When it comes to Lean implementations there is one hard truth: Most companies fail at using Lean to reach their operational and financial goals. Despite all evidence of its effectiveness and a myriad of experts who swear by its principles, companies struggle with using this management philosophy to their advantage. Read this blog to learn 10 Reasons Why Lean Implementations Fail.

The success rate of Lean implementations sits somewhere between 25-50%. This can be discouraging to many business leaders. However, just because something is difficult does not mean it cannot be done. Leading an organization through a significant amount of change is hard work.

Leaders must prepare in advance and learn What to Expect from a Lean Transformation. Every organization is different but there are certain elements to a successful Lean Implementation and leaders should become well acquainted with them.

Many leadership teams take a halfhearted approach to Lean; evidence of this is their level of participation, support, interest, self-education, and understanding of their role as leaders. Unfortunately, this type of approach ends up underdelivering on their goals.

As you consider taking on this challenge, we want you to avoid other’s mistakes by being cognizant of the consequences of a failed implementation:

  1. Wasted resources – Implementing Lean takes a significant amount of effort. When leadership teams fail to lead and support the initiative, they are wasting and undermining these efforts. Depending on the size of the organization, investments such as capital equipment, facilities, salaries, supplies, lost productivity, travel, and contracting services, to name a few, can quickly add up. This leads to losing out on the initiative’s return on investment and missing out on other potential initiatives. Few companies have endless resources and thus cannot afford to waste them carelessly.
  2. Deteriorating performance – There is no denying that applied properly, the Lean principles will help any business thrive. Those that fail to seize the benefits will face the realities of failing to adapt and embrace continuous improvement. The result of that is the competition will begin to gain and eventually overtake these organizations as their deteriorating performance leads to: 
  • Customer impact: Late orders, long lead times, and quality problems will affect customer relationships and risk loss of revenue.
  • Reduced quality of work: The cost of poor quality in the form of excessive tests, inspections, rework, and scrap can bring a business to its knees.
  • Supplier impact: Risk of insolvency can impact the supply chain and strain relationships with key suppliers.
  • Financial impact: Longer cash to cash cycles that will impact working capital and put pressure on cash requirements to sustain the business. This is a dangerous road that can lead to higher levels of leverage and ultimately insolvency.
  • Leadership changes: Leaders exist to deliver results. If leaders cannot drive performance improvement, they are at risk of being replaced.

These effects involve mostly the organization’s resources. Next week I’ll be sharing effects that involve your staff more directly.

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info@alphanovaconsulting.com

 

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