Embracing Lean Management? 7 Ways You Can Help Reduce Your Company's Waste

Lean management can take a lot of work—but using it to cut the fat from your budget and operations may be worth it, according to these experts.
March 06, 2018

Ask anyone about “lean management" and what it means, and you may well get back several definitions.

Still, in a nutshell, lean management generally refers to a process of continually improving management systems and looking for inefficiencies in how a company does business. (It's a practice that is usually credited to automotive manufacturer Toyota.)

After all, haste may make waste, but so does working… very… slowly. Or having three people fulfill a task when two people or one individual would do just fine. The bigger and more successful a company becomes, and the more departments and people it acquires, the more the odds of wasting both time and money go up.

Does lean management sound like an idea that you feel your business should adopt? You can start by looking at where you or your employees squander time and money. But where to look? Here are some ideas that may help your company succeed in lean management.

1. Take a look at your payroll.

Paul Bromen is a Minneapolis-based business consultant and serial entrepreneur who currently owns Upon a Mattress, a website of comprehensive mattress reviews. According to Bromen, every business of more than five people that he has encountered “carries employees that add no value."

That sounds harsh, but as he explains, “they get some work done now and then, but these employees frustrate star performers who pick up their slack."

Bromen once worked with a company that had 60 sales managers for 120 salespeople. He isn't anti-employee; he just wants to see companies with the right employees.

Your business may benefit from having people ask themselves, Is there anything we're doing that we should stop doing?

Getting rid of underperforming employees can often be difficult. But if you feel that it's possible, Bromen advises, “Let them go, gently, and recruit a stellar worker."

And if letting someone go doesn't seem ideal or practical to you, maybe you can find a new role within the company for the person—one where they can thrive.

2. Plan effectively to help with lean management.

Walt Jones is the principal of SEQ Advisory Group, a strategy and management consulting company in the Washington, D.C. region. Helping businesses become more efficient is one of his firm's specialties.

Jones says that if companies would plan ahead better, they'd waste a lot less.

“Often, companies go into a new venture, such as new product lines or operational changes, without fully evaluating the costs and potential risks of the project," he says.

Jones remembers encountering one company that invested in an enterprise-level software system, “but thought they could save costs by purchasing it off the shelf rather than having it customized to their needs."

It did save considerable upfront costs, Jones says, but because the software system wasn't customized, the company also saw “thousands of hours spent looking for workarounds, training and hiring consultants to come in and provide aftermarket customization and further training on the system changes."

3. Improve your expense-reporting policies.

A lot of employees are asking to be reimbursed for "business expenses" they shouldn't be reimbursed for, according to Tim Hird, executive director at Robert Half Management Resources.

The company did a survey of 2,200 CFOs on expense reports in 2016, Hird says.

Some of the items that CFOs said were requested and were deemed unusual and often inappropriate included a new car, toilet paper, dance classes, a doggie day spa trip for a pet and a 10-cent parking meter charge (which may have been appropriate, but this employee must have been really thrifty).

“Companies must have clear policies in place, share them regularly and make them easily accessible to all employees," Hird advises. "For example, post them on the company intranet."

4. Check recurring charges on credit cards.

This is an interesting, under-the-radar cost.

Max Soni is the CEO at Delancey Street, a New York City-based tech startup that uses artificial intelligence technology to fund real-estate transactions and other business expenses.

“Because we fund other companies and businesses, we often get an inside look at their spending habits," Soni says. "That means looking at tax returns, and in some cases, even looking at credit card statements where necessary."

The biggest source of waste that Soni says he sees is “when businesses have credit cards and forget to cancel recurring charges. Most of the time, the charges are slight, like $3 to $70 a month. Often, because they are so small, bookkeepers ignore the charges and assume they are on purpose."

But Soni estimates that from his experience, the average business has anywhere from five to 15 of these miscellaneous charges coming in.

“The bigger the company, the bigger the number grows," he says. “Often, you'll see miscellaneous charges that have been going on for years."

5. Improve your forecasting to improve lean management.

Joe Carella, assistant dean at Eller College of Management at the University of Arizona, says that he thinks the biggest form of waste is generally in this area. Businesses too often get their demand and supply forecasts wrong, where they predict incorrectly how much of a product or service will be needed, and how much raw materials and services will be required.

Carella says a lot of this could be avoided if company culture changed so that departments worked together more.

“Most managers are focused on their departmental goals and tend to ignore the greater organizational goals," he says.

6. Work together, better.

The problems that can lead to poor forecasting can negatively manifest itself in other ways, according to Sandy Geroux, CEO of WOWplace in Orlando, a company that trains business leaders in how to motivate employees. 

One organization Geroux worked with told her that their administrative professionals from all their different locations scattered throughout New York City came together for their first-ever conference and brainstorming session. It was there that they discovered they were all buying office supplies from different vendors.

“We assume everyone has master purchase agreements nowadays," Geroux says, but in this company didn't.

The administrative professionals requested bids from all their current vendors, selected the one with the best deal and saved their organization $500,000 in the first year, according to Geroux.

7. Ask more questions—and more probing ones.

Many companies do things because everyone has always done it that way, Geroux says. But your business may benefit from having people ask themselves, Is there anything we're doing that we should stop doing?

“One HR leader told me that her assistant asked permission to stop distributing three reports they had been producing every week for years because she didn't believe anyone was reading them," Geroux says.

It was decided that the reports would be produced for the next month—but not distributed.

“Turns out that one report was missed, but no one noticed that two of the three were not being distributed," Geroux says. “After 30 days, they were able to eliminate the two unnecessary reports. The savings in man hours totaled $50,000 per year."

If there's a lesson here, it's that adopting a lean management mindset could help your company. You may not have a complicated manufacturing outfit with machinery worth millions. Maybe you have a very uncomplicated office where everyone sits quietly at their desks and produces reports.

Still, any business can stand to gain time and money. And they may be able to find them if the owners and employees take the time to look around for areas that they can be more efficient in.

And if you don't feel you have the time to look for places where your company can be more efficient? Then your business probably could benefit from lean management more than you realize.

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