Sir Terry Leahy: Lean Thinking

Business Executive
Lean thinking was a concept that originated in the Japanese car industry in the 1970s but can be applied to the challenges of sustainability and conserving natural resources
  • Transcript


Sir Terry Leahy: Lean thinking was a concept really that originated in the Japanese car industry in around the 1970s.  They were young--a young industry; they were worried about competition from Detroit.  So they worked out how could we get more from what we have, how could we look at the way we make things and iron out the bottlenecks, the discontinuities so things flowed better.

Well, that thinking really applies itself very well to retailing and the supply chain of retailing, and many retailers, like Tesco, have improved their efficiency an enormous amount applying lean thinking to the supply chains.  But when you look forward to the challenges of sustainability and conserving natural resources, I think that lean thinking can be applied there, too.  How can we actually get more consumption, better goods and services, but rely less on scarce natural resources like energy and water and so on?

So Tesco had a lot of plans to improve its environmental consumption.  We set a target to half carbon omissions by 2020.  We're well on target to do that and indeed to become a zero carbon business by 2050.  In order to do that we had to completely redesign how we operate our stores.  That's where most of the carbon is generated from.  We had new lighting systems, new refrigeration systems, the stores were built of wood.  We had new glass.  We powered the stores differently, and also we've worked with our suppliers in the supply chain, manufacturers, farmers, so that we can work with them to reduce their use of energy and the carbon omissions that they produce.  And we have a target to reduce their omissions by 30 percent by 2020.  

The interesting thing is that these initiatives to work more sustainably, more environmentally are actually good business practice too.  When you conserve things, when you don't waste things, when you're frugal with the use of resources, actually you find that you can produce more for less cost, and that's more profitable.  It's good business sense.

And actually I think it also chimes with the way ordinary employees think is right, the way they live their lives.  They don't like to waste things, throw things away.  So they appreciate it when they see the organization trying to do the right thing. 

Directed / Produced by
Jonathan Fowler & Elizabeth Rodd