2. Presentation Objectives
The main objective is to share my personal
consulting experience in Lean implementation
with Malaysian SMEs. At the end of the
presentation, you should learn about;
The key challenges during the implementation.
Prudent approach to mitigate the challenges.
The importance of business innovation for SMEs
development.
3. Presentation
Flow
• Ask for clarification.
• Opinions / ideas
welcome.
• Pause and pace the
speed based on needs.
5. SMEs in Malaysia
SMEs in Malaysia falls under
two categories as follows;
1. Manufacturing: Sales
turnover not exceeding
50 million or full time
employees not exceeding
200 workers.
2. Sales and other service
sectors: Sales turnover
not exceeding 20 million
or full time employees
not exceeding 75
workers.
Source: SME Corp. Malaysia
6. Distribution by Sectors
Sector Number %
Manufacturing 47,698 5.3
Service 809,126 89.2
Agriculture 10,218 1.1
Constructio
n
39,158 4.3
Mining 865 0.1
• SMEs represent 98.5% of establishment in Malaysia contributing
to 32% of GDP.
• 76.5% SMEs are micro-enterprise.
• SMEs contribute to nearly 65.3% of employment. (SME annual report
2016)
Source: Economics Census 2016
7. CSFs for SMEs in Globalise Space
Sound management
integrity.
Sound business culture and
entrepreneurial spirit.
Prudent financial
management.
High quality product and
services.
Effective program for
human resource
development.
Strong support from
financial institution.
Strong marketing strategy.
Continuously looking for
opportunity to expend.
8. Developmental Challenges for
SMEs
Recession.
Barrier from Global sourcing.
Low productivity.
Lack of technical professional & management
expertise.
Difficulty in accessing management technology.
Heavy regulatory burden.
Inability to explore market opportunities.
10. 3 Key Challenges with SMEs
Low awareness on the
importance of
management technology.
Limited resources to
innovate and sustain the
system.
Business system
development is not a
priority.
11. Root Cause Analysis
Lack of
business
exposure
Caught-up with
trivial routines
Lack of trust
Micro
operation
Fund is scarce
Self-funded
start-up
Lack of
delegation
Insecure
No awareness of
available financial
assistance
Superficial
12. Critical Business Development Needs
Change in Customer’s Expectations
External Threats & Competitions
Ignorance to Business
Needs and Surroundings
15. Solution for the 1st Challenge
1. Understand the main reason “why the organisation
embark into the program”.
What is the business-case for the initiative?
What is the management expectations?
Never afraid to yield should the idea does not fit the
business needs.
2. Explain the importance of the initiatives for the
organisation.
Emphasise on what the organisation are losing for being
ignorance not on the benefits.
For management, dollar recovery fits well while for the
employees simplified operation will entice them.
3. Propose simple and practical approach.
Make the explanation understandable to 10 years old.
Be flexible.
16. Solution for the 2nd Challenge
Begin with basic activities such as work
standardisation, communication method and
work place organisation.
I’ve observed many SMEs in service sector are lacking
of work standardisation thus, it is critical to do this
first.
Never overcomplicated the standard work documents
as the organisation might feel intimidating.
Encourage idea from the front-line employees and
encourage involvement. Quick win ideas which
could be implemented easily with limited
resources is better as it could boost morale.
Use “hard” control such as Visual Management,
Error Proofing and layout modification to sustain
the gain.
17. Solution for 3rd Challenge
Conduct frequent but “short training session” with
the management team. A 15 to 20 minutes slot is
normally acceptable and get the business owner’s
involvement.
Focus on selling the fundamental points not the
details.
An effective way to get agreement is to emphasize
more on “what is the organisation losing (if
possible relate to dollar)”. Examples from the
organisation itself will be an advantage as it
awakes attention.
Use hand-on coaching approach to develop the
employees and avoid having a long theoretical
session. Learning by doing are not only effective
but it creates “values” in the activities as progress
is expected.
19. –Definition of Lean Production System
“An operation’s strategy with a new set of
values to engage people in continuously
improving safety, morale, quality, cost and
productivity.”
Lean is not a quick fix solution!
20. Total Involvement at Different
Level
Senior
Management
Middle Management
Front Line
MUST “DO”
MUST LEAD THE ACTUAL
OPERATIONAL CHANGE
MUST PROVIDE VISION
AND INCENTIVE Likes the results
Wants to be
successful
Likes the
involvement
Role Impact
Provide the right tools for the right job
MURA, MURI, MUDA
Tools:
Policy Management
Problem:
MURA & MURI
Tools:
VSM or A3
Tools:
Standardised work
Problem:
MURA & MURI
Problem:
MUDA
21. Lean System
Hardware Software
Need both for successful transformation.
However, far to many Lean implementation emphasise on the hardware. Why?
As a result, only handful successfully implemented the Lean System.
22. Organisation-wide Lean System
Leadership/Accountability/Urgency
5S Standardised Work Heijunka
Value Stream Mapping
Just
In
Time
Jidoka
Best in Quality-Lowest in Cost-Shortest Lead Time-High Moral
Kaizen
Waste Elimination
Autonomous Team Direction
&
Control
Change
Capability
Effective System
Clear Vision
Goals
Policy
Deployment
Value Stream
Design
Talent Development System
Autonomous team
activities
Model
Area
Lean
Office
A3 Report
Suggestion System
“Manufacturing System” “Management System”
These are the tangible component of Lean system
that enhance efficiency and effectiveness of the
operation. Usually immediate effects are visible
after proper implementation.
These are the intangible component of Lean
system that manage organisation transformation.
The effects are realised in long term with a
sustainable Lean system in place.
1
2
23. Manufacturing System
Leadership/Accountability/Urgency
5S Standardised Work Heijunka
Value Stream Mapping
Just
In
Time
Jidoka
Best in Quality-Lowest in Cost-Shortest Lead Time-High Moral
Kaizen
Waste Elimination
Autonomous Team
Foundation
1st Pillar 2nd Pillar
“Making a factory operates for the company just like human body operates for
the individual.” Taichi Ohno
29. –Journal of International Business Research
“Globalisation has made the economy of a
nation more exposed to any unfavourable
events…SMEs, small in its assets, working
capital, skilled workforce etc, are affected in
larger degree especially those involved with
trading and supplying products or services to
other businesses. Lower cash flows and limited
financing are the major challenges faced by the
SMEs during this bearish period.”
30. Modernisation of Management
Product
innovatio
n
Business
Innovatio
n
• Research & Development
• Customer driven
• Capital dependency
• Technical demand
• Organisation with “deep-pocket”
• Creativity & Courage
• Customer driven
• Knowledge dependency
• Common sense
• Anyone could participate.
Next 5 years
NOW
Total Quality M
anagem
ent
Product Engineering
31. Reference
1. Journal of International Business Research, Small and
Medium Enterprises (SMEs) Competing in the Global
Business Environment: A Case of Malaysia.
2. International Journal of Marketing Studies, SMEs in The
Malaysian Economy.
3. Journal of Asian Social Science, Dissecting Behaviours
Associated with Business Failure: A Qualitative Study of
SME Owners in Malaysia and Australia.
4. Personal consulting experience on company-wide quality
or productivity infinitives with Malaysians SMEs.
