Amazon, Nike and Toyota are household names around the world. The secret to their success is the same mindset that underpins the work of Time Consulting Group.
Management consultants have a reputation for using jargon, but there’s one concept in our toolkit (see?) that really does deserve more respect: Lean.
Lean thinking is an idea about how to run business operations, and at its most basic is the simple idea that businesses must pursue continuous improvement to get closer to what the customer really wants from the product or service. The best way to explain the effectiveness of Lean is to show you how it has worked for three of the world’s biggest companies.
As you will see, the businesses are very different, but the principles behind their growth and dominance of their respective markets is the same.
Amazon
Few companies have taken delighting the customer as far as Amazon in recent years: from accurate product recommendations and simple online purchasing to next-day delivery, the tech giant has consistently shown an almost uncanny ability to raise the bar for customer satisfaction.
Marc Onetto, former Head of Global Operations at Amazon, says this is made possible by the spirit of Lean management. Writing for McKinsey, Onetto explains, “Since the day he created Amazon, Jeff Bezos has been totally customer-centric. He knew that customers would not pay for waste – and that focus on waste prevention is a fundamental concept of Lean.”
Lean principles, tools and techniques underpin the way Amazon seeks to continually over-deliver in terms of customer satisfaction.
For example, autonomation or jidoka, is the Lean model of automation with human supervision. This allows people in the workforce to focus on higher-value, more complex tasks while making best use of machines and robots – a system that’s in evidence within Amazon’s famously hi-tech warehouse operations.
Amazon has also implemented the andon cord to eliminate defects in the process. Customer service agents have the power to take a product off the website until any problems with it have been fixed.
And last but not least, Amazon is one of the most striking examples of kaizen, the ethos of continuous improvement to improve efficiency and exceed customer needs. Amazon’s fulfilment centres are some of the most efficient operations you’ll find today, handling volumes of orders within timeframes that are simply unheard of elsewhere. Despite being world-class, the quest for staying ahead of the competition is still fundamental: every one of their centres has a manager dedicated to ensuring continuous improvement in the workflow.
Nike
Nike has built a reputation as one of the top sportswear manufacturers in the world; they are a powerhouse when it comes to advertising and branding. But their market leadership is also built on a culture of Lean thinking and a focus on continuous improvement.
Nike’s Lean philosophy is ‘Make Today Better’, and it’s evident in every one of their facilities. Employees are trained in continuous improvement and empowered to improve operations.
Nike first shared the significant benefits gained from Lean in 2012 in their ‘FY10/11 Sustainable Business Performance Summary’ document. The report revealed Nike had gained a 50% reduction in defect rates, 40% faster lead times, a 20% improvement in productivity, and a 30% reduction in time taken to introduce a new model.
All this means Nike can provide high-quality, customisable products, on time. In the world of fast fashion, the ability to stay several steps ahead of the latest trends has helped Nike build – and keep – a loyal customer base.
Toyota
Toyota is the birthplace of Lean. Remember jidoka and kaizen from Amazon? There’s a reason why we dropped some Japanese into the conversation. The Lean manufacturing philosophy was derived mostly from the Toyota Production System (TPS), a waste-elimination methodology developed over the decades since the business first started manufacturing in the 1930s.
It should come as no surprise that Toyota still practices what so many have come to preach. With nearly 100 years’ head start, they are widely recognised as one of the top Lean manufacturing companies in the world.
Toyota simply wouldn’t be what it is today without Lean. By creating a Lean learning culture where employees at all levels are focused on continuous improvement in everything they do, every day, Toyota has achieved tremendous growth and success.
Their operations are built around core Lean principles such as Value Stream Mapping (VSM), standard work and policy deployment to align company goals and Lean strategies. Continuous improvement is so important that there are always a percentage of shop floor workers focused on this full-time.
Toyota also places significant importance on making sure their key suppliers follow Lean processes as well, recognising them as an important part of the extended value stream.
All this is reflected in their customer satisfaction levels. In the UK last year they were the highest-ranked automotive brand in the UK Customer Satisfaction Index (UKSCI), and placed 19th overall against all UK companies.
Can smaller companies benefit from Lean?
These global companies have seen monumental outcomes from implementing Lean, with loyal, highly satisfied customers being the ultimate accomplishment, but the concept applies just as well to smaller businesses, especially if those businesses are hoping to be better than there competitors and gain market share.
Lean is just one of the tools that we use in helping mid-sized businesses undergo transformations of their processes, with a responding transformation in their productivity, growth and profit. If you are curious about how your organisation could benefit from our expertise, get in touch for an informal conversation.