Lean Business

Hundreds of Irish firms are becoming more cost efficient and are increasing profits thanks to a support programme designed to encourage companies to adopt lean business principles. Cian Molloy reports.

Lean business aims to use objective analysis to identify and eliminate waste in the production system to improve overall customer value. The techniques were pioneered in Japan, most notably by the world’s largest car manufacturer, Toyota, but they are now used throughout the world by companies of all sizes and types, including those in service industries, to improve cost efficiency and to maximise profits. Key elements of lean thinking are the introduction of new measures and metrics to estimate and identify waste and wasteful practices: the idea of working for continuous improvement and the establishment of a quality circle, or ‘kaizen’, with teams working towards improvement using a define / measure / analyse / improve / control (DMAlC) model.

Dr Richard Keegan, manager of EI’s lean business department, says that switching to lean business methods typically leads to an increase of 10 to 15 per cent in productivity and between 5 and 10 per cent in profitability, although some firms have seen profit increases as much as 20 per cent,