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What would you do if one day your accountant walked in and said Ok boss, we have no money and the bank is going to have to step in. They are going to keep us afloat and let us trade out of the problem, but we need to improve what we do. They want us to increase our productivity, reduce our money tied up in WIP & stock, oh, and they will not let us spend money!
Your first reaction may well be to bury your head in your hands then, when you are done with that, phone a local recruitment agent to see if they can help you find your next role because let us face it, what is being asked of you is impossible right? Not really, that is pretty much the situation Toyota found itself in in the late 1949 / early 1950, effectively bust, zero money to spend and massive change needed. Since then, they have been making profit every year until the market crash of 2009 and they returned to profit in the 3rd quarter of 2010, well ahead of their competitors. The key for them was embedding a culture of Continuous Improvement.
When companies start to look to improve, they tend to spring for the wallet first. They may buy a new faster machine, fancy tooling, new benches, reduce headcount, in fact they can normally find a myriad of other things to spend their money on. The other side of things, they go after their suppliers to screw down the prices and at the same time they look to their customers and increase the prices. The age-old formula on how much you sell things is
In other words, it does not matter how much it costs you to make something you will just add on your % profit you want to make and then sell to your customers at that point. That means you accept all the waste, extravagance, scrap, or rework levels and inefficiencies and you are going to pass 100% of that onto your customer and hope they pay for it. That drives a behaviour of either accepting a smaller profit because you have hit the market cap of the selling price or, more likely your prices are going to keep going up, and as a result you sell less. What happens if we flip the formula? What behaviour would that drive? What if the formula you focused on was:
Again, imagine that your selling price is at a point you really cannot (or should not raise it) you still what your profit level, so the only option you have is to reduce the actual cost. That was the approach that Toyota took when they wanted to develop their continuous improvement culture. The only thing they could attack was the actual costs, but in a way that did not cripple the company. That is the challenge you have as well, so how do you do that with no or little money?
leanDeveloping your continuous improvement culture can be quick and it does not have to be complicated, here are our top 10 things you can do:
All these things can be done cheaply with what you already have and everyone of them doing well and often will dramatically improve your operation, more importantly, it will dramatically improve your engagement with the team and make them feel more fulfilled when they walk out the door at the end of the day.
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