The Value of Lean
For much of the past 20 years, businesses have been triming costs, and becoming more competitive via a succession of outsourcing initiatives. It began with spinning out capital and labour intensive operations, such as manufacturing; proceeded with outsourcing so-called non core activiities, and in the last decade has focused on off-shoring labour intensive activities to lower cost regions.
As I have pointed out in previous posts, the majority of opportunities in this regard, have now been exploited. So where do businesses look to next for efficiency opportunities, given the relentless march of globalization and cost pressures?
We believe that Lean process design, popularized by the Japanese over two decades ago in the manufacturing domain, offers trememdous potential within the broader business domain. Lean process design has been used occaisionally in product development and other business processes with success, but has not really caught on to the degree one would expect given its promise. This is likely due, in part, to the complexity of many key business processes and the risk of changes. As more business leaders become aware of the potential, however, and more success stories come to light, we expect that this will become an explosive area of growth.
Consider a recent article in McKinsey Quarterly citing one such IT led initiative at a bank, that yeilded improved customer satisfaction, reduced labour costs (50%), and resulted in ~$6m in savings. In addition, the same article noted that:
The benefits compound when companies use the lean approach to create new sources of value. During an IT–lean collaboration at one bank, project managers saw that queuing times were an issue for premium customers. In collaboration with the technology team, these managers saw to it that the chip on the cards of premium customers was customized so that the bank’s staff became aware of them when they entered the system and they received priority in the queuing system.
These are pursuasive arguments for companies to consider lean process design for their business processes.
