Logistics – Vanderlande
Lean Strategy delivering sustainable growth in UK logistics automation
Lean Strategy delivering sustainable growth in UK logistics automation
The UK subsidiary of Vanderlande designs, builds, operates and maintains automation systems across a number of sectors. It operates business-to-business. It has established world leadership through excellence in product quality and more recently through innovation that has moved the company from a supplier of equipment to an integrated control systems partner.
Alec Gilbert talks to Martin Brenig-Jones about getting Lean Six Sigma started in Vanderlande UK
This case study looks at the deployment of a Lean Strategy at the UK subsidiary of a global world leader in automation technology. The global organization has over 4000 staff and a turnover of around £1.5Bn, whilst the UK subsidiary is a Small to Medium Enterprise (SME) of around 200 staff, turning over around £50m.
In 2012 the company suffered some shocks to its UK business – some positive, some negative.
It had just lost some mechanical system service business that it had held for 5 years, but it had also won some new IT controls service business that was unexpected. We could also see that nearly all the business in the previous 10 years had been with one customer, and that this customer was entering a period of reduced investment. It was clear that a fresh appraisal of the business direction was needed.
I could see that just “fixing our internal processes” as someone suggested I should do, would be akin to “rearranging the deckchairs” – not on the Titanic perhaps, but certainly on a rudderless ship.
My experience in recent years has been deploying Lean Sigma across European organisations. Prior to that I had led business development, sales and marketing activities.
I felt that this challenge was not so much a “lean process” challenge as a “business change leadership” opportunity.
I listened. I interviewed the leadership team of the company for their views of the state of the business, its strengths & weaknesses and the market opportunities and threats (voice of the people). We interviewed customers on their experience of the company (voice of the customer). We also mapped some of the key processes to understand some of the issues (voice of the process).
I then sketched out a Kotter change leader roadmap of the 8 steps, and planned the approaches and tools that I could apply on that journey. I worked closely with the MD of the company as I developed this journey. His buy-in to this approach and journey was key.
It was evident that the organization had become rather inward-looking. So I wanted to move the organization to a “customer-centred organization”.
3 of the 4 strategies we subsequently developed had the word “customer” in the them.
It was also clear that silo working was interfering in the business (so the fourth strategy was “teamwork”).
I aimed to apply the principles of lean to a business change. These included:
Voice of the customer – listening to customer needs as a driver for strategy
Voice of the process – measure what matters
Voice of the people – listen to the team and use their strengths
As we worked through the 8 steps of Kotter’s change approach, we used a variety of approaches:
Interviewed stakeholders to identify their concerns
Established who was in the leadership team and their roles
Change Readiness Assessment against the Kotter journey: self-audit to highlight our readiness for a change
“Insight” preferred working styles assessment of the leadership team to assess the team style, strengths and weaknesses
Thus delivering the Strategic Vision
Measure what you need to manage:
As the strategy was a growth strategy, we deployed a new sales processes, a new Sales & Operations Planning process and new sales metrics to give more structure and metrics to the sales process. The introduction of new processes and metrics into this area allowed us to proactively manage and measure this process far more objectively than had been the case previously.
The Sales & Operations Plan: by adapting this demand and capacity management tool from manufacturing industry, we collated all the “demand” data of the pipeline of sales activity into “one version of the truth”, shared across the business. By loading some capacity assumptions, we were able to estimate the “supply” of sales and delivery resources needed to fulfil the demand. This translated into resource profiles needed across 10 key roles in the organization looking forward a number of months and years, leading to recruitment and development of projected resource shortfalls.
“Decision to Engage (D2E)” and “Decision to Bid (D2B)” were identified as the 2 key gateways in the sales process where resources would need to be committed if we proceeded further. We introduced a metric for the strength of our customer engagement at theses 2 gateways. By correlating these scores with the eventual sales outcome we were able to establish scores below which further investment was not justified and scores where sales success was highly likely.
The challenging area was where the scores did not correlate clearly with winning or losing the work: the sales outcome was not certain either way. This “area of sales opportunity” was where we made decisions either (rarely) to withdraw from the process or (usually) to invest in the relationship to improve the score (and the likelihood of winning) by the next gateway.
Sought quick wins through the improved sales processes
Updated and re-launched the strategy after 3 years to keep it relevant
New leaders and staff hired with customer service ethos
Customer Excellence culture programme started
After we launched the new vision “Destination 2020” to the whole organization, with a structured communication engagement, asking people to “get on board” the journey, things went a bit flat. It was quickly evident that we had not yet “empowered our people”. People did not know how to get on board or what to do differently.
So we then spent another 2 – 3 months re-designing the organization around the 4 new strategies. By creating new leadership roles, putting new leaders in post and moving teams below them, this catalysed the change in practice and change started to happen.
The re-organisation and leadership changes tackled the biggest barrier of inertia, because it became evident to everyone that this change was “real”. Everyone sat up and took notice.
Keeping this strategy alive over 4 years has been thanks to a couple of main things. Firstly, a consistent MD who supported the approach, encouraged its development, sponsored and visibly supported the changes. Secondly, the strategy was developed by the whole leadership team of 9. By fully engaging all 9 of the leadership team in the strategy development, it took a few months longer to shape the strategy than would have been possible with a small core team. However, as a result, all 9 leaders contributed to the strategy, and “owned” it. This has undoubtedly meant that it has been a non-negotiable basis for the business for the last 4 years.
We also ensure that we hold a “Destination 2020” strategy event at least annually to update every employee and keep the strategy visible. At the end of 2015 we consciously refreshed the strategy to ensure that it met our customers’ evolving needs. This “nudge on the tiller” moved the focus towards “partnership” as a key enabler for sustainable growth.
Firstly: The results of the growth strategy included:
Increasing our rate of winning bids:
From 50% to 75% between 2012 and 2015 on over £300m of work.
Beating our growth target: We aimed to grow geographically from 1 customer to 10 customers by 2020.
We beat this by winning our 10th customer in 2016.
Diversifying: We aimed to expand into adjacent sectors,
We won £40m of business – double our target – in an adjacent sector.
Doubling the size of our UK office base to accommodate the growth.
Beating our EBIT target from 2012 – 2015.
Secondly: The greatest success was sustaining this journey over several years. This was because the MD of the company “got” the approach, and sponsored the changes through the leadership team. He made the necessary organization changes and sponsored the new key processes such as the Sales & Operational Planning meeting and the annual goals setting Hoshin cascade.
Thirdly: The growth in capability of the organization: The proactive approach to creating a customer-centred organization has led to us hiring a more customer-centric leadership team and staff. We are empowering customer-facing staff to develop more innovative solutions and to develop a customer service culture.
Leadership changes were made at a steady pace, and not “all at once”. It may have been possible to tackle more under-performance issues in a shorter time. However, there was a strong “family” culture in the organization, and a more aggressive change approach may have put the culture at risk.
Quick wins were hard to deliver in this “organic growth” strategy. It took more than a year to start showing tentative sales progress, which meant it took longer to convert “doubters” to the approach. I would put more focus on delivering some more concrete steps early on.