When Lean increase costs

It happens once in a while, top management is disappointed by Lean assessment results.

Assumptions and expectations

Almost all testimonies about Lean initiatives report savings and gains, which is both a blessing and a curse for Lean.

On one hand, savings and improvements fueled Lean’s fame and attractiveness in the eyes of top managers and decision makers, on the other hand Lean became synonym of cost cutting which is reductive and misleading, more a curse than a blessing when going shop floor.

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Many decision makers thus launched Lean initiatives in order to reduce costs, savings in their understanding is more about cost cutting then turning wasted resources into value-creating ones.

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Their expectations were to reap the 20 to 30% savings a Lean program usually yields.

Opposite outcome

It happens once in a while, top management is disappointed by Lean assessment results.

Instead of listing all the possible savings, me and my team would strongly advise to increase spending in order to return some critical resources to their nominal state.

This means fix safety issues or retrofit machines too long deprived of proper maintenance for example.

I witnessed several times new plant managers or general managers ordering a Lean / performance assessment and discovering through our findings that the previous manager in charge cut costs for maintenance in a way critical resources are nearly worn out and/or dangerous for workers.

These short-term savings endangered future production and competitiveness, lead to productivity drops (machines stoppages, breakdowns, longer repairs, slower production rate, higher scrap, etc.) and discouraged users as well as maintenance teams.

Worse, in some cases, the pressure to achieve production objectives lead to endanger workers because of makeshift repairs, poor or no problem solving, etc.

The same can happen to manual work, the extended resource being people. Luckily this is far less frequent, for what I saw.

In order to secure operations and continuity of business, the recommendation is to mend and fix, retrofit and sometimes replace costly parts, return to preventive maintenance with adequate frequency and content, and so on.

This means temporarily spend more, which was not the initial intent.

For the manager who ordered the Lean assessment, it looks like Lean increase costs.

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