Aspire2bLean Blog

Lean Consulting for Corporates and SME's.

-- MOVE AWAY FROM THE GREY --

Russia

I have seen some great examples of “Lean” thinking on my recent consultancy trips in Russia. A great one for “Takt Time” , and meeting customer demand for airline passengers. Not only is the immigration both rigorous and efficient at Domodedovo Airport, but they have set a standard of 40 minutes from the time when the plane hits the tarmac, to the time you clear the airport with your luggage. On each of the last 4 occasions when I have been there, my luggage was on the carousel before I got to it, and the shuttles were quick. It would be interesting to do a VSM (Value Stream Map) based around saved business time. I would imagine it would run into Bil. RUB. It would be great to see the same approach at Heathrow.

This is another example of how other countries / cultures are getting the message and moving forward, not just about saving money, but also delighting customers. As always, this driven by a business need.

Strategy founded by Vision, People Engagement & Cultural Shift

There is  considerable debate about strategy, both ongoing or as part of a new initiative or launch . Company or project strategy needs to linked, or support the “Vision” . It can take time to build a strategy, especially if you are working in a complex environment, multiple inputs and/or multiple stakeholders. If we want to achieve ROI on our strategy, it needs to be understandable , drive employee engagement, involve an element of cultural transformation and be executable. The cultural transformation is the hardest piece, because this will require individuals to change. People are creatures of habit, and don’t like change. Significant change always pushes people out side their  personal comfort zones. There is an argument that says we can get our strategy to fit our current  culture, but there is a high chance in the rapidly changing market place, we will end up sub optimising our strategy. I recently heard a great quote in a presentation, “Culture eats Strategy for Breakfast”.

So how do we effect the “Cultural Transformation” ? I view cultural transformation as the synthesis of 3 key elements. Firstly we need improved systems, which is the transnational piece of work. We then need people to behave in a different way, or make a behavioural shift. The first two need to be supported by passion or energy, which is the “engine room” for the required change. Those at the top, or responsible  for the strategy  need to be passionate, and their passion must be visible. In my experience passion generally propagates by osmosis. The behavioural shift is achieved through, training, capability building, coaching and role modelling  which can take a significant  period of time. If we are going to enact the strategy , the plans that support it need to be  SMART (Specific, Measurable, Action Oriented, Realistic and Time Based). If you think about that acronym, we actually need the plans to be “Lean”, i.e. minimal wastage and fit for purpose. An effective strategy can be visualised as the 3 cogs of Vision, People Engagement and Cultural Transformation meshed together.

A strategy that does not have the elements of vision, people engagement, and cultural transformation, will have a higher probability of failure or re-drafting. Having to re-draft a strategy, or move it away from its natural evolution, is a significant waste of time and money. With these elements in place, then there is a good chance that the strategy will succeed, but it could take 3-5 years.

 

Lean is Alive & Kicking

Some commentators have said that “Lean” has had it’s day, with the majority of western manufacturers, and those in the developing world, having run lean and similar programmes. These programmes show up under other guises such as “Production Systems” and “Operational Excellence”. However the fundamentals of these are founded in Lean . Lean has always been about continuous improvement and development.

“Lean2” is firmly here,  because some programmes are failing and have failed. This has happened for numerous reasons, such as lack of drive, passion, energy, significant business restructuring or just turnover of key leaders. Global instability is creating a renewed business need, and the smart companies are engaging in programmes. We are seeing an upturn in demand. In these cases it is not just about the tools or specific approaches, but the “Lean Mindset”. It was ever thus, but some companies never really grasped this. The mindset is about hunting waste and transforming culture in a way that enables this to happen. This is where EI plays a significant part in the improvement, and those who can coach as well as consult have a significant advantage. We are seeing more and more referrals for these specific skills. In our view this will increase exponentially, as global and regional uncertainty increases. It is critical to get inside the heads of those who can make a difference at the execution level, and also support those leaders and “influencers” who have a passion for change.

Fundamentally it is simple. It is about improved processes, behavioural shifts and a passion for change. Those organisations who grasp this will win.

ESOS (Energy Savings Opportunities Scheme) Gaps

 A number of companies have failed to comply with ESOS. This in turn has lead to an increase of legal proceedings against those companies. Seven percent of the obligated companies have failed to comply, and the EA has so far served 353 notices for those who had not met the extended compliance deadline of April 2016. Qualifying companies are UK legal entities (whether part of a larger corporation or not) considered as a large undertaking, with criteria such as more than 250 employees and a turnover of Eu 50 million at the qualifying date in 2015. In total the EA has received 6841 compliance notices. Fines  for non-compliance can be significant with a maximum penalty for failing to provide an Energy Audit being £50,000 with a further £500 per day additional fine for continuing to breach, up to a maximum of 80 days.

The fines are just one aspect, and loss of reputation is also critical for some, and should be for others. However, there is a huge missed opportunity, which of course is the energy audit itself. The energy audit/assessment is a brilliant opportunity to potentially save money year on year with potentially minimal capital investment or supported via a grant. It will also help with your eco-credentials.

It is not clear what the future of ESOS is, but we are now in the second compliance wave. I hope this approach is rolled out to smaller companies as it will benefit them, and the economy in the long term.

Electoral Jitters

 

As we get closer to a UK election there is a lot on peoples minds. The “snap” election has postponed slightly the “Brexit” discussions /negotiations. However, whatever the outcome of the election, because both the main parties have vowed to see “Brexit” through, business will have to be leaner and fitter than ever before. I have talked about speeding up the decision making processes before. Not only do businesses need to get their act together in their own facilities, they also need to look at the supply chain, and ensure they are protected without interruptions.

If their are opportunities to bring facilities back into the UK to both shorten the supply chain, and to mitigate against higher potential costs abroad (exchange rates), government funding may also available to support this process. Match funds are available through the LEPS (Local Enterprise Partnerships ) . Furthermore the Manufacturing Growth Programme has been initiated recently, similar to the old MAS, which provides the opportunity for qualifying companies to get significant rebates for associated tranches of consultancy, similar to the services we offer.

As I mentioned in my previous blog, governments also need to get smarter, such as removing unnecessary bureaucracy , that allows companies to make investments, purchase land, and also have the correct infrastructure in place to expand. A “Lean” mindset is critical for delivering on this. A leaner business does not just have lower operating costs and working capital, but it will be more agile in the market with a greater chance of surviving the turbulent times.

If you are interested in support, please take a look at our moving forward page and contact us.

Humans & Machines in Harmony

 

We know technology is advancing at a rate, but I have become aware of a great example. There was a recent article in The Economist around how a German online retailer OTTO, who are utilising AI effectively to improve the performance of their business and customer service. OTTO used technology developed by Blue Yonder and a deep learning algorithm originally developed at CERN for particle physics experiments, to analyse 3bn previous transactions with 200 variables. These included previous site searches. Armed with this capability they were able to purchase over 200,000 items, predicting what will be sold in  30 days with a 90% accuracy.

OTTO are clear that they see this as performance enhancement, not human job reduction. Interestingly Juergen Maier ,UK CEO of Siemens when asked  a similar  question on AI on last weeks Question Time, stated the same. Commerce and Industry needs to up-skill in order to programme the robots and develop systems. We need to invest in the right skills to have the right economic growth. I have written about AI in a previous post, it can be a very powerful tool, but in the race performance there will need to be checks and balances on efficacy. It raises an interesting question about how far AI can really go, but we do know that global companies that are managing their data effectively, are becoming the economic super elite. Companies that are close to point of use are certainly getting “leaner” in terms of workforce, but we must not forget the service / IT jobs that are created behind it. Furthermore, if there is better order accuracy and less physical waste we are moving to a more sustainable planet. OTTO have won awards for Corporate Social Responsibility.

 

 

 

Lean in Retail

 

I stumbled across a great article about Aldi and their continued pursuit of Lean. The article makes it very clear that Lean is not just for manufacturing, and although Lean may have lost some profile over the last few years it still very much has resonance today. Some say that Aldi’s current success is down to its models and market positioning. That is true, but how did they get to that position ? Lean thinking and principles which are referenced in the article allow businesses to get to a competitive market position. All too often Lean is just perceived about removing unnecessary waste and cost, but effective Lean drives flexibility, adaptability and agility. These are the key elements that allow businesses to have a strong market position. The article also references how Aldi have engaged their workforce, to increase their Lean bandwidth and achieve even more. Aldi also multi-skill their workforce to allow maximum flexibility, alleviate boredom and improve overall effectiveness. This is exactly what the manufacturing sector have been doing for a couple of decades. With the pressure on the retail sector, and the relentless competition, one may think that the staff remuneration would be low. However, Aldi also pay above the average sector pay. These savings  allow Aldi to pay above market rates, and entice the most capable staff. They have an empowered and a motivated workforce to deliver on future improvements, and cost savings. The improvement cycle repeats itself. They will also be taking waste out of the all their administrative processes . A Lean mindset drives the removal of waste everywhere.

Aldi know their customers, and what drives them to there stores, which is both quality and value. They keep their product range / variants to what the customers will buy. This is analogous to a manufacturing operation optimising their SKU’s to reduce unnecessary processing and raw material costs. Again this is classic Lean. Aldi use this practice to gain procurement leverage with their suppliers and pass the savings on to their customers. This creates loyalty with their customers. Some of their competitors open for long hours. As they know their customers well, and there is no need for them to be open for the hours that some of their competitors are. This saves time, salaries, energy cost and even wear and tear on assets.

Aldi  are also connected to the community and fund local events. This is yet another side benefit that builds further brand equity. Aldi are reaping the huge benefits of Lean, and the self-fulfilling circular improvements that Lean creates.

 

 

 

Connecting “Waste”

I thought that this picture is an excellent illustration of how different operational wastes are “Linked” together. The four key physical wastes in any operating business are “Process”, “Energy”, “Effluent”, and “Transactions”. These are not mutually exclusive. If you have process waste, i.e. inefficiencies in making your product, you are likely to be using more energy than you absolutely need, and creating unnecessary effluent in the form of defects or recycles. Underpinning all this, will be a management process or transaction that is driving the others. This is is how they are all linked, and another justification for  more simplification. If we look at the four electrical plugs we can see how these could represent the four wastes, and the totaliser above indicating that the whole is greater than the sum of the individual parts. We can use this as a means of showing our teams to challenge “Waste” as a means of reducing costs and driving a sustainable business. This “Lean Mindset” is the way we get staff to act as “Waste Hunters” rather than just Process Engineers and Statisticians.

Artificial Intelligence

There was an interesting point of view from Daniel Dennett (Philosopher) on BBC Newsnight last night on AI. Computers are getting faster and smarter, but are we truly building AI, with more clever algorithms. His view was that we are creating “Super Tools”, which is an interesting perspective. With all the buzz around IOTIOE at the moment, we are getting more efficient and better connected. This is of course is a classic “Lean” , i.e. reducing waiting time, defects, motion etc. However a powerful tool is only as good as the person using it or driving it. This was in part Daniels’ point. In any system or approach it is important that all those affected by it, or affect it, (guardians) fully understand the scope and purpose of  the system or approach. One could argue that in a fast moving approach that in a fast moving environment, critical understanding of these parameters could hamper progress. However, I would argue that when systems start to become self driving or perpetuating, that also generates unnecessary waste, and its corollary a lack of understanding. Furthermore we all  have already experienced the wastage of unnecessary complexity, and the confusion it can bring.  Interesting times ahead as we don’t want to hamper technological innovation, but make sure that we don’t generate waste in the process of trying to remove it.

Taking “Waste” out of Administrative Processes

There has considerable focus on “Manufacturing” processes in the context of “Lean” & “Waste”. When people have time to think, they realise there is real “Waste” in all of the administrative processes. This is sometimes forgotten. If we start to think about some of the huge financial decisions that are taken daily by governments and corporations, these all have complex processes and analytics that sit behind them. The impacts of failures or defects can run into billions. The concept of the “8 wastes” has been well established for manufacturing and engineering for decades. We can start to think about applying these “challenges” or concepts to administration. As an example, “Defects” ( 8 Waste #1) can apply in an administration process. This can be as simple as a miss typed letter or fax, and adding or removing a zero to a deal can have an enormous impact. Even if this is caught before it is too late, there has been a delay in the process, which in itself can have a financial impact. This is in addition to the time associated with getting it corrected. Every error has a waste, a touch point by an individual, and a multiplier associated with all those involved.  Data in a recent CNBC article suggests that spreadsheet errors can cost billions. This is a huge opportunity for standardisation, which is one of the cornerstones of “Lean Thinking”. Furthermore, delayed or inefficient decision making can cost vast sums of money. This is another opportunity for a lean approach. Poor decision making processes usually encompass at least seven of the eight wastes, if not all of them. Think of the “Waiting Time” ( 8 Waste #3), and how that has a huge negative effect on the decision making process.  However, help is at hand. By following lean principles/approaches and working on the “Waste Free” mindset, these associated losses can be significantly reduced or eliminated. We managed to significantly improve the decision making processes on multi-million CAPEX expenditures for a major UKR conglomerate back in 2014 with a lean approach. Decisions were taken more rapidly, and unnecessary recycles avoided.

I refer to my recent blog post on decision making in the post “Brexit” environment, the opportunities for better and more sustainable results through effective decision making are immense.