So You Want to Reduce Your Costs? Don't Focus on Cost Reductions

By Lonnie Wilson   Article

“If the title of this article sounds odd, don’t be surprised. The implementation of a lean initiative will teach you about a whole litany of paradoxes. There is the jidoka paradox: Shut down the system so the system will run continuously. There is the standard-work paradox: Standardize the work so you can change it. The production paradox: Slow down the machine so you can speed up the process. And my personal favorite, the Toyota success paradox: Toyota has been very successful because they tolerate failure.

Paradoxes abound and the one about cost reductions is particularly interesting. Most plant managers seek to reduce their operating costs and, regrettably, most of them go about it by implementing a “cost-reduction program.” And guess what? Two predictable things happen. First, they reduce costs. Second, … all the costs come back and usually with a vengeance. …

A Taiichi Ohno Lean Initiative

Well, if you don’t implement a “cost reduction program” to reduce costs; what should you implement? Simple. Implement a lean initiative …

“Establishing the flow is the basic condition.”

“All we are doing is looking at the time line…..And we are reducing that time by removing the non-value added wastes.”

“After World War II, our main concern was how to produce high quality goods … After 1955, however, the question became how to make the exact quantity needed.””

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