Aspire2bLean Blog

Lean Consulting for Corporates and SME's.

-- MOVE AWAY FROM THE GREY --

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.

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.

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.

Lean & Climate Change

I recently attended a webinar run by the I.Chem.E. on and the following climate change initiatives post COP22. It finally looks like the engineering institutions are coming together as one, and working with politicians, technologists. This is a critical step in the process as engineers make it happen. There was a lot of debate about carbon credits, and  fossil fuel subsidies. Although there is a lot of drive from environmentalists and believers in the political arena, history has shown that significant change ultimately happens when businesses understand the need and buy into it. As one participant mentioned this happened with the behavioural safety culture 30 years ago. Businesses will buy into it, when they see a need for it to sustain their operations. This is where engineers can really get traction, as they are the ones that make things happen at the sharp end. Furthermore, engineers, technologists and operations managers who have a “Lean” mindset will really make it happen. Lean thinking is fundamental to business improvement and long term sustainability. By eliminating “Process” and “Transactional” waste, this saving money alternative forms of low carbon energy can be utilised. The more that low carbon energy is used, the greater the economies of scale, and the greater the long term returns.