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How Manufacturers Use Agile and Lean Principles to Increase Profits

Updated: Aug 15, 2023

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Bright AM Reading Time: 4 minutes

Agile and Lean manufacturing isn’t just a series of theories.

It does transform how manufacturers approach a longstanding set of processes, but Lean also changes the way that manufacturers think about value, innovation, and profit.

Switching your manufacturing processes could transform your value stream. Let’s explore the ways that Lean manufacturing provides a reliable value stream that transforms into real profit.

How does Lean work?

Adopting Agile and Lean requires a certain understanding. It’s not a new system to implement, but rather a culture change that happens within. Lean introduces basic principles that transform the business.

Lean is a practice and mindset

Lean isn’t a formula. It requires a complete reformulation of the way that a company approaches business processes. Businesses can learn to operate like small, fresh startups, while retaining the established expertise that comes from their long history.

A Lean mindset helps teams re-examine the status quo. As each process goes through re-evaluation, teams identify waste and opportunities to improve. Without this mindset change, teams may miss two key components affecting the bottom line:

  • Waste and backlog. Both of these reduce profit margins. They often fly under the radar under the assumption that “it’s always been this way” or the process works “well enough,” while creating deceptive revenue leaks.

  • Missed value opportunities. Traditional value pipelines may not keep up with your customer needs or cause you to miss opportunities to provide new value (and new profit streams).

Lean is dynamic, not static

Lean processes change. They don’t rely on an established method or formula, which offers flexibility in times of disruption or an evolution in the target market. The iterative process means nothing in the business ever grows stagnant or is allowed to stay past its usefulness (aka its value).

Lean relies on the value stream

Mapping a value stream is one of the best ways to improve profits. It helps you visualize your process, optimize the value that you deliver to your customers, and build continuous improvement into the product lifecycle and your business processes.

Putting your workflow on display forces you to evaluate how you’re bringing value to your customer. You can analyze your process and find where to improve to build overall profit.

Lean utilizes technology

The right technology can streamline the switch and enable teams to implement Lean faster. Starting with small iterations, technology can:

  • Improve universal communication. Each department, down to the team member, must be part of the communication stream to ensure process control and consistency.

  • Streamline process control. Improved process control eliminates backlogs and waste.

  • Establish a single source of data truth. You cannot improve your value stream or streamline your process without universal data. Teams must have this data to assess each Lean sprint.

Lean manufacturing and your profits

Once you’ve adopted these Lean principles, how does this translate to increased profits? What shifts? Three main improvements can happen.

Lean minimizes waste

Any waste creates a hole in your bottom line. Lean identifies seven main areas of waste:

  • Overproduction. This includes too much inventory (translation: tied-up capital).

  • Inventory. This includes storage, processing, and potential deterioration.

  • Motion. This causes deterioration and wear and tear and wastes unnecessary time.

  • Defects. These include deviations from design (requires extra paperwork, replacement, and potential loss of customers).

  • Over-processing. This adds time, cost, and energy to the process.

  • Waiting. This results in slow or halted production, downtime, and less efficiency.

  • Transport. This doesn’t add value to a product. Reducing these costs is essential.

Lean helps you identify hidden areas of waste (unnecessary downtime, for example) and reduce overt waste, e.g., transportation or overproduction costs.

Lean improves workflow

The health of your workflow indicates the health of your organization. Lean adoption can:

  • Enable solutions for backlogging, bottlenecks, and other issues clogging production.

  • Increase productivity.

  • Build customer satisfaction and lifetime value.

  • Allow greater customization.

Lean improves efficiency and points to areas of waste that are draining your bottom line and frustrating your customers. With a new, optimized workflow, you can see improvements in your overall profits because you can offer customers what they value and streamline your costs.

Lean develops continuous improvement

Without innovation, a company dies. Companies operating on older production models may miss critical areas for improvement and growth. However, continuous improvement uncovers new opportunities within the value stream to provide innovative solutions:

  • Innovation brings value to customers.

  • Value increases loyalty.

  • Value brings in new customers.

Innovative offerings can help increase customer loyalty, which translates to an increase in overall customer lifetime value. It also brings new customers into the fold and nurtures them into becoming loyal customers themselves.

Understanding Profits through Value Creation

The most significant change that Lean brings is in company culture. Better communication and strong, consistent data ensure that processes move intentionally—no more ignoring waste or sifting through multiple data streams.

Bluestreak | Bright AM offers a full suite of solutions designed to transform every part of your manufacturing process. These solutions include the universal communication and workflow software you need to implement Lean and secure your bottom line, all while facilitating the value that your company is ready to give.

When your quality control process needs improvement, you’re wasting time and money. You are also putting future business at risk, and we know how small of an industry this can be. Dissatisfied customers tend to spread the word to their colleagues, which can hurt future sales. Recognize the warning signs and take action today by contacting Bluestreak | Bright AM.

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