Buying a Franchise

Watch Out For The “7 Wastes” – Keep It Lean

Lean manufacturing has been transformational first for factories and then for all kinds of organizations, not only in Japan where the system began, but around the world.

The franchise system you will learn when you invest in a franchise is probably already intrinsically lean, since your franchisor has been watching for opportunities to streamline and perfect it. Still, one of the biggest reasons for franchise failure is franchisees’ failure to follow the system. If the franchise system doesn’t seem to work for you or it’s hard to keep it profitable, chances are good that lean thinking can get you back on track.

One of the key concepts of lean management is the “7 Wastes.” These are the areas that tend to go astray:

1. Defects: The international uproar when it was discovered that some Subway stores’ footlong sandwiches weren’t exactly 12″ long seems petty at best, but failing to meet strict standards is one of the first ways franchise operations have problems. Two pickle slices instead of three? No bow on Rover’s head after the grooming session? These are defects: failures to meet the standards of the franchise. They lead to unhappy customers and rejected products and services, which are a waste of time and effort.
2. Overproduction: Having more inventory than you can move in a reasonable length of time leads to wasted space and wasted money… not to mention wasted inventory. Keeping strict control over the product helps, but you’ll also need to control ordering and storage.
3. Transportation: Do parts, things, and people spend more time moving from one process to another than they should? If you meet with the client in her office, drive back to your office to draw up paperwork, and then travel back to her office in order to get her signature, you might be able to tighten things up with electronic documents and signatures.
4. Waiting: How often does a delivery person wait for a food prep person, or a home service rep wait for a customer to show up? If one person is helping a customer while another stands and wastes to ring the customer up, you have waste.
5. Inventory: Inventory has shown up already, but it deserves its own item. Depending on the industry, a franchisee might throw away brochures for special offers that didn’t get distributed, over-ordered food, salon products that get overused, or chemicals that are eyeballed rather than measured. Almost all franchises involve some inventory, and control over that inventory has immediate financial consequences.
6. Motion: Do you spend more time than you should traveling from one location to another, carrying products from one room to another, or even walking back and forth from one part of the room to another? Physically arranging the workflow in the most efficient way (probably the way the franchisor told you to do it) saves time, effort, and even wasted products since it helps to control inventory and use of materials. .
7. Processing: Does your rep fill out a form, bring it back to the office, and give it to a secretary who transfers the information to an electronic form, then prints it out, and files it? Think about the processes and make sure you’re not adding extra steps or going beyond what the system specifies.

Waste naturally creeps in, but reducing it can get you back to the lean system you need.

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