How this SME made lean its strategy for sustainable growth
NOTES FROM THE GEMBA – The author visits an SME specializing in the instalment of electrical equipment. Its CEO has learned that integrating lean in their strategy can lead to sustainable growth.
Words: Catherine Chabiron, lean coach and member of Institut Lean France
As I pay a visit to Grégory Verdon, CEO of Soditel, I decide to try and test, with his help, the concept of the “4 Fs”.
Described in the recently published book The Lean Strategy, the 4 Fs (Find, Face, Frame and Form, as opposed to traditional management’s Define, Decide, Drive and Deal) outline a set of radically different management behaviors that every lean leader should embrace. The idea is for a leader to: apprehend the environment around them by going to the gemba (Find); accept that they might have been wrong on the market, customer expectations, competitors or problems with delivery (Face); support their teams in solving the now-visible problems with flow and quality through a number of lean techniques and tools (Frame); so that everyone can progressively contribute to the construction of a strategy through better, different products and services that help society and respect the environment (Form).
Grégory picks up the concept very quickly and confirms he started as the classic 4D type. He had little experience when he started and simply mimicked the behaviors he saw in other (traditional) managers: he was stern and demanding, never questioned his decisions, and was quick to blame people when something went wrong. More importantly, he would provide solutions to his team, stifling their initiative.
He tells me the story of their CRM, with humour and a good deal of introspection. Back in 2010, he had discovered that a large number of invoices hadn’t been issued and sent to a large customer. True to his 4D approach of the time, he: defined that this was not acceptable and that a rigourous invoicing process with validations and checks was necessary; decided, in 2013, to purchase a CRM software that would support this invoice validation workflow; and drove the implementation. Soditel then entered the deal phase: Grégory’s teams had lost the global vision and only focused on their silos within the CRM, some were overbooked with operational needs and became recurrent bottlenecks in the validation flow, and most started reverting to Excel. Although the CRM was still not completely paid for, Grégory decided to discontinue it after just one year.
“This is when I started my find and face phases. I began to discuss with fellow CEOs and questioned my approach: did it help that I snapped and yelled when something went wrong? Was there a better way?” he recalls.
Soditel initially specialized in the installation of low-voltage equipment – from phones and TV aerials to intercom systems and access badges – in homes, hotels and office buildings. Growing increasingly frustrated with their dependence on other trades, which often prevented them from completing their work, they decided to add high-voltage installations (cabling, plugs, lighting) to their offering in 2013.
“We had an exceptional year in 2011, with the arrival of Digital Terrestrial Television, but otherwise our turnover was always rather stable at just under €3 million,” says Grégory. Soditel is a small business, but collectively, small businesses represent the number one employer in France! Today, the company works on new buildings (low- and high-voltage), low-voltage refurbishments, and aftersales services and maintenance. They don’t design the energy-saving or home-automation solutions they install – they see themselves as an integrator of existing products.
“As we moved into high-voltage installations, I realized I needed guidance on how to manage my business. That’s when I discovered lean thinking. It’s going well, if you consider that our turnover last year was twice as big as that of 2013, and we have learned plenty along the way.”
At this point, I ask Grégory how he integrates lean in his daily life and his strategy, and how he managed his “find and face”.
FIND AND FACE
Grégory takes me to the Sales Administration room, where aftersales customer requests are received. Most customers here are building management agents, acting on behalf of co-owners. Typically, Mr or Mrs Smith will claim they have an issue with the building’s intercom system, and the agent will contact Soditel asking them to go and have a look and requesting a quote. Upon embracing lean thinking, operators began to sit and think with Grégory: a problem that occurred often was that operators always received numerous phone calls or mails from agents enquiring about when a job would that place, even though that job had already been scheduled, if not completed. (The agent is not on site and relies on the information she is given.)
Creating a single mailbox for all incoming requests and deciding that all interventions (or, at least, diagnosis visits) should be scheduled and confirmed on the same day created a major shift: agents in the area had never seen such reactivity, with the number of visits scheduled and confirmed within one day from the request growing from 75% to 95% in 2017. Right now, Soditel is aiming at 2 to 4 hours maximum, depending on the type of assistance.
Most customer complaints in aftersales are related to the poor quality of the solution, but also to the lack of information (remember last time you called for support and were left hanging for days without any hint that someone was working on your case). Taking the hot potato off the agent’s hands within just a few hours is a major relief for them. It also considerably reduced the workload for sales administration operators, as the number of queries and claims decreased.
This “find and face” approach led to more discoveries. For example, Soditel offers contracts of preventive maintenance, and it became clear that all the associated docs left with the customers were highly technical reports that people found hard to read. Possible improvements were not followed up on, either. So, Grégory asked a team leader to look into the problem and find a way to improve things with the team, trying to understand what a “good” preventive visit looks like, building up a standard for visits, and devising more user-friendly reports like the one showed below (a before and after).
After visiting the Sales department, Grégory and I go back to ground level, where logistics are located. Laurent, who is in charge of Logistics and Supplies, seems to have completely grasped the idea of “find and face”. Our of his own initiative, he started discussions with technicians on the road, to understand their jobs and hopefully find ways to make them easier. Most people managing on-the-road technicians are content when they come back and confirm the job is done, whereas Laurent wants them to talk and open up. And open up they did, sharing priceless anecdotes that helped to highlight problems: “When I started to work, I realized that some parts were missing from the box and had to go back to pick them up” or “We sold three power breakers to the customer as part of the sale bundle, but they only needed two”. All of these conversations got Laurent and Grégory to start thinking about how the work could be improved.
In Soditel, all forms of rework – from re-schedule to re-install and re-turn – are referred to as “RE” and when Grégory asked the team to map it the number of things that popped up was staggering. Next door, we start a discussion with a building site works manager (installing equipment in new buildings), whose team has started to log the “RE”. One of the results was that they launched a checklist on site to highlight what is sold versus what actually needs to be done – a safety check to prevent rework from occurring, as most sales on new sites happen via bid and specs on paper, rather than on technical visits.
This new approach – encouraging everyone to acknowledge the not-right-first-time – paved the way for the “Frame” stage.
Once a repair is booked and scheduled, a kit with the requested parts, cabling and necessary tools, is put together in the warehouse. Initially, the kits were placed on a trolley assigned to one technician covering all the jobs scheduled for the day. Determined to understand the reasons behind the “RE” – in this case, the technician not having the right parts for the job – through discussions and observations Laurent unearthed two main causes: first of all, as the days passed and the Sales team refined the schedule, jobs would often be re-assigned to other technicians, but the information wouldn’t reach Logistics and the necessary parts or materials wouldn’t be moved to the trolley of the new technician in charge of the job. In addition, technicians would often forget to pick oversized parts and equipment.
Laurent developed a new solution. As the work is planned, he now opens a kitting box for each job to start on the preparation, thus levelling the effort and visualizing the missing parts as early as possible. If stock is at hand, a green thumb confirms the status (the “eyes” mean that oversized equipment is to be picked up from a dedicated trolley by the technician before he departs). A red thumb signals that the kit is not ready. Kitting boxes are assigned to technicians at the last minute, based on the latest dispatch.
This typical lean approach of kitting a job in the planned sequence is a great example of the Frame stage described by the authors of The Lean Strategy. This is when exposed problems are tackled with the appropriate lean techniques, provided the intent behind each lean tool is well understood.
With the kitting boxes, the intent is to reduce the instances in which there are missing parts and wrong kits by checking ahead of time and assigning kits to technicians on a just-in-time basis, but there is a need to refine the solution further. For example, how will management and operators understand at first glance which kit is in a normal or abnormal condition in terms of delay (a “red thumb” is not critical three days before a job is planned, but it flags a major problem the day before or the day of the job)? Also, how will the whole team learn from the system and improve together?
Despite these open questions, the results of the new approach to creating kits are already very good. The number of checks and questions when organizing for the day’s work has decreased by 3 and internal complaints have disappeared overnight.
I continue to discuss other “framing” topics with Laurent and Grégory. For example, working on pulled flows to stock the high runners (intent: work at takt time, reduce stocks, order only when needed) or “pulling the andon cord” whenever a missing part or a lengthy installation requires an alert (intent: provide an immediate and strong support to fix the problem and make it right first time).
As we go back to the Sales Department, we see another great illustration of framing with lean. As mentioned earlier, Soditel developed a unique market savoir-faire in terms of providing feedback to building agents. But they are also extremely efficient at building-up standard offers when bidded. The result is that they receive masses of requests, but that their order intake remains low. In other words, Soditel is used as a useful reference in bids but doesn’t always retain potential customers. The Sales Manager, also named Laurent, confirms this situation but is torn between the time spent on answers (to avoid disappointing customers) and the need to launch continuous improvement on order-taking. It looks like further framing is needed here.
When we walk out of the office, I discuss with Grégory: do they have to put on the wall each and every ongoing bid or only those on which a decision is expected in the coming weeks to focus the busy teams on those bids only? In other words, how do they implement kanban to highlight the upcoming deadlines? Another frame that could be useful is to define whether Soditel wants to answer all bids, at the risk of a poor intake rate, or answer less bids in a standard manner and focus on the added value that they can bring to a limited number of targeted businesses.
Grégory is well aware of the fact that, until now, his gemba walks have been mainly focused on support functions. Sure, their work on past-due invoices brought in a big stack of cash. True, trouble-shooting in Sales has helped to identify wrong parameters on a DNS server that prevented messages or offers from being sent to the customers. It’s also true that organizing gemba walks with technicians on the road is complicated, but it is clearly necessary to understand what happens on sites, what problems customers are facing, and which solutions are hard to install or maintain (remember what Jean Baptiste Bouthillon does on his building sites? Check out this Planet Lean article).
Nevertheless, the find and face with technicians or customers started to bring ideas that could make a real difference for the business. For example, most of Soditel’s competitors sell the installation, but few follow up afterwards. Imagine you move into an apartment where home automation was installed by the previous owner: you will certainly struggle to install your own phone with the home automation apps and the lodgings parameters, at a time when you have a million things to do as you try to settle in your new home. This is where Soditel steps in and offers their help to do the set-up and train the new tenant/owner – something few competitors do.
The work on the “RE” will also bring in new opportunities to improve the quality of the delivery, while relieving Soditel’s employees from the mental burden of having to address rework, unclear instructions and customer complaints.
Little by little, as true conditions are revealed and continuous improvement takes place, opportunities for a new strategy for Soditel are being unveiled: what are they good at? What are their competitors doing? Where could they develop a competitive advantage? What do they need to learn further? I believe that lean and the 4Fs will help Grégory to refine Soditel’s strategy going forward, allowing it to continue to deliver sustainable growth (and maybe double the turnover again over the next four years). All in all, Grégory’s management style has undergone a great change, from 4D to 4F, a result of his daily commitment to finding and facing.