Get Financially Lean for 2014
January 2, 2014
Once again, we begin a brand-new year, when we can reflect on the past and resolve to improve the future. For some, this is usually a time of remorse, as they regret all the wasted opportunities that passed their way. Others use this period to make optimistic plans for an even better year to come.
If you're already in the process of recording your New Year's Resolutions for 2014, try not to repeat the mistakes you may have made last year. It is pointless to put together a wish list of dreams and goals you would like to accomplish, without equipping yourself with the means to get them done.
This week, I would like to introduce a concept of planning and execution that may change the way you think about and approach goal setting and achievement. This methodology will help you to become more efficient and effective in many aspects of your personal, financial and work lives.
Lean, mean production machine
Many years ago Japanese vehicle manufacturers Toyota pioneered a system of production that was designed to reduce wasteful processes and increase customer value and profits. This method helped Toyota to transform itself from a fledgling auto maker to one of the largest corporations in the world.
Experts studied Toyota's techniques of driving efficiencies, and eventually coined the word 'lean' to describe this production approach. Lean is simply a way to achieve optimum output with the least amount of effort or cost; and the business concept has been replicated in many other organisations.
Lean focuses on eliminating all production activities that can negatively affect the bottom line. The idea is that if you can find the most resource-efficient way to create the goods or services that are being demanded by your customers, you will be able to reap the maximum profit from your efforts.
Obstacles to lean production
While lean mainly looks at waste, there are three facets that explain the types of inefficiencies that can hinder efficient production: Muda, Mura and Muri. Muda is Japanese for idleness, waste or futility, and it occurs when more resources are engaged than are actually necessary to complete a task or product.
Mura is anything that is uneven, irregular or unequal, which may put pressure on one area while others are underutilised. For example, a business may have a lot of workers in the packaging department, while customer requests are delayed because there are not enough people to answer the phones.
Muri means impossible, excessive or unreasonable. Any activity that overburdens the production line, such as one person trying to do three job functions, would fall into this category. Working together, these three concepts comprise the main deterrents to optimal production which lean seeks to rectify.
Living a lean life
The concept of lean has not only impacted the manufacturing world, as there have been benefits from implementing its practical applications to institutions such as schools and hospitals. Lean living has even been promoted as a way to achieve peak performance in your personal life as well.
I first heard about the lean methodology a couple of years ago from a client. She explained how she utilised the concept in her supervisory capacity at work, and that she tried to mirror its principles in her everyday activities. For her, lean has become a way of life.
In doing some research on this production process, I realised that the simple techniques could actually provide some of the missing links for persons who were finding it difficult to achieve their personal and money goals. Let's look at some ways in which lean can be applied to your financial life.
Letting go of financial waste
As I outlined, getting lean necessitates the removal of wasteful processes. Your financial results may have suffered last year because you frittered away important resources, such as your time and money. The lean method may help you to devise a way to stop wasting your precious reserves.
Make a list of all the ways in which you habitually squander your resources. Add up all the hours you spend on Facebook or idly watching television. Think about the money you spent unnecessarily on impulse shopping and entertainment, or by not seeking out the best prices for your groceries.
Also consider how Mura, or unevenness, may be holding you back. You may have been putting in extra hours at work to clear your desk because you operated inefficiently during the regular job time. Instead, use this period to generate part-time income or learn more about investing your money.
Don't overburden yourself as you strive to accomplish more in your life. If you are a busy parent or attend school after work, it may be counter-productive to set too many resolutions for yourself. Choose one objective that you really want to achieve in 2014, and put all of your extra effort into this main goal.
Cherryl is a money coach, business mentor and founder of Financially S.M.A.R.T. Services. Her upcoming book, "The 3 Ms of Money" will reveal all the secrets she learned about financial success. Read more on money and business matters at financiallysmartadvice.com and entrepreneursinjamaica.com. E-mail comments to firstname.lastname@example.org.