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EXECUTIVE SUMMARY

Lean thinking has its roots in the Toyota production system, and has been developed in the manufacturing sector. Womack and Jones (1996) highlight five core principles to define Lean thinking as a means for understanding value (Womack, 2002):

A toolkit of methods for practical use at the operational level has been developed to support lean thinking. Tools include, for example, value stream mapping Tools include, for example, value stream mapping which is used to analyse the flow of resources, highlight areas where activities consume resources but do not add value from the customer's perspective. This map is used to generate ideas for process redesign.

Although applied successfully in the private sector, especially in manufacturing, the approach is less frequently applied in the public sector, and little research has evaluated whether the lean approach transfers successfully and what impact this has had on productivity and/or quality of service.

Methods

This research aimed to evaluate the application of Lean in the public sector to consider if it is an appropriate means to embed a culture of continuous improvement. The research consisted of a literature review; case studies of eight public sector organisations, predominantly based in Scotland; a survey of Scottish-based public sector organisations who believed they were implementing aspects of 'Lean'; and an evaluation of the implementation and impact of a Lean methodology in three pilot sites.

Lean in the Scottish public sector: Working definition of Lean

The research found a key difference between Lean in the public service sector and that used in manufacturing. In manufacturing, the emphasis is on a set of management tools and techniques that are used to standardise processes. Within the public sector, however, there is engagement with the principles of Lean, but less with the full range of tools and techniques. Most organisations, for example, used just a few tools, such as value stream mapping.

This implies that many of the tools and techniques used in a manufacturing context are currently not immediately and obviously applicable to service environments. Instead, some of the tools need to be adapted to cope with the need for greater process flexibility that are found in the public sector to meet the needs of the customer. In some cases, the limited range of Lean tools in use in the public sector may be because the service sector has yet to understand the value, relevance or purpose of the tools being applied from within the toolkit.

Lean in the Scottish public sector: Implementation approaches

Two models of Lean implementation are used in the public sector, and can be described as Full Implementation of the philosophy and the use of Rapid Improvement Events. Examples of Full Implementation, which is considered to be embedding of Lean principles and broad use of different Lean tools including the use of Rapid Improvement Events, are more difficult to identify in the public sector. This approach aligns improvement to strategy taking a whole systems perspective.

Most case study sites use a Kaizen approach, often described as a 'Kaizen Blitz' or 'Rapid Improvement Event ( RIE)'. The RIE approach uses rapid improvement workshops to make small, quickly introduced changes. Rapid Improvement has three phases. It begins with a 2-3 week preparation period, followed by a 5-day event to identify changes required and a 3-4 week follow up period after each event when changes are implemented.

An advantage of the RIE found in this research was that public sector managers found its style of delivery could overcome slow responses by staff to change initiatives. Line managers argued that it provided a faster return for effort, was more visible and did not challenge existing management control styles to the same extent as Full Implementation. It was also favoured by staff as they felt engaged in an improvement process that quickly demonstrated potential results where they had some input. However, the disadvantage of the RIE was that 'quick wins' may be difficult to sustain because they are not easily integrated into the overall strategy of the organisation which would be more likely to lead to longer term continuous improvement. The Full Implementation model, on the other hand, has the advantage of linking improvement to overall strategy which, as will be shown, was found to be advantageous in Lean implementation.

Outcomes from Lean implementation

The test for any new management concept is whether or not the outcomes of the approach are sufficient to justify the cost and effort of implementation. All case and pilot sites, as well as survey respondents, reported some improvements, but most sites had not achieved all the objectives they had hoped from the Lean project. The research found two types of outcomes from lean: tangible and intangible, the former referring to measurable outcomes, and the latter referring to more qualitative outcomes.

There was a wide range of tangible outcomes reported, including:

There was also a range of intangible outcomes delivering benefits to the customer, the organisation and the staff which can be summarised as:

In sum, the research found that Lean can drive efficiency improvements but cannot necessarily be used for the primary purpose of making cash savings in particular through reductions in staff numbers.

In considering why change has occurred to a greater or lesser extent, the research highlights several factors that inhibit change from happening. These factors relate closely to pre-existing evidence from the manufacturing sector, and include:

Irrespective of the Lean model used, therefore, these findings suggest that organisational and cultural factors shape the degree of success of Lean.

In most cases, improvement initiatives had not been integral to organisational strategy. This apparent weak link between strategy and improvement had not impacted the outcomes of Lean, as successes were found across all sites, but it was felt that this may not be sustained in the longer term as organisations become more process focused and need to more clearly allocate resources to improvement activities. This implies that a more sustained and effective Lean application would link strategy and operational improvement in a whole systems approach.

The research found that organisations who are more engaged with Lean and had considered and planned for it are ready to embrace Lean improvements. The results suggest that the organisations with a history of managing change, that had previously tackled process change and are able to build effective, multi-disciplinary teams to work across traditional organisational barriers are those with the greatest capacity for Lean improvement.

In terms of more sustained improvements, however, other factors are also relevant to understanding the degrees of success of Lean. The research suggests that a critical mass of people who are comfortable working with Lean practices is required. In the short-term this requires behaviour change and those using the tools and techniques need to be trained in Lean. In the longer term, skills transfer, especially from consultants to employees, from those involved in the RIE to those needing to implement change, is a key factor in sustainability, and strong leadership and communication of the changes are the main ways through which people become skilled and engaged and add to the critical mass.

Success factors in implementing Lean

The evidence uncovered a wide range of factors related to the successful implementation of Lean in the public sector. These are:

Organisational culture is an important success factor, with a need to ensure that all staff are willing to take on board the initiative and to gain a sense of ownership. The case sites and pilot studies both demonstrated that a key challenge during the early stages of a Lean implementation was to engage all staff in the process as quickly as possible. By engaging staff, they become motivated in their work and in making changes to the process. In addition, the experience of participating in a process improvement initiative changes people's attitudes to the concept of change and prepares them for a future culture of continuous improvement.

Organisational readiness is a key factor in the success of Lean. This includes generating a vision of a fully integrated Lean organisation at the outset of implementation; being realistic about the timescales involved in making changes and embedding the process; engaging staff and helping them to understand how the Lean approach may impact upon the organisation and; evaluating the degree to which a process and customer view already exist within the organisation.

Management commitment to the improvement events is a key element of the implementation. The survey, for example, found that managerial commitment to ongoing improvement was the most important factor contributing to the success of the Lean projects. However, this also requires making provision for supporting changes, including staff time for the duration of the preparation meetings and RIE and financial resources for any changes recommended.

The research found that external support, often through management consultants, is effective and even necessary for implementing lean. However, it was agreed that consultants should provide a skills transfer function so that investment in consultancy will lead to wider gains within an organisation. In one case, for example, the organisation had become dependent upon consultants as skills transfer had not taken place, resulting in a much larger investment in Lean consultancy than originally foreseen.

Good communication is also important to ensure Lean is implemented effectively. Good communication during a Lean implementation has a number of benefits, including recognition of employee effort; maintenance of the momentum for change, sharing knowledge across work streams or departments, and generating buy-in from other staff not involved in the RIE process. In a poorly communicated Lean implementation, the initial enthusiasm for Lean may quickly diminish, while other staff not directly involved in the RIE may remain disengaged, resulting in a reduction in improvement activity and a consequent lack of sustainability of the changes made.

Taking a strategic approach to improvements can also help to generate this vision of Lean as having broader impacts upon the organisation. The research found that by aligning Lean to more strategic aims of the business more sustainable wins are made and commitment from staff to the change process is enhanced.

Team working is an important, even critical, aspect of the Lean approach as well as other change or improvement activities. The constitution of teams is important to generate both buy-in from the participants and the staff who are involved in the process under review. It was reported that team work allowed organisations to generate capacity for improvement, it helped to reduce the hierarchical boundaries between staff where improvements were required, and developed a sense of joined-up working in a whole system.

Finally, it is important to set realistic timescales for change so that expectations are set. Timing is also important for building on the momentum for change generated by improvement events as delays can impede implementation.

In contrast, the research identified a wide range of barriers to successful improvement programmes, including:

Conclusions: Implementing Lean in the Public Sector

Analysis from the research with organisations in the Scottish public sector, together with evidence from the literature, indicates that Lean is transferable to the public sector and can be used to develop more seamless processes, improve flow, reduce waste and develop an understanding of customer value. Lean is most suited to organisations with high volume, repeatable tasks that allow greater standardisation and integration, supported by a less hierarchical management structure that allows empowerment and engagement of the workforce. However, to ensure greater successes, organisations require an awareness or realisation of the need for improvement; the capacity within the organisation to deal with change; and an organisational culture which is receptive to understanding the customer and process analysis and is able to use relevant data to drive improvement.

For longer-term impact and sustainability, implementation of lean should be tied to more strategic objectives. By tackling the barriers and ensuring the provision of the factors contributing to success, this research finds that Lean is a suitable methodology for improving performance and embedding a continuous improvement culture in the public sector.

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