Tuesday, August 26, 2014

Lean Management-The Best Way To Reduce Waste & Enhance Profits

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Any organization prospers on the basis of their results. The results of your company are something which differentiates it from its competitors. And any business is able to achieve desired results when it plans and follows the strategic plan with commitment & eliminating wasteful resources.

The
 management philosophy which has helped many businesses to achieve desired results, eliminate waste & create value for customers is Lean Management which was pioneered by Toyota. 

Learn how the world top mattress maker greatly benefited from Lean Management-

Sealy is the world's top mattress maker. During 2000 and before, workers at Sealy used to churn out dozens of incomplete mattresses at one time & load them on a conveyor. The process resulted in mattresses to cover large precious floor space. As result many of the products produced were often damaged due to rubbing against each other. Hence, there was lot of wastage happening which was eating into the profit margins of Sealy.

Sealy incorporated Lean Management in its business operations in the year 2004. Seeing amazing results it still uses lean management to overcome wasteful resources & create value for its customers.


How Lean Management helped Sealy & thousands of manufacturers to remain profitable?

Sealy is among those thousands of manufacturers which remained profitable even during recession thanks to lean manufacturing. “It helped us to become more & more cost-efficient,” says an executive of Sealy. “Lean management favors streamlining at every turn of business operations. This entails each production widget to work in an uninterrupted flow thus avoiding unfinished batches. It favors production of only those items which customers order. It helped us to greatly chop off billions of dollars in inventory & increase our productivity & profit margins by 50%.”

"The key beneficial factors are less material handling, less defective products and less movement thus focusing on one task at a time,” says the Vice president of Sealy.

And all this paid off! Sealy’s, net sales during recession fell 14%. However, its earnings rose to around $12.1 million from $10.9 million. Also its gross profit margin surged to 41.8% from 40.5%. All this happened because Sealy incorporated Lean Management.

  • Today each bed at Sealy gets completed within 4 hours, down from 21. This is possible due to less wasted time between the production stages.
  • Also the median delivery times saw a cut to 60 hours and less, down from 72.
  • The plants have been able to reduce raw-material inventory by 50%. This reduced inventory costs greatly.
  • They were able to eliminate thousands of square feet having "work in process". This helped them to eliminate wastage like piles of unfinished beds.
  • Sealy was able to move the workers closer and work together. As a result, they were able to free up enough space to merge two shifts thus slicing costs.
  • Sealy has decreased its workforce by more than 30% in the last 5 years through attrition & temporary staff cuts. Lean management helped this business organization to employ far fewer material handlers & enhance productivity by 50%.


 This is only one example. More than 70% of manufactures and businesses worldwide use lean management to achieve desired results & reduce waste & create value for its customers.

Lean management helps to eliminate waste by achieving one-piece flow. I remind the readers of 7 wastes-

  1. 1.Labour
  2. 2.     Overproduction (this is achieved by demand leveling where production is altered as per current demand)
  3. 3.     Space
  4. 4.     Defects
  5. 5.     Unnecessary human motion which causes fluctuations in the operating system of production
  6. 6.     Inventory
  7. 7.     Transportation

  8. Lean management uses a set of tools to eliminate the above wasteful resources and increase profits and productivity. The tools are-

• SMED
• Value Stream Mapping
• Five S
• Kanban (pull systems)
• Poka-yoke (error-proofing)
• Total Productive Maintenance
• Elimination of time batching
• Mixed model processing
• Rank Order Clustering
• Single point scheduling
• Redesigning working cells
• Multi-process handling
• Control charts (to keep a check and eliminate further wastage)

Indian Academy of Management invites everyone who wants to learn all the above tool & methods for an expert seminar on “LEAN MANAGEMENT”. It will cover every aspect of lean management required for businesses to enhance its profit margins and reduce wastage & create value for customers.
 Click here to know more.


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