Business Base

More and more businesses are starting to take an interest in Lean. From its roots in automotive manufacturing, it is fast becoming a mainstream subject for discussion across all industries and market sectors, including public sector bodies and councils. Despite all of the talk, surprisingly few businesses fully understand the potential implications of Lean / Six-Sigma / Continuous Improvement and its impact on future business success.

The ISO Revolution

Cast your mind back 10 or 15 years. At that time, formal quality systems such as ISO9000 were starting to emerge as the must-do management tool of the moment. Prior to that, there was no consistent method of differentiating between companies, and short of going to visit potential suppliers to see for yourself what was happening, it was practically impossible to separate those worthy of doing business with from those that you wouldn't touch with even the longest of bargepoles. This was especially true as businesses started to evaluate a rapidly-emerging global supply base, looking at suppliers and business partners from a host of new "low-cost" locations.

Looking at it from the supplier's perspective, ISO-accredited companies were handed a powerful message which could be used as a marketing edge. Not something either easy or cheap to achieve, those businesses that invested in accreditation were able to hold themselves as superior to their unaccredited competitors. Highlighting the fact that you were ISO accredited to existing and potential customers gave the sales and business development people a compelling message with which to build the customer value proposition and differentiate themselves from the crowd of wannabes.

Move forward a few years, and the landscape had changed significantly. Rather than a positive business advantage and the domain of larger, well established businesses, the equation soon became that ISO accreditation was a must-have; you simply had to be ISO9000. Investing in training, in the systems and procedures and in the support to gain accreditation became a cost of being in business, just like the cost of product liability insurance or the development of a website.

Lean Thinking

Now compare this to the Lean / Six Sigma / Continuous Improvement evolution and the similarities are striking. Businesses that have a strong, well structured Lean initiative are already using it as a marketing tool. By demonstrating a commitment to Lean, they are signalling to existing and potential customers that their primary focus is on enhancing customer value creation - the first principle of lean thinking - and this is something which can deliver a powerful message when developing new business in much the same way that ISO accreditation did all those years ago.

In fact, in certain industries, Lean has already become a business essential. The automotive industry, the aerospace industry and their respective supply chains are already insisting on a demonstrable commitment to continuous improvement in order to be included in the future supply chain. Lean is already a must-have; to remain a supplier you must be Lean. This trend is set to continue and expand across other industries and markets, and be pushed further down the supply chain. It is coming, and there's no escaping it.

Turn to the Public Sector, and the pressure for visible and tangible improvement is everywhere. The need to reduce costs, whilst at the same time improving services, seems to create a conflict and it doesn't take much research to find news article and reports condemning some of these bodies for unbridled waste and carelessness when it comes to the public purse. Yet this is an area which has been under intense and increasing scrutiny, and it would be wrong to think that such pressure has gone unanswered. The heads of Councils, NHS Trusts, Police Authorites and the plethora of other public service bodies are acutely aware that the public's perception of their performance can have a huge influence in attracting people and businesses into their area, yet it is difficult to prove that the are Value for Money organisations.

The problem is that there is no recognised standard for Lean, at least in the same way that ISO enabled the standardisation of quality systems. There is no universally recognised certificate; no plaque for the reception wall; no crest that can be added to the company stationery. It is this lack of a recognised standard and the accompanying "how to" documentation that causes the most confusion and, arguably, wasted effort. If our customers expect us to be a Lean organisation and prove that we are "Value for Money", how can we demonstrate our commitment to Lean and, more importantly, that we are actively engaged in and achieving the benefits of continuous improvement activities?

In fact, as there is no standard format to follow, a business can be flexible in its approach to developing a Lean strategy. This helps avoid many of the pitfalls associated with ISO-type accreditation such as discouraging process innovation and creation of an administrative headache. The Lean Strategy instead becomes the mechanism by which the business can illustrate to the world that it truly provides Value for Money .