Why Lean Companies Stay Fat

July 8, 2007
Lean manufacturing initiatives, much like diets, are designed to trim fat and make you fitter, faster and more competitive—in short, a high performer.
The overall goal is the lasting improvement in company profitability that underpins high performance. And it’s achieved by fighting flab of all sorts, from excess inventory to over-extended equipment set-up times. The benefits, moreover, can be dramatic.Building flexibility into manufacturing processes and facilities and integrating and coordinating your overall supply chain network will both simplify and speed up product flow and facilitate just-in-time delivery. A slimmer supply chain will optimize the alignment of product capabilities with what customers actually want.Studies indicate that more than half of all U.S. manufacturers have embarked on some kind of lean manufacturing initiative. Far fewer actually achieve lasting profit improvement. Much like fad dieters, most companies simply don’t stay the course. They fail to recognize that long-term success hinges crucially on a full commitment to a totally new and fitter lifestyle.Successful lean manufacturers undertake lean manufacturing as a way of life, involving everyone in the company, from top management to the shop floor. They recognize that long-term success involves far-reaching change—and embrace it boldly. Then they get on the scale and stay on—measuring the right things with appropriate technologies and sharing the results. Finally, they avoid the big letdown by staying the course through fully integrated and consistently communicated change programs.Accenture’s experience with companies that have achieved high performance through lean manufacturing reveals that their approach to the challenge is what differentiates them. Like successful dieters, they don’t allow the “diet of the month”—the rules, tools and schools that claim to guarantee success—to distract them. An effective lean manufacturing program is a long-term strategy, not an isolated project. What’s more, it has to be an integrated, operational strategy that encompasses the entire company and its culture.For most companies, this means challenging current thinking and requires driving lean principles and a lean mindset into the manufacturing environment and beyond. Companies must instill the enterprise with the underlying philosophies of lean
elimination of waste, a “lot size of one” mentality, visual management, just-in-time delivery. They must also foster a spirit of continuous improvement that leverages these philosophies. 
As a company begins the journey toward becoming a lean enterprise, it is very important to take a holistic view—one that looks both within and beyond the four walls of the plant and considers the implications that the various elements of the overall supply chain network have on each other. Without taking a total, end-to-end view, companies typically are not effective in migrating to a lean enterprise. They usually fall into the trap of incremental improvement, thus missing the opportunity to extract the significant value that can come from a lean enterprise.Studies demonstrate that the benefits of lean manufacturing make it well worth the effort. Indeed, most companies that have initiated lean manufacturing programs will see a positive cash flow within 120 days of the program’s start. And over a longer timeframe, the benefits in terms of more specific measures, including inventory and order-to-delivery cycle time, can be striking.Stay the courseThat’s why a lean lifestyle has to be a total commitment. Successful practitioners use it to change the entire culture of their companies. They recognize that to stay lean in the long term, they will have to institute strategic and operational changes that go beyond mere manufacturing. Only then can they avoid the pitfalls and stay the course, ensuring that lean manufacturing realizes its promise as a foundation of
sustained, long-term profitability and high performance. 
Paul Loftus, is North American Practice lead for Accenture, a consulting firm in New York City.