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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

Are you interested in learning from lean practitioners and pioneers like Jean?

The pilot Lean Talks session at the 2017 Lean Transformation Summit was a hit, so we’re bringing it back for the 2018 Summit.

Join thought leaders like Jean and John Shook, who helped Toyota transfer its production and management systems from Japan to the U.S., for succinct, 10-minute presentations tightly focused on one critical topic. And Jean returns for a talk on Value-Based Activities Using Financial Information

Save your seat now for Lean Talks, Monday evening, March 26, and register for the 2018 Lean Transformation Summit. Jean will also teach Capturing the Value of Lean at LEI’s Seattle workshops on April 16.

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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2 Comments | Post a Comment
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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Search Posts:
Capturing the Value of Lean
Dr. Darlene Dumont & Jean Cunningham
Real Numbers
By Jean E. Cunningham and Orest J. Fiume