‘Lean’ management techniques have long been deployed to improve the efficiency of manufacturing industry – and now the same methods are coming to a government department near you. Joshua Chambers reports.
Forged in the car plants of Japan after the Second World War, ‘lean’ techniques allow companies to continuously cut waste out of a process while actively improving the customers’ experience. What does this have to do with the civil service? Already used with success by organisations including HMRC and the Ministry of Justice, lean management can help civil servants squeeze good services into smaller budgets: just last week, cabinet secretary Gus O’Donnell praised the approach at the Public Administration Select Committee, noting that it taps into the expertise of frontline staff to yield efficiency savings.
Toyota is credited with creating the lean method in its manufacturing systems, by engaging employees and asking them to think of ways to cut costs and improve processes. Even today, every step of its car production lines are assessed by workers to ensure that cars are manufactured in the most efficient manner possible.
Other manufacturing companies have also taken up the idea, including Unipart: an engineering firm, created after the breakup of British Leyland in the 1980s, which has launched a consultancy wing to sell its business experience. The head of performance at Unipart Expert Practices, John Coulston, explains that “essentially lean is all about building quality into processes so that it’s impossible to get an activity wrong. At the same time, you take waste out of the process and make it more efficient.”
Lean saves money not only by looking for avoidable costs in manufacturing processes, but also by focusing only on what the customer really wants, Coulston explains: “The start of any lean programme is to work out what are the customers’ needs, and go on from there.” Unwanted parts of a service are cut out and its most valuable elements improved.
Given that lean techniques were developed in manufacturing, their value in the public sector is not immediately obvious. However, IT company Wipro Technologies found that the process could easily be applied in other industries. Wipro’s head of public sector, Geoff Llewellyn, says that “going from the world of metal-bashing to the world of IT was a leap of faith, but when we applied the techniques, we did find the read-across was very good.” Llewellyn explains that Wipro used lean to identify a huge amount of waste and duplication in software development processes.
Public sector potential
Lean differs from traditional consultancy because rather than tapping into external expertise, it trains and engages staff to find the waste for themselves. Some government departments have already started to use the techniques, and are reaping the benefits. One such organisation is the Tribunals Service.
Its chief executive Kevin Sadler is an evangelist for lean, having found the technique valuable in his organisation. Last year, he said in an interview with CSW that one team increased its productivity by 136 per cent in one year by streamlining processes and cutting out duplication. Updating CSW on his organisation’s progress, Sadler says that every month the service saves 7,000 working hours “through improvements identified by lean.” He adds: “That’s the equivalent of 60 staff, and it’s making a big difference.”
Another organisation which has used lean techniques to great effect is HMRC. It spent £54m on setting up its lean programme, called the Pacesetter Programme, and has achieved over £900m of savings since 2005 – £300m from gross salary savings, and £600m from additional yields in taxation realised as a result of improved productivity. The programme’s deputy director, Ms Chris Simpson, notes that HMRC has also “seen real benefits for the customer in terms of the quality of the work that we do. Customer waiting time has reduced and productivity has increased”.
Some other departments also run their own lean programmes – and now the Cabinet Office has joined in. Late last year it commissioned a report by lean experts that identified potential savings in complex government procurement processes.
Not only is the Cabinet Office using lean, but it also wants other departments to do so. So far departments have been hiring lean consultants independently and training their own staff in these techniques; but this looks set to change, with reports that the Cabinet Office has plans to establish a central ‘lean academy’ to train civil servants from all departments. So what will any future students be learning? CSW has looked at how two departments (and an NHS trust – see below) have applied lean.
The Tribunals Service
The Tribunals Service is an executive agency of the Ministry of Justice (MoJ) and consequently has been able to use the MoJ’s ‘lean academy’ – a training body that teaches civil servants to become dedicated in-house experts on finding and eliminating waste. Starting in 2009, the Tribunals Service has trained 25 lean experts through the MoJ academy.
Sadler is clear on the benefits, and in an interview last year with CSW said that “to get the enthusiasm, you do need to use your own people. I think everybody working in public services has seen consultants come up with a set of ideas, then – because the consultants have gone and something else comes along – those ideas get neglected. We can’t afford to do that.”
Frontline workers are key to the process. “Lean is all about getting the people operating the processes to work out how to do them better and eliminate waste. The people who get most frustrated about waste are those at the frontline,” Sadler says.
There are two major costs, however. First, the direct cost of running the academy. Second, the indirect cost of taking frontline staff away from their work – particularly at a time when redundancies are putting the frontline under additional pressure. This latter problem can exacerbate manpower shortages, Sadler says. “We’re taking people out of hard-pressed offices running the processes, and training them and putting them back – but we took the view that we have to spend to save here. Given the tight financial circumstances, the only way we can make the savings we require is by investing in this way,” he says.
A key lesson learned by Sadler is that lean practitioners should be encouraged to follow processes wherever they lead, rather than stopping at departmental boundaries. The Tribunals Service recently had to tackle a surge in unemployment tribunals and, instead of just looking at how to make the tribunal more efficient, Sadler’s lean team worked with the Department for Work and Pensions to reduce the number of people seeking appeals.
The team designed and piloted a process of telephoning people to explain tribunal decisions to them. This has reduced the number of appeals, and also makes people more satisfied with the service they receive, Sadler says. The Tribunals Service is now planning to use its team of lean experts to reduce the number of appeals against decisions made by the UK Borders Agency.
HMRC’s Pacesetter Programme
HMRC first started using lean in 2005, but initially found it difficult to win the support of senior management. Consequently, efforts to communicate the scheme’s aims were expanded and it was rebranded as the HMRC Pacesetter Programme.
The programme’s deputy director Chris Simpson explains that rebranding the project as an internal scheme won over senior staff who’d previously seen lean as something being imposed by outside consultants. HMRC’s lean team now make sure that “senior management are very much involved in the programme,” she says. “It’s the connection between senior managers understanding what’s happening, being visible, and allowing people who do the work and serve the customer to find savings.”
Currently, half of the department works in an environment using lean principles, and Simpson says that the target is to have reached everyone in HMRC by 2013. As part of the lean team’s efforts to build internal support for the scheme, the department has been keen to take over the work of training staff in lean techniques. “Our academies used to be run by external consultants; now they are wholly run by internal practitioners,” Simpson says; 300 lean practitioners are being trained this year. Further, she says that HMRC expects to be consultant-free by the end of this year.
The department is proud of the waste it has eliminated by using lean techniques – in particular, by making more intelligent use of its property so that work is completed more quickly. “In one particular process, a self-assessment return travelled about half a mile around a building before it was worked on,” Simpson says. “It now goes into the post room and then straight to the team member who is going to work on the case.”
A central government lean academy
Both HMRC and the MoJ have their own lean academies, but now the Cabinet Office is looking at the lessons learned from these programmes and wants to ensure that departments collaborate more when training staff in lean skills.
Work is underway to set up a single central lean academy, says Simpson; this will “contain all the generic tools: the lean and leadership aspects, so that [departments] can use them in their business”. She adds that HMRC has “been working closely with DWP, MoJ, and the National School of Government and demonstrated that there is scope for one academy across government.”
However, the Cabinet Office is reticent on its plans: a spokesperson says that there is “no active plan in place” and that “it might be a bit premature to talk about any of the specifics.”
The case for lean
Despite lean’s origins in manufacturing, the technique’s champions believe it can make a real difference in government departments as they seek to reach their spending review settlements. In particular, Simpson says that lean techniques have enabled HMRC to take on more work without requiring extra staff, and will help it to cope with staffing reductions. “Pacesetter will be a huge enabler in reaching our spending review savings,” she says.
Tax collectors and, indeed, benefits appeals courts are a long way removed from the automotive plants in post-war Japan, but Sadler and Simpson are certain that departments need to use lean more in the future. “I think it’s absolutely necessary.” Sadler says. “Departments with big frontline operations – and even departments which are more policy-orientated – can always benefit from looking at their processes and reducing waste.”