As the global economic downturn deepens, cash-strapped companies are looking for ways to cut costs and increase liquidity. One way to get fast results is to refocus your lean efforts on the basics -- and correct the bad habits that are undermining results. Besides generating much-needed cash, you'll make your company stronger and better positioned for the upturn.

It's critical to take a closer look at whether your lean initiatives are really boosting cash flow and improving the bottom line, especially during tough economic times. Our experience shows that well-executed lean programs can cut lead times and quality costs by half, increase productivity by 10% to 30%, and reduce inventories by 30% to 50%. What's more, quick wins can deliver a large share of these savings. The problem is that lean is rarely done thoroughly and effectively. In our client work, we consistently find that companies slip into costly bad habits that prevent them from achieving or sustaining these results. Here are the five bad habits we see most often:

Bad Habit #1: Not Focusing Lean Efforts

Ideally, lean should become a way of life, and applying its principles throughout an organization is a worthy long-term goal. But companies should scale back their ambitions at the start of a lean transformation -- particularly during a downturn. Too we often see companies diluting their efforts and misusing valuable resources by not scaling back and focusing on high impact areas. For instance, factories with sophisticated Overall Equipment Effectiveness (OEE) measurement systems often monitor hundreds of machines instead of focusing on the bottlenecks, where even minor improvements could boost output or reduce the number of resources needed. Improving the efficiency of non-bottleneck equipment has no effect on overall output. It only increases lead times and work-in-progress inventory, which ties up needed working capital.

Every factory has a few critical, high impact areas where even small changes can deliver major improvements to the bottom line -- especially important during a downturn. By spreading lean resources too thin, companies often miss these high impact areas, or don't fully capitalize on their potential. Be sure to target these critical areas.

Bad Habit # 2: Not Looking Beyond the Shop Floor

Because lean programs are often the domain of manufacturing, they tend to be production-focused. As a result, potential savings beyond the shop floor are often overlooked. For instance, they may fail to address administrative and support functions -- a good potential source of cash in a downturn. Examine the size, role and structure of support functions, especially if your business has high indirect labor costs. By applying lean concepts to these functions, companies can often reduce headcount without hurting service levels.

Bad Habit #3: Not Using Lean Insights to Avoid Capital Outlays

Done right, lean allows companies to do more with less. If your lean initiatives haven't allowed you to postpone or reduce capital expenditures, then something's wrong. For instance, most companies have much more available capacity than they think. The trick is to release the "hidden" capacity in bottleneck assets -- often tied up in unplanned breakdowns, changeovers, shift changes, small stops or lines running at non-optimal speed. Make it a point to analyze theoretical capacities and OEEs to determine what improvements could be made to key bottleneck machines to reduce or postpone short-term investments.

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