lean consultant’ spends a week at the factory helping Bob to reduce his scrap percentage and decrease his production costs. Now Bob only scraps 10 widgets a week and is able to make 600 widgets at a cost of £4,000.
Well done Bob.
But it is a common mistake to associate lean thinking exclusively to the manufacturing environment. You may be correct for assuming that lean thinking is about the reduction of waste, but most people misunderstand the meaning of ‘waste’.
In order to understand waste, it is much easier to ask yourself, “who is TIMWOODS?”
T (Transport): The unnecessary movement of materials or resources.
I (Inventory): Too much stock increases the need for storage, and ties up cash flow.
M (Motion): Unnecessary movement of people either to or from a process, or during a process itself.
W (Waiting): People, equipment or resources sat unused between processes.
O (Over-processing): Repeated or unnecessary actions which add little or no value.
O (Over-production): Producing more than is required.
D (Defects): Reworking / repairing poor quality output, or rejections.
S (Skills): Poorly trained staff can be inefficient and productivity can suffer.
It is clear from each of the categories above that lean thinking can apply to either tangible or intangible processes and resources. For example, ‘over-processing’ could either mean one too many coats of paint (tangible) or the fact that sales invoices are entered into two separate computer systems (intangible).
Many businesses make the mistake of focusing on the tangible processes and often forget about the intangible ones, which are equally as important.
So how can businesses improve their intangible processes?
Well, you could follow Bob’s Widgets and hire a consultancy firm to look at your current processes and recommend improvements. Inevitably, this will involve an expensive and exhaustive consultation period often culminating in the recommendation of a computerised system which requires significant upfront investment and inflated ongoing costs.
But how many small & medium sized businesses have the luxury of spending tens, or hundreds of thousands of pounds on a business software solution?
This is where we come in. At Hudman, we aim to change the way that business software works by offering our range of powerful and affordable software solutions, with no upfront costs and one simple, affordable monthly fee. Our solutions promote lean thinking by aligning all business processes into one, fully integrated system.
Central ERP® provides complete control over your customers, suppliers, resources, scheduling and business performance with one award winning, cloud based accounting and ERP solution. Full time support is also included for one single monthly fee, with prices from £299/month.
For more information please visit www.hudmansolutions.com
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