Why I like recession – A lean manufacturing perspective

Have you heard all the horror stories of recession? Do you think it is bad? This is a lean manufacturing perspective to recession. As usual you can leave your ideas on this post as a comment to this post.

Today the economy has slowed down globally. People are losing jobs and big companies are collapsing. These are obviously not good signs. But if we analyze the situation carefully, especially with a lean perspective, you will find it might not be all that bad in the bigger picture in long run. Below are few thoughts on positives recession can bring to any (lean) organization.

1. People will have to be satisfied only with what they want. So the market will actually be in control. Just advertising will not sell. So manufacturers have to “react to the actual demand” of the market. They cannot just produce something in bulk and create demand for themselves with huge advertising campaigns and similar means. So they will have to be demand driven. This is what lean concept of pull manufacturing is. This will reduce the unnecessary inventory, working capital. Obviously good for the world isn’t it.

2. Organizations can not waste time and energy on experimenting with new things. They cannot buy time and do nothing in the name of experimenting with new technology, machinery and processes. They have to use their existing resources and do better just to be in the game. This is great news for the organizations since most of their problems can be sorted internally. It is good time to start step by step improvement by getting the views of all the employees without looking for high cost, high tech solutions to solve your problems. Continuous improvement or Kaizen is a tool used by all the successful lean manufacturers all over the world.

3. Organizations have to change; there is no other option in recession times. So if you were facing heavy resistance in implementing something new, time could not have been better for you. Especially if you wanted to implement lean, time is ideal for you. You can easily bring the cultural shift lean brings to the organization without much of resistance, because otherwise you will be not in the business anyway. Toyota might not have created its famous Toyota Production System or TPS if it had a huge market willing to buy anything for any price. Those pressures from the market created a crisis and lead the way for lean. It is a similar situation for all of us all over the world. So capitalize on these times, even if your organization is not in the verge of collapsing you can certainly do better with lean techniques.

4. Bigger players and monopolies might tumble creating new windows of opportunity for the new comers to the businesses. This is great news for all the small business owners to become big in your industry. You cannot become big in the same industry doing all the wrong things those big companies did like having huge overhead structures, inefficient manufacturing and distribution techniques and so on. So you have to be better. You have to be lean even if you do not want to use that word.

5. When organizations start to lose nice profits they were enjoying earlier and may be start incurring losses, they have to have a relook at each and everything they do. This opens up large number of ways for improvement by eliminating wastes involved. Management by exception will not work anymore. Managers will have to be in the floor and know what is going out their exactly. They will see the way they waste up to 95% of their resources. This can be the starting point of your lean journey.

So in simple terms, recession times will get read of all the money wasting unfit organizations from the system and will open the ways for more efficient operators. Only the fittest of fit will survive the game. Just like natural evolution I believe this is for the betterment of the world itself. To survive these tough times you have to be lean, whether you use those words or not.

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