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Craig Cochran


Lean Management Systems Revisited

An analysis of fundamental lean processes

Published: Sunday, July 11, 2004 - 22:00

Lean means doing the most with what you have. It’s efficiency and intelligence. In the modern economy, lean is a fact of life. Management systems must absolutely be lean, or they will be abandoned as impractical dinosaurs. In the October 2003 issue of Quality Digest, we began exploring some of the fundamentals of a lean management system in “Don’t Think Small—Think Lean.” The article addressed lean processes for strategic planning, measurable objectives, business review, documentation and document control. Let’s continue our analysis of lean with some fundamental processes for driving the organization’s success: planning and forecasting, methods for capturing sales and lean techniques for gathering customer feedback.

Planning and forecasting

Work begins in most organizations with orders being booked or forecasted. In the perfect world, business organizations wouldn’t produce anything until there was confirmed demand for the good or service in question. After all, when organizations take a guess at future demand, they are often wrong. Being wrong means wasting resources. Too many wasted resources and you’re out of business.

One way to react to demand in real time is to maintain flexible capacity. This capacity may include the availability of equipment, machinery, supplies, personnel, information or other resources. Ideally, we would always have the resources necessary for flexibility. This ideal condition doesn’t exist, however. Few organizations have the luxury of maintaining idle resources just for the sake of being flexible.

A solution to the capacity dilemma is to establish partnerships with subcontractors who can help the organization react to demand in real time. The use of subcontractors to carry out the organization’s mission has significant risks, though. Subcontractors may not view your customer with the same importance as do you. The long-term significance of the customer may not register in his or her mind. Furthermore, the subcontractor’s methods and procedures may be contrary to your own.

If subcontractors are utilized, the organization must develop means for making 100-percent certain that subcontractors understand exactly what they must provide, how they must provide it, and any reporting or follow-up that’s required of them. You don’t have the time to micro-manage subcontractors, but you absolutely must manage them. This can be accomplished by a subcontractor package, which would include the following elements:

  • Lean, graphic instructions that guide how they perform their work
  • Unambiguous customer requirements (e.g., specifications)
  • Internal service or manufacturing specifications, when applicable
  • A supply of blank comment cards or mini-surveys that will be given to the customers in cases in which the subcontractor deals directly with them

The more you can treat your subcontractor as a branch of your own organization, the better prepared the subcontractor will be to work as a partner and help fulfill your mission. If you’re suspicious that the subcontractor might steal your business, then you’re using the wrong subcontractors. Noncompete clauses in contracts with the subcontractor can also help reduce the chances of someone trying to cut you out of the loop.

The second approach for dealing with the uncertainties of the marketplace is to improve the accuracy of forecasts. Many organizations have cyclical sales cycles. Some parts of the year are very busy and other parts are slow. In organizations that must operate in a cyclical environment, forecasts help dictate how and when to build inventory and capacity, and exactly what kind of inventory or capacity is needed. There’s only one problem with forecasts: They’re often wrong.

When forecasts are accurate, the organization can plan resources, build inventory and manage for the future. So how can forecasts be made more accurate? The answer is remarkably simple: get to know your customers—really know them. Understand their customers, competitors, industry trends, core processes, suppliers (besides your own organization), strengths and weaknesses. An intimate understanding of the business variables will help the organization paint a clearer picture of the future and what it can reasonably expect to do in terms of business.

Because not all customers operate in the same industry, it may be necessary to subdivide customers along industry or sector lines. An analysis of an organization’s customer base generally reveals a handful of industry lines. For instance, a particular customer may serve the paper, chemicals and pharmaceutical industries. The organization serving this customer would need to become familiar with the variables surrounding all of these industries.

  • Some typical lines of investigation might include the following:
  • Do you see your business with us changing in the next six months?
  • If so, what aspects about it will change? (quantity, product type, requirements, etc.)
  • How do you expect to see your business with other suppliers changing?
  • How do you expect your overall business to change in the next six months? (increase/decrease in volume, new/changed products, change in product mix, new customers, etc.)
  • What are your competitors doing these days? How will their actions affect you?
  • Is your industry in general expanding or contracting?
  • What are the leading economic indicators for your industry? What direction are the leading indicators heading in?
    Are there any new or emerging technologies that have the potential to affect your business?
  • Is there anything you’d like us to do differently in order to be a better partner? How might these changes affect our business with you?

Organizations that serve consumer markets can’t subdivide their customer base by industry lines. They must study broader demographic and economic trends in order to develop meaningful forecasts. All of this sounds terribly complicated, but it’s actually simple. It just takes a little effort. The business faculty in local colleges and universities are usually willing to assist as well. The typical methods of forecasting—to simply extrapolate previous trends into the future—must be abandoned in favor of forecasting based on real evidence. The evidence may not be perfect, but it will be better than forecasts based on hopes and prayers.

While talking to your customers about their business variables, make sure to tell them why you’re interested in their affairs. It’s so you can plan and forecast better, with the ultimate objective of serving them better. Few customers will argue with that kind of motivation.

Capturing sales

When customers place orders, it’s critical that the organization have a lean, efficient process for capturing the customer requirements. A significant number of problems in many organizations can be traced to miscommunication at the point of placing the order. It all comes down to that dangerous word: assumption. We assume we know what the customer wants. Of course, assumptions like this are often wrong. The amount of detail solicited from the customer at the time of the order should not be a function of the natural curiosity of the person who’s taking the order. The detail requirements must be standardized so that the same variables are probed for all customers. Some of you may read this and think to yourselves, “But this is only going to add time and effort to the process. Isn’t that the opposite of lean?” In the short term, it might add time and effort. But in the long term, it will save invaluable time and effort. Remember, when an organization assumes customer requirements, complaints often result. Complaints are very expensive and time consuming to address, so anything that prevents complaints is the epitome of lean thinking.

It’s helpful to divide the customer requirement variables into two categories: product requirements and service requirements. It’s also important to acknowledge that many of the so-called requirements are nothing more than desires, expectations and preferences. These things have the weight of requirements, and they need to be treated as such. The trick is to establish a lean process for capturing and comprehending all the desires, expectations and preferences expressed by the customer. Here are some of the potential lines of exploration for order takers at the time the order is placed:


  • Description of services to be performed
  • Estimated cost, if known
  • Date and time for services
  • Contact person at customer location (including telephone, e-mail, etc.)
  • Preferred sequence or priority of services, if applicable
  • Waste disposal preferences, if applicable (e.g., on-site, off-site, recycle, etc.)
  • Desirability of expediting services (and willingness to pay additional costs, if any)
  • Billing address
  • Preferred service person


  • Description of goods to be provided
  • Any additional features, services or add-ons
  • Estimated cost
  • Date of delivery
  • Packaging and labeling requirements
  • Shipping requirements (contract carriers, customer pickup, UPS, etc.)
  • Agreement on partial order shipment
  • Exact shipping address
  • Billing address

The best way to capture these requirements is through a standardized form. This form can be paper or electronic, but its content should be consistent for all personnel using it. It should also be revised when new variables are determined and old ones lose their relevancy.

Once the requirements are determined, it’s critical to briefly re-confirm them to ensure all details are accurate. Many organizations go as far as to fax or e-mail the documented order to the customer for their confirmation. This practice is especially desirable when the order requirements are complex or the price is high, but the ease of e-mail makes it applicable to almost any order. It’s a wise preventive measure that can save a lot of time and trouble.

Asking customers to enter their own order requirements via the Internet can streamline the process as well. There are two important caveats related to this approach:

  • The order entry procedure must be error proof and very simple. Do not rely on your customer’s detail orientation and carefulness.
  • Provide another method for placing orders for those customers who prefer not to enter orders themselves or who don’t trust the technology.

Questions are bound to come up during the order process, and there’s nothing more frustrating (or inefficient) than for the company representative to not have the answer. The response “I’ll have to get back with you on that” should only be uttered as a last resort. Every person taking orders or interacting with customers should be an experienced user of the product or service being sold. Where possible, they should be an experienced user under similar conditions to those that the customer will face. It’s also desirable for the salesperson or order taker to have experience in the production or manufacture of the product. Someone with experience making the product, who also has experience using the product, is in an especially good position to capture all the order details and answer questions on the spot.

Customer feedback

Another lean technique is to put your customers to work for you as salespeople. Ask them to refer your company to someone they know. It may even be worth applying a 10-percent discount to their next order when customer referrals generate extra business. This is the epitome of a win-win relationship. Your organization recruits a new sales force in the field and your customers get a nice discount.

The next task for your customer is to dutifully provide feedback on your performance. Explain how critical it is that you get their timely feedback, both good and bad. Give them as easy way to provide the feedback. Explore existing customer interactions—sales visits, trouble shooting appointments, customer service calls and e-mails—and turn them into a forum for capturing customer perceptions. The fact is the feedback is out there, you just have to organize it in a way that can be readily analyzed and acted upon. Here is a road map for partnering with your customers to generate useful feedback in a manner that doesn’t put undue burdens on either party:

  • Brainstorm existing customer interactions. In other words, find out where you are already coming into contact with the customer.
  • Examine how each kind of interaction presents the opportunity for collecting feedback.
  • Develop a lean, concise tool for collecting feedback, matched to the type of interaction in question. Focus especially on open-ended questions about the product or service (e.g., “What could we do differently in the future to make you happier?”)
  • Run some field tests on the feedback mechanism. If it takes your customer more than five minutes, consider streamlining it.
  • Contact your key customers and find out if they’d be willing to participate in the feedback mechanism. Get their commitment to use it and actively provide their perceptions. In selling the feedback mechanism, make sure to emphasize the purpose of the feedback: to make your customers (and you) more successful. Who could argue with that?

The final issue is to analyze and take action on the customer feedback. Customer perceptions are meaningless unless you do something about them. The best way to analyze feedback is to convert individual bits of information into trends, then analyze the trends graphically. The large, troublesome issues will be obvious immediately. Enter these into your corrective and preventive action system and track them through to completion. The result is continual improvement, which is the most profound output of the lean management system.


About The Author

Craig Cochran’s picture

Craig Cochran

Craig Cochran is a project manager with Georgia Tech’s Enterprise Innovation Institute. Cochran is the author of The Seven Lessons: Management Tools for Success; Problem Solving in Plain English; ISO 9001 in Plain English; Customer Satisfaction: Tools, Techniques, and Formulas for Success; The Continual Improvement Process: From Strategy to the Bottom Line; and Becoming a Customer-Focused Organization, all available from Paton Professional. His most recent book is ISO 9001:2015 in Plain English, also available from Paton Professional.