How Much Does a Lean Journey Cost?
Investing in a Lean Journey: Understanding Costs and Potential Returns
As businesses strive for growth and success, a culture of continuous improvement becomes a cornerstone of their strategy. Among the first questions executives and business owners grapple with when considering this path is, "How much does a lean journey cost, and how do we fund it?".
The Cost of Building a Culture of Continuous Improvement
When leaders emphasize that continuous improvement is an integral part of every employee's role, the cost of this improvement gets absorbed into the existing business structure. However, initiating or substantially increasing continuous improvement activities entails additional expenses. These costs often include training, recruiting experts, and allocating time away from daily tasks for improvements.
Some organizations adopt a benchmark of assigning one continuous improvement expert per 100 employees, which equates to approximately 1% of labor costs. However, the precise cost of a lean journey will depend on the extent of the change, the speed of implementation, and how much of each employee's time is devoted to driving these changes.
Planning for Continuous Improvement
Having no financial plan for continuous improvement is arguably planning to fail. The importance of this step cannot be overstated. Embarking on a lean journey does come with certain expenses, but it's important for businesses to view these as an investment, ensuring they have the appropriate resources to facilitate a smooth transition.
What Returns Should You Expect?
When deciding how much to invest in continuous improvement, the question that naturally follows is, "What results should I expect?" Goals and expectations for improvement can be set, but the potential for improvement also hinges on the existing operational efficiency.
For example, if a business operates with an excess inventory, lengthy delivery times, and high rework and overtime costs, significant double-digit improvement could be achievable. Therefore, companies in such situations can expect a substantial return on their investment in continuous improvement.
Long-term Benefits of Continuous Improvement
Beyond the immediate savings from operational improvements, there are long-term benefits to engaging everyone in daily problem-solving. Cultivating a culture of continuous improvement can lead to increased employee engagement, improved customer satisfaction, and ultimately, a more competitive business.
In conclusion, while the costs associated with embarking on a lean journey can be substantial, the potential returns - in terms of both financial savings and broader business benefits - can be substantial. Therefore, businesses must carefully plan and budget for continuous improvement, setting realistic expectations based on their current operational efficiency.