Lean is supposed to about getting rid of waste

I could barely believe my eyes when I read today that public sector managers are now going back to school, gaining an FICiPS en route, to learn about 'lean'. It's not that I don't agree with the need to implement 'lean' thinking in the public sector, indeed back in the 90s I was writing about the application of lean supply in the public sector. No, my concern is that the UK government have been preaching the 'lean' message for years too - indeed we have the 'Lean sourcing: The standard solution'.

What has gone wrong with their recruitment that they now need to invest in training for these managers - did the recruitment process actually let staff through the system without checking their understanding? Are we to view this as an admission that central government is 30 years behind the curve in management thinking?

My suggestion is quite simple: give each of the managers who require training a copy of either The Machine that Changed the World, Lean Thinking, or Systems Thinking in the Public Sector get them to research why the Japanese local government has struggled to implement 'lean', and then set within their personal objectives an appropriate objective to pilot a 'lean' initiative, reporting on the difficulties, how they overcome the difficulties, and the lessons learnt. No £17,000 training course, no mercy, if they can't deliver chase them - I can't see that after so long any other approach will work.

Lean or anorexic procurement

If you cast your mind back to 1993 you may recall the seminal book by Richard Lamming on Lean Supply. It wasn't actually called Lean Supply but 'Beyond Partnership'.  That was closely followed by Peter Hines' 'Creating World Class Suppliers'. Many other discussions at the time were indicative of a paradigm shift in procurement thinking. These were more than conceptual ideas, they were based on the hard evidence of what worked. The key change was a recognition that 'adversarial' relationships were not always appropriate, that while there was plenty of talk of partnership, there was a need to go 'beyond partnership' and adopt 'lean'. You may well ask which procurements would be most appropriate for 'a lean strategy' - well, in general terms, those procurements which are strategic.

Fast forward 20 years and we hear the rhetoric of 'lean sourcing' within UK government as the panacea to all woes. Yet have they really understood what 'lean' means. Lean is more than taking costs out of the system and drawing closer so that innovation can flourish. It also requires an entirely different approach to buyer/supplier relationships and contract management.

We have the theory and gospel of 'lean' in government procurement and we can set that alongside the practice, for example, the transporting of prisoners and tagging services. Let's consider Serco, who would have been assumed were a strategic partner of the government but now appear to have fallen from favour on both those contracts - the MoJ have called in the police to investigate claims of fraud in prisoner escorting and there are parallel claims of overcharging for tagging 

This does not exemplify lean on either side of the dyadic. The notion of calling in the police to investigate fraud, claims of overcharging and even allegations of some questionable contract management are an anathema to lean.

It would be possible just to throw stones at Serco. It would also be possible to throw stones at MoJ. Both those approaches may bring short-term solace for one party but wouldn't really help public procurement as we approach the economic recovery. However, we could consider this an opportunity to adopt a more strategic approach and find out what went wrong in melting pot of the theory and rhetoric of lean, the current cost reduction focus and the day-to-day breakdown of contract confidence. Either way we need to revisit the implementation of lean within the UK public sector during a time of 'bust' as opposed to a time of plenty. 

The supply chain behind might be a bit of a mess

3.4m Toyota, Honda and Nissan cars have been recalled as a result of human error in the supply chain: "[a] worker forgot to turn the switch for a system that weeded out defective product parts" and improper storage of parts. Seems an amazing coincidence that last week I blogged on avoiding mistakes in procurement through using checklists - a checklist could have avoided the failure and a loss of reputation and potential profits.

Of course this isn't the first time we have discussed Toyota's supply chain woes and my heart goes out to all those buyers who must been accessing their personal procurement risk management. One recall is is understandable but this is becoming a habit - I suppose it means you get your car washed for free.

But then is it fair to point the finger at the automotive industry - is this not just just another version of the horsemeat supply chain problems which even this week refuse to gallop of into the sunset. In spite of unsuccessful  ministerial efforts to off-shore the blame and say there was no risk to health we may now have a health risk.

Nevertheless, pause, take a step back and recall that the rail franchise disaster also appeared to be based on human error in the evaluation formulae.

Then reflect on the PASC evidence that the adoption of 'lean' (which had its origins in Toyota) will be the panacea to all central government public procurement woes. Personally, I'm a great believer in Lean, indeed its application in public procurement was the focus of my MSc, but lean will not solve public procurement's core problems which appear to be much more related to culture and resistance to change.

Regardless of the sector, perhaps the real human error lies in trying to believe that systems work in absence of people and not recognising mistakes happen, therefore you need to put in place a comprehensive procurement risk management system. The car manufactures do not appear to have had the risk profile and impact right for the airbag issue.

Lean, for all it's benefits doesn't remove risk - ask the guy in front if he happens to be driving a Toyota, Honda or Nissan.

P.S. 12 April 2013 it has now become clear that Toyota have joined an automotive industry risk community with a strategic approach to risk management - the question remains though whether the proposed approach is too strategic to have identified the airbag risk? 

Recalling PRM woes

No, I am not pursuing an interest in cars.  It's just that the automotive industry seems determined to usurp public sector procurement as 'could do better on Supply Risk Management' and SRM has been a recurring theme of recent blogs.  Toyota, you will recall were the birthplace of Systems Thinking and Lean Supply, yet are recalling vehicles once again. One recall by a manufacturer is perhaps to be expected,  but Toyota appear to becoming masters of it.

The lessons for procurement are: think about the risks of prolific standardisation of parts, processes and specifications.  Why? Well as Toyota now know to its cost, if you are following a 'globalised standardisation approach', and it goes wrong - it is multiplied globally.  That's a big risk and not necessarily cost reduction!

It's also very difficult to make a switch to an alternative source, particularly if you are reliant on the intellectual property or patients of your suppliers.

But 'recalls' have other adverse impacts: customers who experience repeated 'recalls' become less tolerant, brand loyalty evaporates, and stock market value deteriorates.

Were these basic risks considered, and if so what were the mitigation plans?

All this provides yet more justification of the need to ensure procurement risk management at the board room.

I hope that our friends in central government procurement, who appear to be aiming to put in place bigger and bigger, standardised contracts, give some thought to these potential risks too.   I hope they also recognise that the 'kings of lean thinking' don't always get it right.