Nick explains how thinking lean can benefit customers the essence of lean

A handful of global firms have achieved astonishing results over many years. They have transformed our view of what can be done. They have grown fast and profitably and overtaken all their rivals, and yet often the secret of their success is not apparent until they have achieved leadership.

Lean bacon

Toyota is now the third largest vehicle maker in the North American market. While General Motors and Ford have had to cut their prices to induce customers to buy, Toyota successfully implemented an increase.

According to Toyota, by 2008 it will overtake GM as the world’s number one vehicle manufacturer. It already makes more profit than GM, DaimlerChrysler and Ford combined.

Computer manufacturer Dell now accounts for 18% of worldwide PC shipments. Not bad for a company started by Michael Dell from his university dormitory in Texas.

Dell is renowned for its efficient business model, taking orders by telephone and the internet, and only making to order. The time taken to build a computer is now less than four minutes. So the thirty seconds it takes to apply holograms and logos for Microsoft and Intel is losing Dell precious time. Dell is currently locked in discussions to eliminate the bottlenecks caused by ‘other peoples’ advertising’.

Closer to home, homeowners spend more than one pound in every eight with Tesco. Its share of the UK grocery market is 30.3%, nearly twice as much as Asda or Sainsbury’s. Last year it achieved double digit volume and profit growth: a remarkable performance for a business of its size.

At one time Tesco was seen as a grubby, discount retailer with small, cramped high street shops. It nearly went bust in 1977, when an all-too-successful price cutting promotion attracted so many customers that it bottlenecked with a 50% increase in sales volume.

If that sounds like music to the ears of marketing managers, who dream of 10-20% increases with their promotions, dream on. Tesco had slashed its already low prices to the point that it would have had to sell at least 66% more just to break even. The experience was so cataclysmic, Tesco abandoned budget margins, moved to large out of town stores, and became master of operations and logistics.

What’s the connection between Toyota, Dell and Tesco? They have a secret weapon that demolished their rivals, and transformed productivity, customer satisfaction and profits. Thinking lean is the weapon: lean manufacturing at Toyota, lean logistics at Dell and lean service at Tesco.

Customer choice

Companies that restrict customer choice by cutting back on services and support, fail to meet customers’ needs

Being lean doesn’t mean limiting customer choice. In fact all these companies offer more choice to their customers.

Toyota doesn’t make a car until it’s been ordered, so every car is bespoke to the customers’ requirements. Dell does the same. And the minute products are removed from the shelf and pass through Tesco’s checkout a new order is sent to its suppliers. Tesco constantly increases the number of products available to maximise the amount consumers spend in store and on-line.

The essence of lean, which Toyota pioneered in the 1960s, is to eliminate waste and progressively remove all the activities within the company that do not contribute to the value of the product supplied to the customer. Companies that restrict customer choice by cutting back on services and support, fail to meet customers’ needs.

With the window market tightening some companies are restricting stock and cutting back on services and support. Less money is spent on research and development. Cutting back on support services, stock holdings and – in some cases – product lines makes it harder for fabricators and installers who need more support in a difficult market.

Synseal has used lean thinking to improve the performance of its business, raising productivity, shortening cycle times and increasing choice and customer satisfaction.

In the past running different colours meant having to spend a long time cleaning and changing tooling, but dosing the colour during the extrusion eliminates down time. Smaller quantities can be made quickly and there’s less wastage so Synseal can now deliver brown, caramel and blue white off-the-shelf. Our efficiency savings mean that customers can have blue-white at the same price as standard.

Order to delivery in three days

Synseal gives customers more choice in products and services. Cutting response times means customers can get what they want, when they want. No part of our business is free from continual assessment to ensure this. It goes beyond adding new products for customers.

Investments in highly productive state of the art manufacturing equipment have paid off. Delivery times have been significantly improved. By changing sales order processing, IT and manufacturing management systems, days have been cut from delivery times. Now our customers can have a roof from order to delivery in just three days. In the time saved, Synseal’s customers can make more, sell more and improve their own delivery times – the benefits are passed down every link of the chain. By thinking lean thinking, business can be continuously improved.