Tag: supply chain and extended enterprise

As you may have read in my previous blogs, Lean is rapidly evolving. It is moving past the traditional tools and one off events stage. People are also challenging whether the original concepts we learned about in the last century are really right. One of the most serious mistakes that organisations make is to only look inside their four walls and not at the wider supply chain, both towards the customers and suppliers. As it happens this supply chain area is where my career started in industry before moving on to the University and consultancy world. My early research (captured in the book ‘Creating World Class Suppliers’) showed that the management of the supply chain may be the most important element in achieving competitive advantage.

I believe it is a more holistic or systems based approach is needed, balancing traditional hard methods within multiple processes as well as a range of enabling mechanisms within the strategy deployment, leadership and engagement areas of work. In other words the secret lies in thinking about Lean less in simple cost reduction terms and more as a way of thinking, behaving and improving, impacting on every aspect of work inside a business. I call this a Lean Business System.

So how do you go about developing this modern lean approach? Those of you that read my previous blogs will know that I believe the starting place is not copying some exemplar such as Toyota who almost certainly is in a different industry, faced with different circumstances and at a different stage of its evolution. What is needed is to start from a simple set of Lean Principles that can be applied to any industry and using this to guide your journey. Having learned from 25 years of application of lean I have defined 8 such principles: the 8Ps of the Lean Business System.

This framework helps companies in any industry, and at any stage of Lean maturity, to reflect on how they are deploying Lean in their business. It helps to take the focus away from point-kaizen activity towards a more contingent approach, a more aligned approach, a more human approach and ultimately, a more sustainable approach. Indeed it is part of a move to Lean becoming a cultural journey towards everyone in the organisation actively working towards a fully aligned ‘tomorrow better than today’ system.

No company or organisation is an island and to create a world class organisation usually requires the creation of a world class supply chain. Indeed, the leading practitioners of Lean worldwide such as Toyota and Tesco have also heavily focused on creating a high performing supply chain.

Indeed, when I compared the relative performance of Toyota’s Japanese supply chain with a comparative one in the UK I found that the management of the supply chain was Toyota’s key competitive advantage. As can be seen below, based on comparative productivity figures for the whole supply chain, the major competitive advantage did not lie at the car producer but more at the 1st and 2nd tier suppliers.

The Competitive Gap When Partnering

The question is, why? After three months of extensive research I discovered that the reason was that Toyota invested a huge amount of effort into partnering with their suppliers. In doing so they made dramatic improvements to their performance. Not only that, but Toyota had also taught their suppliers how to do the same using an approach they call Kyoryoku Kai or Supplier Association.

Unfortunately, although this inter-company development and coordination is at the heart of a true Lean Business System there are few companies in the West outside of the automotive industry that have got anywhere near achieving the type of results we see from Toyota in Japan. One of the main reasons is that insufficient focus has been given to the Partnering Principle in traditional Lean businesses.

For further information about this blog series or the accompanying webinar series please contact Dr Donna Samuel, donna.samuel@sapartners.com the series manager.