WAY Unipart Teaches a Business Philosophy Rooted in the Effi Cient Production Methods of Japan’S Car Industry
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RELEVANCE Financial Management | December/January 2015/16 WAY Unipart teaches a business philosophy rooted in the effi cient production methods of Japan’s car industry. John Neill, its chairman and CEO, tells Lawrie Holmes why this is equally applicable in the public sector – having helped National Health Service trusts to achieve startling productivity gains 36-38 John Neill (UnipartV2) NC GA.indd 36 18/12/2015 10:32 RELEVANCE Financial Management | December/January 2015/16 37 TO GO Senior public servants have been just been formed from British Leyland, develop and be more eff ective, both fl ocking to Oxford for years to learn how a publicly owned corporation with a individually and as teams.” to improve operational effi ciency, yet long history of industrial strife. Unipart The move paid off : interested the city’s ancient university has not would continue to use the same corner organisations soon started visiting the been their destination. The chiefs of of the site where Germany’s BMW now fi rm’s HQ to see its model in operation UK government departments, hospital makes the successful reincarnation of – and they haven’t stopped calling trusts and ambulance services have Leyland’s iconic Mini. “The only way to since. “A lot of people came to ask us: shunned its dreaming spires in favour secure the future of the business was to ‘How do you do this?’ They were of an unprepossessing industrial estate separate it from Rover,” he recalls. interested in how we engaged our on the city’s eastern outskirts, home to The management buy-out enabled people to improve performance a former maker of car components. Neill, a former General Motors executive continuously, by serving customers Unipart, now a manufacturing, who’d become Unipart’s CEO in 1975 better or creating better products, or logistics and consultancy group, while still in his twenties, to turn his by increasing productivity or being provides them with guidance on key fi rm into “the benchmark for after- more innovative,” Neill recalls. issues such as improving employee market logistics”. He learnt particularly engagement. They’ll also fi nd out how from clients Honda and Toyota, whose Bill of health an approach to continuous improvement innovations in just-in-time production Unipart’s insights have attracted a used everywhere in the company to and continuous improvement made particular following in the healthcare increase productivity could benefi t their them industry leaders in effi ciency. sector over the years. “National Health own organisations. “British companies were slow to Service trusts want to understand how The desire to boost output has grasp the principles being described to put quality up and cost down and how permeated British manufacturing, as lean manufacturing,” he says. to transform their cultures to be more especially the car industry, for more “But we studied these carefully and innovative,” Neill says. “They also want than a generation, according to John adapted their ideas to our own to be more open about their problems.” Neill, chairman and CEO of the privately organisation, culture and markets. One case he cites is that of owned business. We applied what are now the Unipart Wrightington, Wigan and Leigh NHS “The UK has lagged behind its global components to the production Foundation Trust, which was seeking competitors by between 20 and 40 per processes in our factories and from to hit a £12.6m cost-saving target while cent in this respect for three decades,” there we built a body of knowledge still improving standards of care. he says. “It’s been on the agenda of that we codifi ed before branding it “Unipart was asked to help identify many senior politicians, from Lord and deploying it more widely.” and support an area of activity that Heseltine [deputy prime minister in The resulting approach is known as off ered the potential for service 1995-97] to Gordon Brown [PM in the Unipart way. Neill describes it as improvements, as well as the 2007-10]. Everyone who comes into “an evolving integrated ecosystem that opportunity for signifi cant fi nancial government wants to fi x this problem.” we’ve been building for 25 years. You benefi ts,” Neill explains. “Operating The notion that British must continually develop and refi ne theatres were identifi ed as a suitable manufacturing could be much more the body of knowledge and practice area, as streamlining the pathway to productive was on the agenda in 1987 with it to make it work more eff ectively. deliver a better experience for both when Neill and his backers completed We employ thousands of highly creative patients and staff would also increase the deal that split Unipart from the people with great talent and ability. the number of patients handled and troubled Rover Group, which had itself I hope that we’re helping them to deliver cost savings. There were 41 36-38 John Neill (UnipartV2) NC GA.indd 37 18/12/2015 10:32 38 fewer unplanned cancellations across ideas. We’re too impatient in this data derived from good processes, that all specialities, along with a 20 per cent respect. You can’t play Beethoven’s you can act on? You can then apply reduction in late starts and a 27 per cent Ninth Symphony like a concert violinist the tools of the Unipart way to the reduction in late fi nishes.” simply by buying a violin and a page of insights you have gained by applying Unipart was also approached by music,” he says. the principles in order to improve Yorkshire Ambulance Service NHS Trust, For 15 years, Unipart’s expert productivity through engaged people which was facing a signifi cant fi nancial practitioners (Neill is at pains not to call driving high performance – manifested loss and criticism from the region’s them consultants) have been introducing in better long-term fi nancial results.” ambulance service commissioner about its ideas to an expanding client base, He continues: “It’s not diffi cult to the underperformance of its patient forging commercial relationships “that improve your organisation’s fi nancial transport service (PTS). always deliver benefi ts which exceed performance in the short term – you can “The trust sought our help in fees”. He says that any organisation easily reduce inventories, reduce space developing a way to improve its PTS adopting its approach can broadly expect costs and improve profi ts. But the key is while also reducing costs,” Neill says. to have a sustainable, continuously “The resulting high levels of employee improving performance in operational engagement across the organisation in excellence, which should feed through the design of new processes has meant ‘It’s in all our to good long-term returns.” that staff have taken ownership of the Looking ahead, Unipart is preparing contractual key performance indicators. interests for the a UK publicity campaign that chimes All of these indicators improved by with the government’s eff orts to make between 10 per cent and 35 per cent. country to become improving output a national concern. An additional 23,000 patients are being “We think it’s in all our interests for the dropped off for their appointments and more productive, country to become more productive, so picked up afterwards on time compared we’re raising awareness to dispel the idea with the same period last year. These so we’re raising that this issue is unsolvable. We want to improvements were recognised by the show that all organisations can improve commissioner, who asked the trust to awareness to dispel their productivity, including those in the tender for extra transport activity.” public sector,” Neill explains. “We will try the idea that this to show in comprehensible terms what’s Road to joy needed. I hope this will inspire a lot more Neill, who was born in South Africa and issue is unsolvable’ entities when they realise that it isn’t a educated in Scotland, is not surprised puzzle wrapped up in economic-speak. that his fi rm’s philosophy has attracted So we’ll play our part by producing white so much interest from the public sector. papers and a range of documentary fi lms “We’ve always believed that our to “achieve productivity improvements and adverts to stress that there is a way of principles are universal and will work in in the fi rst 12 months of about 40 per fi xing it. We’ll be looking to create a every sector of every economy,” he says. cent”, but stresses that it’s an ongoing conviction in the minds of people in the “We’ve proved that, because we’ve now process. “That’s the only way to make it public sector, as well as in business, that implemented the Unipart way in most work. Otherwise, the grass grows back, there’s a solution within their grasp. No of the world’s leading nations and in which is why so many operational doubt, some organisations will ask us to practically every industry.” excellence initiatives fail,” he says. help them with it – and we’ll do that.” Unipart’s philosophy is enshrined in Neill agrees that there is a natural 18 principles, which means that it can’t synergy between the Unipart way and Visit www.theunipartway.com be summed up in a couple of sentences, the CGMA Global Management for further information about according to Neill, who says: “If that Accounting Principles. “What is the the Unipart way. For more details were the case, everyone would go and purpose of these principles but to give about the Global Management do it. We in the West tend to seek the you a true and fair view of how an Accounting Principles, visit simplistic trivialisation of complex enterprise is working, using high-quality bit.ly/CGMAgmaps 36-38 John Neill (UnipartV2) NC GA.indd 38 18/12/2015 10:33.