Planet Lean: The Official online magazine of the Lean Global Network
Small businesses, big impact

Small businesses, big impact

Paloma Rubinato Perez
March 14, 2024

FEATURE – The successful project discussed in this article shows how Lean Thinking can bring huge benefits to small and medium enterprises and paves the way to a new way of looking at lean coaching.


Words: Paloma Rubinato, Lean Institute Brasil


Small businesses represent around 90% of the global economy and are responsible for a huge proportion of employment. Yet, when it comes to Lean Thinking, they are often neglected. Most lean transformations we hear and read about refer to medium and (more often) large organizations – many of them employing thousands of people and relying on supply chains that span different continents.

But the experience of Lean Institute Brasil (LIB) and SEBRAE over the past three years proves that Lean Thinking can have a very positive impact on SMEs, too.

SEBRAE is a government-funded agency present across all Brazilian states, which dedicates itself to supporting small and medium enterprises. Historically, their approach to developing the capabilities of these organizations has been based on in-person training and interventions. When the pandemic hit, this model quickly proved problematic and SEBRAE looked for a way to turn a liability into an opportunity.

That’s when they reached out to LIB and asked us to develop a consultant program – called Quick Wins – for their members in São Paulo State. The initiative aimed to provide SMEs with immediate and impactful solutions to the challenges they were facing. Unlike traditional programs, Quick Wins was designed to be 100% online, offering pre-recorded training in conjunction with real-time online coaching sessions (we use different platforms – Zoom, Meet, WhatsApp video – to ensure every company has seamless access to us, regardless of their technological infrastructure).

SEBRAE member companies that needed help – which ranged from churches to hairdressers and shops – were encouraged to participate in the Quick Wins program. The results were outstanding and challenge our preconceptions about the scalability of lean principles.


THE RIGHT KNOWLEDGE TO THE RIGHT PEOPLE AT THE RIGHT TIME

Unable to visit the companies due to Covid restrictions, our coaches had to find a different way to assess the current state of SEBRAE members to then provide them with a proposal for improvement. That’s why, at the diagnosis stage, they tell the companies to make a video that shows the process in as much detail as possible. This is our way to “go to the gemba”.

With only two to four weeks available to complete our interventions and ensure tangible and rapid improvements, we knew that a traditional approach wouldn’t cut it. Therefore, to help them develop a basic understanding of Lean Thinking, our coaches ask trainees to watch the video content developed by the institute – some of it mandatory, some of it on-demand. The coaching sessions are then used to challenge the client companies to make the improvements identified together with the coaches.

Because of the limited time available to help organizations to achieve those quick gains, LIB decided to limit the scope of what they taught in the program to a small number of fundamental lean tools and techniques. The online training course they developed is comprehensive without being overwhelming and includes the most high-impact tools in the lean toolbox: Process Maps, Job Instruction Sheets, Ishikawa, 5 Whys, Effort-Impact Matrix, 5S, and spaghetti charts. Some of these tools – like 5S – were added at a later stage, in response to the requests coming from the client companies.

The nature of the problems presented to our coaches evolved over time. Initially dominated by uncertainties related to the pandemic, the cases presented to them shifted towards more operations-focused challenges as businesses adapted to the changing landscape.


EXAMPLES

As mentioned, all kinds of organizations participated in the Quick Wins program. Here are a few short examples of the problems they experienced and the countermeasures that were implemented.

  • Yonamine & Hito Alimentos is a producer of sweets and cotton candy. They found they were wasting too much sugar in the production and packaging processes. The root causes of the problem were found to be the absence of a sugar quantity measurer for the turbine and of working standards, as well as lacking visual management. The team implemented a number of countermeasures to address the situation: they started to use a measurer once the right quantity of sugar was determined; a SOP for the process was established; the visual management in the facility was strengthened and the team trained. These changes resulted in an approximate 12% reduction in the total process time, with non-value-added activities cut by 50% and non-value-added but necessary activities by 33%. Additionally, waiting time was cut by half.
  • Redora Serviços e Produtos do Mobiliário manufactures and repairs furniture in the city of São Paulo. To diagnose the problem, the team looked into customer requirements and realized that in their pilot process – chairs – there was an excessive amount of stock and a significant imbalance between operations, which resulted in a bottleneck. Workers worked in big batches and were often idle. To turn around the operations, production cells were introduced (Separation, Picking, Sealing, Painting and Assembly) and minimum and maximum stock levels for inputs were defined. Clear procedures for the production cells were developed, inventory control was deployed, and a plan for preventive maintenance was put together. The company also changed the layout to allow for better production flow. Operators were trained in the new procedures. Among the benefits realized, there were: work balance and a reduction in operating times; a reduction in the lead-time from separation to dispatch from 8 hours and 13 minutes to just under 7 hours; increased productivity; and cost reduction through better utilization of the company’s human capital.
  • At food company Lorenzzo Comércio e Distribuição de Produtos Alimentícios, specialized in the production of dough for pizza and pastries, the application of Lean also brought great benefits. The business faced delays and low efficiency, especially in the drying process and during the offloading and release of carts from the drying facility and the oven. Therefore, established production goals were rarely achieved. The process was analyzed to better balance production between the two lines. Furthermore, maintenance of the drying chamber was carried out and the ventilation time for cooling the dough was reduced from 15 to 10 minutes, thus freeing up much-needed carts. Thanks to these improvements, energy consumption was reduced by 10% (saving R$800/month) and daily productivity improved by 50%. Additionally, the company saved R$60,000, which it was about to invest to purchase new carts.
  • A marketing agency that also participated in the Quick Wins program was looking for a way to reduce the time to close new deals and, in this way, increase revenue. The analysis of the problem, carried out by the team and their LIB coach, revealed that the main causes of the problem were the centralization of activities, people’s work deviating from their job description, an outdated briefing process, and lacking information provided to prospective clients. To tackle the situation, the team began to prioritize customers. They made an effort to better define roles and responsibilities and to make workers more autonomous in their work. The creation of product packages also proved to be an attractive proposition for the clients of the agency. After the intervention, the process of closing new deals took 61% less time than before (going from 16 to six hours – which they are now trying to bring down to two hours).
  • Starcookies sells hand-made cookies but was having a lot of trouble controlling their stock of finished products and with the limited space available to store their products. They also didn’t have a process to plan production in place. The controlled inventory was only what was available for sale (ready batch). Putting into practice the knowledge acquired during the Quick Wins program, the company started to control batch inventory, frozen inventory, as well as expected sales. As a result, the total time it takes them to complete the inventory management process went down by 26%. They also carried out an ABC analysis of their products to understand which ones give the biggest contribution to their revenue. A big change was also implemented in the way products are stored. Before the program, cookies were kept in zip bags and only half of the freezer capacity was utilized. Now, boxes of 50 units each are stacked on top of one another, facilitating inventory control and increasing the freezer capacity by 86% - an additional 1,200 units.

PLANTING SEEDS

In a departure from the institute’s traditional way of working, the Quick Wins program doesn’t aim to achieve full-scale lean transformations, but to deliver targeted interventions that address specific business issues. But this isn’t to say that the introduction of basic lean knowledge in these organizations isn’t planting seeds that one day might grow and lead to transformations that are wider in scope.

In 2023, the third year of the program, there was a transition to a fee-based model. Fewer companies joined, but LIB observed a greater commitment, with the participating organizations increasingly interested in long-term management skill development.

The program is a completely new way to spread Lean Thinking and Practice for Lean Institute Brasil. The collaboration with SEBRAE allowed us to reach a significant number of SMEs (well over 3,000), demonstrating the universal applicability of lean principles. The success of the program (reflected in a high Net Promoter Score of 97%) begs the question: what would happen if the program were implemented nationwide? And indeed, what if other countries adopted a similar approach to the support of SMEs?

We believe that the model LIB and SEBRAE have been exploring and perfecting over the past three years can be of inspiration for governments and government-funded agencies around the world, tasked with improving the success rate of small and medium businesses. Lean Thinking is a management philosophy that is proved to help generate profitability, and it is clear to us that more profitability for SMEs, which represent the backbone of our economy, will lead to the improvement in the livelihoods of millions of people.


THE AUTHOR

Paloma Rubinato Perez is Head of Lean Healthcare at Lean Institute Brasil

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