You do some improvement activities to eliminate wasteful activities like sorting, expediting, or grouping similar machines together in “process villages.”
Then, finance or senior management asks for the financial value of those activities.
“There is none,” says author, lean practitioner, and former CFO Jean Cunningham. Such activities, by themselves, don’t create financial value. But they do create something potentially even more valuable.
“They create capacity,” she explains. “They create the opportunity to use the time and the talent and the genius of our employees on something that matters more to our customers.” And that’s the trick.
In this nine-minute Lean Talks video, she explains the five ways lean makes money for businesses. Jean then goes deeper into one of them – added capacity – to give you ideas for making it pay off.
0:55 – How business makes money; chart
1:40 – 5 ways lean influences making money
3:44 – Struggling with capacity creation
4:37 – How to use added capacity to free up people
7:25 – Spreading the benefits
8:37 – Win-win