Lean Six Sigma in small businesses

Earlier this year, eta’s Nicole Harvey and Rishi Malhotra visited a clothing manufacturer with annual sales of about $1.5 million — small enough that the entire operation runs out of a single building, large enough that the operation has the kind of recurring expenses that quietly add up. The visit was a scoping conversation rather than a kaizen event. In the course of one of those conversations, the firm’s clerk explained the firm’s current spend on barcode labels — and the conversation that followed is the clearest example the practice has of the 5 Whys discipline producing a useful result inside fifteen minutes of starting it.

The conversation, lightly compressed:

> “Each label costs ten cents, so we have to be careful not to lose them.” > > “Why do you pay ten cents for each label?” asked Rishi. > > “We need a bigger barcode sticker to fit the tag.” > > “Why do you need a barcode sticker?” > > “We don’t use it, but the retailers we sell to need it to count and track their inventory with scanners.” > > “Why don’t you buy blank labels and print them yourself?” > > “We don’t have a printer for that.” > > “If you could use a printer you already have,” Rishi said, eyeing the high-capacity laser printer in the office, “why not print the labels yourself?” > > “We don’t know how to make the barcode.” > > “Do you have Excel? Let me show you.”

Within fifteen minutes, the clerk had learned how to generate a barcode in Excel and print it on a label using a printer that had been sitting in the next room the entire time. The firm’s recurring spend on pre-printed barcode labels had been just over twenty thousand dollars a year. That spend was eliminated, in fifteen minutes, by a conversation that did not require a consulting engagement, a software purchase, or any new equipment. The conversation required, instead, the discipline of asking why five times in succession.

Five lessons from this kind of moment travel directly into the practice’s other engagements with small operators.

It is difficult to self-correct. This is true especially of processes one has been operating for some years. The clerk had been buying ten-cent labels for so long that the price was no longer the kind of thing the operation noticed.

A small amount of information can make a substantial difference. The clerk did not need a Six Sigma certification to use Excel’s barcode feature; they needed to know it existed. Most of what the 5 Whys surfaces in operations of this size is information of similar character.

Changes can be made instantaneously. Small changes do not need to go through a lengthy approvals process. They do, however, need empowered employees — operators who have permission to act on what they have just noticed.

Change is best completed at the point of the problem. Effective and efficient change tends to happen when and where the problem occurs — what Lean calls the Gemba, the workplace itself — because the facts are clearest there. The barcode change was made at the clerk’s desk, on the clerk’s screen, with the printer in the next room, in the same conversation in which the problem was noticed.

Small changes can add up to culture. Leadership’s acknowledgement and nurturing of rapid small changes — a per-idea recognition system, a shared log of completed changes, a public acknowledgement at the end of the week — is what sets Lean culture apart from Lean technique.

Lean tools can produce life-changing and revenue-improving differences in operations of every size. For small businesses, the tools are sometimes the difference between surviving the first decade and not surviving it. Toyota itself was small in 1950, when the operating disciplines that became the Toyota Production System were being worked out — small enough that it could not afford to compete with Ford’s capital-intensive American mass-production methods, and was therefore obliged to find another way. Entrepreneurs and start-up executives may have more to gain from Lean adoption than larger firms do. No operation is too small to benefit.

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