The Case for Lean in Small Business

I recently attended a workshop for small manufacturers to review the process and requirements for ISO certification. Workshops like this are commonplace, but I was struck by the composition of the group. One company that stood out in particular was a local manufacturer of cutting tools. By cutting tools I don't mean carbide routing bits that are the cornerstone of the high technology machining industry- I am referring to... scissors!

Developments in U.S. manufacturing and the larger economy over the last two decades have created a schism in the industry with a large percentage of the lower technology products being outsourced while the high technology segment has continued to become even more complex. Small manufacturers that are not on the upper end of this curve continue to face challenges to operations that many did not envision scant fifteen or twenty years ago. Global competition drives selling prices down, yet supply chains have narrowed so that companies that don't purchase high volumes of raw materials still see increasing costs. Customers require products of the highest quality and also mandate short lead-times. This environment of competitive free-for-all has surely been the source of many sleepless nights for small business owners.

What alternative to eroding market share and prices do these entrepreneurs have? Some have actually outsourced portions of, or their entire operations to reduce costs. While this is a short term "fix", in the long term it will certainly drive the value of the business down and, if extensive enough, will be its downfall. The best solution lies in addressing the problem directly and aggressively by using world class manufacturing practices to control operations. The same strategies that nearly all large manufacturing companies employ to insure that they remain competitive can be adapted and scaled to small companies. Just as the weekend warrior needs to adopt some of the training practices of the elite athlete if they want to stay in the game, smaller companies need to arm themselves with the tools of Lean and even Six Sigma if they are going to avoid fading from the field.

A very common reaction to this position is that small companies don't have the resources to invest in programs like Lean and Six Sigma and that the return is not as significant as in large companies due to the scale. I'll be the first to admit that this argument does carry some weight, it is a daunting task; however does the fact that you can't get your Bachelor's Degree from Brown University mean that you should avoid getting a degree, or even learning? The unequivocal answer here is of course not. Since statistics have shown that individuals with degrees overwhelmingly out earn those without, the investment makes sense even if the institution does not carry the same pedigree. What small businesses need to do is look outside their organization to find resources that they can partner with to effectively expand their capabilities and help train their employees. Whether you are a Fortune 500 Company or a manufacturer with ten people the key to the initiative is to understand the benefit, begin the process, and leverage the talents of your people to sustain progress. You can't win the race if you don't enter and you won't win the race if you don't train.

So, where do small organizations begin? As with most topics there is a wealth of information on the internet and as with most topics some is accurate, and some... not so much. In any event it is a sound starting point to gather information and begin to understand the basic concepts. Bear in mind that any program absolutely requires management's buy-in and support if it is to succeed. After the research, there are manufacturers groups, on line groups, and consultants that can be used to varying degrees supply information and start to move the company in the direction that it needs to go. Yes, we are talking about some financial and time investment but we are also talking about the future of your business in which you undoubtedly have a huge sweat equity investment already. From here it's your call; do you get up off the couch and put on the running shoes, or stay there and grab another (diet) soda?