It’s been over 60 years since the U.S. Small Business Administration (SBA) first celebrated National Small Business Day. What started as a day is now a weeklong celebration (2025 May 4-10) in recognition of small businesses and as a needed reminder of how critical micro, small and medium enterprises (MSMEs) are to powering economy-wide production and positively impacting the job market.
According to McKinsey and Co., MSMEs not only contribute around 50 per cent of the global GDP, they account for more than 90 per cent of businesses worldwide. Yet, they continue to face tough conditions and often struggle to survive due to low productivity, almost non-existent digital literacy and financial instability, among other factors.
Despite all the sacrifices, blood, sweat and tears, most small businesses crash and burn quickly, with only 57 per cent of U.S. manufacturing businesses surviving past the first five years. The Financial Times reports that start-up failures in the U.S. have surged by 60 per cent in 2024, but worldwide, there are a record number of businesses closing their doors. Australian business closures have reached a four-year high, while the UK reportedly lost 37 small shops in a day in 2024, according to the Guardian.
The good news: regardless of these significant obstacles to success and solvency, small businesses and MSMEs are often agile and dynamic by design because they must be to survive, and that is a massive bonus.
How lean and kaizen methodologies for continuous improvement can support MSMEs
To remain competitive and resilient, MSMEs must embrace continuous improvement, often beginning by integrating proven methodologies such as Lean and Kaizen. While distinct, these methodologies are all interconnected and collectively address the modern needs of small manufacturing businesses, often boosting efficiency and productivity and eliminating waste wherever they are implemented.
Here are the differences and benefits between lean and kaizen methodologies and why you need to consider their application to achieve operational excellence and truly realise your manufacturing business’s potential.
The gains of lean manufacturing
Well-established principles like lean manufacturing place emphasis not only on waste reduction but also on maximising productivity simultaneously. Lean manufacturing has become a global standard for driving efficiency, improving performance, and delivering more value with fewer resources but Toyota first designed lean management in the 1940s with the goal to eliminate non-value-adding activities from the production process. Today, these principles still live on and have spread globally from manufacturing to service operations and almost every other department and function at companies, governments, and non-governmental institutions.
According to the U.S. Environmental Protection Agency (EPA), various top-performing global brands have realised the benefits of lean manufacturing, which has not only fundamental savings and benefits but also a positive environmental impact. General Electric (GE) achieved cost savings of USD $1,000,000 due to fuel use reduction, and the Boeing Company realised resource productivity improvements of 30-70 per cent from lean initiatives, underscoring just a small sampling of how lean methods can add up to significant improvements and cost savings.
The advantages of kaizen methodologies
Kaizen, meaning “good change” or “improvement’ in Japanese, is based on “the philosophy of continually improving the products, processes, and activities of a business to meet or exceed changing customer requirements and the organisation’s standards in an effective and efficient way.”
McKinsey and Co. highlights the benefits of cultivating kaizen culture in a recent study that outlines how one mining company experienced increased output at its “fully optimised” facility by a quarter per cent in year one. Subsequently, in year two, it went up another 15 percentage points and then a further eight percentage points in year three with capital and labour costs remained flat. While kaizen does require dedicated commitment, but we see that time and time again, the results pay off.
From struggles to success: tackling manufacturing challenges with operational excellence
With the rapid rise of Industry 4.0 and AI, the manufacturing sector has a lot to contend with already, but small manufacturing businesses specifically have more obstacles that require pivoting or urgently addressing to remain competitive. Yet, for every challenge, there is a solution. Here are the top 5 manufacturing challenges we have identified, and how operational excellence can help:
Challenge 1 – Transformation stagnation
MSMEs and manufacturing business owners face workforce shortages and struggle to attract and retain the workforce due to limited growth opportunities, leading to low productivity.
The solution: A tailored roadmap stemming from a quick self-assessment that provides data-driven and actionable recommendations while answering the key question: What areas need to be improved and how can new, innovative solutions be effectively implemented?
Challenge 2 – Low productivity and talent shortage
MSMEs and manufacturing business owners generally face workforce shortages and struggle to attract and retain workforce due to limited growth opportunities, which leads to low productivity.
The solution: A clear understanding of areas requiring improvement to increase productivity and answers the critical question: How can I maximise returns with my current resources?
Challenge 3 – Operational inefficiency
A top challenge amongst most manufacturers, operational efficiency is costly and requires continuous improvement to achieve operational excellence.
The solution: Increase productivity and efficiency by leveraging a comprehensive operational excellence assessment to compare against peers while answering the key question: What is my current operational maturity?
Challenge 4 – Low digital literacy
This is one of the most significant challenges holding MSMEs and manufacturing business owners back from achieving their goals. Once digitally literate, businesses have the opportunity to flourish.
The solution: Start your digitalisation journey by concentrating on creating a high digital literacy workforce culture, then businesses can ensure they are future ready, while answering the key question: What is my MSME’s digital literacy, and do I have the proper foundational growth culture in place?
Challenge 5 – Slow business growth
This is a symptom of low productivity and subpar digital literacy but once all the challenges above are addressed, MSMEs and manufacturing business owners can accelerate growth to meet core business objectives and goals.
The solution: Armed with the data-driven insights, you can expand knowledge and drive growth to discover new opportunities while answering the key question: How can I unleash my business’s hidden potential to take it to the next level?
Empowering MSMEs and business owners on the path to operational success
While National Small Business Day acknowledges the crucial role of small businesses and how much they contribute to society, the hard truth is that celebrating them will not help them survive as they continue to face the threat of impending closure. To keep their doors open, transformation is essential to move forward, requiring tailored solutions supported by lean and kaizen methodologies to ensure operational excellence.
The path toward embracing continuous improvement is not a straight line. However, INCIT’s Operational Excellence Industry Readiness Index (OPERI) empowers MSMEs and manufacturing business owners to take control of their operations with the actionable insights gained from their OPERI self-guided assessment. Using OPERI can be as easy as taking this brief, self-guided assessment on your smart device, but by assessing operational maturity, this “all rounded” assessment is mighty. It can act as the catalyst for the operational success of micro, small, and medium manufacturing businesses, supporting a structured approach to ensure long-term success.
Learn more about the INCIT approach and how to leverage OPERI to accelerate growth, advance digitalisation, and increase productivity.
