FEATURE
MEETING THE PUBLIC SECTOR THE ART OF REDUCING COST W
also reducing the cost. But how is this waste to be identified and eliminated? And what is the track record of eliminating waste in the past – the ‘old’ way? The Public Accounts Committee seems to make this clear in its latest report published on 4th November:
T
“Departments were in general unable to make real value for money savings of 3 per cent a year following the 2007 Comprehensive Spending Review – and that was at a time of increasing budgets. Now that much more radical cost-cutting measures are required across government, my Committee is gravely concerned about the ability of government to make efficiency improvements on the scale needed. There is a serious risk that, to reduce costs, departments will rely solely on cutting front-line services”. Lean is a proven approach to reduce waste – but it must be pursued correctly to deliver sustainable, significant benefits for an organisation. At its heart, Lean is a philosophy rather than a tool. The prize is an organisation that can avoid the repeating pattern of arbitrary cost cutting and reducing service levels.
Over the last few years some parts of the public sector have begun to use Lean
he Comprehensive Spending Review has now been delivered. The general view is that ‘waste’ must be reduced, thus protecting the things people value whilst
approaches to address their challenges. Areas within Defence, National Savings & Investments, HM Revenue & Customs, the NHS and the Department of Work and Pensions have been leaders in Lean’s early application. For any organisation turning to Lean as a route to achieving their improvement goals, there are a number of key factors to understand and address. This list is not exhaustive but contains elements that are frequently overlooked.
IT’S NOT SOMETHING THE SENIOR LEADERSHIP TEAM SHOULD DELEGATE
The Senior Management Team must take the time to: • articulate clearly the real purpose of the organisation and the core value it must provide, so that the needs of the customer and citizen are central to any activity.
• understand the Lean approach and agree how it will be applied in the organisation
• find the money, staff and necessary time to resource the implementation effectively
• commit to staying actively engaged in selling the message to their staff and throughout implementation – until it becomes self-sustaining.
The Senior Management Team need
to demonstrate through their own actions the changes they wish to be adopted, whilst ensuring that a robust deployment strategy and governance/management structure is established. Defining, agreeing and articulating to the organisation the activities and outcomes required to achieve both the continuing value in terms of services and the savings sought need not take long, about six weeks on average, but it is vital. It will ensure control stays in the hands of the senior team, that the purpose of the organisation is not lost, that scarce resources are used to maximum effect and a consistent and coherent approach is taken to implementation thereby increasing the chance of success of delivering valued front line services within the financial constraints.
FOCUS ON WHAT THE CUSTOMER VALUES
In this context the ‘customer’ is the recipient of the output from the organisation/process (the community, citizen, partner organisation, customer or the colleague who is the next step in the chain). The organisation, starting at the top, needs to examine fundamentally who its key customers and stakeholders are and what they really need and value. This inevitably challenges some long held preconceptions and misconceptions so customers and stakeholders should be involved in this process to keep it honest. The rail industry arguably lost its way
post-privatisation – with too much focus on cost reduction/profit. Most customers are interested in price, but not at the expense of safety or trains that run on time.
UNDERSTAND THE PROCESSES IN YOUR ORGANISATION AND MEASURE PERFORMANCE AGAINST WHAT THE CUSTOMER VALUES Once the organisation understands what the ‘customer’ values, it can examine the internal processes by which it currently delivers that value. This is the key point at which the opportunity to start to drive out waste appears – by focusing the whole organisation on the value adding activity. This can be very illuminating – particularly for managers. HM Revenue & Customs have embraced Lean for a number of
38| SUSTAINABLE FM | NOVEMBER 2010
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