Small Business editor of the NZ Herald

Small Business: Lean thinking builds efficiency

Changes in the publishing industry led to a refocus with an entirely different way of viewing productivity.

Geoff Blackwell says lean thinking is a concept that needs to be continually applied in a business. Photo / APN
Geoff Blackwell says lean thinking is a concept that needs to be continually applied in a business. Photo / APN

Geoff Blackwell is chief executive of Auckland publishers PQ Blackwell and MILK Books, which have a total of 16 staff.

What are some of the productivity issues you had in your business?
We needed to completely rethink our production process to accommodate a decision we took three years ago to add a new print-on-demand business to our existing publishing model.

Our old publishing model involved coming up with ideas for book projects and then developing them from scratch to being finished books.

We would then sell those books to publishers around the world and they would be printed in large runs - from 25,000 at the low end to quarter of a million copies per print run.

However, all of the changes that were occurring in the publishing industry - the arrival of digital books and the impact Amazon has been having on bookshops - were having a negative impact on that model.

So when we made the decision to broaden the business, we decided to employ our book design and production skills to develop MILK Books, an online "create your own book" service where people can go online and design their own beautiful book and have it shipped to their door.

With this new service we went from having print runs of 25,000-plus to making books one at a time. You would think that having dealt with large print runs it would be a piece of cake to make books one at a time, but in fact it was difficult to master the production and the cost efficiencies.

We were on a steep learning curve and some way into the journey we had the opportunity, through New Zealand Trade and Enterprise, to go through the Better By Lean course midway through last year. That was fantastically informative.

What did the course involve?

It was a two-day course dealing with a variety of subjects founded on lean thinking; it was all about moving away from traditional business thinking to an approach more targeted towards identifying real value and waste in your business in order to focus on the value and cut waste.

This lean thinking approach made a big impact on the way we now approach production. When we launched MILK we had a process where there were lots of logistical, cost and timing issues that amounted to waste because we would manufacture components in different factories before sending the products out from three different locations around the world.

With a lean thinking approach we have set ourselves the goal of developing a supply chain that can respond more dynamically and make a product from scratch to completion inside three days in one factory after an order has been received.

We thought that would be an impossible challenge, but when we really applied ourselves to streamlining our designs and the materials we use, we found it was possible and that we could markedly improve our efficiency, the quality of our products and service and our profitability.

It wasn't a case of changing things overnight; it has involved a change in thinking and the development of carefully thought-out strategies and ongoing work to apply practical plans to continue to cut away waste and replace it with lean strategies.

What effect has that change in thinking had?

Lean thinking is a continuous thing. It's a work in progress inside the business and we need to continually apply that thinking to every decision as we develop new products, bring in new production partners and think about our customers' needs.

When you really apply lean thinking you discover there are so many areas where you can find waste and opportunity for efficiency. For us these were primarily found around speed and savings in terms of shipping costs and the amount of capital tied up in materials, but also production efficiencies - all of which is leading to better service for our customers, growing sales and improved margins.

It helped that our print-on-demand business is relatively new. The business is growing quickly and it's needing to be pretty agile as we build the business and work out what's important and what's not. It was the perfect moment for us to be introduced to lean thinking.,

Smart moves boost productivity
Work smarter, not harder. It's a maxim that goes to the heart of what productivity is all about: getting more out of each hour of work.

Murray Sherwin, chair of the New Zealand Productivity Commission, points out that New Zealanders work about 15 per cent longer than the OECD average to produce about 20 per cent less output per person. He says our lagging average incomes directly reflect our poor productivity record.

With small companies making up about 90 per cent of all our businesses, they play an important role if we want to turn those productivity trends around. Kathryn Anda, managing director of PEPworldwide, an Auckland workplace productivity specialist, reckons a lack of strategic planning and direction is one of the biggest barriers small businesses face in lifting output.

"Those at the executive level of a business need to set absolutely clear goals," says Anda. "They then need to be able to communicate these successfully to their staff ..."

Little things count: acting on an item the first time you touch or read it, cleaning up clutter and instituting planning routines are among everyday actions that boost productivity, she says.

Things don't get more everyday than breakfast, and Raymond Dobbe, managing director of World Moving and Storage, says feeding staff has been hugely successful in boosting productivity at the relocations business.

Staff pay $2 a time for cereals and toast each day with a full cooked breakfast on three days.

Dobbe says the breakfast programme has boosted productivity by about 11 per cent and has brought with it improved communication, punctuality and on-the-job focus.

•Coming up in Small Business: Taking your products offshore can be a big step for a small business. Finding distributors is a common approach, but how do you get a good one?

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