Spending Cuts To Pave Way For Greater Use Of Lean Management

Institute of Operations Management (IOM) response to public spending review announcement – 20 October.

In response to the recent spending review, Mark Eaton, Managing Director of Amnis, IOM’s Lean training partner, said: ‘The cuts will trigger the most radical period of transformational change in the public sector that anyone has seen in their lives. There will be fundamental differences in the way services are commissioned and managed with inefficient and non-core activities merged or withdrawn.

‘As well as the public sector, the cuts will have a deep, prolonged impact on third sector organisations and tens of thousands of private sector businesses, from suppliers of equipment to outsourced services providers.

‘While the public perception will focus largely on across-the-board cuts, senior service managers will have a complex task to transform what they do in such a way that it maintains quality within their reduced budgets.

‘Most organisations are not prepared for that. Looking fundamentally at how you structure your activities is not easy. Many organisations have difficulty co-ordinating their operations, management hierarchies and value streams.

‘I believe the spending cuts will pave the way for greater use of Lean management techniques to solve these problems. Lean has already proved effective in a wide range of small and medium-scale public sector programmes. Examples include reducing the costs of managing vacant properties, reducing the time from referral to treatment in the NHS and improving the processes associated with home fire risk assessments. Now, the challenge will be on transforming whole systems.

‘The starting point with Lean is that any use of resource which does not create value is wasteful and should be challenged. Managers looking to lead whole system Lean programmes in the public sector will have to overcome any limiting beliefs about risk, performance and accountability.

‘To achieve this, they should ensure transformation becomes a core business function just as much as the management of day to day operations. This will need to be preceded by the creation of a Transformation Map that looks at the whole system and details the steps that will be taken.

‘Organisations will need to ‘cut through the politics’ and build effective relationships with each other to get to grips with tough decisions. Staff, customers and other stakeholders will need to understand the scale and scope of the changes that are required and also how important the need for transformational change is. This requires effective, regular and high impact communications.

‘Perhaps the biggest challenge is for everyone involved to develop three key Lean behaviours: be obsessive about finding better and more efficient ways of doing things; constantly search for the ‘hidden’ part of the organisation that is adding no value and eliminate it; and tackle limiting beliefs that prevent the organisation from becoming more efficient.

‘Organisations that can successfully get staff to adopt these three behaviours will survive and prevail in the new public sector environment.’

For an article on Lean in the public sector, ‘Optimisation and transformation for the public good’, visit www.iomnet.org.uk/uploaded/documents/Optimisation_Transformation_Public_Good.pdf

IOM and Amnis are offering an ‘Understanding Lean in the Public Sector short course. A well led and well executed lean approach can help deliver transformational change in the public sector, making the achievement of financial and operational targets easier and helping to change organisational cultures. For more information and how to book go to:
http://www.iomnet.org.uk/Events/08-12-10/Understanding-Lean-in-the-Public-Sector.aspx

Spending Cuts To Pave Way For Greater Use Of Lean Management

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