Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Holistic Lean system thinking approach for business profitability


Published on

The objective of this presentation is to create awareness to SME business owners on the following .
1.The reason why do your business struggle to deliver profitability ?
2. Solutions approach to improve profitability and growth through proven ,holistic lean system thinking approach
3.Case study examples of business transformation using lean system thinking approach .

  • Be the first to comment

Holistic Lean system thinking approach for business profitability

  1. 1. Holistic Lean System Thinking approach for Business Profitability
  2. 2. Objective of this presentation : To create awareness on Why is your business sales growth stagnant? Why is your profitability fluctuating or eroding over a period? Solution approach for sustainable business profitability Case study examples of business turn around / profitability Improvement
  3. 3. Contents •Typical challenges for SME CEO •Changes in External and Internal environment •Reality in SME organizations •Reason for slow growth and fluctuating profitability •Solution approach as “ Lean System Thinking” •Introduction to Lean System Thinking •How lean system thinking helps your business growth (Turnover & Profitability Perspective) •Typical wastes in business and operational process •Typical Lean Tools and Techniques •Why does some SME organization find difficult to implement effective lean system thinking approach? •Turnaround case studies using Lean system thinking
  4. 4. Typical key challenges for SME CEO : Managing the balance Between Growth and Survival
  5. 5. Changes in External scenario
  6. 6.  Globalization  Competition  Technology  Increase in Variants  On time delivery  No inventory  Speed & Flexibility Taken granted Zero defects  Customer awareness Social media
  7. 7. Internal Organizational challenges..
  8. 8. Challenges in internal organization … Reduce Cost Improve Quality “Cheaper”“Faster” Reduce Lead Time “Better” Net Margin We need to deliver all , at the same time! Scaling up “Bigger” Employee Engagement “Higher”
  9. 9. But, in reality….
  10. 10. Typical Scenario in SME organizations.. • Value added ratio : less than 1 % over total through put time • Delivery Lead time is in DAYS whereas actual Throughput time is in Min /Hrs… • WIP / Queue helps to manage the operations .. • Overall Plant Effectiveness less than 50 % ,but taken granted • Focus on local optimization than overall cost efficiency • People are busy in “managing the problem” than “solving the root cause” • More focus on Individual / Functional focus than Organizational Growth Leads to missing sales target, lower profitability, sustainable issues , Not able to attract high value customers
  11. 11. Solution approach : Holistic Lean System Thinking
  12. 12. Understanding Lean System Thinking
  13. 13. What is Lean ? Lean is achieving “More with LESS”. It means  achieving more with given resources or  achieving more with less resources . Mainly it is elimination or reduction of waste in the entire value chain .
  14. 14. What is Lean Manufacturing ? Lean manufacturing system can be understood by relating to the human body. If the person appears “lean”, then general assumption is that he/she is free from unnecessary FAT in the body, hence free from unnecessary side effects like BP, Pain in joints, laziness etc. And the person is perceived as healthy, more flexible, active etc.. The same way ,Lean manufacturing means , manufacturing system is free from unnecessary fats like high inventory, high rejection, high breakdowns or line stoppages factors etc which leads to more flexible in delivery, less lead time, first time right , low cost of manufacturing and free flow of communication etc .
  15. 15. What is Lean System Thinking ? Similarly, Lean System or Lean Organization means free from unnecessary waste in the entire value chain starting from extended supply chain system to customer, even after sales service system . Lean system Thinking is more than application of Tools and Techniques. It is a culture of continuous improvement or a way of working or winning mindset of everyone working for the organization.
  16. 16. Misconception about Lean system thinking ? There are some misunderstandings about lean and its application .Some of the misconception about lean are •Lean means cost cutting No.Cost cutting means cutting down the expenses whether it is essentially required or not .Lean is focusing more on cutting down the waste or unnecessary expenses, which is not adding value to customer ,in turn to business. •Lean is for manpower productivity Partially true. Lean is focusing on waste elimination or reduction in any form like man, machine, material, and method. By eliminating or reducing wasteful activities in format, manpower, material, machine, or process efficiency is improved. Hence, it is not only on manpower productivity alone. but for all factors of manufacturing. •Lean is applicable for manufacturing organization only No.As said, lean is all about waste elimination. As long as activities are there in any organization, waste will be present .Wherever waste is there, Lean is applicable. It is applicable for any organization.
  17. 17. Misconception about Lean system thinking ? •Lean can be implemented only in large organization No. One of the assumptions is that implementing lean requires investment and only large organization can afford .Actually, understanding the lean concept, tools, and techniques is easy and does not require investment. Lean thinking and practices can be implemented in any size of the organization. In fact, Lean can be easily implementable in small and medium scale organization because of its size and activities involved. •Lean is all about 5S and Visual Boards No. Most of the people think that doing Housekeeping (5S) and putting display boards is lean manufacturing. Of course fundamental requirement for waste elimination is housekeeping , i.e. keeping the workplace in order ,but that alone is not constituting Lean system. Lean is beyond implementing housekeeping practices. Similarly visual management is one of the elements of lean system in which display and control boards are part of it. Hence, Lean is beyond 5S and visual boards or even it is beyond any lean tools and techniques. It is philosophy and way of conducting daily management.
  18. 18. •Lean is for during lean seasons One of the most misconception is that lean implementation is for not peak season as everyone is busy with activities and lean is for during lean season. Lean is nothing do with the busyness of people either peak or lean period. In fact, implementing and practicing lean concepts during peak period may give more savings. •Lean can be useful during recession Same as above assumption. There is no right time as recession or booming economic environment. In fact, if Lean is understood well and lean thinking is implemented internally, external factors will not affect the organization much. Misconception about Lean system thinking ?
  19. 19. •Lean is only for automobile and ancillary organizations No. As said, Lean is not specific to any industries. Wherever there are activities involved, Lean can be implementable. It is popular in auto and ancillary industries, because the lean concept was evolved and tested first in auto industries. •Lean implementation is time bound No. No organization can claim that they implemented lean system thinking ,because fundamental of lean is zero waste, zero accident , zero defects and it is impossible to achieve and thus it calls for continuous improvement or excellence journey .Lean implementation is a process or journey .. It is not a destination. Misconception about Lean system thinking ?
  20. 20. Application of Lean System Thinking in Organization ….
  21. 21. Even though Lean System Thinking is applicable organization wide , we focus more on SME with Operations which typically includes Manufacturing , Quality assurance, Supply chain, Engineering Support Services , Planning , Maintenance and Logistics etc
  22. 22. How lean system thinking helps your business growth ? (Turnover and Profitability Perspective)
  23. 23. Sales Turnover Perspective : Q1 Q4 Lead time =3 Months Sales Turnover : 10 Cr Q2 Q3 Total Sales Turnover Capability : 40 Cr What will be sales turnover capability if we reduce lead time by 50 % ?????
  24. 24. Profitability Perspective : Materia l cost Proces s Cost Factory Fixed cost Quality Cost Factory Non Fixed Cost Logisti cs Cost TAX Profit MRP Rs 500 Rs 350 Rs 2500Rs 300Rs 250 Rs 200 Rs 100 Rs 300 Rs 500 Typically 40~65% Value Chain Cost –under Operations Control Typical Value Chain in Manufacturing setup What will be the profit or MRP if you reduce 5 % cost in your controlled area ???
  25. 25. Customer - ask for Product / Service Customer - get Product / ServiceLead Time =Money Customer to Customer Process • Wherever there is process, there must be WASTE available • Lean System thinking is all about continuously identifying the waste, eliminating it , if not reducing it from existing level.
  26. 26. Typical wastes in Operations..
  27. 27. Lean concepts , tools & techniques for waste elimination / reduction Housekeeping and Visual management Structured problem solving methods and tools Flow Improvements / Line Balancing Quick Changeover Techniques (SMED) Workplace design and Ergonomics Build in Quality Machine care Techniques Employee Engagement Initiatives
  28. 28. Results achieved in our Client Organizations through Lean System Thinking approach
  29. 29. Some Turn around case examples in our clients business Industry Results delivered Casting and Machining •Business turnover increase by 45%, From loss making to profitability; •Customer service improvement from 60 % to > 85% Auto component machining •Manufacturing cost reduction by 7 % •Inventory reduction by 50 % Auto Vehicle manufacturing 40 % reduction in delivery lead time Casting and Machining 35 % growth in sales turnover Auto chain manufacturing 15 % increase in plant output in 4 months Casting and machining Profitability increase by 3 times Machined comp manufacturing Increase in profitability by 2% despite sales volume drop
  30. 30. Why does some organization find difficult to practice Lean System Thinking ? Lack of CEO and Top Management involvement Not Educating or creating awareness about Lean and its purpose Delegation to down without support Changing priority based on the production volume Not understanding the Big Picture of organizational problem Keen on technical knowhow of tools and not on implementation Lack of people involvement or engagement No In-depth implementation of tools Lack of facilitation and patience Aversion to experimentation and trial
  31. 31. Thank you for your Interest To understand more about its relevance to your business, please mail us to mobile : +91 90259 33666 For Business and Life Excellence articles and case studies please visit website :