UK FMCG – IS LEAN A FOUR LETTER WORD?

For the industry that probably needs it the most, I fear Lean may be on a road to nowhere. It’s a shame – the industry is arguably facing its biggest challenge in history. Relentless price pressure could be forcing a total focus upon cost reduction, and this combined with the industry’s new emerging nightmare scenario that is social media images of poor processing habits could leave some of FMCG players ruined.

THE CURRENT FMCG TREND

Survival by being bigger and ripping cost out. It’s probably nearing the end of its effective cycle – most brands are now part of a huge “food group” and most of the centralised services benefits have probably already been manifested.

WHAT WE’RE LEFT WITH:

Food groups suffering the usual problems of rapid growth through acquisition:
•   Individual business units trying to operate as one
•   Conflicting cultures and values across the group
•   A workforce fed up with the term “restructuring”

That’s OK – the Retailers have the answer – It’s called Lean, and they’re going to make you do it! Here we go again, we must comply!

THE CULTURE PROBLEM

Most FMCG organisations I’ve encountered face a common problem – a culture of compliance. And, where Lean is concerned, this is a major hurdle. A true Lean organisation at it’s very heart has a culture of Continuous Improvement, an approach of challenging everything and striving for excellence in everything it does just because that’s what the whole organisation is about. Having to improve because the customer has raised the compliance bar isn’t the same. External “lean audits” may exacerbate the problem – it’s true that audits can drive actions, but by the same token, actions can drive behaviours, and in time, behaviours form a culture. The term “culture” is currently ranking highly as “sustainability”. Many organisations are chanting these words, but in my experience most are just doing cost reduction. The culture that may emerge could be a legacy of this generation.

COST REDUCTION IN THE NAME OF LEAN

“The ultimate objective of any improvement programme is to lower manufacturing costs”
Anonymous FMCG “Lean Expert”

It seems the FMCG sector is getting the same message from all sides – being lean is all about cost reduction right? Well there’s the problem – it depends upon who you listen to. If we’re talking about how the true Lean principles have typically been bastardised in the past, then yes – it’s all been about cost reduction. For the few that have embraced true Lean principles, it’s about being the best in industry in everything they do, being un-catchable. Ultimately, only those organisations will survive.

5 THINGS THE INDUSTRY NEEDS TO DO:

  1. Make Lean your own and do it for your own reasons – ticking boxes to comply is just a waste of time and will discredit you in front of your staff. It will make Lean a four letter word.
  2. Use Lean from a PULL perspective at a business level, not a PUSH of tools on the shop floor. Link your Lean activities to top level business objectives and PULL the results through.
  3. Get professional guidance from Lean experts with leadership experience – without this, the “lean expert” only knows the tools, and you might as well download them from the internet.
  4. Develop your people, particularly your management team. Leadership strength is the key ingredient to success with Lean.
  5. Once you have enabled your organisation, then set the bar high across a balanced set of business targets. A pure focus upon cost reduction will not grow your business.

What do I do if the top level of my organisation only wants cost reduction from Lean?

Find an organisation with a stronger more visionary leadership team. These are the organisations that will succeed and be the best employer with the best benefits with the best career development opportunities. Move town if you have to.

If you’ve had an average outcome with Lean, don’t throw the baby out with the bath water.  LMAC can show you a better way.

CONTACT US

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