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Seven Steps to a Leaner Organization

September 23, 2008 By Pascal Cotte , Adam Farber , Amyn Merchant , Petros Paranikas , and Harold L. Sirkin

When Toyota created its lean production system in the late 1950s—drawing on the thinking of Henry Ford and W. Edwards Deming—the Japanese company revolutionized auto manufacturing. Since then, lean techniques have moved far beyond the shop floor. Still, the principles of lean production remain the same: an integrated, end-to-end process viewpoint that combines the concepts of waste elimination, just-in-time inventory management, built-in quality, and worker involvement—supported by a cultural focus on problem solving and the use of tools such as kaizen (continuous improvement), kanban (ongoing replenishment), poka-yoke (error proofing), 5S (workplace organization), and value-stream mapping.

Despite the ongoing popularity of lean tools and techniques, however, we’ve seen a variety of outcomes in our work with major companies around the world. Toyota’s success with lean is, of course, legendary. But what types of results are other companies getting from their lean initiatives? And what are companies with the best outcomes doing differently than their less successful peers? To find the answers, The Boston Consulting Group conducted interviews with executives at a wide range of companies with varying degrees of lean experience. We then combined the insights gained with our observations helping clients succeed in their lean initiatives.

We found that most companies’ first initiatives were in manufacturing but that lean projects tended to spread to other areas, such as human resources, finance, research, sales, order fulfillment, and logistics. As one executive noted, “[Our] original expectation was that [the lean program] would be expanded to manufacturing operations worldwide. As time has gone on, it’s been expanded into call centers. I’m starting to think about how to implement it for a sales process.”

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The authors would like to thank their colleagues Ian Colotla, Michael Zinser, Franklin McClelland, David Oppenheim, Mark Ralls, and Sukand Ramachandran for their contributions to this report.

For further information about the topics discussed in this report, please contact one of the authors.

This report was sponsored by the Lean Advantage segment of BCG’s Operations practice. For inquiries about the practice’s activities, please contact its global leader, Harold L. Sirkin.

Seven Steps to a Leaner Organization