Most [footnote] British Business Bank survey (March 2021) highlights that just 18% of participating SMEs had exported in the past 3 years [/footnote] SME businesses in the UK focus on their local market for sales.
This is one of the reasons that, after decades of trading, they are likely to remain as SMEs.
The UK market represents a very small (3.3%[footnote] 2019 figures from worldbank.org: Global GDP = $87.555tr vs UK GDP = $2.879tr [/footnote]) percentage compared with the potential sales overseas.
Sami Caglar, Director and Strategist at iLean Ltd discusses some of the touch points for driving global success through Lean practices.
I was first introduced to the phrase “The world is your oyster” by my boss from the United States 12 years ago. That phrase has stayed with me and I take it with the actual meaning of “the world”. I was out travelling most of the world and chasing opportunities for my business. In terms of results for the business, it was highly productive, but the potential I could see was even greater after being out there and talking to people, both existing and prospective customers.
Let’s say you have identified the export markets you want to be in. You check everything from cultural, legislation, custom practices, market size and everything else that needed for market research and you feel ready to go in. How are you going to win business from the local players in that market (assuming you are not the only producer of these products and services)? What will make you desirable for potential customers to switch their supply to you? Can the current products and services you have for the UK be good for them too? The value proposition that you have for your products and services is very important for your prospective customers overseas.
Value is where lean starts from and it is the backbone of everything you would do afterwards. Understanding the value in the eyes of the customer and building that into your product and service means a lot for the customers. The value can not be defined without mixing with local people and can not be included into your product and service without understanding it from interacting with them. Customs, legal requirements, legislations, function of the product and service can be searched and found from your desk, but the real value comes out in between lines during conversations with the real prospects and customers at a business setting and from a social setting.
Once you found out about the value, it is important for you to build that into your product and services. That’s where lean implementation brings everything you need into your business.
Let’s have a look at the most common QCD measures every business is familiar with:
If you are already successful in the UK market that mostly means that you are offering very good quality on your products and services. You might only be missing out on the repeatability of that quality and your quality is as good as your last delivery of your products and services to your customers overseas. Lean has a long list of tools again for you to produce good quality first time, every time. 5S, standard operations, problem solving, A3 are just some of those tools and techniques. So, when you must prove your quality, lean is your answer.
Most businesses trying to supply into export markets from the UK face price pressures from the local competition where they are trying to expand their businesses into. Reducing costs means improving productivity for production and services or cheaper inputs into the processes. Lean has long list of tools that you can apply and gain more productivity and effectiveness (not efficiency). Value stream mapping, waste reduction, SMED are just to some of those tools and techniques. So, when you are facing pressures on your costs from export markets, becoming lean is your answer.
Your competition overseas will win business over you just because they are quicker to supply or respond to customer needs. Your lead times can be accepted in the UK but when you are looking at expanding into the other markets overseas, most of your prospective customers will look at the lead time effects onto their operations. If they were to accept longer lead time from you, they will have to keep more stock and employ more capital into their businesses. Often, they will ask you for better prices than local competition to cover that cost. If you can deliver your product and services quicker, you are more likely to win business in export markets. Sometimes that would take away the pressures on prices even. Now you are in the best part of benefits from lean implementation into your business. Lean is best at reducing your lead times and cycle times. That is the main aim of becoming lean. When you reduce your lead times, you don’t have to keep as much stock, your money frees up from that and your costs go down as well. Lean philosophy is all around reducing that and all the tools and techniques are designed to make a positive effect on that with a long list. Value stream mapping, takt time, just on time (I have changed the phrase knowingly from just in time, that is a matter for another article), heijunka, flow, pull systems, kanban and many more in that list. So, if you want to be more competitive in the local and export markets, lean is your answer.
Overall becoming lean is not complicated as much as you think. It only starts with value definition, some sense checking, using most of the ideas your employees already have in their mind to improve, and then bringing all that into a lean philosophy and direction will give you the competitive edge you need to compete all around the world.
Feel free to contact me to expand on anything you read above. Look for the next article “Why export is important for a lean business?”
Sami Caglar BEng MBA MIoD FRSA is Director & Strategist at iLean Limited