Category Archives: lean service

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.

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.


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.

Free Lean Management Training Course

From time to time, we offer free training via other organisations.  One such organisation we work with is Leeds, York & North Yorkshire Chamber of Commerce.

On the 25th March 2011, in Leeds, we’re offering a free 2 hour insight into Lean Management techniques. This is about how Lean can be applied across all departments in any organisation, so it isn’t limited to just manufacturing or profit facing bsuinesses.

So

  • if you work in IT, Finance, NHS, Public Sector, Service, Marketing or Manufacturing companies or
  • if your career means you are responsible for continuous improvement, process improvement, or training or
  • if you are faced with getting more out with the same or fewer resources

then this course will give you something to take away to use in improvement.

You can find all the details here LEAN MANAGEMENT TRAINING  COURSE

This session will show you how you can improve your business efficiency, by using tools and techniques developed in manufacturing and now proven within organisations, ranging from Tesco, Toyota, Zara, GE, NHS, Intel, Johnson & Johnson, Seyfarth Shaw (Law firm) through to Starbucks.

Lean manufacturing businesses found that more than 70% of their improvement projects lay not on the shop floor but in the offices and service based departments and so it has spread to these sectors. It will help to improve your business speed, capacity, cost control and quality whatever your sector or department.

If you’ve got any questions on this training then drop us a line.

Thanks

ResQ

Starbucks Lean #2

From our search engine stats I can see that there is considerable interest in the lean programme at Starbucks. We wrote about it back here in our Starbucks Lean Improvement post and this one on Lean:Crossing the Atlantic with your Coffee and we could spend a lot more time writing and trying to understand the application and implementation of lean in Starbucks US, from over here in the UK.

However there are people closer to it, who “see” the reality on their visits to the stores, so if you are looking for insight on the latest lean thinking at Starbucks then can we recommend that you visit this page http://www.leanblog.org/2010/09/controversy-over-new-standardized-work-at-some-starbucks-stores/

Over at the Lean Blog, Mark Graban takes comments on the lean implementation from the Starbucks Gossip website and puts them into perspective, which can be afforded by an experienced lean practitioner.

So if you are looking for a good source of lean stories and the progress at Starbucks, you would be well advised to visit the Lean Blog and have a search around.

Does anyone know if Lean at Starbucks has landed on these shores yet? or when it is due?

Waste – is the UK Government getting it?

The new UK Government has announced plans to attack the “Waste of Rework” in the NHS, provider of the public UK hospital system.  BBC News – Hospital Face Fines

The Waste of Rework is the waste of resources (time, people, materials, equipment etc) when a process isn’t completed to the required standard. Consequently more of the resources have to be spent putting the work right – which also has a knock on effect on the subsequent work planned.

It doesn’t matter whether we are talking about metal forming, handling insurance forms, answering customer calls, or attending to patients, doing a job right first time, will use up less resources, than having to re-visit the job.  So this waste, from a Lean point of view, is pretty universal.

The change proposed is that if a customer (okay they do still call them patients, they haven’t admitted these people are customers who have paid for the service, through taxes!) is re-admitted within 30 days of being discharged then the hospital will not be paid for the second stay, if it is related.

Hence I’ve viewed this as the hospitals will no longer be paid for the Waste of Rework, so the incentive is to get treatment right first time!

Within many of the reports on this new ideal came the complaint that this change will lead to longer times in hospital and increase the length of waiting lists. The people making these claims have never seen any lean thinking or queuing demonstrations on the effect re-work has on the capacity of a system. Re-work lowers the capacity of any system and often by more than the measured rework figure.

So a 10.5% rework rate will reduce capacity by more than 10.5% because of the effects it has on planning, we use a calculation known as OEE (Overall Equipment Efficiency) to demonstrate this, don’t be put off by the manufacturing bias to the name of this, you can use it for any process.

Now I don’t have all the figures to understand this but the % of re-admissions as proportion of all discharges, in the NHS, went up from 8.8% in 1998/9 to 10.5% in 2007/8.  There is no indication whether this 

  • is a statistically significant rise,
  • is a consistent rise from 1998/9, or just 2007/8 was a high year
  • is a function of re-admissions within the new 30 day limit,
  • is due to a focus on treatment at home, which might carry more risks
  • or just a function of an ageing population.

Whether it will actually work or drive the correct behaviours we don’t know because is the problem of rework being caused by people being sent home to early, or by something else….

Now if the Government used the 5Whys to determine this waste, then we’d have a better idea…..

Regards,

Mark

P.S.   Do you know what the rework level is in your organisation?