At September's Associated Equipment Distributors' Executive Forum, the topic was lean distribution, taking the principles of “lean” manufacturing and applying them to the distribution model.

When I first heard of the concept of lean, I thought it was all about cutting costs and jobs. I was quite wrong. The concept of lean has to do with eliminating waste, so that workers can be productive and more engaged in activities that add value to the customer. The lean concept of cutting waste basically means eliminating activities that don't add value to the customer.

Of course some personnel don't directly add value to the customer, but are indispensable, such as accountants. A company can't run properly without accounting, and if the accountant does his job properly, he is helping a company direct its financial resources properly so it can add to customer value.

A good place to start to examine how a distributor or rental company can improve its performance, reduce waste and run more smoothly is to look at the service department. One rental company owner recently told me that, presented with this concept, he appointed personnel to study his mechanics' activities and he came to the conclusion that they spent several hours per week looking for tools, manuals or other materials, time that could have been used actually working on equipment if the items were organized properly. Even when the service technician knew where the items were, he often wasted time going to retrieve those items because they weren't stored close enough to his work area.

Because of the lack of organization of the technicians' workplace, space was wasted in the chaotic environment. If the area was organized efficiently, many more tools, materials and manuals could be stored close by the actual work area, thus reducing the steps the mechanic would have to take to procure the items he needed, and reducing the time spent looking for items that should be right where the mechanic could have easy access to them.

In addition to the time wasted looking for things, or taking extra steps to get them, was a sense of chaos that clearly pervaded the technicians' minds as they worked, making it harder to concentrate on their work or to come up with creative solutions to problems that arose, according to the owner.

This owner looked around informally with his sharpened awareness and discovered similar waste in other departments — in the office, on the rental counter, in the shipping and packing areas, in the way the company ordered supplies, paid bills, processed information, and ultimately in the way it serviced customers. It quickly became apparent to him that if waste is removed from the organization on all these levels, ultimately the customer will be served quicker, more efficiently, with fewer mistakes and equipment failures. Deliveries can be more efficient, equipment can run better with fewer breakdowns, repairs accomplished more quickly and machines returned to the field more rapidly.

Jeffrey Liker, who studied the Toyota organization and wrote a book called “The Toyota Way” about how that highly successful company deals with waste and continually strives to improve its processes, describes spending some time with Dr. Toyota, a member of the Toyota family and one of the company's top executives. He describes a visit to a major U.S. dealership and while the manager was showing off his shiny facility and presenting financial numbers, Dr. Toyota went to the service area to watch the mechanics at work. He asked a mechanic what he was working on and the mechanic told him he was repairing a faulty transmission. He asked what was causing the problem and the mechanic pointed to a defective part he had dumped into an oilcan.

Dr. Toyota then illustrated a fundamental principle — if you throw away the part, you have repaired the transmission but haven't figured out what caused the problem. He retrieved the faulty part from the can, wrapped it in his handkerchief and brought it back to Japan with him. He had his engineers figure out why the part was faulty. They looked at the chips in the oil and determining there was a grinding problem, they sent the part back to the factory to correct the issue.

As I understand “lean,” the essence is eliminating waste and solving problems at the root — the cause, not the effect. While this conference inspired me to want to read books on “lean” principles, I also saw that you don't have to use Japanese terminology or read books on “lean” to find ways to run more efficiently. But you do have to learn to solve problems where they begin and not where they end. Do that and you'll service your customers far more effectively.