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Inventory is always bad. Based on the premise operations modeler have forever tried to keep inventories at an optimum level- just think Wal-Mart spent billions in developing automated systems to maintain and re-order their stocks. However, Toyota changed the game by adopting “Lean Manufacturing” techniques. “Just in Time” or the famous “JIT” was born. All raw materials and supplies came to the manufacturing plant at the right time, entered the assembly line, and then after a series of micro-calculated steps the complete car proceeds towards the sales shops. Apart from work-in-process materials, the system exhausts any option for ideal resources.
After the widely studied JIT technique, businesses became more interested in lean thinking and Eric Ries, author of ‘The Lean Startup’ and entrepreneur-in-residence at Harvard Business School popularized the model for Startups. As of now, a high percentage of Silicon Valley entrepreneurs adapt to this technique, top global names who utilized this technique include the likes of Facebook, Dropbox, and Second Life.
So what does Lean Thinking Movement exactly means and how this has become relevant for Bangladesh? The Lean Business Model entails that instead of committing too many resources in building a full product; one should build a Minimum Viability Prototype (MVP) and then test it out with customers. Based on their direct feedback the company should then either build on the product or make necessary feature modifications. This means the company continuously commits resources to build a value the consumer actually wants and stops all peripheral or ancillary activities.
Post the financial meltdown, large economic systems were hit including the states plus European Union. Global banking giants like HSBC and Citi decided to approach leaner models. They closed down all peripheral activities wherever possible and focused on their core expertise. For example, HSBC has closed consumer banking in Thailand and has severely curtailed retail banking platforms in Bangladesh.
If this wasn’t enough, we recently witnessed the government shutdown fiasco of the USA. Talks are high on how the US healthcare sector can become Lean and work in models similar to India’s (where hospitals cut cost by adopting a hub and spoke model- for example a hospital brand has medical centers all over the country for high volume and short treatments but feeds in complicated and high-value cases to headquarters). This way Indian hospitals are able to achieve higher economies of scale and keep expenses and client charges down.
So what kind of impact will this have on Bangladesh? Since the globe is increasingly focusing on Lean Thinking – in almost every domain starting from Startups to corporate and ending in even public sectors, it’s time for Bangladesh to start adopting such practices. Any particular multinational banks in Bangladesh operate with far fewer employees than our local private commercial banks and still have a significantly higher revenue per employee ratio. Joint ventures here will increasingly center on lean operations and local businesses here will risk losing out on the competitive edge.
Moreover, Bangladesh needs the Lean Thinking Principals, our inflations are high, the cost of living alarmingly going up and even necessary rights to services like quality education and healthcare are getting scarce. Universities and programs worldwide are adopting similar approaches to solve development critical problems, India is also going big with Frugal Innovations even on an industrial scale (like Tata Nano) so to take industrialization forward Bangladesh has to commit to being the least wasteful and doing things that achieve results (that also means limiting political instability as well).
As the connected world moves towards achieving higher efficacies, global firms will start selling products in our market by lean solutions like social media engagement and e-commerce front ends. We are already seeing the advent of firms like OLX. If not careful our domestic businesses who often take an extended time to react to the market will become less cost-competitive and Leaner Global Businesses will actively take market leadership.
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