How Lean Fights Obsolescence

I heard an interesting story the other day about baggage fees. Although the decision to charge for extra bags has alienated travelers, it hasn’t seemed to reduce the number of fliers significantly. But the fees did, however, alter passenger behavior. Travelers take fewer bags with them now when they catch a flight. Of course, anytime a customer gets less for more, they lose.

But the airlines win regardless of what fliers do about their luggage. If passengers carry more bags, the airlines add to the top line. If they take fewer bags, the airlines have less weight in the hold, so they save fuel. And since nearly all airlines use this business model, there are not a lot of alternatives for people needing to get somewhere quickly.

But passengers are not the only losers with this new business model. It seems that the rental push cart industry had been hammered by the proliferation of luggage fees.

As people carry fewer bags with them, making their way through airports is much easier. There is less need to pile the luggage on the rental carts, so the little trolleys sit idle far more often. The owners of the carts, therefore, suffer.

The manufacturers of the carts probably also saw a precipitous drop in their sales. The wheel manufacturers and the company that made the printed circuit boards that managed the brains of the self-serve units and all the other component suppliers also likely saw a dip in the number of units they sold.

Now, all good companies tend to have some sort of risk management in place. But sometimes an unforeseen change such as the baggage fees can come out of left field. Five years ago, Rental-Carts-R-Us may not have anticipated this change, even if they were keeping a close eye on economic conditions and the price of aviation fuel.

Lean companies, though, have a few major advantages when these types of curveballs come at them that make their products and services outdated in a heartbeat.

1. They are sitting on less inventory. If the cart supplier had a year’s supply of carts parked in a warehouse, there would likely still be a year’s supply today. The less money a company has tied up in finished goods, the more working capital they will have available to change course.
2. They are used to change. Constant process improvements prepare people to adjust to new situations rapidly. The less energy spent convincing workers about the need for change, the easier the change will be.
3. Change systems are in place. When companies are used to altering processes regularly, they create the infrastructure to reduce the cost of changes. They have improvement work areas set up, forms and tools for stabilizing new methods, and processes on how to create kanban systems for new parts. (Get an 11 page PDF by clicking the kanban link.)
4. Teams are trained. Teams in Lean companies are well versed in problem solving. When the company has to alter course quickly, teams know what to do when they come across obstacles.
5. Teams are empowered. Team members can make changes when they see the need. This also makes them more likely to take action at the early stages of a problem.
6. Lean companies are closely tuned to demand. Because demand is so tightly linked to production in Lean companies, any subtle shifts are immediately recognized. This means more time to take action before a crisis mounts.
7. Strategy deployment aligns the company. Lean companies use a cascading set of long term strategies and short term objectives. When the company charts a new course, it can get everyone on the same sheet of music quickly.
8. Respect for people creates respect for the company. When people are treated well, they are more loyal to the company in a time of crisis. That means fewer people jumping ship, and teams that are more willing to sacrifice.
9. Lean creates satisfied employees. Satisfied employees have more reserves to deal with upheaval. When people are already at the end of their rope they have the energy to go all out to save the company.

Whether the crisis comes from obsolescence as in the case of push carts, or from some other factor, Lean companies, like fit people, are simply better equipped to handle the strain on their systems.

I’d be interested in hearing your thoughts. What are some other advantages Lean companies have when things start falling apart?