By Andrew McBean
The weakness of the world economy will have inevitable downstream ramifications on Thailand. I recently heard a speech by ex-finance minister Korn Chatikavanij, who said that during the 2008 crisis Thailand had lost more than 500,000 jobs in the manufacturing sector within a few months. Fortunately, the Kingdom has a low rate of unemployment and a social structure that absorbs laid-off workers either at home or as informal labour. However, it seems likely to happen again with two key differences; it will be deeper and more protracted.
Combine this with the horrific flooding affecting many parts of Thailand, especially manufacturing bases, and it means that existing businesses will be under tremendous and ever more relentless pressure to produce more from less.
Two other local factors are lending weight to this focus too: a growing foreign management cultural influence within Thai companies and the present government’s policy on wage rises. Even if the policy is delayed, businesses know it will happen eventually and are preparing for this.
A useful silver bullet to increasing productivity is looking at key business processes and how to improve them. Analysing the individual tasks, which comprise that process allows an intimate and detailed look at its long-forgotten journey uncovering critical procedure, people and systems information along the way. Armed with empirical information, leaders can more easily defend and justify necessary changes.
A popular approach to process improvement is called “Lean”. This process started in a post-World War II Japan struggling with resource constraints, although the term itself was first coined by John Krafcik in a 1988 article, “Triumph of the Lean Production System”. As the name implies, it works by delivering improvement through constant, iterative small changes.
Lean is typically focused on reducing waste, and therefore cost. It also attempts to “smooth” operations through continuous improvement. At its heart is the quest for a process to deliver the ultimate, almost theoretical, panacea of allowing customers to “pull” their own products and services. This is done by always considering what, in the process, provides the most value to the customer.
To get Lean:
-Break a process down into the sequence of its constituent tasks (in Lean this is often called the value stream);
-Capture the “why, who, what, where, how, when and how well” for each and every task;
-Through analysis, identify those tasks that create value for the customer;
-Eliminate any task or part of a task that does not add this value;
Lean has many advantages in today’s challenging business environment: It is not as disruptive as larger process improvement approaches. Often business leaders are hesitant to tackle problems related to their key business processes as they are concerned that any disruption to them would simply cause further problems; a classic Catch-22 leading to procrastination and, ironically, poorer results and an increase in remedial costs.
Lean works quickly. For ex-ample, we can analyse one typical business process and report our findings within 10 days.
It is cost-effective as each project is “bite-sized” giving leaders more “bang for their buck” as they see results, and hence value, more quickly.
As changes are smaller but iterative, the fear of change, which is often the key reason improvement projects fail, is markedly decreased, meaning that recommendations are more readily adopted by employees, which makes for a more practical solution.
Lean projects do not need to be led by a subject matter expert who is typically an expensive resource, for example a “Banking Expert”. The majority of what constitutes a process is logic. Therefore “process experts” can work on any process across any industry, using only a small amount of time from an expert if and when required.
So, want to get cracking on Lean? Here are a few reasons why help might be useful, at least at the beginning:
Grinding down a process is extremely pedantic, rigorous and detailed. If it were easy, companies would already be doing it. But many companies do not have the expertise to do this even within their operations.
Employees who are involved in an existing process may have a vested interest in its status quo and not particularly inspired to change it in any meaningful way. Also being “outside” a process helps give a fresh perspective.
Finally, but most importantly, key business processes always cross the political lines in a company. Business leaders need independently gathered data with which to defend and coerce critical organisational changes.
Finally, harder to explain but often found in improvement projects is that recommendations to fix the business process, which was identified as the priority, have quick, positive effects on many other processes. This leads to even further value from getting Lean.
Andrew McBean is a partner at Grant Thornton Management Consulting, a newly formed unit of Grant Thornton Thailand. His column is published every third Monday of the month.