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Impacting your SME business with continuous improvement methods

Article by Kaizen Institute South Africa

While continuous improvement methods are world-renowned for turning around large-scale multinational businesses such as Toyota, Bosch and Shell, less well known is the fact that small and medium enterprises (SMEs) can derive similar benefits by applying the principles to their organisations.

In South Africa, this is particularly relevant with small and medium enterprises (SMEs) comprising up to 91% of all formalised businesses in the country and contributing around 34% of the country’s GDP (Banking Association of South Africa (BASA)).

And while government and the private sector hopes are pinned to the growth of the SME sector – the aim in the National Development Plan is for SMEs to contribute 90% of job growth by 2030 – recent findings of a new study by the Small Business Institute (SBI) and the Small Business Project (SBP) found SA has only 250,000 formal SMEs, less than previous estimates of between 2-million and 6-million.

Formal SMEs – defined as businesses employing fewer than 200 employees – account for 98.5% of the economy, yet they only employ 28% of the formal workforce. This is significantly lower than employment rates internationally; raising questions about possible policy and regulatory failure.

And with South Africa’s economy growing at a sluggish 1,7% annually, clearly South Africa’s SMEs are struggling.

At Kaizen Institute South Africa, we have seen first-hand that by applying KAIZEN™ principles of Continuous Improvement even small businesses can benefit.

KAIZEN™ is a word with an ancient origin that belongs to the Japanese vocabulary. It is composed of two words: Kai, which means “change” and Zen, which is related to Oriental theories of the pursuit of perfection and means “for the better”. Hence KAIZEN™ means to change for the better, every day, in all areas of the company, involving all employees. In short, KAIZEN™ is the practice of Continuous Improvement.

We’ve identified four major pain points that typically afflict small to medium enterprises (SMEs).

  • Employees lack of engagement,
  • Clients changing requirements and demands,
  • Economic factors,
  • Regulation or bureaucracy

With each of these, continuous approaches can have a significant impact and reduce a lot of the stress and administration typically associated. We’ve identified five quick wins with KAIZEN™ for SMEs.

Number One: Planning. Isolation and loneliness are the hallmarks of leadership, no more so than in a small business.  Often small business owners just get by with the day-to-day fulfilment of orders, making improvements difficult to implement. However, by identifying major processes that take place in your business, daily, weekly, or monthly, you can get started thinking about how to improve and how to continuously evolve to make your business practice more efficient.

Number Two: Visual Management. By visually displaying activities on the walls of a boardroom or office, workplace teams have the opportunity to review key focuses for the day and the month.  This encourages employee participation and active engagement. This is a good time too, to factor in customer service. Taking care of customers according to veteran Ken Blanchard is everyone’s responsibility, not just the job of the people in the customer service department.

Number Three: Tidy Up (workplace organisation). This involves a focus on positioning things (stationery, equipment etc.) in the office where they’re needed, avoiding time wasted in searching for the right tools or documents.

Number Four: Best practices. This is when the team jointly develops standards by which the business operates. Because the entire team has developed these practices, each member is encouraged to adhere to them. At a small business, it is vital that everyone feels empowered to bring new, exciting ideas to the table.

Give your employees the freedom to fix issues they find. Encourage them to find creative solutions to make their work processes and assignments more efficient and effective. If they find them, they should share with the team. Celebrate even small wins to foster a culture of continuous improvement.

Number Five: Monitoring Improvements. Make continuous improvement part of the company’s culture. Employees should be excited to come to work every day and know that if they find a better way to do their job, they are free to do it. Even small wins add up over time. Your employees may surprise you with huge gains that improve your bottom line and your employee’s work experience.

Kaizen Institute South Africa are proud Premier Members of the NSBC.