The next generation of lean: concept can be improved--but only if all floors are in synch.

For years, companies have worked to implement lean initiatives focused on factory production improvements in an effort to lower costs, increase customer satisfaction and enhance quality and operational metrics. But can the concept of lean manufacturing be improved upon? The simple answer is yes, but only when a company adopts a cross-functional mindset that creates lean processes extending beyond the shop floor--and all the way to the top floor.

Lean is a cultural and people-oriented initiative, so applying lean tools, new technology, and new business processes to a traditional silo-oriented culture will not be successful. The key to making the transition to a lean organization is implementing fundamental change in the corporate culture to foster cross-departmental teamwork and communication up and down the entire organization.

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A three-layer approach

Successfully implementing a company-wide lean initiative can be viewed as having three essential layers:

* Value stream layer

* Improvement layer

* Strategies and tools layer

Companies typically adopt one or more of these formal practices believing that they then will be operating in a lean fashion, but this only produces isolated improvements instead of long-term results. It is the sum total of all three elements and the synchronized relationship between them that makes a lean initiative effective.

Additionally, the application of lean across more than one department is necessary if a company wants to sustain the results.

Technology plays a vital role in helping a company maintain its lean practices, but first a company must evaluate, and possibly augment, its service and supply processes.

The value stream layer, sometimes referred to as value-stream mapping, consists of streamlining and optimizing specific processes or activities, such as order to cash, procure to pay, attract to perform, and accounting to reporting. Companies must define and optimize the way they respond to customer demand and how it adds value to ensure customer satisfaction.

Within this layer, the company defines the value stream through a cycle that includes:

* Defining value based on the customer's viewpoint

* Mapping the value streams for all processes serving internal and external customers

* Making the activities flow efficiently

* Responding to customer demand

* Continuously improving the processes based on feedback

Value stream activities should precede the implementation of a business software system to ensure the practices are well understood and can be matched with the capabilities of a specific software solution.

The business improvement layer includes those elements that seek to uncover areas of improvement and enhancement, and support business excellence on a daily basis.

On the supply side, companies can utilize lean initiatives to minimize the procurement of material, reduce time and costs, and decrease returns and quality issues.

On the demand side, businesses have the ability to deliver products faster, with increased quality, at lower costs--when and where customers want them.

Historically, areas where companies have given less attention from a lean perspective, but which provide the opportunity to improve efficiency, eliminate waste and lower operational costs include customer and supplier relationship management, quality assurance, accounting, and sales and marketing automation.

The business strategy layer, which encompasses both business practice and software tools, is used to manage and monitor the business transactions, such as order placement, production, fulfillment, customer service order tracking, and material receipt and inspection, etc.

Regardless of the business practices and software a company chooses, it is critical to select a production plan that can be executed by the entire organization. Some of the more recently developed strategies, such as Simplified Market Pull, are being embraced for the simplicity and ease with which an organization can adopt them.

Benefits of lean

The benefits of bringing all facets of the business under the lean umbrella can be significant, and in many cases can mean the difference between merely surviving and thriving. When approached as a company-wide initiative, the resulting customer benefits include:

* Improved on-time delivery performance

* Faster order turnaround time 

* Improved quality and reduced defects

* Potentially lower pricing due to lower operational costs

* Increased capacity to allow for increased customer order volumes

These benefits contribute to greater customer satisfaction, long-term loyalty, and repeat business.

On the operational side, the organizational benefits include:

* Increased profitability

* Increased capacity to take on new business

* Increased capital to invest in new business initiatives

* Improved employee morale and retention, leading to improved employee performance

* Elimination of waste at all levels

* Lower inventory levels

* Improved supplier relationships, which can lead to lower purchasing costs

Continual monitoring

Adopting a comprehensive lean philosophy throughout requires continual monitoring and incremental improvement within each functional department and across all external relationships. This requires not only organizational discipline and top-level commitment, but also the right technology and the right professional services expertise.

Critical to a lean initiative, as with any business process oriented initiative, is the effective application of technology. The speed, volume, and complexity of business transactions today dictate that technology be used to efficiently support communication and information exchange across departmental boundaries and throughout an organization's supply chain.

Additionally, the appropriate application of lean-centric technology can eliminate redundancies, improve efficiencies, and lead to further lean practice improvements within an organization.

By improving communication between internal and external participants, an organization can take the first steps toward improving quality, decreasing operational costs and boosting profitability. Given the accelerated pace of business change and global competition, a lean philosophy is one practice every organization should consider in its business planning process. Discrete Industries, Infor, www.rsleads.com/807tp-171

Kevin Piotrowski is director of industry and product marketing for Discrete Industries, Infor, a global provider of enterprise software.