What is Lean Business Model?
Definition: A lean business model is a business strategy that focuses on eliminating waste in operations and production process. The strategy entails integrating lean concepts in operations with a view of reducing waste and improving the quality of products.
A lean business model goes a long way in fostering a culture of continuous improvement. In return, businesses are able to maximize value and minimize waste. The outcome of lean business concepts is often reduced need for cash as well as fewer errors and higher quality products.
Types of Lean Business Model Concepts
Just-in-Time production
A just-in-time lean business model entails business carrying out production processes only when customers place orders. The output, in this case, tends to fluctuate depending on the amount of orders placed. The business strategy helps in shrinking work-in-process inventory. Likewise, the strategy helps in easy detection of production errors leading to higher quality products.
Total Quality Management
Total quality management as a lean business model is a concept whereby a number of tools are used to improve production processes in various stages. Some of the tools used include product design control, statistical process control and failure analysis.
Throughput Management
In throughput management, business owners pay close attention to their investment decisions given their potential impact on the entire system. The system view is based on the fact that production costs don’t vary at the level of individual unit produced. In this case, there is less investment in fixed assets.
How to Achieve a Lean Business Model
While most businesses owners are open to embracing a lean business model, very few have an idea of what to do and how to go about the same. Below are some of the ways you can use to achieve a lean business model.
Avoid Copying
Success in the business world is all about being unique and genuine. Likewise, to achieve a lean and effective business, one ought to refrain from copying other startup’s business model. In this case, a business owner should be innovative and able to utilize design thinking techniques to formulate ideas on how to cut waste, reduce errors and focus on meeting customer needs.
Change is Inevitable
Any entrepreneur looking to implement a lean and successful business ought to be open to change. Consumer shopping patterns and needs are increasingly changing. Likewise, because a given business model works now, does not mean it will work in future. For that reason, a business should be ready to implement new strategies that not only address customer needs but also keep production costs low.
Focus On Customer Opinion
Most businesses spend chunks of money on market research as well as production processes while forgetting an important factor, which is usually the customer. For a lean business model to succeed, then the business must pay close attention to customer’s opinions.
Customer’s opinion are paramount to coming up with products that the market needs as well as when needed. Customer’s opinion, therefore, help in cutting back on production excesses that only go to waste.
Lean Business Model Benefits
A lean business model ensures that customer needs are at the center when it comes to the production of goods and services. Consequently, costs are kept at a minimum as only what the markets needs and in the right amount are churned out.
Continuous improvement is at the heart of any lean business model. In this case, businesses are open to new ideas and practices that have the potential to enhance the production of goods and services at the lowest price possible.
A lean business model also leads to a high degree of perfection, given that continuous improvement leads to the value stream.
Lean Business Model Cons
Paying too much focus on the customer as part of a lean business model can take a toll on a business strategic positioning, especially in anticipating, where the market is likely to go.
Too much emphasis on wasteful practices can cause a business to ignore other important factors.