Thursday, September 6, 2012

How It Can Reduce Costs?

One of the simplest ways to achieve lower costs is by using Lean management techniques. This management style is widely believed to be beneficial only for the manufacturing industry since it borrows heavily from the Japanese automaker Toyota's style of management; however, it can be used in almost any industry with great effect.

Some of the many ways in which Lean management style can help your company save costs are:

1. Reduce waste: One of the first things that you will have to do is organize your workspace as well as work processes so that there is maximum efficiency. You will find that plenty of processes, tools, people etc. are not necessary to get the job done and have no bearing upon customer satisfaction. The process of identifying and reducing waste will enable you (along with other people in your company) to devise better methods of doing work.

2. Regular review of progress: Lean management places great emphasis on reviewing any project, whether it may be small or large. This enables your company to spot deviations from the plan as soon as they occur. Also, this makes it easy for you to change plans in order to account for changes in the business environment. Many companies persist in following plans that have reduced relevance or which have strayed too far from the objectives to be irrelevant, thereby wasting a great deal of money.

What makes a Lean business very competitive is that reduced costs are achieved whilst increasing customer satisfaction at the same time. This comes as a big shock to people who have the traditional mindset that costs can only be reduced by somehow bringing down product quality or service standards, with disastrous effect on the bottom line.

You do have to be aware of the fact that your company can only become Lean if there is a concerted effort to transform how all employees think and work. It has to be admitted that it is quite difficult to change the mindset of people, especially if they have been doing work in a certain manner for a very long time. You will therefore have to invest in a good training program and also get help from professionals in the field in order to make the shift to Lean Management.

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