What do Legal Process Improvement, Cola and Lorries have in common?
Back in 1997, an established company, in a relatively mature market, looked outside of their industry for ideas on improvement.
They saw one which might just work and set out to learn more about it.
So it was that one cold January morning in 1997, a group of Directors from operations, finance, purchasing and distribution gathered, along with a group of experienced process improvement people.
Their starting point? a retail store where the customer (not the consumer mind, they are often different) bought the product they had selected to observe; a can of Cola.
They then traipsed from store, to the RDC (Regional Distribution Centre), warehouse to you and me, to the finished goods storage at the factory, the production filling line and ultimately the can production supplier.
At that time the whole process consisted of 150 “touch-points” which involved human intervention and they determined that the number of days from the start of the process to the end was 20.
These touch points may well have included paperwork handling, reporting, duplicated effort, dealing with re-work etc or finding the 7 Wastes that exist in many organisations.
All along the process the team was encouraged to ask WHY?
- Why are products missing from the shelves?
- Why does a sales associate need to re-sort products from roll cages that have just come off the truck from the RDC?
- Why is so much stock needed in the back of the grocery store, at the Tesco RDC, and at Britvic’s RDC?
- Why are there huge warehouses of cans waiting to be filled near the bottling plants?
The team had been encouraged to borrow and adapt Lean Management techniques to improve their product supply chain.
After improving the process the number of “touch-points” had been reduced by 2/3s to 50 and it now took only 5 days to move product from the start to the end of the process a 75% reduction.
Normally this is where analysis of the process improvement would stop, however consider …..
The Cash Flow Effect #1
- You buy a raw material on day one. You are invoiced to pay for it 30 days later, on day 30.
- You convert the raw material into a product, paying for energy, labour and transport, again often in arrears.
- Now you sell your product on day 5, getting the money direct from the customer.
- For 25 days or thereabouts you are sat on the money for the full value of your investment in materials, people, transport, energy + your margin
Any surprise that you decide that later that year you decide to go and develop your own bank proposition?
Which was the business in question? It was Tesco who were understanding their Cola supply chain.
If you want to read more about this full story go to Teaching the Big Box New Tricks
What does Tesco Cola have to do with lorries and legal process improvement ?
Who are one of their transport partners, who provide lorries? Eddie Stobart.
The same Eddie Stobart, who are now bringing “Stobart Barristers” to the legal market.
Before you dismiss them, note I’m not going to pass comment on the branding, or the marketing just the operating model here, consider that;
According the Stobart Barristers website there are normally 14 stages to the old way of conducting business with a Barrister via a solicitor.
Their new way, has only 4, a 60%+ improvement.
The new way doesn’t start till after the 5th traditional stage; okay the two process aren’t completely comparable but it would appear to be the closest stage.
They even state;
“We hate waste. We work hard to minimise non-productive time and maximise the utilisation of our fleet. It’s the same with the law – we think dealing with legal issues the old way is just wasting money.”
They don’t say how much quicker the new process is but if it has less than 1/3 the original interventions it really should be considerably quicker. Does a 2/3 reduction in “touch points” sound familiar?
They go on to state that “Compared to doing things the old way, most people find they save at least 50%!”
There is one interesting sting in the tail;
Under the traditional way the customer pays for the service after they’ve received it, they may in some cases pay part of the fee, part way through, with Stobarts they pay at the start.
The fee is fixed up front and the customer pays up front – in order to compete against this you have to consider how much customers like to know what they are paying.
In 2010, 25% of customer were surprised (negatively) by the price they had to pay for legal services *.
You also have to counter the claims of a quicker service; in an era where insurance can be arranged over the phone, mortgage applications tracked by sms, how can you improve your speed?
In 2010 again, 30% of deliveries of legal services were late or took longer than expected *.
The Cash Flow Effect #2
What are the odds that Stobart don’t get invoiced till after the work is completed by the Barrister and then it will be on 30 day terms – thus creating a handy positive cash flow.
Now where did I see that before?
If you want to find out if you have excessive multiple touch points then you can by clicking on this Lean Guide for Legal Practices & Departments you’ll be taken to our page which has a number of free articles and a guide on how to start a conversation in your business about finding the hidden wastes in your legal practice or department.
* – Ministry of Justice: Baseline Survey to Access the Impact of Legal Services Reform, March 2010.
About the Author
Mark Greenhouse has been working on the application of Lean management and process improvement in Legal and design led Manufacturing companies for the past 5 years. His own Lean journey started back in 1988 when he started study of Production Engineering. He’s applied lean in many organisation types, finance, call centres, banking, FMCG etc. Mark also provides lectures on operational management at Leeds University Business School.