Reducing Costs

When we speak of reducing costs, we really mean reducing wasteful costs. A healthy business will always be spending money to pay the people who supply, assist and support the work. Costs are not the enemy; waste is.

The Toyota Production System is perhaps the most famous methodology for eliminating waste. Its often imitated, most widely under the generic term “Lean,” and, far more often, mimicked. That is, many more people imagine that they are imitating the Toyota Production System than actually are. For many, “Lean” means using less money to make more money, and has mostly to do with the special words you use and the particular look of your charts and graphs.

A better understanding of the Toyota Production System could be expressed as using less time to make your customer more happy, and has mostly to do with making it easier to see and understand what makes your customer happy.

Among all the thousands or perhaps millions of people who know and teach some form of the Toyota Production System, we certainly are not the the most knowledgeable. But it isn’t necessary to be the best to make a difference. The most fundamental principle of the Toyota Production System is that small, persistent improvements will eventually lead you to a much better place than large, expensive projects the purpose of which is not well understood.

Our approach to cost savings is as follows:

  1. Find tasks that are done often.
  2. Talk with the people who do the work; understand why they do what they do. Watch them do it.
  3. Talk with the people who use the results; watch what they do. Try to understand how and why they use the task results, and check your understanding with them.
  4. Talk with the people who provide information, material, or other inputs for the task; watch what they do.
  5. Look for ways to break the task into smaller tasks.
  6. Look for ways to make it easier to see what is needed for each task.
  7. Look for ways to make it easier to see that each task is done right.
  8. The goal is a task or process that can be stopped at any time and it will be easy to tell what is needed.
  9. Check that the task takes less time than before. If the task now takes more time consider what signs, signals, training, tools or equipment could reduce the time.
  10. Watch the task being done. The improvement is not complete until the same people can complete the task in less time without any interventions from you or the supervisor.

Sometimes it will be necessary to change a task in a way that requires more time. This should only happen if you have a new definition of the result that the customer wants. For example, you may have learned that mistakes made in this task are causing problems later on.

In this case, the worker, the supervisor, and the manager must all understand that there is a new purpose for the task, so the task must be changed. The worker, the supervisor and the manager must all be able to see how often the problem has happened in the past and how often it continues to happen, if at all. You must never change a task so that it takes longer unless you have a new definition of quality and the worker, the supervisor, and the manager all understand the new definition of quality.


We recommend our Contingency Consulting services, which shares the benefits of an improvement project between the employees, the owners, and the consultants. Hourly rates are available for those who prefer more traditional arrangements.

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