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Month: April 2016

FMCG SURVIVING THE NATIONAL LIVING WAGE – MORE IS LESS

TIPS FOR SETTING TOP-LEVEL BUSINESS OBJECTIVES USING LEAN PRINCIPLES

SETTING TOP-LEVEL BUSINESS OBJECTIVES USING LEAN PRINCIPLES

The Unknown
As we know, there are known knowns.
There are things we know we know.
We also know, there are known unknowns.
That is to say, we know there are some things we do not know.
But there are also unknown unknowns, the ones we don’t know we don’t know.
Donald Rumsfeld (2002)

At first reading this may seem like a crazy statement, but when you look closely at it and think about it, this is the reality for many businesses.

Businesses and many business leaders get bogged down in the day-to-day operations. Often so much that they cannot see the wood from the trees. Many never really look above the horizon and ask the simple question, “Are we running this business in the best way possible, or is there a better way?”

Lean manufacturing is well known for its ability to remove waste from physical processes. But used strategically, Lean is much more than that.

Deployed correctly across an organisation, Lean has the ability to challenge the norm and start to ask questions across all levels. Culturally, many businesses operate with some level of silo mentality, which stifles creativity – since people only see what they need to see. In short, teams operate with ‘known knowns’ and ‘things we know we know’.

By using Lean tool sets like Hoshin Kanri, organisations can start to understand how they are really performing as a whole and what is really important to drive the business forwards.

So what exactly is Hoshin Kanri? Interpreted from Japanese, Hoshin in English means “setting a direction or objective”. Kanri translates as “management”. So Hoshin Kanri can be loosely translated as “the management of direction and objectives”. This in turn sets a platform for Strategic Lean deployment

In a typical organisation, quite often the process of setting top-level business objectives and communicating them clearly across the entire business is poorly done, or is very often over-complex.

Within your organisation, ask yourself these simple questions:
  • Is everyone pulling in the same direction?
  • Are all managers focused on the exactly the same goals?
  • Is every task that people are undertaking completely necessary?
  • Are there projects or tasks being worked on that do not contribute to the top-level objectives?

The Hoshin Kanri process helps unravel these points and once this is done, clear directions can be communicated and simple, clear directions can be set. Teams and departments can then be challenged to work collectively and silo thinking can start to be broken down. Clear, simple, common performance metrics and targets can be set and measured.

Once this has been done the teams and departments can be asked to process map cross-functionally and the question can be asked: “Is this process really achieving the desired result in the most cost effective way?” Normally the answer is no.

In effect at this point, the organisation is ‘learning to see’ and process maps can be used as a common communication tool.

The more common Lean tools can then be deployed, to identify waste and look at the ‘known unknowns’. These can be studied and improvement activities can be put into place.

Over time the whole organsiation will change the way it looks at the way it does business. A cultural shift will start to take place. People will start to challenge the norm. This is what Lean is really all about – not just looking for waste.

As Donald Rumsfeld said, “We know there are some things we do not know”.

Lean deployed correctly will help look for these opportunities that exist and start to understand them. In effect, Lean will help in getting your organisation ‘learning to see’.

Find out more about LMAC

At LMAC, we’re experts in applying Lean principles like Hoshin Kanri to business. We work with companies across the globe to help them set top-level business objectives, create efficiencies and improve their performance. If you’re interested in finding out more, feel free to contact us.

FMCG

UK FMCG – IS LEAN A FOUR LETTER WORD?

For the industry that probably needs it the most, I fear Lean may be on a road to nowhere. It’s a shame – the industry is arguably facing its biggest challenge in history. Relentless price pressure could be forcing a total focus upon cost reduction, and this combined with the industry’s new emerging nightmare scenario that is social media images of poor processing habits could leave some of FMCG players ruined.

THE CURRENT FMCG TREND

Survival by being bigger and ripping cost out. It’s probably nearing the end of its effective cycle – most brands are now part of a huge “food group” and most of the centralised services benefits have probably already been manifested.

WHAT WE’RE LEFT WITH:

Food groups suffering the usual problems of rapid growth through acquisition:
•   Individual business units trying to operate as one
•   Conflicting cultures and values across the group
•   A workforce fed up with the term “restructuring”

That’s OK – the Retailers have the answer – It’s called Lean, and they’re going to make you do it! Here we go again, we must comply!

THE CULTURE PROBLEM

Most FMCG organisations I’ve encountered face a common problem – a culture of compliance. And, where Lean is concerned, this is a major hurdle. A true Lean organisation at it’s very heart has a culture of Continuous Improvement, an approach of challenging everything and striving for excellence in everything it does just because that’s what the whole organisation is about. Having to improve because the customer has raised the compliance bar isn’t the same. External “lean audits” may exacerbate the problem – it’s true that audits can drive actions, but by the same token, actions can drive behaviours, and in time, behaviours form a culture. The term “culture” is currently ranking highly as “sustainability”. Many organisations are chanting these words, but in my experience most are just doing cost reduction. The culture that may emerge could be a legacy of this generation.

COST REDUCTION IN THE NAME OF LEAN

“The ultimate objective of any improvement programme is to lower manufacturing costs”
Anonymous FMCG “Lean Expert”

It seems the FMCG sector is getting the same message from all sides – being lean is all about cost reduction right? Well there’s the problem – it depends upon who you listen to. If we’re talking about how the true Lean principles have typically been bastardised in the past, then yes – it’s all been about cost reduction. For the few that have embraced true Lean principles, it’s about being the best in industry in everything they do, being un-catchable. Ultimately, only those organisations will survive.

5 THINGS THE INDUSTRY NEEDS TO DO:

  1. Make Lean your own and do it for your own reasons – ticking boxes to comply is just a waste of time and will discredit you in front of your staff. It will make Lean a four letter word.
  2. Use Lean from a PULL perspective at a business level, not a PUSH of tools on the shop floor. Link your Lean activities to top level business objectives and PULL the results through.
  3. Get professional guidance from Lean experts with leadership experience – without this, the “lean expert” only knows the tools, and you might as well download them from the internet.
  4. Develop your people, particularly your management team. Leadership strength is the key ingredient to success with Lean.
  5. Once you have enabled your organisation, then set the bar high across a balanced set of business targets. A pure focus upon cost reduction will not grow your business.

What do I do if the top level of my organisation only wants cost reduction from Lean?

Find an organisation with a stronger more visionary leadership team. These are the organisations that will succeed and be the best employer with the best benefits with the best career development opportunities. Move town if you have to.

If you’ve had an average outcome with Lean, don’t throw the baby out with the bath water.  LMAC can show you a better way.

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