Lean Frontiers: Are they differences in getting middle management on board from getting executive management support?
Are there differences in getting middle management from executive management on board for 1) developing the lean enterprise and 2) direct engagement on their part? What are the differences, if any?
Posted on May 9, 2015
Archives by Tag 'cost'
Orry Fiume

Orry Fiume: Rather than cost accounting, look out for cash improvement

By Orry Fiume, - Last updated: Tuesday, January 18, 2011
This is a question that has been asked in every Lean Accounting workshop that I have conducted over the past 10 years. Probably the single biggest reason why we can’t see the gains in the Profit Statement is because most companies still use full absorption standard cost accounting.  In this system any deviation from standard is treated as a variance. As we implement Lean we satisfy some of our current demand from existing inventories, resulting in improving inventory turns…which is a good thing.  However, since our people are not producing product, by design, that shows up in the financial statements as ...

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Jeff Liker

Dan Jones: Lean, Quality and Cost Cutting

By Jeff Liker, - Last updated: Thursday, April 22, 2010
I have met many of these folks too who talk about lean but whose heads are stuck in the old cost cutting mind set. Organisations that employ them, whether as internal or external consultants, deserve what they get – traditional cost cutting! A great shame and a missed opportunity. On the other hand I have also met good lean folk who know all the tools but who do not have an A3 plan to guide their actions. And I often encounter quality folks who imply that improving quality is somehow more virtuous than the grubby task of eliminating waste, which ...

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Tom Johnson: Financial results such as revenue, cost, and profit are by-products of well-run human-focused processes

By , - Last updated: Thursday, February 18, 2010
Dear “Lean Edge” Colleagues: The cause of Toyota’s current crisis is found, in my opinion, in its very recent surrender to Wall Street pressure to grow continuously, as virtually all large publicly-traded American businesses, including those that pursue “lean” practices, have attempted to do for the past 30 years or more.  Steady growth in size and scale presumably improves profitability by conferring increased control over market prices and decreased costs. Unfortunately, as Toyota has discovered, the strategy never works. The flaw in this finance-oriented growth strategy is the belief that profitability improves by taking steps aimed at increasing revenue and cutting costs.  ...

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Michael Balle

Michael Ballé: Leaning processes is about seeking true cost

By Michael Balle, co-author of The Gold Mine and The Lean Manager - Last updated: Thursday, January 7, 2010
Lean can certainly help in getting commitment on specific financial targets and seeing that these targets are met on schedule, but not in the way one thinks, which is again one of the interesting paradoxes of this new way of management. First, the lean approach is definitely more precise about costs. For instance, I was recently looking at purchasing practices in the automotive industry. In a traditional group, purchasing assumed a ballpark figure of a few percents of the part cost for transportation and holding. In a company that has been doing lean for years, there are tables to calculate the ...

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Tom Johnson: Reduce cost by nurturing relationships, not by cutting costs

By , - Last updated: Thursday, January 7, 2010
Since my first encounter with the company over 20 years ago, what has always impressed me about Toyota is a deep commitment to the idea that financial results emerge from managements' careful attention to nurturing process, not from their taking steps to achieve financial targets.   For decades, no other company has been as focused as Toyota is on reducing costs.  But no other company seems to understand as well as Toyota that lower cost is not achieved by cutting costs; instead, they lower cost is reached by cultivating patterns of relationships that are designed to continuously reduce the resources (including time) and effort required to serve customers better ...

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Art Smalley

Art Smalley: Toyota’s Cost Reduction Focus

By Art Smalley, - Last updated: Wednesday, January 6, 2010
Prof. Austin's most recent question strikes a chord with me as I think it unfortunately highlights an important aspect of lean or TPS that is not accurately depicted in the world today. Like most people when I started working for Toyota in Japan I sat through the standard half day introduction to TPS put on at that time by the education department. The second or third overhead transparency shown to us was the following simple equation for discussion purposes: Profits = (Sales Price - Cost) x Volume There are three ways to manipulate profit in this equation. 1) Increase prices, 2) Sell ...

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Mike Rother

Mike Rother: Lean Ain’t Just Cost Cutting

By Mike Rother, - Last updated: Friday, December 18, 2009
Question:  How do you avoid lean becoming just cost cutting? How do you get people to embrace the philosophy? When we started investigating Toyota 20 years ago we looked at Toyota’s outcomes -- reduced waste -- and labeled that “lean production“. That's what we've been trying to implement, and what then leads to lean as ruthless cost cutting. We missed Toyota’s less visible thinking, intentions and behavior routines that produce the outcome of reduced waste. Is Toyota simply cost cutting? Try this on for size: Toyota corporate guidance in the current harsh economic climate is:  “No permanent layoffs ...

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