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Moving People Around as Key to Unlocking Financial Outcomes of Lean

by Jean Cunningham
March 6, 2018

Moving People Around as Key to Unlocking Financial Outcomes of Lean

by Jean Cunningham
March 6, 2018 | Comments (2)

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.

Timeline

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

 

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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Rick Bohan March 07, 2018
3 People AGREE with this comment

New "lean law"...any article or book that says a goal of lean is "cost cutting" (and there have been a lot of them over the years) is to be put through the shredder.

One of the toughest hurdles lean practitioners and champions face is put there by "accountants" who demand "cost savings" from each and every lean initiative.  I've taken to telling my clients that focusing on "cost savings" WILL lead to the failure of the lean initiative.  And Ms. Cunningham does a good job of showing why this is so.  Present accounting methods simply aren't up to the task of measuring the value of a successful lean initiative.

 



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Deylan March 08, 2018

Dear Madam,

I am truly happy and delighted to watch and find your videos because i am working in a company that with perfunctory management system of lean, simply because the president and vice president could not see or comprehend where the hard savings reflect in P&L as mentioned in the videos - after moving two machines closer together, reduce cyle times.....etc.

really appreciate your videos.

best rgds.   



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Profit and Cost At Toyota
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