Transform Your Service Business with Lean Management
Bill Fotsch | Forbes
Lean. That’s something for big manufacturers, right?
Wrong. The lean philosophy can transform nearly every business—small as well as large, service companies as well as manufacturers. If you haven’t yet discovered these concepts, you may be missing a sizable opportunity to improve your bottom line. There’s just one caution that we want to offer, which we’ll get to in a moment.
First let’s consider the story of Dan Foley. In 1987, still in college, Foley founded D. Foley Landscape Inc., in Walpole, Massachusetts. In 1996 he implemented open-book management. In 1998 he launched a division called CampusCare to serve local schools and colleges. The company grew steadily and made good money. When it came time for Dan to sell the business, in 2009, D. Foley Landscape was a highly attractive candidate for strategic acquisition.
One secret of its success? Lean management.
Foley’s discovery of lean began with a week-long visit to the Ariens Company, Wisconsin-based manufacturers of Ariens snowblowers and Gravely commercial lawn mowers. “I worked there on a kaizen team on a snowblower line, embedded in their organization,” he remembers. “It blew my mind. We did a value-stream map, eliminating waste, and you could see how quickly that same line produced more snowblowers. And it made the job easier for the people producing the products.”
What he also saw was that you didn’t need to be a big manufacturer like Ariens to profit from lean. Every business has processes. And nearly every business process generates waste—muda in Japanese—meaning any activity that doesn’t provide value to the customer. Some of the waste is necessary, like processing the payroll. Much of it is unnecessary, like looking for a tool that you can’t find because somebody put it in the wrong place.
So Foley plunged in, following a curriculum titled The Working Smarter Training Challenge. The program was designed by a firm called JP Horizons, drawing on resources provided by Dan Ariens, CEO of the Ariens Company. “The first year was mostly learning the concepts,” Foley says. “At the end of the first year we did our first weeklong kaizen event.” Over the following three years, the company would undertake ten such events, along with several shorter initiatives aimed at specific targets.
Kaizen is a Japanese word meaning “change for the better.” An essential element of lean, it’s a philosophy of continuous improvement fueled by hands-on employee involvement. A kaizen event is an initiative designed to eliminate unnecessary waste and cut necessary waste to a minimum. Team members use lean tools such as value-stream mapping to identify opportunities and techniques for improvement. An event can be a costly exercise (“You can imagine,” says Foley, “we’re an open-book company and we’re going to take five or six people out of their day job for a week? Right!”). But it typically pays off handily, both in immediate efficiencies and in the spirit of continuous improvement that it encourages.
And pay off it did. Foley’s teams revamped the organization of the shop and the landscaping trailers. They redesigned processes such as the weekly servicing of mowing equipment. Time was saved; costs declined. One team even attacked payroll processing. Here’s Foley’s account of that effort:
“We had distributed crews. They would leave in the morning, go out and do work, come back, and turn in their paperwork. Their manager would have to review the paperwork, then turn it in to the office. Ultimately those reports would get processed for payroll, job costing, and invoicing. In a kaizen event we reduced the steps in the process by just over 50%. During the busy portion of the landscape season, that’s 37 to 40 weeks, we saved approximately 24 hours a week. It adds up fast.”
Now to get to that caution that we wanted to mention. Lean is a powerful set of concepts that help people in a company learn how to improve. Using lean techniques, any group of employees can identify waste and figure out how to eliminate or minimize it. But in many companies lean management practices run into an insuperable obstacle. It’s imposed from the top down. It doesn’t help people understand the economics of the business. It doesn’t always give them a share of the improvements. Employees’ natural reaction, often, is, why should I care? What’s in it for me? Worse still, the efficiencies coming from lean management are often seen as a threat to employees’ job security.
D. Foley Landscape didn’t have those problems because it was already an open-book company with a well-designed incentive system. Employees understood the company’s economics and the power of learning to produce more value for clients. They knew that improvements would feed the business’s financial performance, and that they would share in the proceeds. “Open-book management gave us a compelling why,” says Foley. “And any change initiative always needs a ‘why.’ The whole idea of winning by making improvements in the business was motivating, and obviously it was financially rewarding as well.
“But it wasn’t just about making more money. We got addicted to the concept of working smarter. The open-book culture made us hungry for improvement.”
Hungry for improvement. That’s something that could benefit any company, whatever its business.
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