The Ultimate Guide to Lean Auditing
A business strategy called lean auditing is a systematic way of focusing on the working principles of how everything is being done to satisfy the customers, especially when it comes to creating value for the customer.
Lean is a strategic path of how one can eliminate waste production. If any company’s business model is designed to prioritize the customer first by putting the maximum possible value for the customer at the minimum possible risks and efforts. To implement lean either in your manufacturing or your auditing technique, one must know where your current situation exists.
Why is Lean Auditing Done?
To ensure that the manufacturing company is following and has embedded lean manufacturing techniques in its business flow, one must clear a lean audit.
Developing a Results-Oriented Culture
By developing an audit culture, your team becomes more focused on value addition by identifying the significance of stakeholders’ engagement in the decision-making process.
Alignment with Goals
After deciding on a mission statement and motto, one must enlist all the organization’s goals and key drivers aligned with the goals.
Lean Auditing Applied to Internal Audit Practices
The “lean” strategy applies well to internal audit practices also. Getting audit engagements right, designing internal audit reports (audit reports should be crisp, to the point, and fruitful for making desired improvements in the system). Please note that anything found during an audit that doesn’t add value to overall results must be replaced or eliminated, depending on the situation. This will help you to make the internal audit report more robust for the auditees.
The lean audit approach is all about producing efficient outcomes in less time and with higher accuracy without compromising quality. It also offers a combination of other benefits like devising cost-saving or cost-effective solutions to enhance profit margins.
Fundamental Principles of Lean Auditing
The fundamental principles of lean methodologies revolve around eliminating or minimizing waste (Muda). Have a look at the basic principles of lean, listed below:
- From the Eyes of the End Customer
Put your thinking caps on and investigate what your end customer wants from you. After investigation, look into how such end results can be accomplished.
Gemba or Go See gives eyes to see what is happening in your organization and around your workplace.
- Value Addition
To see how one can add value, one must identify non-value-added tasks, and this can be done by recognizing waste in your process stream leading to the final product. For a better understanding of waste, the following factors are considered Muda (waste). They include waiting, product rework, product rejection, bottlenecks, etc.
- Perfection at its Best
By using quality control techniques like Just in Time (JIT), error proofing, and design automation, one must achieve clear objectives and definite time bound measures.
Periodic Audits Schedule
Periodic audits should be assigned to different cross-functional departments. This will help ensure that audit assignments are completely resourced, timebound, and according to the available budget.
Audit Report Compilation
Audit reports must be made crisp, insightful, and should contain points of all opportunities for improvement that are practical and easy to implement by keeping the nature of the business in mind.
The compliance of control processes should be appropriately streamlined, which can benefit the organizational values.
Return on Cost
The audit function should be able to define the positive rate of return on its cost vividly.
Stepwise Guide to Lean Auditing
Below are some critical steps in the lean auditing approach that you can jot down for your ease:
- Main Objective Identification
It is essential to recognize your motto and mission and the reason why you are doing your business. A lean audit determines whether your business exhibits proper implementation of lean methodologies and techniques. The analysis can gauge the achievement of lean manufacturing by analyzing how your company implements lean practices in the manufacturing cycle, intending to improve manufacturing procedures and product quality.
- Audit Planning
Do your homework before you come and sit in a meeting room to discuss audit outcomes. Please note that it is preferable if autonomous third-party auditors are performing the audits to ensure transparency. Moreover, getting audited by a third party opens many doors towards improvements by identifying opportunities to get one’s business in better shape while finding possible optimum solutions for potential loopholes existing in the current management system.
- Be Specific to Your Business Needs
An organization can be gauged by some unique criteria that other businesses might not follow or prefer not to follow because of their separate needs and customers’ demands. The outcome of a lean audit should highlight any lacking point of the current management system and should highlight any loopholes that one came across while interviewing selective employees.
- Application of Lean Standards to Audit Procedure
The audit should be done in synchronization with lean practices, but lean practices would be specified to the business type and nature. For safety concerns, make sure that safety labels and warnings are vivid in all the designated sensitive areas. Tools should be placed at the right places and in the right quantities following the 5S methodology.
- Follow-Up After Audit
A weekly review by the leadership team or periodic internal audit every month supervised by the department head should be conducted to ensure that lean standards are being followed (or aren’t) and how lean standards impact daily industrial practices.