‘Lean’ management: The business model celebrated in times of slowdown has taken flight again

Since Toyota developed lean management in the mid-20th century, a system that enhances productivity and prevents losses, it has been adopted by the largest companies worldwide, including Croatian companies in recent times. Its effectiveness was particularly evident during the great oil crisis of 1973, which halted the growth of the Japanese economy. This management model has proven to be very effective during the coronavirus crisis and is a reliable ally for companies operating in market-distorted conditions. Among the Croatian companies that have improved their operations through lean management are Franck, A1, Croatia, Cemex Croatia…

Faster and more flexible

According to Ivan Artuković, the director of Franck, lean management enables the company to achieve continuous improvements in all segments of its operations, particularly reflected in innovations, ongoing enhancements of production processes, and ultimately, product quality. Its application at Franck means creating new value for consumers while making the best use of the company’s resources, adapting all other processes, and the way the organization is managed and operates in the market. Alongside research and development of new products, Franck is simultaneously working on cost efficiency and optimizing the inventory of raw materials, materials, and finished products. They are also focused on improving business processes that ensure cash liquidity, maximizing production capacities, eliminating potential production delays, and identifying and removing unnecessary steps that waste resources and time.

– This way, we gain flexibility, speed, and the ability to better respond to consumer demands, market challenges, and new circumstances caused by unexpected events such as the crisis triggered by the coronavirus pandemic. Of course, all this comes with the introduction of new systems, investing in automation, and applying robots in production and warehouses, thereby improving work processes while reducing the risks of breakdowns and non-delivery of goods, ultimately increasing productivity – says Artuković, emphasizing that lean management implies ecological and social responsibility and sustainability, which are integral parts of Franck’s modern management.

Changing practices

Artuković emphasizes that they regularly monitor the development of the situation both locally and globally and approach potential crises by not expecting a return to the old ways, but systematically contemplating ways and models of action that will enable successful management in crisis circumstances and sustainable business in the new normal.

– The key is the flexibility of the company and the ability for a quick initial response and adaptation to the newly arisen situation, which we witnessed at the beginning of the pandemic, as well as questioning the existing status and business model in the long term. In this sense, we strive to identify and change those practices and ways of working that may limit us in new circumstances, and we prioritize building systems that will ensure the creation of new values – says Artuković.

The coronavirus pandemic, Artuković points out, is a disruptive event that imposes new rules requiring innovative solutions and redefining key processes and models of organizational management. He explains that at the beginning of the crisis, they assessed all risks to the business and adjusted production plans. However, every crisis, including this one, is seen at Franck as an opportunity for change, which is already frequent in this industry.

Comparative advantage

The concept of lean management at Cemex Croatia was introduced in 2018, since when the company has been conducting internal training to equip as many employees as possible with knowledge and skills for optimizing business and production processes. According to Mirela Kotarac, the Human Resources Director at Cemex Croatia, education and practical application of this model in all aspects of the company’s operations are key to the implementation of lean management. Cemex conducts training for employees tailored to positions for introducing the lean management concept, from ‘Yellow Belt’ to ‘Black Belt’ training, with instructors from across the Group participating.

– In our plants, we successfully apply modern work methodologies such as 5S, kaizen, Standard Work, Waste Elimination, and many others that have significantly improved processes in our operations – emphasizes Kotarac, highlighting that Cemex Croatia, as part of Cemex’s Europe Region, has a comparative advantage because it views every potential crisis from both a local and regional perspective.

They exchange experiences and information daily with other European countries, and in this situation, it has been shown that Central European countries have coped well during the isolation period.

– Daily exchange of information and practices from all countries where Cemex operates, along with developing various scenarios we can expect in the short and medium term, allows us to prepare packages of initiatives and measures that will help overcome potential crises – says Kotarac.

Important or unimportant

Telekom A1 Croatia practices lean management, which is the foundation of the agile methodology it has successfully applied in its operations for the past three and a half years.

– Lean is the ability to distinguish the essential from the non-essential in business or the process of creating a product or service, focusing only on those elements in the process that add value for the user. By applying lean management, we improve work processes, develop a culture of teamwork and shared responsibility that breaks down silos within companies. For us, this specifically means listening to user needs, seeking feedback on our products and services, and together with other departments in the company, applying their expectations in the development of new products and services while continuously working on improvements – says Ivana Mandušić Hrupački, head of the digital transformation program at A1.

For example, new tariffs for prepaid users were developed using this method. Experts from marketing, sales, technical support, and customer service were involved in the development to enhance the process from their perspectives and direct contact with users, ultimately resulting in a product that meets all user needs.

– As a company that began its digital transformation more than three years ago, we were ready for the crisis caused by the coronavirus pandemic. This proved crucial in adapting our business to new circumstances, and our employees were already trained for efficient remote work. We continue to work according to agile methods, developing products and services that meet all user needs, and we remain focused on digital channels and educating our users about digital skills – says Mandušić Hrupački, emphasizing that A1’s virtual store, launched last year, experienced expansion during the period of implementing restrictive measures.

However, this does not mean that A1 will close its stores, as users enjoy coming in to talk in person, see the product before purchasing, or gather information. A hybrid model has also been introduced, allowing employees to work two days a week from home and three days in the office, enabling them to take advantage of all the benefits of working from their desired location. They come to the office when they need in-person contact with colleagues, office infrastructure, and collaboration on creative activities.

Well-structured processes

For those who do not know how to apply lean management, this management model can be established by the consulting company Culmena. Anja Štefanić, COO of Culmena, points out that they encountered this type of management during Culmena’s first major project in 2005 at the Expo in Japan. Seeing how Toyota has excellently structured processes and quickly resolves any issues in daily operations, Culmena became interested in the secret of their success.

– Almost perfect organization of all processes, simplicity, speed, a zero-waste policy, and high productivity quickly convinced us that we wanted to apply such a system in Croatian companies, and after returning from Japan, we began to implement lean. Our knowledge and years of experience in production and process optimization were crucial factors without which we would not have embarked on this adventure. First and foremost, we are a consulting firm and help companies implement lean with excellent results, but we would not be so successful if we did not apply it ourselves – says Štefanić.

She emphasizes that the secret to the success of lean application lies in identifying activities in processes that are excess and waste financial resources, and eliminating them to create time for activities that generate financial resources and that the customer is willing to pay for.
According to Anja Štefanić, lean offers countless opportunities for organization and optimization: from highlighting visual procedures, goals they want to achieve, information they want to convey to employees and colleagues, optimizing all processes, business transparency, standardizing work, a ‘no waste’ policy, reducing the number of errors in work to higher quality of products and services, and ultimately a satisfied client or customer with the product or service.

– When a company implements lean, it creates a situation that is mutually beneficial, and by using tools and optimizing processes, it saves a lot of money – claims Štefanić, emphasizing that more work can be done with the same resources while simultaneously increasing the quality of the product or service, making the company more competitive in the market.

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