Tag Archives: process 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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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.

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

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

Continuous Improvement in Legal firms

“Doing a better job, in a shorter time, makes customers more satisfied. The more satisfied a customer is, the more they will recommend you to others and be prepared to look to you again for future solutions”

If you find the statement above agreeable and yet also believe that “Value Billing” or other alternative fee arrangements in the legal (or other professional services) sector could mean that revenues and profits will be reduced, then one solution that has been used in the States could be of interest.

The Association of Corporate Counsel has noted that the work conducted by one company in the article has put it “five years ahead of every other AmLaw 200” and led to them being able to cut the cost of providing services by up to 50%.

The article, which is entitled, Continuous Improvement”  (in legal firms)

click the article title to access the pdf, or as we knew it internally here “Improving Legal Firm Efficiency: 5 Management Principles”, was written by ourselves and published in the September 2010 edition of the Law Business Review magazine and it explores the dramatic results of applying Lean Thinking in a law firm.

Note: Law Business Review don’t have a copy of the magazine available on the web, this is the only place you can get a free copy of this artice from the magazine. If you want a copy but have problems downloading it then contact info@resqmr.co.uk requesting a copy and we’ll send it on.

If you would like to explore how this form of Continuous Improvement can work in your legal (or other professional services) organisation then drop us a line info@resqmr.co.uk

The website for the magazine, who kindly published our insight, can be found at LawBusinessReview.co.uk and it is published by LexisNexis and covers a wide range of business issues and typically contains 6 core areas; Business School, Client Focus, Skill Development, International Business, Future Knowledge and Risk Management.

Other sources we used for this research include:

www.leanlaw.net by Mark Jackson

www.troubleahead.co.uk by Michael Scutt

Tip: Use the buttons below to re-tweet, email or print out this blog.

 

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.

£6,000 of Business Improvement – FREE!

Despite the daily feed of cuts and budget reductions, there is still one source of funding for business improvement available to businesses in the UK.

Manufacturing businesses can access up to £6,000 worth of FREE business improvement work.

So who is eligible?

  • turnover less than 50m Euros?
  • less than 250 employed?

Then you should meet the criteria. Design and distribute from the UK but get items manufactured elsewhere? this is okay to.

If you’re based in the East Midlands (Northampton to Lincoln, Skegness to Burton) or Yorkshire & Humberside (Worksop to Kirbymoorside, Flamborough Head to Halifax) then give us a call and we can help you access this help.

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.

We offer a FREE one day consultation, where we work out exactly how much this investment could return.

So who have we helped? FMCG companies, small batch producers, furniture manufacturers, electrical panel producers, fabrication companies, printing companies, joinery manufacturers etc 

We’ll take you through all the paperwork to get at the funds (there aren’t too many papers and most businesses can find the information required easily.)

This match funding comes via the Manufacturing Advisory Service. This is the national scheme, administered on a regional basis, which can help your business to develop and grow.

Give us a call and we’ll see if your business can get £6,000 towards finding the hidden improvements to increase profits and customer satisfaction!!

Mark

www.resqmr.co.uk

www.twitter.com/theleanmanager

Sir Terry Leahy’s Lean Commandments?

I came across these Ten Commandments for Good Management from a presentation given by Sir Terry Leahy, CEO of Tesco PLC, Fresh & Easy in the States, only one of them is called Lean Thinking but I think that I can easily make a case for six of them relating to a true lean journey. You might even be able to make a case for another two of his Ten Commandments to be part of the same journey.

For info Tesco started on a lean journey in about 1994, when a clear second in the UK Supermarket league, fifteen years later and they are almost twice the size of their nearest UK competitors and are making a go of it internationally.

Here are, a shortened version of the Commandments: (link to full article below)

Commandment Number 1: Find the truth – LEAN; Gemba

Commandment Number 2: Set audacious goals.

Commandment Number 3: Vision, values and culture are critical.

Commandment Number 4: Follow the customer – LEAN; only customers can truly value your products or services.

Commandment Number 5: Create a steering wheel – LEAN; Visual Management Systems

Commandment Number 6: People, process and systems – LEAN; Value Stream Mapping, waste reduction, & create flow 

Commandment Number 7: Lean thinking.  LEAN; I’ve left the full quote in here, ” Most think that lean thinking comes out of Just-In-Time manufacturing in Japan, but it can apply to anything from retail through banking. We apply lean thinking to the complete supply chain, and that is why we are more productive than most.”

Commandment Number 8: Competition is good (LEAN??; read Taichii Ohno’s book the Toyota Production System and you’ll find that they set out to learn and beat the US producers.)

Commandment Number 9: Simple beats complex – LEAN; Value Stream Mapping, Removing the 7 hidden wastes.

Commandment Number 10: Leadership (LEAN??; as he is quoted “So big organisations in order to be effective needs thousands of leaders, not just one”) 

If you want to read the full article, with all the details of the commandments then it can be found on the following website  Sir Terry Leahy’s Ten Commandments.

What do you think are 6 or 8 of the commandments based on Lean, can a case be made for all 10? or is that just trying to fit the data to support the model?

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