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”.
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.
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.
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.
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.
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.
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.
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 IOT & IOE at the moment, we are getting more efficient and better connected.
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.
Some interesting reflections on the use of “Diesel” in recent debates. Considerable negative press around particulates and NOx. There is no doubt that fumes and particulates can harm the lungs, and that we still do not fully understand the impacts of these. However, diesel engines are very efficient and power the worlds transportation, whether it be marine engines, train traction units or HGV. The unit fuel consumption per item delivered is considerably lower than that of petrol, even for road transportation. Because diesel involves less refining, the production costs vs. petrol are also lower, and thus the impact on the carbon footprint. The point here is to look at diesel from a “Lean” perspective, i.e the value add quotient.