Four Sectors that have Benefited from Lean Thinking

Lean thinking has produced some impressive results for organisations over a range of industries and sectors. The lean concept, popularised through Toyota, was created to cut down on waste and establish a more customer focused business. Since then, the principles of lean have been replicated and adapted to almost every industry and sector beyond manufacturing, as the examples below illustrate.

Government

Government funding is always an issue and finding the resources to provide new services and for new projects is challenging. Attempting to allocate scarce resources is always a challenge and governments are often forced to abandon initiatives in order to balance the books and cope with the financial realities.

A lean approach, however, can help mitigate the impact of cuts. By eliminating wasteful processes which add no real value for the end user or stakeholder, governments can ensure that funds have a significant impact, targeted on the right areas. For example, UK highways maintenance projects are expected to save a staggering £250 million through the application of lean thinking and HMRC has saved £991 million in the past 4 years though its lean programme and many more areas are seeing similar impacts.

Healthcare

The public sector and particularly healthcare is faced with the challenge of having to be resourceful without sacrificing the quality of service delivery. Limited budgets and financial pressures can often make it very difficult for healthcare to provide an appropriate service to deal with the high and growing volume of demand and the costs of new technology and treatments..

Lean thinking can help healthcare create capacity in their systems by cutting out waste in processes, understanding and managing demand more effectively and concentrating their efforts in priority areas. The NHS has widely benefited from implementing lean principles by identifying and removing unnecessary processes, reducing waiting, speeding up treatment time, improving the quality of care and patient satisfaction.

Hospitality

Many reputable hotels have embraced lean thinking to make their operations run more efficiently. The hotel industry has so many different processes taking place at one time that without an effective coordination strategy, standards will start to fall and customer service suffer. Managing staff, taking bookings, running the restaurant, ordering food deliveries and providing good customer service are just a few of the many processes that hotels operate, making efficient management absolutely crucial.

A key objective of the hotel industry is to provide customers with a rewarding experience by hiring service-oriented staff, delivering prompt service and ensuring their experience is enjoyable. Lean strives to fulfil each of these requirements by empowering staff, cutting out unnecessary processes and focusing resources on areas of the customer journey that ‘delight’ customers. That is why so many successful hotels and restaurants continue to use the lean approach.

Food and Beverage

Businesses in the food industry rely heavily on a good reputation while invariably needing to be highly cost-effective to maintain profitability. Simply cutting costs across the board can have a detrimental impact on service quality and business performance, which is why restaurants, cafes and food suppliers need to have a more considered and targeted plan in place to maintain their reputation whilst also maximising profit.

Lean thinking can help food based companies to identify which processes can be removed without compromising quality or causing damage to reputation. By focusing on processes which add value for the customer, food companies can target their resources towards generating growth focused on customer needs.

Lean also encompasses an environmentally friendly approach. By cutting out unnecessary processes, businesses automatically become less wasteful in their use of physical products as well as business processes.

Could you benefit from lean?

No matter what industry you are in, adopting lean thinking lean can provide you with a much effective route towards achieving your business goals. Whether your aim is to cut down on costs, increase productivity, maximise customer value or increase work satisfaction for employees, lean has a role to play and can be adapted to suit any business. If you think that your business could benefit from lean, don’t hesitate to get in touch with us via the LCS website: https://www.leancompetency.org/

Why Lean Thinking is Valuable to the Service Industry

Is Lean Thinking Only Applicable to Manufacturing?

Lean’s success has been tried, tested and proven in manufacturing and with the service industry constantly growing, many in the sector are also looking at whether or not the same principles can be applied with the same impact. Some are sceptical and argue that methodologies intended to streamline manufacturing processes cannot simply be replicated within other industries.

However, after becoming familiarised with the core principles of lean, many companies believe that it is not just specific to physical products and that it can be easily shaped and adapted to suit other sectors too.

The fundamental concept of lean is to help businesses establish what is valuable for their customers and then optimise their value creating processes by cutting out waste and to perfect the entire operation so that the service flows smoothly.. Although it can be more difficult to locate intangible wastes in a service environment, the principles of lean remain the same – to achieve maximum productivity and performance with the fewest resources.

Lean for service organisations

Companies in the service sector are constantly under pressure to deliver excellent customer service, faster response times and valuable support for their customers. Lean can help to optimise all service delivery processes by targeting wastes and either removing them completely or move to a more effective state as part of a journey of continuous improvement.

An IT company, for example, is very different from a manufacturing company, however it still has many wasteful processes that could be removed or reduced. Lean tools and techniques can improve the customer experience by reducing unnecessary activities such as the number of call transfers and unnecessary IT processes, whilst also providing solutions to cut down on errors, maximise employee empowerment and become more cost-effective.

Examples of lean services

Lean in the financial sector

Financial firms are a prime example of a service sector that cannot afford to be wasteful, due to strong competition, the impact of the recent financial crisis and vulnerability to economic downturns. Yet, t is claimed that at least 40% of costs in the financial sector are spent on wasteful activities that have no added value to the customer. Although they cannot control the fluctuating economy, financial companies can however invest in refining and redefining their own operations to ensure more effective and customer focused operation.

Lean thinking can provide businesses such as banks, insurance and investment companies with more productive and cost-effective solutions, therefore reducing risk during an economic dip. Lean would also help to improve employee satisfaction, increase customer value and ensure the supporting activities are focused on delivering value..

Lean in marketing services

Marketing companies have so many different processes to their business, that without effective coordination in place, mistakes can easily occur. Every task needs to include a thorough process of planning, writing, designing and proofing to generate a high enough standard of quality for their clients. These ongoing processes are not only extremely time-consuming, but with different tasks being assigned to different departments, project efficiency could also be compromised.

Lean implementation can help marketing companies to streamline their processes by removing tasks that are unnecessary and implementing a much more efficient approach. In doing so, lean also provides a direct improvement on work quality and therefore provides added value for the customer. This allows lean marketing companies to have that added edge over their competitors.

Could you benefit from lean?

If you have a company in the service sector and think that you could benefit from a more effective strategy, then why not consider adopting lean thinking? Not only will you establish a more productive approach, but it will also help you to motivate your employees, increase customer value and improve the efficiency of your business.

For more information on lean service operations, please get in touch via enquiries@leancompetency.org or elias@leancompetency.org

Big Business By Giving Back

Last year, Cardiff Business School launched its Public Value Business Strategy. It aims to be the first business school in the world to seek to deliver as much ‘social value’ as it does ‘economic’. This is a significant shift in focus for a business school to take; to seek responsibility to not only deliver prosperity for organisations, but also to ensure that its students and the organisations that the school interacts with are cognisant of the grand challenges of our time and aim to do something about them.

This means it will work to deliver research that directly addresses major global problems such as climate change and gender inequality. The United Nations has developed a number of sustainability goals, which are a brilliant summation of the challenges the world faces and what we need to do in order to work towards the lessening of inequality.

Innocent Drinks is one company that places equal importance on both responsible business and delivering economic value. It recently spoke at an event at the school that looked at lean and green operations. Case studies included work that it had done in Spain’s Donana National Park to reduce the water demands of strawberry farming, and also how mango farmers in India had been helped to increase their yields by 25% in the face of climate change. Sustainability is part of its DNA, and the financial profits gleaned from its work in this area were not passed on to Innocent, but were kept with the farmers, which is an almost astonishing approach within supply chain management.

To ‘profit share’ would contradict its core values.A somewhat daunting list, but business should not fear getting involved in the sustainability agenda. Professor Ken Peattie of the Cardiff Business School, in a CIPD report about responsible and sustainable business, discusses research by Harvard Business School and London Business School – The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance – that proves “a £1 investment in a value-weighted portfolio of high sustainability firms in 1993 would have increased to £22.60 by the end of 2010, compared with a return of £15.40 from the low sustainability performers”. Indeed, in a 2010 Accenture and UN Global Compact survey of global leaders, 93% of CEOs see issues relating to sustainability as “critical to the future success of their business”.

This view has been similarly shared by the Welsh Government, which has taken an unprecedented step in terms of seeking to put core sustainability values at the heart of our public services. The Well Being of Future Generations Act came into force in April 2015 and seeks to ensure that organisations work across boundaries and make decisions based on their long-term impact, improving the social, economic, environmental and cultural well-being of Wales. Too often companies make decisions based on a short-term view, driven by budgets or political election. The Act is designed to ensure that decisions made will protect and benefit future generations.

To me, it is essential that businesses use all the technological advances at their disposal to protect future generations, to seek to tackle those global goals for sustainable development compiled by the UN. Research and experience has shown that their profits can grow as a consequence of pursuing such an agenda, and that delivering social value can be as important a driver to achieving economic value as the mere pursuit of economic value alone.

Confront Waste to Innovate

It appears that innovation, while far from a new concept, is now the hotly sought after ‘ingredient’ that organisations are desperate to harness, adopt, nurture and grow. I have been immersed in lean thinking since 2005, and a couple of years ago I had a revelation about one of the most basics of lean concepts, Taiichi Ohno’s ‘seven wastes’, and their relation to the innovation process.

I’ve discussed the wastes  in a previous article and how leaders can look out for them within their processes and seek to remove them, but I’m increasingly aware about how powerful a device the wastes can be.

My first understanding of their power came to me when I worked with Nestlé and assisted it in developing and delivering its Lean Learning Programme. I was privileged to work with many different lean experts in order to develop the course and one guy, John Papin, left a lasting impression. He was the first person who made me truly aware of the interconnection of the seven wastes.
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When we seek to improve a process, we often end up ‘trading’ the wastes in order to bring about a desired change. You often can’t just reduce all of the wastes, you might increase one of them in order to decrease a waste that is less preferable. So, for example, it might be better to increase the amount of inventory that you hold within a warehouse as opposed to waiting for the goods to be produced, which has the knock-on effect of making the customer wait. In this example, you increase the inventory in order to reduce the waiting time.

But what if all of our goods are becoming damaged when waiting in the warehouse (defects)? We might choose to increase the ‘over-processing’ and wrap them carefully in bubble wrap in order to reduce the amount of damages. When you look at the interconnection of wastes in this way, you can very quickly move to a position where you can start to see that step change innovation occurs when you can break free of these trade-offs.

I believe (and know) that big companies push for innovation to overcome these wastes and waste trade-offs. Amazon, for example. If you think about the ‘inventory’ that is associated with loading a truck full of customers’ goods and then the ‘wait’ experienced by a customer in order to deliver those products through multiple stops, you can quickly start to see how the prospect of recruiting drones to deliver single packages within a quick time frame, can start to be appealing. Such step change innovation within its business model obliterates delivery inventory, waiting and potentially other wastes, too. However, even here, the wastes await. Are defects and damages more prevalent within drone delivery, for example?

The Internet of Things (IoT), a term that refers to the transportation of goods around the world using the free access and sharing principles of the internet and its rich data sharing capability, has the potential to reduce costs for suppliers and customers, and decrease unnecessary transportation and waiting time for customers. The IoT also possesses the opportunity to provide a greener, more sustainable option for society, and this is where I think the use of the seven wastes as a mechanism to innovate can really fly.

The wastes are, by their very nature, an unnecessary drain on resources. Understanding these resource drains is the first step in identifying a problem and then inciting innovative action in order to do something about it. Technology is often the key driver needed in order to overcome these wastes and bypass any ‘waste trade-offs’ that exist. Will 3D printing overcome the waste of inventory and transportation by enabling manufacturers, even customers, to create parts and products as close to where they are needed as possible? Will driverless cars overcome the waste of defects (crashes) and make the roads a safer place to be? Whatever the future holds, I’ll bet that we’ll see key innovations bursting through those wastes and bringing benefit to suppliers and customers alike.

If You Aren’t Moving Forward Positively, You’re Moving Backward!

Entropy. “The inexorable tendency of the universe and any isolated system in it, to slide toward a state of increasing disorder.”

When I work with organisations to bring about service improvement, I often fight against entropy. The size of the company, the number of years in service and changing messages from the top all collide to create castles of complexity and confusion.

I was first introduced to the word entropy after I watched a film of the same name one night many years ago. I loved the film, loved the word with all its romantic, celestial connotations, but didn’t appreciate how relevant the term would become within my professional life. Many business leaders fear stagnation – i.e. stop developing, progressing or moving – but I think it is too generous a term for what occurs. While organisations stagnate they do more than simply stay still – they slide into a state of increasing disorder. Change is the only constant, so if you aren’t moving forward positively, you’re moving backward in decline.

It can become overwhelming navigating a path through the chaos to improve the service and, critically, to innovate within that service, so you are able to keep up with competitors and new entrants to the market. Consequently, I’m constantly on the lookout for creative ways to facilitate the innovative process – I was really impressed by a workshop that was delivered by Darrell Mann about a Russian innovation methodology known as TRIZ.

TRIZ or теория решения изобретательских задач, teoriya resheniya izobretatelskikh zadach, literally, the ‘theory of the resolution of invention-related tasks’, was created by the Soviet inventor and science fiction writer Genrich Altshuller and his associates. It was developed from a large-scale analysis of thousands of patents, whereby approximately 40 ‘innovation formulas’ were identified, which can be applied to products or services, to both problem solve and innovate.

A critical aspect of the different formulas pathway is the notion of adapting to overcome contradictions of obstacles. This was explained to me in the following way. You’re a caveman and a rival caveman (let’s face it, they were most probably men) comes along to push you out of your superior cave. You wrestle for a bit, but one of you grabs a large club-like branch and whacks the other over the head. An innovation. The beaten caveman returns to his inferior cave and fashions himself a club, so that he is better prepared next time. When challenged again, the fight is more equally balanced until time moves on and clubs turn to swords. Swords do a more potent job of disposing of a caveman than a stick.

One day, someone thinks it would be a great idea to fashion not only a sword out of metal but a shield out of metal too, an innovation that protects the defenceless side of the body from attack. But a ‘contradiction’ has occurred. Whereas before, both arms could be used to attack and defend, now one has become ‘trapped’ behind a shield. So innovation occurs to solve this contradiction, a suit of armour emerges from the creative mind in order to free both arms for fighting, yet protect the body from stabs. Alas, a new contradiction has occurred – what was once agile and light, is now heavy and slow. Innovation must rise again in order to overcome this challenge, and chainmail armour is created. Each innovation occurs to overcome the contradiction incurred by the innovation of the past.

Innovation explained and explored in this way does not offer a limitless set of possibilities. Rather as each contradiction is overcome and solved, we come closer to a perfect solution. When this is achieved there is no need for innovation as all problems will be solved.

This notion of innovation – that as we become closer to simply ‘what customers want’, the range of delivery options becomes narrower – can be seen as counter-intuitive to the widespread idea of innovation that currently prevails, but I think it is one that carries much credence. Of course customers change, as do their desires and they become more demanding, but IT really can overcome many contradictions, helping to skip customers and allowing corporations to reach simple conclusions.

A quick look at the ‘innovation pathway’ for tax discs offers a glimpse into how technological changes can motor us to the ‘ultimate solution’ to the problem, in other words no tax discs.

E-Efficiency and E-Effectiveness of Public Services

It is my firm belief that public services can be at the cutting edge of digital developments. In a previous blogs I eulogised about the savings in both customer time and actual cost that came from the Passport Office sharing digital information with the DVLA.  Yet despite so much excellent practice, there is still a lot more that could be done.

Having recently sat through two, very painful, election nights, I am increasingly bemused at the archaic paper-based system that determines the next government or our position within the European community. Hour after hour we sit there waiting for thousands of people across the land to painstakingly (and presumably, when factoring in inevitable human error, inaccurately) tot up votes, and then finally declare the decision of the various electorates. I imagine that their counting fingers and adding brains are very sore at the end of such a monotonous exercise. Sometimes recounts are even demanded. Yes, there is a sense of excitement and tradition about all of this, but the results are far too important to be subjected to what is tantamount to theatre.

The whole situation is nonsensical to me. Computers are trusted with all the money in the world but not to determine how many millions of people answered a yes/no question? I am a postal voter, I hope an intelligent one, and even I had to reread the instructions on my vote – which slip goes into which envelope, which part has to be signed – and then trust that the Royal Mail dispatches my vote safely, the envelope opened and contents diligently read. Yet, all around us, people are engaging in virtual reality, using their mobile phones to catch an imaginary Pokémon lurking in their next door neighbour’s hedge. We can manage to engage in an artificial reality world for fun, but aren’t able to use an app on our mobile phone to exercise our right to vote.

Related Article: Behold! Successful Government IT Projects!

At least Estonia has the right idea. In 1996, its government instigated a national ‘Tiger Leap’ project designed to prioritise the development of appropriate Information Technology infrastructure within the country, linking education institutions together, digitally. This project provided it with a core group of technology enthusiasts and practitioners, who could champion subsequent e-developments.

Two elements were critical to the country’s e-journey. The first of these was the development of X-Road, which according to e-Estonia.com is “the backbone of e-Estonia. It’s the invisible yet crucial environment that allows the nation’s various e-services databases, both in the public and private sector, to link up and operate in harmony.” Second was the national ID Card project, which enables every citizen to be identifiable electronically. Both initiatives provide essential digital foundations for the digital society systems to come. Consequently, Estonia was able to hold its first e-elections in 2005.

The country has evolved its e-services to the extent that Estonians can now vote at home, sign a legally binding contract via their mobile phones, access e-prescriptions and 70% of all of their medical records are online.

It is well worth looking around its website to learn more about the story and dip into the impressive array of things that it has achieved through its bold strategy to become an e-nation.

The point is, that the Estonian Government and its public services have been pursuing this agenda for a long time. Yes, we have some significant achievements, but we need to catch up, and fast. To some extent, as trailblazers, the country has carved a path for the UK Government and provides the following list of dos and don’ts to aid our digital public service journey:

• Do: Create a decentralized, distributed system, so that all existing components can be linked and new ones added, no matter what platform they use
• Don’t: Try to force everyone to use a centralized database or system, which won’t meet their needs and will be seen as a burden rather than a benefit
• Do: Be a smart purchaser, buying the most appropriate systems developed by the private sector
• Don’t: Waste millions contracting large, slow development projects that result in inflexible systems
• Do: Find systems that are already working, allowing for faster implementation
• Don’t: Rely on pie-in-the-sky solutions that take time to develop and may not work

This list reminds me of Eric Ries’s Lean Start Up methodology and its ‘build measure learn’ accelerated feedback loop. I understand that this improvement practice carries weight in some public sector IT teams and so let’s hope that our electoral system catches up fast. Perhaps then I can be disappointed at something more approaching 11.00 pm as opposed to when I wake up the next day at 6.00 am.