The Real Deal: Lean
Lean enterprise thinking is a field of knowledge directed at continuous process improvements and elimination of all non-value-added activities in the enterprise, resulting in increasing customer satisfaction, reduced waste, improved throughput and productivity, reduced working capital employed, increased cash flow, and improved returns on capital employed. This topic explores some of the principles and essentials of lean thinking and illustrates the need for implementation of this critical mind-set in any acquisition target.
LEAN ENTERPRISE OVERVIEW: IDENTIFY THE NON-VALUE-ADDED ACTIVITIES
- The ultimate goal of today's lean enterprise model is to eliminate time, distance, and space from every stage of order fulfillment, material conversion, and all other business support processes.
- For the acquirer, the goal is to identify during due diligence the gaps and differences between the as-is and the “ideal lean enterprise” operating environment in order to isolate value-creating lean initiatives that can be undertaken postclosing.
- During a walk-through, the goal is to size up the gaps and identify and quantify the opportunities to create value by eliminating most of the so-called efficient activities observed in Topic 18.
- Generally speaking, in a lean enterprise, any non-value-added activities such as storage, moving, queuing, pushing, packing, stacking, receiving, recording, waiting, staging, overseeing, and inspecting are eliminated from any conversion ...