Small businesses represent about 90% of the global economy and account for a large proportion of employment. Yet they are often overlooked when it comes to Lean Thinking. Most Lean transformations we hear and read about involve medium and(more often) large organizations - many of them employing thousands of workers in services depend on supply chains spanning several continents.

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

SEBRAE is a government-funded agency present in all Brazilian states and committed to supporting small and medium-sized enterprises. Historically, their approach to developing the capacities of these organizations has been based on personal training and interventions. When the pandemic struck, this model quickly proved problematic and SEBRAE sought a way to turn a liability into an opportunity.

That's when they contacted LIB and asked us to develop a consultant program - called Quick Wins - for their members in the state of São Paulo. The initiative was designed to provide SMEs with immediate and impactful solutions to the challenges they faced. Unlike traditional programs, Quick Wins was designed to be 100% online, with pre-recorded training combined with real-time online coaching sessions (we use different platforms - Zoom, Meet, WhatsApp video - to ensure that each company has seamless access to us, regardless of their technological infrastructure).

SEBRAE member businesses that needed help - ranging from churches to barbershops and retail stores - were encouraged to participate in the Quick Wins program. The results were outstanding and challenged our preconceptions about the scalability of Lean principles.

THE RIGHT KNOWLEDGE FOR THE RIGHT PEOPLE AT THE RIGHT TIME‍

Since our coaches could not visit the companies due to Covid restrictions, they had to find another way to assess the current state of SEBRAE members and then offer them a suggestion for improvement. So they tell the companies during the diagnostic phase to make a video showing the process in as much detail as possible. This is our way of "going 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. That's why our coaches ask trainees to watch video content developed by the institute - some mandatory, some on demand. The coaching sessions are then used to challenge client companies to implement the improvements identified with the coaches.

Because of the limited time available to help organizations achieve those quick wins, 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 impactful tools in the Lean toolbox: Process Maps, Job Instruction Sheets, Ishikawa, 5 Whys, Effort-Impact Matrix, 5S and spaghetti diagrams. Some of these tools - such as 5S - were added at a later stage, in response to requests from 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 to more operationally focused challenges as companies adapted to the changing landscape.

Examples‍

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

• Yonamine & Hito Alimentos is a manufacturer of candy and cotton candy. They discovered that they were wasting too much sugar in the production and packaging process. The root causes of the problem were found to be the lack of a turbine sugar quantity meter and work standards, as well as the lack of visual management. The team implemented a number of countermeasures to address the situation: they began using a meter once the correct amount of sugar was determined; an SOP for the process was established; visual management in the facility was strengthened and the team trained. These changes resulted in an estimated 12% reduction in total process time, with non-value-adding activities reduced by 50% and non-value-adding but necessary activities reduced by 33%. In addition, waiting time was cut in half.

• Redora Serviços e Produtos do Mobiliário manufactures and repairs furniture in the city of São Paulo. To diagnose the problem, the team looked at customer requirements and realized that in their pilot process - chairs - there was excessive inventory and a significant imbalance between operations, resulting in a bottleneck. Employees worked in large batches and were often idle. To turn operations around, production cells were introduced (Separation, Picking, Sealing, Painting and Assembly) and minimum and maximum inventory levels for inputs were defined. Clear procedures for the production cells were developed, inventory control was deployed, and a preventive maintenance plan was established. The company also changed the layout to allow for better production flow. Operators were trained in the new procedures. Among the benefits realized were: work balance and a reduction in operating hours; a reduction in turnaround time from separation to shipment from 8 hours and 13 minutes to just under 7 hours; increased productivity; and cost reduction through better use of the company's human capital.

• At food company Lorenzzo Comércio e Distribuição de Produtos Alimentícios, specializing in the production of dough for pizza and pastries, the application of Lean also brought great benefits. The company struggled with delays and low efficiency, especially in the drying process and during the unloading and release of carts from the drying facility and oven. Therefore, established production targets were rarely achieved. The process was analyzed to better balance production between the two lines. In addition, maintenance of the drying room was performed and the ventilation time for cooling the dough was reduced from 15 to 10 minutes, releasing urgently needed carts. These improvements reduced energy consumption by 10%(saving R$800/month) and improved daily productivity by 50%. In addition, the company saved R$60,000, which it was about to invest to buy 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 to increase sales. The analysis of the problem, conducted by the team and their LIB coach, revealed that the main causes of the problem were decentralization of activities, people deviating from their job descriptions, an outdated briefing process and lack of information provided to potential clients. To address the situation, the team began prioritizing customers. They made efforts to better define roles and responsibilities and to give employees more autonomy in their work. Creating product packages also proved to be an attractive proposition for the agency's clients. After the intervention, closing new deals took 61% less time than before (from 16 to six hours -which they are now trying to reduce to two hours).

• Starcookies sells handmade cookies, but had great difficulty controlling their inventory of finished products and with the limited space available to store their products. They also had no process to plan production. The controlled inventory was only what was available for sale(ready batch). By putting into practice the knowledge gained during the Quick Wins program, the company began to control batch stock, frozen stock and expected sales. As a result, their total time to complete the inventory management process went down by 26%. They also conducted an ABC analysis of their products to understand which ones were the biggest contributors to their sales. A major change was also made in the way products were stored. Before the program, cookies were stored in ziplock bags and only half the freezer capacity was used. Now, 50-unit boxes are stacked on top of each other, facilitating inventory management and increasing freezer capacity by 86% - an additional 1,200 units.

SEED PLANTS‍

Unlike the Institute's traditional way of working, the Quick Wins program does not seek to achieve complete Lean-transformations, but to deliver targeted interventions that address specific business problems. But that is not to say that introducing basic Lean knowledge into these organizations does not plant seeds that may one day grow and lead to transformations that are broader in scope.

By 2023, the third year of the program, there was a transition to a fee-based model. Fewer companies joined, but LIB noticed greater engagement, with participating organizations becoming increasingly interested in long-term management skills development.

The programis a completely new way to spread Lean Thinking and Practice for Lean Institute Brasil. The collaboration with SEBRAE enabled us to reach a significant number of SMEs (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 similar approaches to support SMEs?

Inspiration for Governments and Agencies

We believe the model that LIB and SEBRAE have explored and perfected over the past three years can be an inspiration to governments and government-funded agencies around the world who are tasked with improving the success rate of SMEs. Lean Thinking is a management philosophy proven to generate profitability, and it is clear to us that increased profitability for SMEs, which are the backbone of our economy, will lead to the improvement of the living standards of millions of people.

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