The Core Principles Of Lean Strategies Commerce Essay


According to Lean Enterprise Institute (2009) the core idea of Lean is to maximise customer value while minimising waste. Simply, Lean means more value for customers. Lean production is a complex managerial concept, which spans the entire company, from product development to strategies (Womack, 1990). Also Lean process is known as a collection of business value creating process (Womack, 2004).

A change is necessary in business when the process is not working partially or entirely. But to bring change in business it need to follow a management process and here we will be discussing the process of Lean tools and Management.

Answer to the question no 1.

Name of the focus area (company): EDF Energy PLC.

Established as EDF Energy: 2003

Employees: Nearly 20,000

EDF Energy is the largest electricity network operator, distributing electricity to over a quarter of country's population. EDF Energy is also a major generator of power in the UK, and over 5.665 million customers to supply gas and electricity (EDF Energy, 2010). It have coal and gas generation, wind farms as well as combined heat and power plants and also a part of the EDF Group, one of the largest energy companies in Europe, with key business operations in France, the UK, Germany and Italy.

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Organisational Structure of EDF Energy

Source: EDF Energy, 2009

The Operation of EDF Energy Customer Branch:

Provides a meter reading, maintenance and data management service and domestic and business supply sales and marketing.

Very recently EDF Energy has taken over British Energy to strengthen in production capability through its nuclear power stations to produce more electricity to make comparatively affordable electricity to every household. EDF Energy believes in being more than just an energy company. They believe they have a commitments to the community in which they operate and support a range of different charities and initiatives (EDF Energy, 2009).

Electricity Market Sector

According to Market Report (2007) the terms of sales, the UK electricity market is divided into the following sectors:-







The above markets are all covered by EDF Energy in general. The main challenge of EDF Energy is facing in respect of managing one of the organisational divisions that is not getting enough sales to keep the organisations' ratio wise balance scale of the business where they are losing more customers then the acquisitions. Here it is considered only SME Sales because of time constrains and not enough information available at present from rest of the departments.

Answer to the question no 2

Lean production referees to approaches initially developed by Toyota Motor corporations focusing on waste in all forms (Raturi and Evans, 2005). In 1980's a huge paradigm shift hit factories in US and Europe. Theory of mass production of early 1900's were questioned a Japanese manufacturing companies introduced that Just in Time and Jidoka were the better paradigm on Lean Management system.

Just in time (J I T) is defined as rapid coordinated moments though the production system and supply network to meet customers demand. And jidoka is described as humanising the interface between operator ands machine (Slack et al, 2007).

To understand how JIT approach differs from more traditional approaches to manufacturing into contrast the two simple processes:-

Traditional approach- buffers separate stages and ;

JIT approach - deliveries are made on request

Traditional approach and ii. JIT flow between stages

(Adopted from Slack et al, 2007)

According to Toyota study that the design was guided by four rules, among them rule four - any improvements must be made in accordance with the scientific method, under the guidance of a teacher and at the lowest possible level in the organisation (Slack, 2007).

The common calculation behind the lean management success stories is looking into value chain; asking how can an organisation do nothing but add values; and does that as rapidly as possible? It also suggested eliminating all middle steps, people and time or activities. And that will have behind time, people, activities which will add values for the customer.

Overview of Lean Concept:

There are many views of lean thinking and lean productions. But most of the people recognise the root of lean thinking in the Toyota production system (Monden, 1983). According to Womack (2002), Lean classified into five core principles:-

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Specify the value desired by the customer;

Identify the value for each product providing that value and challenge all of the wasted steps (generally nine out of ten) currently necessary to provide it.

Make the product flow continuously through the remaining, value-creating steps

Introduce pull between all steps where continuous flow is impossible.

Manage toward perfection so that the numbers of steps and the amount of time and information needed to serve the customer continually falls.

In reality an assumption made by lean is that organisations are made up of processes. Hence, improvements made in a Lean context optimise the process or customer's journey rather than optimising individual departments. This perspective, which is widely applied in industry, is sometimes referred to as the process-based view of organisations (Radnor et al 2006).

According to Hines et al (2004) Lean from two perspective known as i. Strategic Level and; ii. Operational Level.

Source: Hines et al (2004)

Learning to evolve - A review of contemporary lean thinking

In respect of usages of Lean management in non-manufacturing LEI (2009) stated that every core principle applies strongly even if in the non-manufacturing settings. They also added that many of the breakthroughs have taken place in areas such as services, health care and government. John Shook (2009), senior advisor and co-author of Learning to See of LEI has also stated that TPS described as a manufacturing system, but the thinking of TPS or Lean applies to any function, whether it matters to 15,000 parts or 15 parts or just providing services, Lean works because it is the way of thinking of whole system philosophy.

In one paper report by Ballard et al (2003) the result of an experiment in Lean Production carried out by Strategic Project Solutions. The specific focus of the work with Malling was to reduce the time required to fabricate precast elements. The opportunity was for improvement in construction process where they one order be made to order rather than engineered to order. They also stated that in some cases customisation is necessary in order to meet customer's needs.

The Malling experiments involved numerous initiatives and below are some of the most important actions taken place to establish attention:-

100% reliability of information and product delivery;

Lead time to wards zero;

Six sigma quality standard;

Zero safety incidents and;

Continuous and sustainable recommendations for improvement by all team members.

On the other and Dr. James P. Womack has suggested in one of his video lecture (2008) that Lean tools are there to work but there have to have Lean Management to implement the Lean into the business and it is not easy but he suggested planning from top ( the process) but with multiple feedback loops. What he suggested is that any innovation comes into table it needs to be discussed and agreed on the table to a standard and try it unless it need to sit-down again.

Lean management is process and it is developing every day. Initially it started to facilitate better result from manufacturing units and gradually it is also developing its theory in service industry as well. There are lots of opportunity to explore in the future in sales and marketing areas to improve in sales figure with a positive manner to help people who are devoted in this part of the industry.

Answer to the question no 3b

A major training initiative is underway to spread the world to operators about waste removal and the distinction between value adding and non-value adding activities addressed by Darlington, 2007 in Learning to See. What he wanted to tell us is to learn to observe and also quoted Lean manufacturing insists on seeing the benefits associated with implementation in terms of cost reduction. The removal of waste is seen as synonymous with the removal of cost.

As we have discussed in our earlier assignment regarding contract registration process, now we will be continuing utilising the learning to implement the Lean management system into the Contract Process System (CPS).

To start with my answer to the question no, I do not believe that my organisation is practicing Lean management system in particularly in this department. And as part of the company I believe if we can introduce Lean management system into our CPS then it will more beneficial for the company and also it will beneficial for the concern employees.

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Considering that we have the knowledge of operations of CPS from our earlier assignment where we know that CPS of EDF Energy is practicing in Traditional approach. The development of this Lean management has taught us to reduce the waste which is in another word is reducing cost in my areas of business. What we need to implement is delegation and discuss the whole process among the FSAs and the entire concern management teams of this process. So that the entire employees knows how to change the process and who to communicate effectively without wasting any time by doing unnecessary administrative jobs.

The benefit of these changes in CPS will help to increase the success rate of registration. Also it will give a live reply from the concern FSA exactly what is happening in the filed. The term of this change is to increase communication and develop responsible FSAs as well as registration portfolio executives. The motto of this change is to increase success rate of contract registrations which is ultimately will reduce fixed cost of department as well as per contract expenses.

The roles of both parties are playing very important roles for gaining new customers who will be the life support of the company. It also necessary to emphasise that during the recession period in UK almost all the companies has launched a new strategic policy that they will only do business with such kind of customers those who are able / wishes to pay and reliable to do business in credit. As a result a direct debit mandate is practically becoming mandatory for the new signed contracts and a business credit check has implemented in addition to that.

Now question is why we need to change our CPS policy? It is observed that because of management unnecessary interference; most of the first time unsuccessful contracts have never been live on supply. Although company do not pay any commission on this occasion but the concern FSAs are becoming more and more unhappy for being non commissionable contracts which is a big concern for a company as unhealthy feeling in the industry will never reach it top.

What exactly happening during the last 12 months, company has reduces it strengths to half and implemented several changes in the way of doing contracts. So, that means management has also understood of wrong way of CPS policy. Now, it all depends on how to implement and when and who will be involved. As a norm of the company they tend not to involve its operational staff into a policy making process, as a result a huge gap has created in understanding the registration process and selling techniques in reality.

As a result sales figures has plummeted dramatically and company is suffering for new contracts coming in to pod. Fixed cost has increased and cost per contract has become almost 300% more then the previous year.

The problem is to implement the new proposed management system and to my understanding change should come slowly but effectively. It also necessary to involve all the necessary staffs as they are the one who is working as a driving force. It is also necessary to understand the management jobs are necessary but overdoing of administrative job will create issues among the process.

The issues we normally getting from unsuccessful registration are because of compotator companies do not let us to takeover the business supply. And when they object any registration they also give reason/s in a legitimate way. But it keeps options that some act needed to be done on behalf of the customers prior to register the contract of supply within a stipulated period of time.

If the information of unsuccessful data come directly to concern FSA from registration, what actually going happen. That the concern FSA will be immediately informed about the contract situation, which is a good way to go back to the customer and really the message and help customers to do what they needed to do prior to try to re-registrar the customers. By this change registration will get the information immediately and prompt its action accordingly.

Secondly, prospective customers' data can be sent to directly to the concern FSAs and from there they can start to secure business. At present managers are issuing data on monthly basis, and they also collect sales reports on daily basis, and also conducts meeting on monthly basis or when needed.

The action plan need to implement to overcome the obstacles is suggested by LEI (2009) are as follows:-

To find change agent;

Get the knowledge of Lean tools and Management;

Freeze the grand strategy for a moment;

Mapping the value streams

Begin as soon as possible;

Create a demand of immediate result; and

As soon as got the momentum, expand the scope.

Finally, to my understanding managers need to be more communicative. They should be in the filed to help the FSAs where necessary and provide facility where needed. Having an administrative officer can do the entire present managers jobs which is less expensive and effective. In this way duplication of job will be reduce and will help to increase its success rate with reduction of waste.


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