Lean isn't.....a 'crash diet' to cut costs

A lot of people, including lean consultants, have the idea that if they implement Lean they will be able to cut costs.  But this is exactly the wrong way to approach their process, or more correctly their Value Chain.  In fact many initiatives calling themselves "Lean" are the organizational equivalent to starting a crash diet or buying the latest exercise equipment to lose weight.

If you approach an existing process with the intent of "cutting costs" there are many ways to do that and just as many consultants to help you along the way.  And a lot of them even work...for a while.  The problem is how do you know you aren't cutting a cost that is actually adding Value to your customer?  Or even worse, cutting a cost that will end up increasing Waste to your customer?  For example I had a client who prided themselves on aggressively cutting costs within their process.  One particular way they found was to source a key component off-shore instead of having them produced locally.  On a unit that retailed for $200 they were able to save an average of $12.  On the surface that seems like a good thing.

Now flash forward several years and I am in a local building supply company looking to buy one of these units for my house.  Because I was familiar with this client, and I always buy my client's products, I specifically asked if the store carried that product.  I was told "well we used to.  But we've had so many problems with units being returned because of faulty [off-shore component] that we switched suppliers."  I was told that they only special order units from my client when people ask them to.  He went on to tell me that if I was going to have them order from my former client that I should also order a replacement [off-shore component] that was locally manufactured since "the factory one wouldn't last a year."  Did this company manage to cut its costs?  The answer is yes.  However doing so resulted in increasing Waste for their customer (returned units) and they ultimately lost that customer.

Getting back to the exercise analogy what this company did was the equivalent to going on a crash diet or buying the latest "get thin quick" gadget advertised on TV.  You might have short term weight loss.  But again any trainer will tell you that these benefits will be temporary at best.  And you will very likely end up in worse shape than when you started.

So if Lean isn't cutting costs then what is it?  If this company had approached its processes from a Lean perspective they would have started with Value as defined by the Voice of the Customer.  And in doing so they would have probably learned that one of the things that their customers (the building supply companies, not homeowners) Value is the fact that their units last a long time, including the component that was re-sourced. With this definition of Value they never would have considered going to a lower quality replacement.

Similarly when you hire a trainer to help you "lose weight" a good trainer will instead help you focus on what you need to do in order to get healthy.  With this broader perspective you will consider all aspects of your lifestyle (Value Chain) including diet, exercise, stress, environment, and so on.  Sure the weight will come off.  But the results will be much more sustainable and in the end more Valuable to you.