Category Archives: continuous improvement

Legal Process Improvement, Cola and Lorries

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 ?

Stobart Lorries

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.

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Re-engineering the Business of Law

  • How can I apply resources more effectively?
  • How can I shorten cycle time?
  • How can I lower the cost of the service?
  • Whilst raising the customer service?

J.Stephen Poor, chairman of Seyfarth Shaw, in his article for The New York Times, financial news service DealB%k, offers that lawyers today should be asking these non-traditional questions to meet the changing demands of the buyers of legal services.

What experience do Seyfarth have in this? well if you’d like to read Continuous Improvement in a Law Firm , you’ll get an idea of the results they achieved through their SeyfarthLean program, within the practice.

Secondly, Seyfarth, now advise General Counsel in adopting these techniques read about it in Lean Consulting from a Legal Firm ?…

Stephen goes on in the article Re-Engineering the Business of Law, from DealB%k, to share three core lessons from the, Seyfarth, experience of change;

1. Be Prepared to Examine and Reimagine the Business Model

He talks of the use of Lean Six Sigma borrowed from the Lean Manufacturing sector, in his law firm. He mentions that this has resulted in various tools, analyses and process improvement techniques intended to drive efficiency into the delivery of legal services – at ALL levels of the business.

Free Continuous Improvement Guide for Legal Firms – is our free insights paper in which we examine the 7 Frustrations found in many law firms and departments.  Frustrations that lead reduce efficiency, hold back service delivery and increase costs.

If you have these frustrations then they will be wasting your time and effort.

The guide shows you what we look for and explores in more detail what improvement means for law firms.

We would add that if you have competitors doing things different, faster, cheaper than your organisation ask yourself

“What does the Customer see?” if they see the same service, the same output, how are you going to match it?

*We often use the word customer to replace client in our terminology.

If potential customers see both you and your competitor outputs as being the same, adding the same value; it might just be time to ask “How are they doing it, quicker, faster, cheaper?”

2. Don’t Settle for Half Steps

Process improvement is only part of the solution, it is never the complete answer. Seyfarth realised that trying to drive different behaviours would require them to address issues, such as associate evaluation and to re-examine their staffing models.

If you change how you do business it’s not unreasonable to realise you may need different metrics to measure it and different levels and numbers of skills within that business.

Stephen notes that “The point is not that our path is for everyone. The point is that the willingness to change and adapt business models must anticipate and address the variables that drive organisational success.”

He also makes the connection that “Marketing efforts are lovely; certainly, we all do marketing. But if one is to truly evolve a business model, the only way to avoid having it become simply a marketing effort is to recognise that it must drive through all parts of the organisation.” This is something that often change processes have failed to grasp, regardless of industry.

If you want to see our 2 page paper Legal Process Improvement v Marketing to see which has the greater effect on business performance then drop us a line , mark@levantar.co.uk or call Mark Greenhouse on 01904 277007.

3. Never Underestimate Resistance to Change.

“Never underestimate the resistance to change from lawyers”

Our experience tells us that every sector has its fair share of change resistors because you are dealing with people. Nonetheless these people have reasons and beliefs for not changing; our challenge and yours is to enable them to see what change is and why it is required and how they can contribute and shape it.

Stephen shares that they did “not anticipate the resistance from other crucial stakeholders – especially clients. Much of what we’ve done is most effective when deployed in a collaborative change process with clients.” This is based on the key learning that most of their clients are lawyers too, involving them in building the business case was critical.

If we can offer a tip here.

Many of your clients are working in organisations that have departments and personnel looking into improvement, many use lean or process improvement techniques. These people may not have made their way into the legal departments of your clients, why not invite them in?

His final notes could be applied to any sector;

“The nature of the process requires a continuous, but slow march toward improvement and adaptation. Some things we tried worked and some did not. Nevertheless, the continuous move forward takes persistence and, perhaps, a bit of stubbornness.”

Levantar have been promoting the use of Lean management tools in Law Firms, in the UK. contact Mark Greenhouse on 01904 277007 for more details.

Click on Lean Legal Process Improvement to find out more about the services offered.

About the Author

Mark Greenhouse has been working on the application of Lean management 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 Operations Management . 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.


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?

About the Author;

Mark Greenhouse has been working on the application of Lean management 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.

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.

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?

** You can get a FREE copy of our latest 2013 Lean Management for Law Firms  handbook by clicking on download** The original article continues below

Click here to download FREE Lean Legal pdf guide

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. The 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?

About the Author;

Mark Greenhouse has been working on the application of Lean management 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.