Tag Archives: lean accounting

Where is the Value?

In recent months I’ve met several managers, running departments (operations, marketing, HR, IT), all working for different companies (Sectors include: retail, banking, manufacturing, IT) who at some point have all said a very similar thing;

“one of my problems is, my department isn’t seen as adding value, we’re seen as a cost centre”

So my questions are

  • where is the value created in organisations these days?
  • does it matter that the departments believe they are seen as cost centres?
  • If you subsitute the word profit for value does this help?
  • Should it matter that we understand where value is created? is knowing costs enough?

Any views or examples (positive or negative) on this greatly appreciated in the comments below.

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BOGOF – it’s just not lean marketing

According to this story in The Times Tesco the UK grocery retailer is to drop Buy One Get One Free offers on food. Following Asda, who dropped these offers a while back and Sainsburys who have also announced they will reduce the number of offers.

Food waste in the UK costs the average household £420 and the average Britain throws away 3* their body weight each year in food.

So what does this have to do with Lean Marketing?

well the insights are in the pdf booklet on the 7 Hidden Wastes of Marketing, to find it, go to this page on Lean Marketing.   You’ll need to register on the site to get access to the papers, that’s just so we can see how popular it is, if you have any problems then please e-mail us and we’ll send you a copy of the paper. (info@resqmr.co.uk)

As a taster though (no pun intended) as to why BOGOF isn’t lean.

When you run BOGOF, you anticipate extra demand, sometimes 16* as much as your normal volume.

So how do you cope with this? you convert more of your cash to raw materials, to build the extra demand, next you might run production lines for longer or bring in casual staff, incurring overtime or additional labour costs, then you might build up a buffer of inventory stock for the start of the promotion, incurring extra storage costs becasue you can’t be sure where demand will go up first and by how much.

and for the pleasure of all this you have received half the normal revenue per unit sold, you didn’t assume that the supermarkets pay, did you?

All in all your costs have gone up and revenue per unit down, never mind you can console yourself that the consumer got Value (they paid less) only if the figures above for waste are to be believed did the consumer derive value or just guilt from throwing good products away?

and what happens when the promotion ends? yep you’ve guessed it your demand drops normally well below your normal volume, so now you have staff with nothing to do – except you have accountants who want the machines run, the people kept busy and the overheads absorbed, so you make to stock………..

and to clear the stock your sales and marketing team might decide to run a BOGOF with another outlet………..

and then your brand looks as though it is permanently discounted and the marketing team may decide they need to spend money on campaigns to address this in the marketplace and to re-establish the brand…….

How many brands do you recognise as always being on promotion somewhere??

Thanks for reading

Mark    http://www.resqmr.co.uk

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LEAN – It won’t work here!

Alternative Title “Who else uses LEAN?”

So Lean isn’t for you or your company then, it won’t work in your industry, it’s for car makers or those people on a production line isn’t it?

It occurred to us that a great number of organisations have lean specialists, lean trainers, change managers etc who are trained in and utilise lean and six sigma techniques everyday, to drive change yet where can you find which organisations they are.

Try and find the “Lean” department in structure charts, organisational diagrams and the like and you’ll struggle; you see lean doesn’t lend itself to a single department, it needs to permeate everywhere. Lean practitioners will have other names “progamme managers”, “process engineering”, “Improvement specialist” and so on.

So it not obvious, from the outside, which organisations are using lean & six sigma principles and tools to drive their business forward. Some will just be using lean in operations, production, & distribution, others in offices & call centres, the more progressive in lean accounting and one or two real trialblazers in lean marketing.

Hence, this list; it is built from our collection of articles we have read and from profiles of individuals who claim they use lean thinking and six sigma in their roles.

So next time you hear “Lean, it won’t work here!” you might just want to point people to this blog, to show them where it is working.

The aim of this blog is simple; to record the names of all the businesses, with UK bases*, who use lean and six sigma as methodologies and improvement techniques or employ people who claim to use lean as one of their primary improvement technique.

*- the UK is big enough for us right now.

Please feel free to send us details of companies you know who use it, all we ask is you provide some evidence (an article, a profile etc) & the business sector they are in and we’ll add them to the list.

 First published 13/10/09.

Here’s a few for starters

Lean Banking

  • LloydsTSB
  • Barclays
  • CO-OP
  • GE Cards
  • RBS

Lean Retailers

  • Zara
  • Littlewoods Shop Direct
  • Orange
  • Dixon Stores Group
  • Starbucks
  • Tesco

Lean Utilities

  • Severn Trent Water
  • Thames Water

Lean Insurance

  • Aviva
  • Willis
  • Axa
  • Zurich

Lean Food

  • HJ Heinz
  • Mars
  • Tulip
  • United Biscuits
  • Kerry Group

Lean IT

  • Hewlett Packard
  • Siemens
  • Fujitsu
  • Unisys

Lean Councils

  • Leicester City Council
  • Bristol City Council
  • Suffolk County Council

Lean NHS

  • Birmingham Children’s Hospital
  • Guy’s & St Thomas’s Hospital NHS Trust
  • Gwent Healthcare NHS Trust

Lean Engineering

  • BAE Systems
  • Toyota
  • Harley Davidson
  • ABB

 

Lean Pharmaceuticals

  • Eli Lilley
  • 3M
  • Bausch & Lomb
  • GlaxoSmithKline
  • Smith & Nephew

Please let us know if these details aren’t correct and we’ll amend them straight away.

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What are the traits of a Lean Manager?

We’ve moved What are the traits of a Lean Manager to our new Lean Management website.

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 improves Cash Flow by 38%

In these economic times where “Cash is King”, lean thinking provides a set of principles which can be used to dramatically improve cash flow.

The example we’ve come across here shows how lean thinking can be used to

  • improve cash flow
  • improve customer service
  • improve organisations in the service or knowledge sectors

and proves you don’t even need to resort to slashing stock levels, especially if you don’t have any!

The business in question is Stiles Associates LLC, an executive recruitment agency and the story was mentioned in Lean Directions, using lean thinking Stiles Associates achieved the following results;

  1. 29% reduction in time taken to fill a vacancy! filling in under 90 days
  2. 38% reduction in debtor days, which had a massive impact on cash flow.

They achieved this by conducting

  1. value stream mapping (including their customers)
  2. kaizen events 
  3. daily meetings to highlight completed, outstanding and on-going tasks
  4. visual management systems.

Goes to show that the promises of improved business processes, better cash flow can be achieved through lean and in sectors other than operations or manufacturing.

If you want to read how lean can be applied in marketing, sales or accounting then please visit our website www.resqmr.co.uk to see how we approach these areas as well as the traditional manufacturing/operations areas.

Or contact us at info@resqmr.co.uk , Mark.

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Only 16% do it!

Only 16% of whom, do what? 

Well it’s manufacturers; a recent BDO Stoy Hayward and The Manufacturer research report into Lean Accounting in the UK claimed only 16% of manufacturers continuously eliminate waste from transaction processes, reports and accounting methods. (Read on to find out to get a copy of this 32 page insightful report.)

Would the figure be higher or lower outside of the manufacturing sector? What about manufacturing in other countries?

Surprisingly the same figure, 16% is recorded for those who ensure that financial statements are easily understood by non-accountants, a lack of customer focus perhaps? one of the key pillars of lean and six sigma.

16% also claim (could it all be the same 16% ?) that they eliminate unnecessary data from accounting reports.

The insight from the research into Lean Accounting included the following interesting insights;

  • 14% of manufacturers use some lean accounting techniques, no-one claimed to have totally adopted all the techniques
  • 24% of manufacturers are looking to introduce some of the techniques in the next two years
  • only 3% of those using lean accounting techniques thought they were’t beneficial, so less than 1% of the whole sample!
  • lean accounting will create more accurate information to aid operational decision making – 52% of respondents thought this
  • whilst 42% believed it will assist in setting intelligent performance targets
  • despite 14% of respondents using lean accounting techniques, only 3% have used value stream costing, one of the cornerstone techniques of lean accounting. 

According to the report, manufacturers are not using the right financial metrics in measuring and monitoring their improvements under lean. Are these techniques applicable in the service sector, lean operations has started to make the transition under the banner lean service. 

Before we go on though, the 14% of manufacturers already using lean accounting techniques was an insight we didn’t expect to see so please take part in our poll below ;

So what is holding these companies back from using lean accounting techniques?

The same research found that when it comes to lean accounting  

  1. 61% don’t understand the approach
  2. 51% don’t understand the benefits
  3. 42% claim that their company culture will hold it back

Well my colleague Neil has a raft of information on lean accounting, which you can find at www.resqmr.co.uk.

If you want to read the full report then go to BDO Lean Accounting report, on this lean accounting page you find an email address to write to get hold of the full report. You might want to mention that you read this blog as well!

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