Lean Management – Do you know the rules of your game?

English football wakes up this morning with a bit of a problem. A previous captain of the national team, who plays central defence and a forward who is key to the future, both appear to be unaware of the true Laws (Rules) of football.

So what has this to do with Lean Management? we’ll come to that soon.

So why do we think there may be a problem? well according to the BBC they have both tweeted today

0923 FOOTBALL: Manchester United striker  Wayne Rooney on Twitter:    “Funny how people think I got Kompany sent off. I’m not ref. I didn’t give red card. But it was a clear red card. 2 footed tackle.”

0902 FOOTBALL: Manchester United defender Rio Ferdinand on Twitter:         “How can there be any debate about the red card yesterday? You leave the ground with a #2footTackle = Red card #fact.”

Both Wayne and Rio are alluding to the fact it’s a two footed challenge and therefore a red card - only the strange thing it isn’t.

According to the FIFA and FA rule books there no set rule about 2 footed challenges. In fact there isn’t a clear rule for one footed challenges.

If you want to read the rules on 2 footed challenges, fouls, misconduct, red and yellow cards etc then go to this FIFA document and go to page 34 onwards; Laws 12 and 13 is what you’re looking for. 

There is a rule that refers to serious foul play or violent conduct, one that talks of reckless play and tackles etc but no specific rule about 2 (or 1 footed) footed tackles.

When it comes to Lean Management we have a technique called Value Stream Mapping which often requires the “mapper” to go to the place where the work (activities) is done and watch, observe and ask questions.* All in the process of understanding what happens and why.

During the map building process you often find two things start to come out;

1. There is a process that each individual carries round in their head – some of it is right, some not so. This process is driven by “rules” as to what is done when, by whom, to what standard, in what timescale etc.
2. There is the real process, often with many more activities than anyone can guess. This is often due to

rework, duplication, moving parts/information around, copying and pasting data, delays waiting for info etc.

We’ve seen many examples where staff and managers have not been aware of the “rules” by which they and their teams operate or the “rules” they carry round with them.

These “rules” are often so ingrained into organisational culture that no-one asks whether they are true – they become the accepted norm.

So the question today is;

How many rules do you have, in your day to day work that you’ve never questioned?

How many are rules are right and fit for your business? you can start that tomorrow.

* – the “mapper” may not build the Value Stream Map – often they will aim to get the staff involved to do it but they need to be able to direct and help ask the right questions to help build the understanding.

Lean (Super) Marketing – Price & Promotion

Quiz question : Can (beer) you (nappies) think of (coffee) products (biscuits) that are (cereals) always (cordial squash) on price promotion in one (pet food) supermarket (toothpaste) chain or (deodorant) another?

Today it’s being touted in the Telegraph today that Tesco will start a price war by reducing prices.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8780284/Tesco-to-start-supermarket-price-war.html

The article also takes the view “Unlike most “price war” announcements, analysts expect this to materially alter the profits that Tesco makes in Britain”.

How could it be?  how will it affect profits?

Well the article talks about fewer buy-one-get-one free promotions and more low, round prices.

 Imagine you’re a supplier and a supermarket offers you the chance to take part in a “bogof” promotion.  Let’s look at the simple mechanics of these promotions;

You are selling at a rate of “packs of product per day”, [SKU's to use the jargon] suddenly this rate can start to rise to 4, 6, 8 times that amount. (remember you are on bogof, so doubling of sales rate is a minimum!)

So where do you get all the spare stock from? you make it in advance of course on overtime.

You store the finished goods in additional warehouses ready to go out but remember you need bigger warehouses. You’re going to sell 4,6 times what you normally sell.

Oh and you’ll need to store the increased amount of raw materials as well.

You’ll have to try to forecast  the demand across your different flavours and pack ranges e.g. if you only offer the 500 gram pack on bogof what happens to the 1kg pack sales? 

As the promotion runs, you may well need to run production for longer hours and incur overtime costs.

And the supermarket, well they need more space to put your products out there, they need more transport to get the products out, so you see this “free” promotion seems to be increasing the costs to every one but us, right?

The consumer in the meantime is building a nice little stock of “free” goods at their end of your product, which leads to two behaviours. 

1. they don’t buy your (or your competitors) product for a while, they’ve got a stock at home.
2. they end up throwing it out and they didn’t need that extra pack but hey it was free.

So what happens to your business at the end of the promotion?

Demand drops back and probably to less than before, the customers have got spare stock in their cupboards right?

Another competitor starts a promotion in the supermarket, be it another brand or the supermarket own label.

So now you have production lines with not enough to do, so what do you do? you go to another supermarket and offer a price promotion, yeah!

Here’s the quiz question again : Can (beer) you (nappies) think of (coffee) products (biscuits) that are (cereals) always (cordial squash) on price promotion in one (pet food) supermarket (toothpaste) chain or (deodorant) another?

I’m sure you can think of the brands.

So what might your accounting team say about this?

Well you’ve given products away for “free” and incurred additional overtime and storage costs, never mind the raw material you started with. So will they drive up the normal cost of the product to cover these costs and to make the “free products” less of an effect on your business? You can decide that.

The benefit of going to Every Day Low Prices is two-fold, in our opinion, based on Lean Management;

1. The consumer only buys what they need and not any thing extra because it’s ”free” - this is better for our food waste figures and our waist figures.
2. The suppliers stop having to manage major swings in purchasing patterns, when in fact consumption is relatively stable. Do you really buy use toothpaste twice as fast because it was on BOGOF? So they get on with managing the costs in their business and can focus on reducing these.

So moving away from free products can have a major impact on the whole supply chain. It can reduce the costs and complexity of managing the chain and affects all of our waste [waists]. The reduction in costs can be passed onto the consumers but if you don’t pass all of it on, then your revenues may drop but your profit & margins can increase.

How much waste is there in the Service Industry?

Over the weekend a question was posed to me via Twitter (@theleanmanager if you’d like to follow) about the amount of waste (wasted time) in the back office of banks/service/insurance operations. Now I took this to mean the call centres, data processing centres, mail rooms, customer response teams etc.

The guys asking the questions @wisemonkeyash and @channingwalton  wanted to know could it be as high as 90%? (Update: we do know that in some legal firms the time to process matters is being improved by 50%, by using lean thinking, indicating that wasted time could considerable in the professional services sector.)

I decided I should expand upon my 140 character replies, which were based on my experience.

Variation of demand is the first factor to consider i.e. what does the busiest day (for demand, not completed work) look like and what does a quiet day look like and what are the patterns the peaks and troughs for the demand.  

What causes this demand, the peaks and troughs? Our experience? it’s normally another part of the business which generates and stokes the demand and therefore changes here can reduce the peaks.

This could be letters with incorrect details, mass direct marketing mailing, customers chasing progress etc

This variation often causes capacity (people) to be 50% more than required to achieve the current results.

The implications here are that you can deliver improvement by changing something outside of the back offices, without changing what many individuals do – making continuous improvement more readily accepted.

Remember that so far we haven’t looked at the waste in the activities undertaken in these departments. Now as a lean person we look for the 7 hidden wastes, yes I know others have 8 or even 9 but we stick to the 7.

To give you just one example, have you rung a call centre, in the last 6 months,  to be told ” I’m sorry the system is a bit slow today”?

Sometimes that is genuine, the system is slow, it may be that the networking is slow or the server needs upgrading or the PC workstation is old. So say you have 50 agents handling 20 calls an hour? how much time are you wasting because the technology isn’t up to speed?

The more common reason for ” I’m sorry the system is a bit slow today”, that we see is that staff have two screens in front of them and they maybe running 4 different programmes at once. As the programmes can’t transfer information directly to one another, the staff take info from one system, send to their own e-mail, cut and paste it into another programme and then have to delete the e-mail.

This is just one example and adding up the rest we often find that 50% of the activity time is wasted.

What does this mean  overall?

If we start with 100% and 50% is waste due to Variation demand, this leaves 50%.

Of the remaining 50%, we reckon 50% is wasted time, so we get to the figure of 25% (50% *50%), or 75% of the work can be classified as waste.

Remember this is based on what we have seen, so not as high as the 90% the guys originally asked.

Within an hour I spotted this article all Aviva shakes up it’s Customer Service  from the FT, which shows the global serving UK based insurance firm Aviva put the waste figure in call centres as 60%.

It’s also worth noting that Aviva thought it was completing work in 5 days, in reality it was taking 39.

How can this happen? well sometime companies split activities into discrete chunks and add up the time each chunk takes, assuming this equals the processing time. They forget the handoffs and delays that each happen between each activity. We’ve definitely seen office work with activities of an hour take over 10 days to complete in reality.

Okay there is a variation in the figures but should we split hairs on whether waste in offices is 50% as in the professional services firms or 60% – 75% for the back offices and call centres, the reality is that the waste appears to be relatively large, though maybe not as large as the 90% that started the question.

Do you have any views on what the waste could be?

Lean Office & Management Training

The training referred to below is currently being revised and upgraded. Please visit our new website www.Levantar.co.uk or go directly to Lean Office Management Services page on the website.

 

Despite the inflationary pressures and ups and downs of the wider UK economy, UK manufacturing has continued to grow both in terms of outputs and productivity. Indeed in recent observations the most resilient manufacturing firms will be those exporting. This in a sector often more linked with exporting jobs not products!

Can service organisations and office departments learn from the manufacturing firms and departments? learn the continuous improvement techniques that have made these firms more efficient, more productive and more resilient?

learn how to

• increase the capacity of their departments,
• get through work faster,
• reduce errors and
• positively impact cash flow!

Can service organisations learn how to get more out of their current resources? How can non-manufacturing departments support the shop floor improvement initiatives?

Lean thinking techniques which have been prevalent in UK manufacturing for many years have been translated and applied in offices, distribution and retail environments by many companies including Tesco, Zara, HMRC, Starbucks etc so these continuous improvement techniques can be applied outside of manufacturing to departments such as marketing, sales, accounting, hr and they deliver results in the form of Lean Office and Lean Management.

It gets better in the UK if you’re in Yorkshire or Humberside, not only can you learn the techniques but you can get 50% towards the investment in training. There are no restrictions on sectors, business size or turnover, you must be privately funded though. (Public sector organisations and those outside the Yorkshire & Humber region can complete the course and get the qualifications but the funding is NOT available to them)

The training runs to a total of 24 hours of training (3 days or 6 half days) + a work based project and leads to a qualification for the attendees and the course is overseen by Leeds University Business School and MAS Yorkshire & Humberside.

The article Lean Office, Lean Management Training - Yorkshire and Humberside details the specific offer and how to get the training course (3 days, 6 half days etc) for an investment of just £750 per attendee.

Courses can be tailored to the specific needs of a company if it wishes to put a number of staff through a course.

The Lean Office course is one of  9 continuous improvement courses that follow a similar framework, 3 days of training, work based project and qualification via Leeds University Business School and Manufacturing Advisory Service through their Manufacturing Masters programme and they can all be funded.

Getting the Order out

In the last year UK Manufacturing grew productivity by 5.7% (source EEF),this means that many manufacturing companies will be

1. better at getting products and orders out on time – that end of day or Friday afternoon last minute chasing of jobs is reduced,
2. increasing the margins and profitability of their business,
3. improving the quality of what they send out,
4. starting to sleep better at night knowing that they can pay bills when they come due. 

So just a couple of thoughts?

• Have your team (managers and staff) delivered similar improvements? more products and orders out on time, increased profits, better quality,  and confidence that the business current account can pay the bills!
• Are you getting better returns, every year, from the same levels of investment in people, machinery, raw materials?

If not, how could that be? remember 5.7% is an average, so some companies will have gained much more than this and the cash that goes along with it*

If you haven’t had such gains,

• Do you and your teams have the time to look for productivity improvements or does the day to day get in the way?
• Do you think your teams know where to look for productivity improvements?
• Are they too close to the work to give you an objective assessment of what could be improved?
• Would you like to get to the answers (& the cash, the improved performance it brings) quickly?

If you’re a manufacturing business owner or a manager who’d like to find out whether you could be getting better returns for your investment and improve your productivity there is a FREE scheme that can help you find out.

A FREE scheme? well it’s the Manufacturing Advisory Service which is one of the few business schemes which has survived the Government cuts.

What do you get for FREE then? you get to meet with an experienced manufacturing professional, normally at your own premises, so no travel involved, who will

• listen to what you want to achieve, what you need to achieve to keep customers onside
• understand the challenges you face (cash flow, quality, skills, etc)
• appreciate how the experience, expertise and skills you already have can be built upon

from that they will be able to decide whether they can help and IF they can they will provide the names of accredited companies, with the relevant skills in Lean Manufacturing, ISO 9001, ERP, Product Design etc who can help you to improve your productivity.

Nearly forgot to mention the £6,000 FREE investment for productivity work. If you decide to invest in productivity projects, with an accredited supplier, then you could get up to £6,000 towards the costs.

Lots of paperwork? hoops to jump through? not normally, your advisors can help you with the small amount of paperwork to be filled in.

Do you qualify? Do you employ less than 250 employees? have a turnover less than 50M euros? see most companies will qualify.

ResQ currently complete work for MAS in Lean Manufacturing across Lincolnshire, Nottinghamshire, Leicestershire, Derbyshire, Humberside, Yorkshire ( East, West, North and South ).

If you’re in these areas and you’d like to know more about MAS then give us a call (01904 277 007 or 0115 711 7007) and we can see if we can help.

Outside of the areas above then go to the MAS website and give them a call.

Two companies that achieved much more than 5.7% are detailed below.

Case Study 1 – Lean Manufacturing FMCG, Warehousing & Distribution Company gains 14% Productivity increase.

Case Study 2 – Lean Manufacturing Printing Company gains 40% more capacity.

* the two companies in the case studies above gained 14% & 40% improvement by using Lean Manufacturing and Thinking techniques, we completed the work for them via the MAS scheme. 

This time next year you could be confident that customer orders are being

• delivered on time,
• delivering increasing profits,
• safe in the knowledge that your business can pay its own way!

Oh and you may find you’ll be making 5%,10%,15% even 40% more this time next year!

Venetian Warships, Faster Horses and Legal Firms.

When a US law firm wanted to find a way of becoming more efficient and deliver legal matters more effectively they turned to a set of techniques that have their roots back when the Venetians built ships at the Arsenale, techniques continued by Henry Ford, once he’d noticed his clients wanted faster horses.

Today that law firm is lauded as being “5 years ahead of every other AmLaw 200  firm” and now claims to deliver legal matters some 15 -50% faster than before. Not surprisingly this has driven down costs, driven up satisfaction and helped to secure new customers.

On the 6th April 2011 Mark Greenhouse of ResQ will be presenting to the Yorkshire Law Society on the techniques that can be used to improve the speed of delivery whilst reducing costs and how this will affect firm profitability and pave the way for true Fixed and Alternative billing to take place.

For details visit Yorkshire Law Society Continuous Improvement in Law.

If you’re not in Yorkshire and would like to find out more then drop us your contact details on info@resqmr.co.uk  and we’ll get back to you.

Thanks,  Mark

Lean Management & Continuous Improvement – Is your Law Firm ahead of this Organisation?

The Association of Corporate Counsel has noted that the company in the article below is “five years ahead of every other AmLaw 200 firm” because of its Lean & Continuous Improvement programmme. A programme based on management principles already proven in many other sectors and departments to deliver;

• lower costs, (increases margin)
• faster responses, (improves cashflow)
• better quality,
• and improved customer satisfaction.

Get the article here; Continuous Improvement in Law Firms – LeanThinking in Legal Services (the article was first published in September 2010 in the Law Business Review).

Alternatively visit our new website at levantar.co.uk.

If they are five years ahead of US firms, what about the UK, do we have any organisations looking at this, who could claim to be five years into a lean thinking implementation within the legal sector?

We are presenting to the Yorkshire Law Society, on this subject in April this year.

Do you think that Lean Management programs will work in the UK legal sector be it, law firms or general counsel?