Lean thinking: finding waste in a small factory's numbers
What lean thinking asks a small factory to look at first, and which figures in its own books point to waste worth chasing.
By Achekam · · 5 min read · For Manufacturing businesses in South Africa, Nigeria, Kenya
Lean has a reputation problem in small factories. It arrives with Japanese vocabulary, coloured floor tape and consultants who have run car plants, and the owner of a twenty-person joinery in Ikeja or a plastics moulder in Nairobi's Industrial Area quite reasonably wonders what any of it has to do with them.
Strip away the vocabulary and lean asks a few plain questions that apply to any workshop. What does the customer actually want? Which work produces it? Where is effort, material or time being spent on something nobody would pay for? A small factory's own books will not answer those questions by themselves, but they are a good place to see where to look. This article covers where lean starts and which numbers help.
Start with the customer, not the machine
The Lean Enterprise Institute (LEI) defines lean as a way of thinking about creating needed value with fewer resources and less waste. It also describes lean as a practice of continuous experimentation aimed at perfect value with no waste at all, an ideal you move towards rather than reach.
The LEI says lean thinking always starts with the customer: what does the customer value, or what problem does the customer need solved? This is the step small factories most often skip. A furniture maker may spend effort polishing the underside of a table that no buyer ever sees, while customers are actually frustrated by delivery dates that slip. The waste is not in the polishing machine. It is in working hard on the wrong thing.
The work and the people doing it
The LEI says lean practice begins with the work that directly and indirectly creates value for the customer, and with the people doing that work. Those people learn through ongoing experimentation to get better quality and flow, less time and effort, and lower cost.
Two consequences follow for a small business. First, the owner is not the only one who should be looking for waste: the machine operator knows where material is spoiled and where people wait. Second, improvement is a habit of small trials rather than a single project. A factory that changes one thing, measures the result and keeps or drops it is doing lean, whether or not it uses the word.
Five questions to frame the effort
The LEI's Lean Transformation Framework asks five questions:
- What is the value-driven purpose, or the problem to solve?
- What work must be done?
- What capabilities are required?
- What management system is required?
- What basic thinking does the organisation need?
For a small factory these can fit on one page. Purpose: deliver orders complete and on the promised date. Work: cutting, assembly, finishing, dispatch. Capabilities: a second trained person on the edge bander. Management system: a short weekly look at the numbers below. Thinking: problems are raised, not hidden.
Value beyond the shop floor
The LEI says a lean enterprise keeps specifying value and finding better ways to provide it in three places: product and process development; fulfilment, from order through production to delivery; and the product's use cycle, from delivery through maintenance and upgrades to recycling.
Most small factories only look at the middle one. Yet a design that uses an awkward size of board creates offcuts on every unit made, and a product that is hard to repair generates warranty visits for years. Waste can be designed in long before anyone reaches the factory floor.
Figures in the books that point at waste
Numbers do not find waste, but they show where it might be hiding. Four sources in Achekam are worth reading with a lean eye.
Management accounts, period against period. The income statement for a chosen period sits beside the period before, with a balance sheet at period end, both added up from the business's own journals and exportable as PDF or CSV. Look for costs that grow faster than sales: materials, overtime, repairs, couriers. One caution: the year-to-date preset starts on 1 January, not on your own financial year start, so set the dates yourself if your year starts in another month.
Budget against actual. A business can set a budget per account and period and compare it with the actual figures in its ledger. A materials account that runs over budget every month while output is flat suggests spoilage, rework or buying in uneconomic quantities. Factory expense accounts explains how to set up accounts fine enough to show this.
Wastage on transfers. With the Warehousing add-on, stock transfers between locations go from draft to dispatched to received, and a short delivery is recorded as wastage. Stock that leaves the store for the workshop and arrives short is waste you can count. A pattern of small shortages on the same route tells you where to look.
Labour by department. Payroll reports show cost, headcount and staff movements by month and by department. A department whose cost rises while its output does not, or whose staff turn over constantly, is worth a walk-through. More on reading these figures is in labour cost by department.
Small experiments and how to measure them
Lean improvement works best as a sequence of small, measured trials:
| Step | Example |
|---|---|
| See a problem | Wastage recorded on transfers from store to workshop rises |
| Go and look | Watch the transfer; boards are damaged in a cramped passage |
| Try one change | Move the cutting table nearer the store |
| Measure | Compare wastage on that transfer route over the following months |
| Keep or drop | If wastage falls, make the change permanent |
Write each trial down: the problem, the change, the figure you will watch and the date you will look again. The books supply the before and after; the people on the floor supply the ideas.
Where to read more
The Lean Enterprise Institute's introduction to what lean is explains the thinking and the framework in more depth. Pick one cost line that has grown faster than sales this year, go and watch the work behind it, and try one change before the month ends.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
