Lean: Crossing the Atlantic with your Coffee?

Read the stories in the UK today about the latest Starbucks results and you’d be forgiven for having no idea that they are running a Lean Thinking improvement programme.

Starbucks managed to TRIPLE their profits, whilst increasing dramatically their Customer Satisfaction, so not a bad result by any measure, I’m sure you’ll agree.

The BBC claimed “ The firm has cut thousands of jobs and shut hundreds of under-performing stores over the past two years to trim costs”,  whilst The Guardian reported “When he [Howard Schultz] retook control, he checked the company’s breakneck expansion, took out almost $600m in costs, closed nearly 1,000 stores, mainly in the US, and shut up shop for a day to retrain its legions of workers.”.

I would say blink and you’d miss any reference to Lean, only there aren’t any, not in anything I’ve read, heard or seen today.

Type “Starbucks Lean” into Google news and you get exactly 1 Hit (22.30 GMT 21/01/10), maybe this blog will make it two?

We looked for references to lean as we wrote this post Barista to Fashionista  back in May, when we learnt of Starbucks foray in to Lean Thinking, and we were intrigued to find out what effect it had on their results.

Go to the Starbucks Earning Call and the fuller story comes out.

Troy Alstead, CFO, claimed that “US store operating expenses were 36.6% of total revenues, a 350 basis point improvement over last year primarily driven by the continued application of lean principles in our store operating model plus the effect of company operated store closures.” So admittedly not Lean on its own but the improvement is hardly just due to cost cutting and store closures. Note it was the CFO talking about it too, how refreshing is that?

Howard Schultz, Chairman of the Board, President & Chief Executive Officer and Founder, commenting on what Starbucks will do in their international markets “ Now that the US business has come back the way it is and we feel it is healthy and on solid ground we’re doing two things, one is we’re doing a comprehensive audit of all the things that we did in the US business that worked, that got our customers back, that put lean in our store and things that not only were consumer facing but also behind the customer as well…..a store, is a store, is a store and we believe that we can provide many of the opportunities throughout international that we brought to the US business.” So Starbucks are convinced that lean is part of their future in the US and Internationally.

Howard Schultz also commented on the vast improvement in Customer Satisfaction “I will point out here that we improved labor management and labor costs in our stores over the past year at the same time we have seen a dramatic improvement in customer satisfaction scores.” Now I can’t be certain but I’m not sure that closing stores improves Customer Satisfaction scores or that traditional cost cutting programmes often lead to improved Customer Satisfaction and as Lean is the improvement project Starbucks refer to then I’d chance a guess that it was Lean that drove up the Customer Satisfaction. Our experience at ResQ tells us that this often happens, along with all the other benefits. (faster customer service, order delivery, higher levels of output, improved quality, increasing employee engagement etc)

So if you’re a Starbucks employee or customer outside the US then it looks like Lean is coming to a store near you and you’ve nothing to be afraid of and if you’re a competitor, how could you TRIPLE your profits and improve customer satisfaction…………?

If you have any comments or questions on the blog above then please fill in the box or drop me a line

mark.greenhouse@resqmr.co.uk or check our website www.resqmr.co.uk

regards,

Mark

Skinny view on “Lean Education”

Can lean techniques be used in an education environment?

Well why not, lean has helped improved service and manufacturing industries and is now being used in the cognitive environments, so why not to improve schools and colleges?

This article on Lean Education starts to consider how lean might be applied and okay it references the tools of JIT and TQM as being “lean”; lean isn’t the set of tools or techniques, it is really a set of principles but that aside, it is asking the question “can we improve our service to our customers?” one of the key questions to be answered under the first principle of lean and valid for all providers of a solutions regardless of sector.

However at a time when many lean practitioners are making the 7 Wastes up to 8, with the addition of the Waste of Human Potential, why can’t the same techniques be taken into education and improve the service delivered?

Could we even teach lean principles before the ideas of individual targets, batching, queuing, inventories etc take over and morph into economic batch sizes, overhead absorption rates, variance reports and the raft of information which often blinds us to the real improvements that can be made in the organisations we go on to work for?

 (most economic batch size? it’s the batch size you can sell quickly, or have even already sold that is most economic, if it isn’t you’re wasting your efforts elsewhere)

If these guys here at Lean Education are to be believed then Lean is already delivering impressive, quantified results;

• improved academic results
• time for planning and teaching increased
• budgets managed withing constraints

If anyone has tried this in the UK, let us know.

Mark

www.resqmr.co.uk

www.twitter.com/theleanmanager

Help for UK Manufacturers!

In manufacturing, ever heard of BERR? Well what about MAS? No? okay Solutions for Business?

Well if you’re a manufacturer then MAS is the one you want, the Manufacturing Advisory Service. This is the national scheme, administered on a regional basis, which can help your business to develop and grow.

MAS can offer you free advice and even substantial grants towards improving efficiency, quality, delivery times, reducing costs, reducing carbon footprint etc.

Visit the national MAS website and you’ll find a ton of case studies, events & news all related to the manufacturing sector.

ResQ are business improvement suppliers to MAS in both the Yorkshire & Humberside and East Midlands regions and you can get support for improvement projects, where 50% of our costs can be met by the MAS funding.

Does it apply to you? well there are rules; normally a manufacturer has to have less than 250 employees and turnover less than 50m euros, but these are only guidelines. In some regions even if you outsource all the production you can still qualify.

The best advice, if you’re in the East Midlands or Yorkshire & Humberside is to give us a call, 07712 669396, or drop us a line info@resqmr.co.uk and we’ll see if we can help you.

If you’re elsewhere find the number of your local MAS office and call them, they’ll tell you what is available and put you in touch with the right people to get 2010 off to a flying start!

How do you find your local MAS number?

Go to the MAS website and click on your region on the map of the British Isles and go to your regional homepage and have look there as to how your region are operating and get the number and give them a call.

Remember many MAS advisors are like ourselves, people with experience of improvement techniques in manufacturing and other sectors who now spend their time helping other businesses to improve.

Mark

www.resqmr.co.uk

www.twitter.com/theleanmanager

What Matters Now – Seth Godin

Just a quick note to direct you to a great free e-book by Seth Godin. 70 one page essays, each by a different author, on what you can to do now!

Some great ideas; some lean related, some pointing out the systemic effects, leverage, of things we can all choose to do.

Seth Godin is a marketing bloggers we regularly read, as the basis for his work is creating value for the customer, the first principle of lean thinking. 

As Seth says please pass this book on!