Lean management or agile? What works better for MSMEs

Evaluating New Age Management Principles for MSMEs


The micro, small and medium-sized enterprises (MSMEs) form a crucial part of emerging economies. The MSMEs use qualities of artisans and skilled labor from the manufacturing and service industry. The management rules that work with the sophisticated IT firm may not work here. There are many problems associated with MSMEs,

  1. Timely Procurement of raw materials

  2. Lack of access to finance

  3. Technology

  4. Branding and marketing

  5. Under-Utilization of Capacity

It is observed that small businesses majorly have the paucity of resources to make considerable investments in technological solutions for improving their management. But the post-pandemic recovery has made the enterprises realize how choosing modern-day organizational principles can help them in tapping opportunities in today’s changing environment. It becomes imperative to assess what the Government and technology firms can do to help MSMEs.



Interestingly, for MSMEs, new management principles are being considered. Lean management and agile methods have helped organizations in the past to improve performance. Let’s take a deeper dive into the two concepts.


What is Lean Management

The principles of lean focus on the reduction of waste and the development of processes that operate on a pull force.

Advantages

  1. Leadership and teamwork: The lean principles create ownership in its employees. Here employees are better motivated and more focused.

  2. Better finances: The removal of redundant activities ensures the highest utilization of resources.

  3. Customer Satisfaction: A lean organization ensures a memorable experience for its customers. Teams here focus only on quality.

Disadvantages

  1. Lack of time: Lean practices require time for sound planning of workflow. The daily decision-making calls add up more time.

  2. Inexperienced staff: Organisation decisions by untrained staff can cause risks in delivery.

  3. No fallback plan: The lean enterprises depend heavily on their employees. During their unavailability, there could be unsaid delays.

What are Agile Methodologies

Agile came from the Agile Manifesto. The iterative agile methodologies make the organizational output more robust, flexible, and responsive to changes.


Advantages

  1. Better Finance: With incremental capabilities, the turnaround time in agile is less. The product delivery is fast and the testing cost of smaller modules is also less.

  2. Client Satisfaction: The organization keeps the client involved in ongoing discussions and their feedback is valuable.

  3. Flexibility: In later stages of development also there are chances for amendments in agile design.

Disadvantages

  1. No timeline: The projects can become ever-lasting because of the ever-evolving iterative feature.

  2. Resource estimation: In complex assignments the effort calculation is difficult.

  3. Limited Documentation: Designing a set SOP is difficult in an ever-developing assignment.

The Hybrid Model may be the right answer.

Being the second most employment generation sector after agriculture MSMEs require up-gradation of technology, infrastructure, customer satisfaction, and modernization of skills altogether. Minimizing risk and waste while maximizing customer satisfaction has helped Lean principles create a Legacy. Implementation of new-age software and capacity building can fill in the gaps in lean MSMEs. Organizations need a long-term vision with Agile. Though the exact amount of effort is difficult to define but, tweaking functions on weekly sprints can bring transformational changes.



Through thoughtful design, agile and lean management can be the perfect match for companies in search of lasting performance improvement.


Many companies are benefiting by using the hybrid model.


From a bird’s-eye view, both lean management and agile have the same set of foundations. The amalgamation of the new normal with Industry 4.0 requires employees and employers to work in an entirely new manner. With growing changes, a hybrid model can thus help in unlocking the untapped opportunities in the MSME sector.


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