Just about every FDI multinational organization operating in Ireland has a Continuous Improvement or Lean program. Our indigenous SME companies are, sadly, a different story. This is all the more confusing given that there is 30% plus in savings opportunities available from an effective Lean program, no matter what your business is. Why, therefore, is there such poor take-up of the benefits? Over the recent past I have been discussing this with several SME owners and their views were similar. Their main reason was that they tune out the minute they hear mention of Lean, the number one car manufacturer in the world or indeed, any Japanese word. Their eyes go glossy and their smart phones are picked up.
“It is not relevant to us or our business and anyway, we’re too busy!”
Nothing could be further from the truth. It is relevant to every business and its benefits may be the difference between survival and failure. It forces you to look at how the business is run, to eliminate what are controllable elements that are pure waste and finally focus on your customer. Get rid of the wasteful activities and you will have all the time you need not to be busy. It is not difficult to do and every company can do it. There is even significant support by way of grants from Enterprise Ireland by way of their “Lean Start” programs.
What do I mean by waste elimination? Let’s look at some simple examples.
A service organization spend the equivalent of 56 man-days preparing their month end reports spread over the 5 days either side of the actual month end. It also required most of the 7 people involved working at least 3 or 4 long 10 hour days. After a full review it was decided that 35% of the reports were never read, a further 25% might be used as a reference later and of the remaining 40%, they were able to amalgamate some to reduce it to 25% with the remaining reference information supplied on an as needed basis. Thus month end was reduced to 14 man-days, no long hours and the ability to take on other work that was being neglected. Guess who the hero in that organization was!
A small processor in the food service industry had a 2 man production unit that spent only 2.5 hours a day actually producing product. The rest of the time was spend going to various parts of the facility to get the materials that were needed, waiting for the upstream process to deliver their supplies and various other wastes. Working with the people at the job, some basic pre-kitting of materials for orders and a re-layout of the workplace they were able to increase this to 6 hours per day without any extra resources from within the business. In essence, an extra person!
A plastic processing company had the good fortune to win extra business but between the raw materials needed, the new equipment and the holding of finished goods for their customers, they were faced with having to add up to 50% extra space. This would mean a new building. However, with some work with their suppliers, creative storage of their work in progress and an agreement with their customers to a daily “milk run”, they were able to free up all the space they needed for their new business and thus avoid a second facility. All of that extra profit!
These examples are indicative of what can be achieved by all sizes of companies working in all types of business arenas. Waste is waste no matter what you do. NON VALUE ADDED work is the work that we do that the customer doesn’t want to pay for and the accepted figure for this element of our businesses is 95%. Despite over 50 years of implementing Lean, the company that makes the best built cars in the world, has only managed to get this down to 89% - so there is no shortage of opportunity. However, a move from 5% to 6% is only a movement of 1% in the reduction of waste but it represents an improvement of 20% in our productivity.
Another area where significant gains can be made is by listening to the “Voice of your Customer”. Most customers do not necessarily buy the cheapest available but rather will do business with and/or look to build a relationship with a supplier that offers value for money and that is concerned about their service. Huge benefits can be had from talking to your customer, listening to their needs and most importantly acting on what you find out. Smaller companies had a big advantage here in that it is easier to react quickly and see the benefits. Again some examples.
A small boutique hotel was suffering with the downturn and following discussions at several networking groups discovered that when business people finally get to their hotel room they are usually ready for a relaxing moment and often don’t want to have to go out to eat. To aid this, the hotel put a complimentary (airplane size) bottle of 15 yr old whiskey in every room and offered a dish of the pasta of the day in lieu of breakfast. They had an occupancy rate of double the surrounding hotels but more importantly, an 85% loyalty rate among its clients.
A florist was looking for new ways to drum up business and noticed that most of the area in which they served was apartments usually for single people. So they went and talked to their potential customers namely men (“why would they buy flowers?”) and women (“When would they be swayed by flowers?”) They did so in local bars and restaurants over a number of weekends. They came up with a complete range pre prepared bouquets for novel occasions that conveyed a message that can be ordered by text and delivered that day. Some of these include the “Wow” (subtext, that was wonderful, can we meet again), the “Whoops” (subtext: sorry, I really am…) and the “Prayer” (subtext: please, honey, don’t call the solicitors). Business trebled when simple laminated A4 brochures were placed in every apartment block lobby.
The key here was that both went to ask their actual customers what they wanted and not what they themselves though their customers needed. For some reason it is easier to internalize this process and not talk to or involve our customer. Figure that one out!
Finally, in my discussions with SME owners, I discovered a problem that we, the experts, are creating. There is a form of snobbery & elitist complexity being created around Lean by our overuse of Japanese terms and cofusing terminology. Lean is about common sense being used the same way all of the time. Some of the longest discussions in LinkedIn groups are around “What does Lean mean to them?” The Japanese are very clear about this. It means that they train their people to consistently improve what they do every day. Their credo of “Go See, Ask Why & Show Respect” means that they go to the place of work, validate for themselves what is the problem and work, with respect with those who work there, to find the root cause which they then fix. Their over-riding focus is about fixing problems and eliminating waste. But they use words that mean something to their employees, that speak to their language and customs. We need to do the same.
Therefore, having listened to my customers and in an effort to simplify Lean, this entire piece has been written without reference to any Japanese word nor has it mentioned any car manufacturer by name. There are some Japanese terms and words which have crept into our day to day language and we need to understand their meaning but for today, we will do without them. We need to teach the excellent tools and techniques of Lean with reference to our local customs, language and practices. This way we modify them to be fit for purpose and make them relevant for all our businesses large and small.
I have decided to track a new metric – “Length of time from the start of my presentation to when the first smart phone is picked up, divided by the total length of time of the presentation and measured as a percentage”. The last one was 62%, so clearly I have some way to go.
However, should someone need to take a new Japanese word away with them, try this one - “Oushikuso” – Google it! - I may just make an exception and use this one a lot.
Dermot.
PS Please leave a comment whether you agree or disagree as it is only with feedback I can improve or save you all from future torture whichever is the more applicable.
“It is not relevant to us or our business and anyway, we’re too busy!”
Nothing could be further from the truth. It is relevant to every business and its benefits may be the difference between survival and failure. It forces you to look at how the business is run, to eliminate what are controllable elements that are pure waste and finally focus on your customer. Get rid of the wasteful activities and you will have all the time you need not to be busy. It is not difficult to do and every company can do it. There is even significant support by way of grants from Enterprise Ireland by way of their “Lean Start” programs.
What do I mean by waste elimination? Let’s look at some simple examples.
A service organization spend the equivalent of 56 man-days preparing their month end reports spread over the 5 days either side of the actual month end. It also required most of the 7 people involved working at least 3 or 4 long 10 hour days. After a full review it was decided that 35% of the reports were never read, a further 25% might be used as a reference later and of the remaining 40%, they were able to amalgamate some to reduce it to 25% with the remaining reference information supplied on an as needed basis. Thus month end was reduced to 14 man-days, no long hours and the ability to take on other work that was being neglected. Guess who the hero in that organization was!
A small processor in the food service industry had a 2 man production unit that spent only 2.5 hours a day actually producing product. The rest of the time was spend going to various parts of the facility to get the materials that were needed, waiting for the upstream process to deliver their supplies and various other wastes. Working with the people at the job, some basic pre-kitting of materials for orders and a re-layout of the workplace they were able to increase this to 6 hours per day without any extra resources from within the business. In essence, an extra person!
A plastic processing company had the good fortune to win extra business but between the raw materials needed, the new equipment and the holding of finished goods for their customers, they were faced with having to add up to 50% extra space. This would mean a new building. However, with some work with their suppliers, creative storage of their work in progress and an agreement with their customers to a daily “milk run”, they were able to free up all the space they needed for their new business and thus avoid a second facility. All of that extra profit!
These examples are indicative of what can be achieved by all sizes of companies working in all types of business arenas. Waste is waste no matter what you do. NON VALUE ADDED work is the work that we do that the customer doesn’t want to pay for and the accepted figure for this element of our businesses is 95%. Despite over 50 years of implementing Lean, the company that makes the best built cars in the world, has only managed to get this down to 89% - so there is no shortage of opportunity. However, a move from 5% to 6% is only a movement of 1% in the reduction of waste but it represents an improvement of 20% in our productivity.
Another area where significant gains can be made is by listening to the “Voice of your Customer”. Most customers do not necessarily buy the cheapest available but rather will do business with and/or look to build a relationship with a supplier that offers value for money and that is concerned about their service. Huge benefits can be had from talking to your customer, listening to their needs and most importantly acting on what you find out. Smaller companies had a big advantage here in that it is easier to react quickly and see the benefits. Again some examples.
A small boutique hotel was suffering with the downturn and following discussions at several networking groups discovered that when business people finally get to their hotel room they are usually ready for a relaxing moment and often don’t want to have to go out to eat. To aid this, the hotel put a complimentary (airplane size) bottle of 15 yr old whiskey in every room and offered a dish of the pasta of the day in lieu of breakfast. They had an occupancy rate of double the surrounding hotels but more importantly, an 85% loyalty rate among its clients.
A florist was looking for new ways to drum up business and noticed that most of the area in which they served was apartments usually for single people. So they went and talked to their potential customers namely men (“why would they buy flowers?”) and women (“When would they be swayed by flowers?”) They did so in local bars and restaurants over a number of weekends. They came up with a complete range pre prepared bouquets for novel occasions that conveyed a message that can be ordered by text and delivered that day. Some of these include the “Wow” (subtext, that was wonderful, can we meet again), the “Whoops” (subtext: sorry, I really am…) and the “Prayer” (subtext: please, honey, don’t call the solicitors). Business trebled when simple laminated A4 brochures were placed in every apartment block lobby.
The key here was that both went to ask their actual customers what they wanted and not what they themselves though their customers needed. For some reason it is easier to internalize this process and not talk to or involve our customer. Figure that one out!
Finally, in my discussions with SME owners, I discovered a problem that we, the experts, are creating. There is a form of snobbery & elitist complexity being created around Lean by our overuse of Japanese terms and cofusing terminology. Lean is about common sense being used the same way all of the time. Some of the longest discussions in LinkedIn groups are around “What does Lean mean to them?” The Japanese are very clear about this. It means that they train their people to consistently improve what they do every day. Their credo of “Go See, Ask Why & Show Respect” means that they go to the place of work, validate for themselves what is the problem and work, with respect with those who work there, to find the root cause which they then fix. Their over-riding focus is about fixing problems and eliminating waste. But they use words that mean something to their employees, that speak to their language and customs. We need to do the same.
Therefore, having listened to my customers and in an effort to simplify Lean, this entire piece has been written without reference to any Japanese word nor has it mentioned any car manufacturer by name. There are some Japanese terms and words which have crept into our day to day language and we need to understand their meaning but for today, we will do without them. We need to teach the excellent tools and techniques of Lean with reference to our local customs, language and practices. This way we modify them to be fit for purpose and make them relevant for all our businesses large and small.
I have decided to track a new metric – “Length of time from the start of my presentation to when the first smart phone is picked up, divided by the total length of time of the presentation and measured as a percentage”. The last one was 62%, so clearly I have some way to go.
However, should someone need to take a new Japanese word away with them, try this one - “Oushikuso” – Google it! - I may just make an exception and use this one a lot.
Dermot.
PS Please leave a comment whether you agree or disagree as it is only with feedback I can improve or save you all from future torture whichever is the more applicable.
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