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Lean means more beans for priority schemes…
July 22nd, 2010 Steve Inkpen Posted in CIO Agenda |
… or put another way: The more we can make businesses ‘Leaner’ the more money will be available for new and existing capital schemes (projects), and implementing Lean will also provide greater value for business as usual operations. For the private sector, to which we are looking to lead our economic recovery in the UK, this may result in capital being freed-up to spend on priority schemes that might not otherwise be funded. For the public sector, where departmental expenditure is expected to be cut significantly by Government, Lean would be a very useful methodology to apply for departments to reduce costs and possibly make better use of, and gain more value from restricted budgets.
The challenge for businesses today is to find new ways to dramatically reduce costs and improve investment returns while better serving their customers, particularly in these austere times. To meet these challenges, organisations are turning to Lean thinking, which seeks the elimination of all forms of waste, strives for continuous improvement, and simplifies business processes. Lean is an improvement methodology, but with a focus aiming to enhance process flow, reduce cycle time, and eliminate waste. By applying Lean tools and techniques, organisations can become more competitive, agile, and responsive to customer demands
In a Lean programme that has recently come to a close, we directly reduced the operating costs in one department by 23% within a 9-month period. This was achieved via a combination of ‘Leaning’ operations and better use and exploitation of technology developments. This included a proof of concept phase followed by the implementation of Lean improvements. As one would expect from any well-managed programme, the business will continue to realise benefits, including further savings, long after this programme closes.
These benefits realised were not only financial, although without sound financial benefits being represented in the business case, this (and other programmes) would not have got off the ground. This Lean Programme has realised different types of benefits, and have been categorised in MSP®[1] terms (Managing Successful Programmes) as Direct Non-Financial and Indirect Benefits, as well as Financial Benefits of course. Lists of the benefits realised within each of these categories are shown below.
The Lean methodology for these programmes includes numerous ‘levers’ (as they are known). These levers are the principles on which Lean programmes realise Direct Financial, Direct Non-Financial and Indirect Benefits. These principles are the basis of a repeatable methodology for all businesses. For further details, please refer to the author.
[1] MSP® is the UK Government recognised methodology that represents proven programme management good practice in the successful delivery of transformational change through the application of programme management. MSP® is a Trade Mark of the Office of Government Commerce.
