Lean by the Dozen

Introduction to Lean

In this article we will take a look back at the history and some of the key milestones that have led to the development of Lean as it stands today and then provide a look at the state of Lean today in the public and private sector.

We will end with a short discussion about the possible future for Lean in the UK given where the economy may go in the next two years.

The Origins of Lean

Because Lean contains many elements that are intuitive (such as the desire to maximise productivity and ensure that waste is minimised) the history of Lean can be difficult to trace as much of what went before 1996 when the term Lean was coined would have appeared as good practice at the time and not necessarily have been seen as part of the development of a structured approach to transformation. Like much in the history of human development, it is the bringing together of many factors that has led to the development of Lean including the availability of tested methods, expertise to turn those methods into actions and the need for the methods (in the form of improved efficiency) that has driven its development.

Below, I have provided a summary Lean Timeline containing just a few of the many milestones that have led the way to today’s Lean movement. In the process of selecting items to include, I have had to miss out many more than I have put in including the importance of the US supermarket chain Piggly Wiggly in helping Toyota develop the concepts of the Toyota Production System and the work of the 18th Century economist Adam Smith in helping shape an economic environment in which businesses can have the freedom (and funds) to invest in Lean, but the box contains some of the most frequently cited examples of key Lean milestones.

Summary Lean Timeline

  • From 1473 – The Venice Arsenal develop a continuous flow process based on mass produced and standardised items that ultimately enables them to produce an entire ship in around 1 day.
  • 1776 – Lieutenant General Jean-Baptist de Gribeauval becomes Inspector of Artillery in France and starts to introduce reforms to reduce the diversity of artillery in use and replacing it with a more standardised range of weapons that also used a form of interchangeable parts and manufacture.
  • 1799 – Eli Whitney, inventor of the Cotton Gin, takes on the contract to produce 10,000 muskets for the US Army at a low cost of $13.40 each. To enable him to do this he had perfected the process of designing interchangeable parts between the muskets which enabled the process to be divided up and standardised.
  • 1894-1912- Frederick W Taylor publishes a series of articles on improving efficiency, with his key work ‘Principles of Scientific Management’ being published in 1911with details of how to eliminate many of the inefficient practices existing in industry at the time and strongly advocating standardised work and the division of labour to improve efficiency. Collectively this approach is later termed ‘Taylorism’
  • 1905-1921 – Frank & Lillian Gilbreth (made famous by the film ‘Cheaper by the Dozen’ in 1950 and indirectly the reason for the name of this article) publish a series of articles and books on improving efficiency through Time & Motion Study, culminating in 1921 with their book ‘Time & Motion Study As Fundamental Factors in Planning & Control’.
  • 1910 – Henry Ford along with Charles E Sorensen create a comprehensive manufacturing strategy and move to the Highland Park Plant, Michigan, which was the world’s first automobile plant that used an assembly line and in 1914 they create the first moving assembly line reducing production times by a further 75%.
  • 1924-1939 – Walter Shewhart advocates statistical control of processes and later his work is adapted by W Edwards Deming to form the ‘Plan-Do-Check-Act’ cycle and to form the basis of Six Sigma although many of the concepts are also adopted within a Lean approach to effectiveness.
  • 1943 – Taiichi Ohno joins Toyota Motor Corporation and later (1947 onwards) starts the development of what is now known as the Toyota Production System (TPS) incorporating cellular working, waste reduction, reduction of Work in Process (WIP), in-process inspection by workers and many of the other concepts, including (in 2001) the “respect for people” principle.
  • 1983 – Robert Hall publishes ‘Zero Inventories’ which is seen as the first broad description of the Toyota Production System by an American author.
  • 1990-1996 Jim Womack & Dan Jones produce ‘The machine that changed the world’ (1990) and ‘Lean Thinking’ (1996), coining the term Lean and defining the five principles of Lean.

Lean’s Place Today

What can be seen by the history of Lean is that it has been a process of adaptation of ideas, incorporation of new thinking and extensive testing and we can only expect this to continue into the future.

In this section we will examine the current state of Lean in three main areas, namely the Public Sector, Service Industries and in its traditional home of Manufacturing. What is clear is that in times of economic uncertainty such as we are currently experiencing Lean has an even bigger role to play in helping drive out wastes in organisations but also that these very same organisations are just as likely not to invest in Lean at this time due to the economic pressures, what can be termed a no win situation.

Lean in the Public Sector Following the publication in 2004 of the Gershon Review (titled ‘Releasing resources to the front line) the public sector has been driven by the need both to demonstrate that the services they are buying and providing can be considered value for money and to demonstrate that they are continuing to improve the effectiveness of the services they provide.

Like many manufacturing companies, a large number of public sector organisations have used Lean to deliver short term improvements in performance to meet their obligations under the efficiency agenda and whilst this has generated some significant gains (such as the reduction in the time taken to process high demand housing adaptations for disabled people in one area from 200 days to 12 days) fewer of them are realising the longer-term organisational benefits that can accrue through the associated cultural change that Lean can bring (most notably in creating an environment that supports continuous improvement) rather than just the short term cash and resource releasing benefits that can be achieved.

The available evidence suggests that at a local level (such as local councils or individual NHS organisations) there are islands of excellence but the uptake of Lean is both patchy and in many organisations has been started and then stopped. Some of the factors that seem to underpin this patchwork approach to Lean are the creation of a reliance on an external consultancy that is not transferred to an internal team (and becomes uneconomic to support), a change of management focus (or even a change of management) or simply that Lean was adopted to tackle a short-term strategic issue and was not seen as a long-term concept for organisation wide change.

However, there are still some very inspiring stories of the use of Lean in the public sector in areas such as HM Revenue & Customs and the NHS, with the latter using Lean to both improve safety and the experience of patients as well as the more traditional use in reducing costs and increasing capacity in places such as theaters and outpatient departments.

With 1 in 5 workers in the UK employed in the public sector there is obviously a great scope for Lean to be used to improve efficiency in vital areas such as health and local services but the reduction in revenues that can be expected due to the current economic conditions will significantly reduce the revenues available to fund the external support that has marked out the growth of Lean in public services and this will place an increasing need on public sector organisations to grow their own Lean capability.

Lean in the Service Industries With far more people employed in the service sector than in the traditional industrial sector (with common estimates stating that there are 4-6 service sector jobs for every manufacturing position) there is obviously a large market for Lean but until recently the uptake of Lean in the service sector has not been a prolific as that seen in the manufacturing sector. Some of this was to do with difficulties in the translation of concepts such as continuous flow and standardised work from an industrial to a service context but it was also the absence of established success stories that initially prevented service companies from investing in Lean.

Like the history of Lean generally, the history of Lean in the Service Sector is mixed up with examples of good practice that go back many years but a good stake in the ground for the start of the efficiency drive in the service sector can be traced to the book ‘Relevance Lost’ by Johnson & Kaplan (1991) which ultimately led to the Lean movement in the accountancy sector.

Attempts to introduce Lean (although it was not called such at the time, being mostly done under the banner of Business Process Re-engineering) into the service sector in the early to mid 1990s tended to fall over because the approaches either did not ‘fit’ (being too industrial in nature), were too disruptive, for example trying to transform the entire organisation simultaneously, or proponents misused the concepts to dehumanize workplaces.

Over the last 10 years, and with the development of Lean since 1996, there has been an increasing number of case studies of Lean being used in such places as call centers to improve capacity, the energy sector to reduce administrative overheads and the financial services sector (although I am sure the adoption of Lean was not at the center of the current banking crisis).

There have even been tentative steps taken by various government agencies to promote Lean in the Service Sector (or Lean Office as it is sometimes also termed to allow it to include the administrative functions of manufacturing companies as well as purely service sector organisations) and there does seem to be a correlation between the availability of case studies, the production of available information and the uptake of Lean in the Service Sector since 2000 with an increase in any one of these three areas driving an increase in the other two, for example more case studies triggers more published materials and this in turn has an impact on the uptake.

From discussions with organisations actively involved in delivering Lean in the Service Sector the message is broadly consistent in that those organisations who have seen the benefits of Lean are continuing to invest in reducing costs and improving effectiveness (albeit a number have scaled back the size of their investment) whilst most of those who were toying with Lean prior to the current economic conditions have parked their investment plans for the current time.

The benefits of Lean in the Service Sector are clear from the many case studies that exist, from reducing the time taken to answer calls to a call centre by 90% through to reducing the costs of processing claims in the insurance sector by 75%, but like the public sector the focus has to be on developing internal capability rather than creating or continuing the dependence on external consultants and there are an increasing number of books and workshops with titles such as ‘Lean in the Office’, ‘Lean Accounting’ and ‘Lean in Service’ that underpin the drive to raise the Lean skills of people in the service sector.

Lean in Manufacturing

Manufacturing is the traditional home of Lean and certainly the one with the greatest number of case studies. In addition, the government has invested heavily in promoting Lean in manufacturing through schemes aimed at raising the number of people with Lean skills (including the promotion of the Lean based Business Improvement Techniques NVQ) and also providing discounted consulting advice to SMEs, but even given the length of time people have had to invest in Lean and get it right there are still a large percentage of manufacturing companies paying lip service to Lean or using it purely as a tactical vehicle for short term improvements.

The real issues that underpin why manufacturers have had a love/hate relationship with Lean have revolved around their ability to both turn great plans into great benefits and then sustaining the change against forces that want to return to the ‘old ways’. Productivity in manufacturing has gone up over the last 15 years although it would be impossible to state how much of this has been due to Lean and how much has been brought about by the changing mix of manufacturing in the UK (away from low cost/low margin producers to higher value add manufacturing) but Lean and similar approaches have certainly played a part in the improvements in many companies.

The application of Lean in manufacturing was initially focused on reducing lead-times and the overall amount of work required to produce each item, but latterly has focused on the whole enterprise including the sales and finance functions, stock management, distribution and service. In essence, the focus of Lean for many manufacturing companies is now taking what Professor Michael Porter describes as a ‘Value Chain’ approach from initial concept through to after-sales service.

The results for those manufacturing companies investing in the cultural as well as the process changes that can be achieved by Lean are seeing a year on year reduction in operating costs, increased flexibility, better customer service and reduced defects, but with the current economic conditions pressing hard on the manufacturing sector generally many organisations who were previously investing in Lean have either scaled back or stopped their investment completely. The long term effects of these decisions will be difficult to estimate but it will certainly introduce an amount of inertia that, when things start to pick up, the organisations will need to overcome again to get their Lean programme back on track.

Lean – Alive & Kicking

What can be seen is that Lean is alive and kicking across most of the UK and even though the current economic conditions has created a ‘slow down’ in the progress to Lean, it still has a role to play. If the economy continues to be depressed throughout 2009 and into 2010/11 then Lean will be an essential tool for enabling organisations to reduce costs and create flexible and responsive processes.

When the economy starts to recover, Lean can help organisations to achieve ‘first mover’ advantage as new opportunities appear and it also plays a role in the development of effective new products and services that will meet the growing demand that will signal the start of the recovery.

When back to full strength, Lean has a role to play in creating a culture of continuous improvement that will prepare your organisation not just for the recovery but for any future ups or downs that your market may experience.

Mark Eaton MSc MBA CEng FIOM FIET FRSA

Formerly the director of a number of publicly funded Lean Programmes in the UK and the author of a number of productivity and innovation related strategies for the UK government, in 2004 Mark was awarded the Viscount Nuffield Medal for his contribution to UK Manufacturing. Mark is a director of Amnis, a consultancy active in the health and local government sector, and he is the author of numerous papers and the books ‘Lean for Practitioners’ and ‘Sustaining Lean Healthcare Programmes’.

Author: Mark Eaton

Business Process Management – Streamline Your Business

What is Business Process Management?

It is about speed and effectiveness!

To stay competitive in the marketplace a business needs to be cost effective. This is largely accomplished by streamlining the operations of the business and making sure the processes are running at peak efficiency. All businesses run via processes and Business Process Management (BMP) is a technology developed to give businesses the framework in which to manage more effectively the processes that make them tick. BMP technology is able to automate the managing of processes in your business, but allows for human intervention wherever necessary.

Most business processes involve more than one department and even different organizations. These processes rely heavily on the information from and participation of multiple systems. BPM technology is designed to facilitate these processes by integrating the various components into one streamlined system that runs smoothly and efficiently on a partially or completely automated flow of steps.

BPM automates the flow of a process and it automates the extraction of information needed to ensure that the process is completed properly. When human intervention is needed, each person is notified at the appropriate time to implement the step or steps that must be provided.BPM is also able to provide tracking of results and allows a business to measure the success of operations. The flexibility is in place to allow for changes to be made within the process so that the improvements in the operations will create a better outcome.

What to Look for in a BPM Technology

BPM technology for your business should include at least the following components:

o Design tools and user interfaces

o API/framework layer

o Data transformation

o Process automation, workflow, and rules engine

o Connectivity services

o Activity management for your business

One of the main problems that businesses run into when they begin to consider BPM technology is they find out that they do not fully understand the current processes they have in place. There is a large amount of preparation involved when integrating a BPM solution into your existing business process framework and many businesses do not understand their processes well enough to model them in the new BPM solution. If the business processes are not well understood, then incorporating BPM technology into the framework of the business’ processes may only create more confusion. However, if the processes of the business are defined properly during preparation for the BPM technology, then not only will the processes be fully understood, but weaknesses in the systems may be uncovered that can be rectified trough the use of BPM.
A business must determine its needs first and then look at the available options for BPM technologies that exist. It is also important that, from the business end, there is executive-level sponsorship of the BPM implementation plan and that there is user buy-in. A business will also need a project team to follow through on the integration of BPM into the existing framework of their company and they will need a full understanding of all deployment considerations. Lastly, the business must have a realistic view of the milestones along the way. It will take time to implement the entire BPM solution.

In your business case for implementing the BPM, you of course need to consider your Return on Investment (ROI) and in evaluating the success of the BPM technology for your business, it will be important to compare the actual results against the ROI predicted in the planning stage.

In addition to this, there are other ways to gauge the success of your BPM implementation. By calculating your total cost of ownership, you will be able to make a baseline comparison between your before and after results based on the total cost of running your business. Determining the operational efficiency will reveal the cycle time, the total amount of time needed to run a process, and the required resources, the total number of people and systems needed to support the process. The greater the cycle time and required resources, the less cost efficient the process. Unit cost reduction is another way to gauge the success of the BPM implementation. This allows you to determine the actual cost savings for the business, which affects the bottom line.

Summary

The implementation of BPM technology can be an effective way for a business to streamline the processes that make them tick, which can greatly affect their bottom line. By integrating BPM technology into the process infrastructure of your business, you will be able to automate many of the steps needed to see a process through to completion. During the preparation stage of BPM deployment, a full understanding of the processes may lead to knowledge of how to make things work better.
BPM technology makes sense for any business that runs on complicated processes. These businesses include, but are not limited to, financial services, insurance, government, healthcare, and manufacturing. BPM makes sense in a business world where the bottom line means everything.

 

Author: Thomas Gomez

Change Without Resistance

Seeing change as a problem in a previous article, I examined why problem solving, which is our conventional approach to change, is instrumental in creating resistance and slowing or neutralizing attempts to create change.

Briefly, the reasons are as follows:

  • The focus of problem solving is usually on the ‘gap’, and the present problem/s and rarely is enough emphasis placed upon creating shared clarity about the destination.
  • The emphasis on deficiencies tends to have a disempowering effect – ‘I can see that’s the problem but I’m not sure I can change’.
  • This in turn creates defensiveness – ‘Why should I change?’ because it becomes easier to knock down the change than to admit we can’t.
  • In turn, this defensiveness and reluctance, coupled with a human dislike of being confronted with our shortcomings, fractures the relationships and depletes the trust necessary for people to make changes.

A different starting point

Every person or organisation has inherent creativity, capability, imagination and success. If we begin from this perspective then a new approach to change is possible.

Appreciative Inquiry (AI) is an approach to change that begins with the assumption that, for whatever the issue, there will always be examples for an individual or organisation of success. They may be fleeting or infrequent or incomplete but they will always exist.

Too often these successes are dismissed as being a distraction to the problem or too insignificant to matter. But, surely, it is worth finding out how these successes occurred – not because we want to revel in the knowledge that everything is OK but because if we really understood how these occurrences came about we might be much better equipped to create more of them.

The Appreciative Inquiry way

Appreciative Inquiry begins by asking exactly these questions. It also begins, critically, by asking them of the individuals who will ultimately be asked to change.

AI begins with establishing the change which is aspired. What does the individual or organisation want more of? This then becomes the focus of research, and questions are developed to look deeply into where such behavior or outcomes already exist.

These questions are positively framed and individuals involved in the change are interviewed to explore the best examples of the chosen aspiration. The emphasis is on real stories and actual events as these are not only primary data but they tend also to be easier to collect and communicate.

The stories are then shared and discussed to establish what they all have in common. It is also useful to examine where they differ as this can uncover alternative and complementary strategies to success. The conclusions are then drawn together into a compelling and memorable vision of what success would look like and feel like.

The next stage is to create a set of statements for what will be necessary to create the desired future. These will be based in the vision but will be both provocative and practical and will provide guidance for action planning – both now and ongoing.

Using the vision and guidelines, action steps are created for who will do what and when – both immediately and into the future.

Why does it work?

Most people, when they hear this approach, say that it sounds very logical but struggle to see why it is so much more effective.

AI is based on a vast body of research into human behavior in the fields of psychology, anthropology, sociology and other social sciences. It also shares its scientific underpinnings with other leading edge approaches to change like Neuro Linguistic Programming and Coaching. There are many reasons, therefore, why AI works but without going too deeply into the theory, some of the key ones are:

  • We get more of what we focus on. If we ask questions about our problems the issues will take up more of our attention and become more significant. If we inquire deeply and persistently into what we want we will find, inevitably, that we create the future that we are learning about.
  • Successful change needs to engage with what really matters to each individual. The interviews connect each individual with what really matters to them and thus help create a personally compelling reason to change.
  • Change is a social phenomenon. Relationships, support and co-operation are required for almost any change. AI fosters and grows these by creating energising, positive and transformative interactions between those involved.
  • Human beings move towards positive images of the future and the creation of a compelling, sensory rich picture of the destination is vital.
  • Change takes courage. People have more energy and confidence moving into the future (unknown) when they take forward parts of the present (known).
  • Change requires action. Positive practical steps, by as many people as possible, are essential to make progress and achieve results

It’s a great theory, but does it actually work? AI is proven in applications across the world. From major organizational change at NASA and British Airways to Imagine Chicago where over a million people have been engaged in the process. From coaching to creating self sufficiency in food in villages in the developing world AI has proven incredibly powerful.

I believe that there are two particularly interesting things about AI. The first is that, in a world where some estimates say that 75% of all organizational change efforts fail, I have yet to come across a story about where AI has not worked.

The second is that AI is the only approach to change I know which is generative – which is to say that the scale of the change increases as you go further from the point of initiation in both space and time. Most change efforts work like a rock thrown into a pond – big ripples at first which gradually diminish to nothing. Because of the energy it creates in people AI goes on working long after and far away from where the change started – and that has to be worth having!

How could you use it?

AI can be applied from 1:1 coaching interactions to organizational change involving thousands of people. It can help individual change, the creation of powerful teams, in conflict resolution, cultural change, mergers, redundancies – any form of change in fact. It can transform workshop or training design for a short session of a few hours to much longer term projects.

Chris Henderson is founder and leader of Leadership Connections, a network of associates who bring a variety of skills and experience to any project requiring management, leadership or change management expertise. Chris helps leaders and organisations pull forward together through a range of coaching, mentoring and development services. He can be contacted via the Leadership Connections website at http://www.leadershipconnections.co.uk

Author: C Henderson

What’s the Real Problem? – Find the Root Cause

Root Cause

Finding the Root Cause!
Finding the Root Cause!

Root cause analysis is used in many quality programs and can be used to solve many management problems. A person without the discipline to find the real problem will often jump to an answer that doesn’t uncover the root of the problem. A review of quick assumptions will uncover this problem in an operation.

Quality programs have been the way of life for operations in the aviation manufacturing business since WWII, but it has spilled over into other industries in modern times. Quality companies seeking certification under quality programs such as ISO 9000 will have to learn the discipline of digging for the root cause. For example, an airliner crashes, and on the surface it appears to be pilot error, frequently the first assumption made by the FAA. The crash investigation team knows better. There is much digging to be done.

Analysis

In the industrial setting, a quality certified operation demands the discipline of root cause analysis. For example, a manufacturer of car seat actuators was challenged by an annual cost reduction challenge, which is common to automotive operations. The cost reduction challenge was passed down to the gear manufacturer, a subcontractor, and the gear manufacturer sought ways to reduce material cost. One common approach is to go offshore with material and/or manufacturing requirements. Since changing the source of material and manufacturing requires prequalifying the new source, samples of the offshore products need to be cycled through the engineering, manufacturing, and quality operations. Testing, similar to the original qualification testing, needs to be repeated. This is the normal course of events when developing alternate sources.

If the new parts perform like the original parts, then the new source can be qualified, and parts can now be sourced from off shore. The other possible outcome is that there are significant shortcomings in the new parts, and the offshore source needs to be sidelined until quality issues are cleared up. Proceeding without prequalifying testing could cause havoc in the field. The following illustrates a hypothetical situation caused by a lack of quality discipline.

The new source of gears is accepted without prequalification testing, and the new parts are built into the product. The seat actuators are shipped worldwide, and they are installed into sedans and vans representing the spectrum of vehicles all the way up to luxury cars. Then there is a rash of part failure across the board ‘ in some cases with serious injuries resulting. The sales outlet CEO is screaming; the parent organization officers are screaming; the domestic original product manufacturer is embarrassed, and they are eager to help.

Implementation

Root cause analysis is the implemented. The new products are set aside for qualification testing. The original source production line is reactivated to produce qualified products, and the pipeline is filled with originally qualified products. At the same time, the new assemblies made from unqualified parts are cycled through the qualification testing series. Notable differences are found in the performance of new actuators, and the new source is condemned.

The chain of events can be summarized as follows: Seat failure BECAUSE OF actuator failure BECAUSE OF gear failure BECAUSE OF unqualified source BECAUSE OF failure to prequalify: ROOT CAUSE

This case is fairly transparent, but most of the time the root cause of failure is elusive, and it takes detective work to get to the source of the problem. It could require a cycle of analysis / testing / re-analysis, etc. Working as a team to solve a problem is required in most situations. It’s worth every effort because the future of the company and jobs is at stake. It is not for the faint hearted.

 

Author: Christine Casey Cooper

50 Ideas For Increasing Profits and Cost Reduction

Increasing Profits

Tracking Your Costs and Profit
Tracking Your Costs and Profit

Do you want to know 50 great profit building ideas that you can put to immediate use in your business to increase profits and reduce costs?

If yes, read all these ideas that have been implemented by clients and have benefited them giving their businesses dramatic boost in profitability. Most ideas can be put to action immediately. Each idea has the potential to give you many %points increase in net profits.

Research shows profits increase by 4%-56% and costs reduce by 18%-37% within 2 years using the simple 5 step process called the Profit Maps Model. Usually a 5% reduction in cost is adequate to turnaround most loss making businesses.

Businesses can calculate the value of the savings by these 2 simple formulas

If the business made a loss

Total Costs and Expenses = sales + absolute value of net loss +/- income tax = say X

Minimum Savings you will make in 2 years = 5% of X (which was calculated above)

If the business made a profit

Total Costs and Expenses = sales + net profit +/- income tax = say Y

Minimum Savings you will make in 2 years = 5% of Y (which was calculated above)

So how much can you save? Improve your profits by?

Revenue

This category typically contains inflows of resources into the business generated through operations.

Needless to say the profit building process can be used to generate marketing and sales ideas. The following ideas were generated with the objective of increasing revenue with little or no impact on the cost structure.

Revenue Increasing Ideas

1. If your company has facilities located over a multi-geographical area you may be able to rent antenna space to cellular phone companies. Typically these companies will pay for the use of rooftops as a place to erect their antennas. Another option is for billboards as advertising if you occupy a central location with a high visibility building. This enhances your revenue without any additional cost you. The point here is to explore alternative uses for your facilities. Remember they are assets that can be used 24 hours a day, seven days a week. There are numerous opportunities available for increased revenue if you look for them. Training room and function room facilities can be rented out in the evening or weekends. How about spare land or excess slots you own for public car parking?

2. Determine whether your business can market commission and non-commissioned products as add-on sales. Look for opportunities to sell products to your existing customer base at no additional cost. Examples are catalogue sales to airline passengers and the sale of miscellaneous products to credit card customers. You may have the opportunity to do something similar. Your customers have more value than you realise.

3. Is there any additional value in your customer database? Perhaps your business could generate additional revenue by selling the data. Alternatively consider starting a telemarketing department to market another line of products or services. Depending on your business and the nature of your customer base you may have something great here.

4. Explore the advantages of an effective e-strategy including e-commerce, e-business, e- people and e-technology. There is no question that the new opportunities available through the Internet offer new and innovative ways to increase profits and reduce costs. Consult with an expert in this area including a cross-section of your employees and magic will happen.

5. Segment your customers into heavy user and light user categories and determine the difference between these two groups. What needs to be done to generate another sale from both categories? All customers are critical. What can you learn about the different types of customers to determine whether more selling occasions possible? Make the most of these customers; you already have them.

6. Develop retention strategies as well as growth strategies. In today’s markets, it is as important to hold on to your existing customer base as it to grow your business. It took you a certain amount of resources to attract your customers: you may want to explore ways to retain a high percentage. What is your cost to acquire a customer? What is your cost to retain a customer? Do your employees know?

7. Continue to look for augmented products and/or services that would add value without adding expense.

8. Explore opportunities to licence or franchise your business products or services for additional market share or penetration

9. Explore merger and acquisition scenarios where efficiencies would be gained for all businesses concerned.

10. Develop a relationship with a long-distance carrier whereby your company will distribute phone cards to your customer base in return for a fee or residual commission.

Salaries

This category typically contains charges associated with

· Management Pay
· Non-management Pay
· Hourly Wages
· Training Labour
· Overtime Pay
· All Other Pay, Wages and Salary items

Cost Saving Ideas

11. Establish a 45 to 60 hour per week work environment among the managers. Cost structures among your competitors are basically similar to your cost structure so you will obtain an advantage because your managers are working more hours. This assumes that your managers are productive. Managers who have responsibility for a workforce of hourly employees are usually at the facility, a retail outlet, restaurant or office at least this amount of time. Sometimes business volume is extremely low at early or closing hours. During the slow hours managers can save substantially by scheduling fewer employees and filling it themselves. In addition to the Labour savings, managers will become more knowledgeable about operations and will find ways to improve customer service, training and operations. I have put this procedure in place in several places. At the beginning there will always be resistance, but once managers get beyond the initial hump things will run smoothly. I also find that certain incentive programmes work well here. Get the manager’s incentives based on Labour dollar saved and they come to understand the process.

12. Effectively manage your salary administration programs. Many companies pay lip service to this principle but failed to obtain true levels of success in salary administration and management. To start, make sure you have a salary range for every position in the company. Salaries should be structured so that the midpoint is 100, the minimum is 80% and the maximum is 120%. The basic philosophy is that the candidate should be hired into a position between the minimum and the midpoint on the basis of his or her level of experience. The employees are then moved higher in the range on the basis of performance. This philosophy is based on the premise that mid-point is the amount the position is worth to the company. Employees can obtain an additional 20% through stellar performance. Few employees should be paid over the 120% range. Each job is worth a specific amount to the organisation. If a new hire needs training to become efficient in a particular job, that employee is working at a level below the worth of the position and therefore should be paid at the minimum salary range. When the employee’s performance rises at successful completion of training and can perform 100% of the job duties move the employee quickly toward the midpoint of the salary range.

13. Insist that a salary survey be done every year to ensure that you have achieved the desired community position relative to your competition. In this case the competition is those companies that would recruit your employees. You need to make sure that if you survey 10 competitors; you have a salary range higher than 75% of these companies for your key positions and higher than 50% of these companies for lower-level positions. Implementing this strategy will help you reduce turnover and will also ensure that you are not overpaying for positions.

14. Make sure your salary administration program allows for regular salary review. Typically, this is done once a year for salaried employees and every six months for hourly employees. The review should include a performance appraisal form and the employee’s performance levels should correspond with established pay increases. In other words, establish the pay for your performance review system.

15. Establish a bell curve of salary increases. Let’s say that approximately 8% of your employees are superior performers, 12% are above average, 60% are average, 12% are fair, and 8% are poor. Create a salary increase guideline that mirrors this curve, with the better performing employees receiving higher increases. For example superior employees are given 6% to 7%, above average employees 4% to 5%, average employees 3%, fair employees 2%, and poor employees 0%. This allows the organisation to check and reward performance whilst still meeting its salary increase budget. Obviously, your goal is to continue to train and develop your workforce. Occasionally, low performing employees have to be replaced with those most suited to the position. The Bell curve is just a process to ensure that star performers are recognised and rewarded for their work.

16. Establish the salary increase guideline budget and stick to it. Plan salary increases for the coming year by using the Bell curve mentioned in the above idea. Department managers should budget salary increases for employees assuming that the next year’s performance will be at the same level as this year’s. Please be aware that some performance ratings will change. There will always be exceptions. This process will help ensure that your organisation will remain within the new salary increase budget.

17. The salary increase guideline budget should be preapproved. When a different rating is submitted during the year, treat it as an exception and make sure to justify it because performances can change- it may go up or down. A strict salary administration program will ensure that budgets are achieved.

18. Establish a training rate for all appropriate positions. This is crucial when your organisation experiences higher levels of turnover during the first and second months of employment. The training rate is lower than the standard pay rate and is applicable only during the training period. Employees are given a raise once the training has been completed satisfactorily. Determine whether the training rate could be established for other positions in the organisation.

19. Where the training rate is not appropriate, establish a probationary rate for the standard 90 day period. This rate is lower than the standard pay rate and is applicable only during the first 90 days of employment. If performance is satisfactory, the employee will receive a raise to the standard pay rate. Determine whether a probationary rate could be established for all positions in the organisation.

20. Develop a labour-management system whereby a computer predicts daily or hourly volume and the amount of labour needs on the basis of seasonality. Most businesses have a trend cycle that can be measured with 15 minute increments. First, you must find a way to get past the notion that your business cannot be tracked this way. There is a pattern to your business. Discovering your business pattern is the first step toward determining how to manage your Labour cost. Management will give you many reasons why the business cannot be tracked. Once you work through all their concerns, you and your team can identify those trend items, aspects of your customer behaviour that, in fact, can be tracked and schedule Labour accordingly.

21. Determine whether your new hires would qualify for the targeted job tax credit program whereby a percentage of training dollars is refunded by the government.

22. Determine whether your organisation would qualify for tax benefits for providing employee childcare services.

23. If your employees handle cash transactions, install software driven cash reconciliation process to save time at shift changes and at closing. This will also reduce cash shortages. This type of procedure also saves time in the cash out process.

24. Constantly look for software modifications that can reduce labour. Seconds saved could also mean dollars earned. Using technology is a natural approach to the whole effort of productivity improvement. If your business has not recently explored this area, effective tools that currently exist may surprise you.

25. Have an industrial engineer evaluate your business in terms of time and motion studies to determine whether additional efficiencies can be achieved in areas where high throughput is important. This approach can still work today. Some managers run their businesses the same way they did 10 or 20 years ago. Time and motion studies can have an impact on cost savings, productivity, customer service, and employee morale.

26. Establish a self-regulating team with the specific responsibility of improving productivity and reducing costs in a particular department or area of the organisation.

27. Develop an incentive to reduce absenteeism. This incentive should be linked to productivity improvement goals and to the availability of the workforce. It should be based on reducing absenteeism from previous period. The incentives could be a vacation bonus based on a 1% reduction in absenteeism

28. Develop a variable pay program whereby management salaries are reduced 5% to 10% across the board and these dollars are set aside into a bonus pool. When there is goal achievement, managers have the potential to earn even higher levels of compensation. However, these dollars will be at risk if managers do not achieve profit objectives. The potential to earn even higher levels of compensation will help sell this item.

29. Controlling your staff turnover is another way to reduce operating costs. Implementing strategies throughout the entire human resources cycle to ensure that all systems, procedures, policies, and practices are tight preventing employees from falling through the cracks. I refer to this as the human resources closed loop. If you think about it you will see that there is a cycle to the human resources process. It starts with recruitment, interviewing, selection and placement and continues to orientation, training, salary administration, performance appraisal, development, promotion, and finally termination. Then the cycle begins again. Make sure that all of the areas mentioned are employee friendly and are designed to retain employees. Identify any areas where improvements would reduce the number of employees leaving.

30. In order to determine where are to place additional controls, measure your labour costs in terms of cost per unit, cost per test, cost per guest check, etc. Breaking your labour costs down to the lowest unit will help you better identify cost saving ideas. It will also make it easier to affect and control.

Other Personnel Costs

This category would typically contains charges associated with

· Applied Payroll Burden
· Superannuation Employers Portion
· Vacation
· Paid Holidays
· Sick Leave
· Bonuses
· Short/Long term disability
· Group medical

Cost Saving Ideas

31. Make sure your company has a program that offers all full-time employees the opportunity to receive a higher salary in lieu of accepting certain benefits (such as medical, dental and life-insurance). Today many employees are being carried on a spouse’s plan. Why not let these employees choose a higher salary instead of benefits? As long as salary increases less than the cost of benefits, the company will save money and employees will increase their income.

32. Evaluate the cost of your superannuation administration. There are competitive programs that can reduce administrative costs. A simple evaluation of three different companies will determine whether you have an opportunity to realise savings. Even if you do not want to change the current superannuation administration you may still be able to negotiate better terms by showing your evaluation.

33. Reduce workers compensation insurance by aggressively reducing accidents. Evaluate your workers compensation actual to determine your claims history. Most companies set an actual rate and never re-evaluate them even though their experiences change. Depending on your business you may be surprised at the potential savings here.

34. Using the Internet conduct benefit surveys to comply your cost with those of similar organisations.

35. Challenge third-party providers to reduce administration costs by using the Profit Maps Model and passing those savings along to you.

36. Continue to monitor workers compensation costs and develop action plans to reduce them.

37. Develop a back to work programme that puts injured employees in alternative positions. There are times when injured employees want to remain active in the organisation and appropriate positions are available.

38. Negotiate settlements when long-term workers compensation situations dictate.

39. Eliminate alcohol at all company sponsored activities. This approach can prevent accidents, cut beverage costs at functions and reduce risks.

Communications

This category typically contains charges associated with

· Long-Distance Telephone
· Cellular Phone
· Pagers
· Data lines
· Fax lines

Cost Saving Ideas

40. Authorise a telecommunications consultant to analyse all your communication costs in terms of rates charged, equipment used, and programmes offered, promotions available, usage, cellular phone options, long-distance carrier performance and pricing, fax and security line combinations, past bills, and so on. Structure the contract so that the consultant bills on the basis of percentage of cost saved or refunds received. In this way, there will be no cost to you if the consultant is not successful in improving your bottom line. Review all areas of communication to ferret out these pockets of expense that often go unnoticed. Pagers and cell phones are usually ordered and distributed without the benefit of an organised plan. There are real and meaningful discounts if you shop around.

41. Continue to renegotiate rates and terms with the vendors who provide services. Set up an ongoing procedure for constantly renegotiating rates and terms.

42. Monitor and control your communications cost on the basis of the cost per unit test (guests check, or that like) in order to determine locations for exerting any additional control.

Utilities

In this category typically charges associated are

· Gas and Electricity Usage
· Water

Cost Saving Ideas

43. Authorise a utility consultant to analyse your utility costs. Such consultants would know how to deal effectively with the local public service companies in order to discover advantages or missed opportunities associated with gas and electric services. They should be fully authorised to check existing equipment and records. They should be experienced in developing an index and analyses and creating demand graphs to spot situations where you may have been overcharged. They would also represent your issues to the public utility commission.

44. Pay your consultant on the basis of a percentage of the savings associated with his or her action steps. The typical rate is 25% to 30% of the demonstrated savings and refunds over a specific period of time. There should be no charge if savings are not demonstrated.

45. Take energy conservation action steps including setting thermostats at 72°F. Automatic controls should be put in place to control temperature during off hours.

46. Turn off lights in conference rooms, restrooms and officers when they are not in use.

47. Turn off all lights not related to security at the close of business.

Professional fees

This category typically includes charges associated with professional services such as

· Legal and Human Resources Related Fees
· Proposals (domestic and international)
· Fees for Technical Services
· Other professional fees

Cost saving ideas

48. Talk about fees. If your lawyer does not bring up the subject of fees, you should. Do not be shy. In business, lawyers are free to set their own fees. The best time to discuss is at the beginning of a new legal matter.

49. Try to settle cases rather than litigate.

50. Have lawyers design standard forms you can use in routine transactions.

Conclusion

The more you understand the power of this list, the more you’ll realize you must get your hands on all the other ideas to benefit your business. Go to http://www.profitmaps.com.au to obtain and use a simple 5 step process that can do this for your business.

As mentioned each idea has the potential to increase your net profit margin by many % points. Research shows profits increase by 4%-56% and costs reduce by 18%-37% within 2 years. Usually a 5% reduction in cost is adequate to turnaround most loss making businesses.

To obtain the maximum benefit and ensure that the actions result in improving your bottom-line of increasing profits to cost reduction you need a structured methodology or a process on an on-going basis such as the 5 step process suggested in profitmaps.com.au.

 

Author: Skanda Kumarasingam

The 7 Wastes of Lean Leadership – Common Errors in Working With Continuous Improvement Teams

Effective LeanDiscussions about continuous improvement frequently mention the term ‘waste’ which is anything that doesn’t add value. But how often is waste discussed with respect to managing Lean teams? Leadership, like operations or any other process, uses resources. Doesn’t it make sense to figure out ways to lead teams more effectively by using the least amount of time and energy?

In an attempt to take a look at this subject through a familiar Lean lens, consider how Taichi Ohno’s 7 Wastes apply to leadership.

  • Quality. Is the manager making good decisions? What is the impact of her choices on the individual employee? On the team? On the product or service?
  • Time. Do employees have to wait around for a supervisor to give instructions or are they empowered to act on their own?
  • Transportation. Are leaders delegating in the most effective way or does a manager have to be present for a team to operate effectively? If so, that creates a lot of back-and-forth between different areas of responsibility for a leader.
  • Overprocessing. Does the leader micromanage? Does she feel the need to give instructions about things that people are already doing? Does she have to explain things that could be standardized? Does she delegate something and then do it herself anyway?
  • Inventory. Is the manager giving constant feedback or does he save it all for an annual review? Does he give individual input or lump it together for a whole team?
  • Overproduction. Is the supervisor effective at prioritizing or does she pile on more work than teams can handle? Is work parceled out Just-in-Time or is there a long backlog of things to do?
  • Motion. The ‘motion’ of leadership is really communication. Are instructions concise? Is the communication clear? Do employees understand the message? Do managers make it easy for their teams communicate with them? Are instructions effective in producing the desired outcome?

In Ohno’s view, overproduction is the worst of all the types of waste because it creates or hides all the other forms of waste. For leadership, though, it is really something else that drives other waste. It is the waste of mistrust.

When leaders and team members don’t trust each other, the other forms of waste are exaggerated. Why do leaders micromanage? They don’t trust that an employee will get it right. Why don’t employees take a risk and choose to act independently when the leader is not around? They don’t trust that their leader will respect the decision, and are worried that they will get in trouble if they make a mistake. Trust is the cornerstone of a leader-team relationship. When it exists, an organization is much more effective than it would otherwise be.

Building trust takes time and is not always easy. A good starting point, though, is for a manager to apply a continuous improvement mindset to her own actions as a leader. Have a misstep with one of your a direct reports? Think of or something that you could have been done more effectively? Do a root cause analysis. Look for the waste. Come up with a better way to do things next time. Make a change. Make sure the change was effective. Repeat.

© Velaction Continuous Improvement, LLC 2009. All rights reserved.

Jeff Hajek, MBA, is author of the ground-breaking book Whaddaya Mean I Gotta Be Lean? He is also the founder of Velaction – a company dedicated to making continuous improvement easier, more effective, and more rewarding for Lean Six Sigma managers, supervisors, employees and frontline professionals in the trenches. Visit http://www.Velaction.com today to download your FREE LEAN eBOOK: The Continuous Improvement Companion. Whether you are a seasoned expert or just starting out, this valuable, easy-to-read, interactive guide has over 72 pages that are chock full of Learn terms, ‘how-to’ tips, warnings about common pitfalls, strategies to help you and your team overcome everyday obstacles. Not only that, you also get simple, but powerful ideas about how to increase your job satisfaction in today’s stressful, fast-paced work environments. You have nothing to lose and everything to gain – and unlike a lot of other places, you don’t even have to give out your email address to get this unique Lean Six Sigma resource. Grab your complimentary copy right now!

Author: Jeff Hajek

Business Simulations – Do They Have A Place In Training?

Business Simulation and Training
Business Simulation and Training

The use of simulation learning tools to educate employees is growing rapidly due to the decisive success rates of their targeted commercial content. Increasingly they are teaching management teams improved business acumen and decision making in a risk-free real-world setting.

These simulation tools will often take two forms; either a manual business game – often requiring business decisions to be repeatedly made and providing learning measures alongside the exercise  or using electronic media to provide business simulations (either fictional or realistic) dependent on the skill sets being targeted. These simulations are increasingly being referred to as ‘Serious Games’ which can sometimes be misleading however this reflects the growing awareness of the simulation tool in the training market.

Today’s simulations should actively engage and respond to the trainee, creating an effective and lasting learning experience, reducing the resources needed to create training materials and improving the impact (and often depth) of the training budget.

Simulation is one of the most effective ways to teach high-level skills with off-the-shelf training materiel no longer being perceived as the most effective method in teaching skills– most effective when building awareness i.e. you can outline new legislation well with traditional training however to develop improved commercial decision making involves developing and mastering new skills, and that requires practice, and often time that a commercial undertaking or a senior level post holder cannot afford. Simulation is the most effective way to do that.

Business simulation games have a high level of user interaction that work faster than traditional training or e-learning methods and are increasingly becoming a solution of choice amongst discerning training purchasers.

Simulation content can easily get out of hand though so it’s important to know the key organisational requirements before purchasing a business simulation;

– Who is the target audience?

– What are the objectives of the training to be undertaken?

– How do I plan out what this user experience is going to be?

– Where is the learning going to take place?

Simulations are built step by step whether it be a manual game or an electronic simulation so you must have a process that builds content page by page, so you wind up with a high-quality simulation that’s well thought out from start to finish.

For instance, recently we were asked to develop training for customer call-center agents on the complexities of call flow segmentation and how to use tools in the call flow to handle customer scenario interactions. To develop the traditional training material involved several weeks of complex Instructional Design with the end result needing train the trainer material, and all of the associated hand outs, overheads/power points, exercises and knowledge base articles and at the end of this process you have spent a fortune and have developed a laborious process to pass on the required knowledge.

Surely better to develop a electronic simulation product that creates an interactive environment exactly as a real call would take place, perhaps with a coaching module inside the simulation so that when you make a mistake, there’s a coach that comes on screen, and hints at improvements in your response. Or, if something simpler is required a coach that takes you out of the training session and puts you into a learning centre where the trainee can be exposed to the necessary information about the situation they are currently handling.

Simulation training guarantees the same quality of interaction from incident to incident and from person to person so when you talk about the ROI of simulation training you should be evaluating against improved customer satisfaction, up selling of new products and services, and establishing customer service best practices for an organisation. The trainer/ coach can tell trainees exactly what they have done right and what they have done wrong during the simulation and will also be able to listen to all of their questions and answers and grade their performance.

Simulation training is not meant to replace the function of a training department; but is intended to make training much more efficient and completely immersion-based so that the trainee can leave saying, ‘I understand.’ Simulations engage users emotionally so that the impact of training is internalised more completely than in other training methods and allows repeated attempts until performance levels have improved to the required standard.

The inherent value of simulation training is that learners can practice strategic and commercial business skills and apply them in a risk-free training environment. This kind of efficiency- and performance-focused theme means that simulations are starting to heat up the commercial learning arena with buyers of training recognising how it’s better to create custom-based simulations that deliver skills to the workforce. Business performance depends on workforce performance and the most efficient way to increase workforce performance is with simulations tailored to your market and its customers.

The future of business training may include widespread deployment of simulations as simulation-training becomes more commonplace. Already we are starting to see a huge impact in some of the less traditional training areas like customer service and sales because if you say “Let’s work through this sales situation and I’ll coach you as you go”, it resonates with the employees and they start to rapidly take on board the learning. Employees are increasingly becoming more and more discriminating in their choice of employers and look for organisations where the training meets their needs as employees – so that they can join a new business with confidence that they will receive effective and time efficient training support.

So for the employer then the key to success is all about the content. If we can be clear about the training needs of our teams and use skilled personnel to develop suitable business simulations and games then we’re going to open it up to all sorts of tasks, and we’ll truly see it become a significant portion of the training mix.

When costs are tight, overheads being watched and every penny of the margin being monitored and you want to invest in people development then why would you opt for traditional lecture type training–you’re going to put them in simulations. You can have a choice of off-the-shelf simulations or custom simulations each with their benefits and drawbacks; off-the-shelf is cheap, immediate and if you are clever in selecting the right publisher you will get extended use from their licenses.

If you opt for custom-made then you will pay more but you will get simulations with your metrics, your market and your business model.

If you want to get serious about your management development so they understand what levers and knobs they can pull in the company to drive profitability and shareholder value, then simulation training offers a vital solution to discerning employers.

 

Author: John M. Stuart

Business Simulations – Do They Have A Place In Training?

Business Simulation and Training
Business Simulation and Training

The use of simulation learning tools to educate employees is growing rapidly due to the decisive success rates of their targeted commercial content. Increasingly they are teaching management teams improved business acumen and decision making in a risk-free real-world setting.

These simulation tools will often take two forms; either a manual business game – often requiring business decisions to be repeatedly made and providing learning measures alongside the exercise  or using electronic media to provide business simulations (either fictional or realistic) dependent on the skill sets being targeted. These simulations are increasingly being referred to as ‘Serious Games’ which can sometimes be misleading however this reflects the growing awareness of the simulation tool in the training market.

Today’s simulations should actively engage and respond to the trainee, creating an effective and lasting learning experience, reducing the resources needed to create training materials and improving the impact (and often depth) of the training budget.

Simulation is one of the most effective ways to teach high-level skills with off-the-shelf training materiel no longer being perceived as the most effective method in teaching skills– most effective when building awareness i.e. you can outline new legislation well with traditional training however to develop improved commercial decision making involves developing and mastering new skills, and that requires practice, and often time that a commercial undertaking or a senior level post holder cannot afford. Simulation is the most effective way to do that.

Business simulation games have a high level of user interaction that work faster than traditional training or e-learning methods and are increasingly becoming a solution of choice amongst discerning training purchasers.

Simulation content can easily get out of hand though so it’s important to know the key organisational requirements before purchasing a business simulation;

– Who is the target audience?

– What are the objectives of the training to be undertaken?

– How do I plan out what this user experience is going to be?

– Where is the learning going to take place?

Simulations are built step by step whether it be a manual game or an electronic simulation so you must have a process that builds content page by page, so you wind up with a high-quality simulation that’s well thought out from start to finish.

For instance, recently we were asked to develop training for customer call-center agents on the complexities of call flow segmentation and how to use tools in the call flow to handle customer scenario interactions. To develop the traditional training material involved several weeks of complex Instructional Design with the end result needing train the trainer material, and all of the associated hand outs, overheads/power points, exercises and knowledge base articles and at the end of this process you have spent a fortune and have developed a laborious process to pass on the required knowledge.

Surely better to develop a electronic simulation product that creates an interactive environment exactly as a real call would take place, perhaps with a coaching module inside the simulation so that when you make a mistake, there’s a coach that comes on screen, and hints at improvements in your response. Or, if something simpler is required a coach that takes you out of the training session and puts you into a learning centre where the trainee can be exposed to the necessary information about the situation they are currently handling.

Simulation training guarantees the same quality of interaction from incident to incident and from person to person so when you talk about the ROI of simulation training you should be evaluating against improved customer satisfaction, up selling of new products and services, and establishing customer service best practices for an organisation. The trainer/ coach can tell trainees exactly what they have done right and what they have done wrong during the simulation and will also be able to listen to all of their questions and answers and grade their performance.

Simulation training is not meant to replace the function of a training department; but is intended to make training much more efficient and completely immersion-based so that the trainee can leave saying, ‘I understand.’ Simulations engage users emotionally so that the impact of training is internalised more completely than in other training methods and allows repeated attempts until performance levels have improved to the required standard.

The inherent value of simulation training is that learners can practice strategic and commercial business skills and apply them in a risk-free training environment. This kind of efficiency- and performance-focused theme means that simulations are starting to heat up the commercial learning arena with buyers of training recognising how it’s better to create custom-based simulations that deliver skills to the workforce. Business performance depends on workforce performance and the most efficient way to increase workforce performance is with simulations tailored to your market and its customers.

The future of business training may include widespread deployment of simulations as simulation-training becomes more commonplace. Already we are starting to see a huge impact in some of the less traditional training areas like customer service and sales because if you say “Let’s work through this sales situation and I’ll coach you as you go”, it resonates with the employees and they start to rapidly take on board the learning. Employees are increasingly becoming more and more discriminating in their choice of employers and look for organisations where the training meets their needs as employees – so that they can join a new business with confidence that they will receive effective and time efficient training support.

So for the employer then the key to success is all about the content. If we can be clear about the training needs of our teams and use skilled personnel to develop suitable business simulations and games then we’re going to open it up to all sorts of tasks, and we’ll truly see it become a significant portion of the training mix.

When costs are tight, overheads being watched and every penny of the margin being monitored and you want to invest in people development then why would you opt for traditional lecture type training–you’re going to put them in simulations. You can have a choice of off-the-shelf simulations or custom simulations each with their benefits and drawbacks; off-the-shelf is cheap, immediate and if you are clever in selecting the right publisher you will get extended use from their licenses.

If you opt for custom-made then you will pay more but you will get simulations with your metrics, your market and your business model.

If you want to get serious about your management development so they understand what levers and knobs they can pull in the company to drive profitability and shareholder value, then simulation training offers a vital solution to discerning employers.

 

Author: John M. Stuart

Designing and Deploying Human Centric Processes

Human Centric Processes
Human Centric Processes

A lot of effort has been carried out in the last years to re engineer processes in order to automate all or parts of them. A great number of companies have changed their processes as a result of the introduction of new software systems, aimed to streamline the management of the back and front office. Companies have even taken care of processes crossing the company boundaries in order to optimize communications with clients, providers and partners. A characteristic of this interest is that is has been driven by technology.

In the last years we have seen the introduction of ERP and CRM systems, Content and Document Management systems, Workflow Automation Applications, etc… that have (or hopefully will) help companies achieve a more efficient use of their resources. It seemed that CIOs believed that an impressive IT portfolio would directly result in better processes.

However less interest has been directed at the human side of process optimization. A lot of money is spent on paying a team from a world class consultancy firm, best of breed software products licenses, etc… and it is usual that the importance of deploying the new processes effectively is underestimated. Designing and documenting enhanced processes does not create value for the company. It is only when these new processes are carried out in the real world that value is created.

If we use the popular metaphor that compares a business with an orchestra, you can have the best musicians (employees) playing the best instruments (software systems) with the music scores (processes) in order. Value appears when they start playing together in a coordinated manner.

The objective of most Business Process Reengineering (BPR) projects is to increase the quality of products and services produced, to lower costs, to reduce development time, to increase client satisfaction, etc… At the bottom line what you need to achieve is that people work in a new and more efficient way.

The success of a BPR effort, specially when process are carried out by people, is therefore highly dependent on people’s understanding of the following concepts:

“Who does what, how, when and where”

Who. The person in charge of each task in the process must be clear. It must be clear who is accountable for each activity.

What. The characteristics that the output of the activity must conform to. The value it adds to the process object.

How. The way in which the task must be performed must be clearly known and made explicit (documented) with the necessary level of detail. It is important that this set of descriptions and instructions are easy to update, so best practices and lessons learned can be incorporated and widely employed.

When. Which activities precede and follow the task.

Where the activity is carried out.

The importance of efficiently deploying a process is also dependant on the number of persons that will be following the procedure. The greater the number is, the more value that an efficient deployment provides. Think of the claim processing department of an insurance company, people analyzing mortgage requests in a commercial bank or a big call center. These units normally have a great number of people executing the same process.

The objective is that people executing the process perform it as close as possible to the new version of the process, in the shortest possible period of time. These two variables are extremely important to generate value and to recover the resources invested in reengineering the process.

Some of the practices that can contribute to this objective include making the procedures easily available in a format that facilitates its look up, training, controlling, incentivating process compliance, etc…
But applying this techniques alone is not a synonym for success.

The real challenge is to get participant buy in. These is were social and cultural factors must be taken in to account, and change management, knowledge management, management of expectations, etc… come into play.

Experience has shown, especially with knowledge workers, that involving process participants in decisions that affect them, ensuring that they are well informed and making them feel that their opinion is being taken into account, is more effective than forcing them to follow the new processes. Although there are some cases were strict discipline must be used to enforce compliance with the process, it is usually better to reward good attitudes than to punish non compliance.

Once the process is being carried out following the new process it is also very important to enable feedback to the system. Process participants’ opinions are extremely important to enhance the process and it is likely that they have some good ideas to improve it. For example, performing a specific task in a way that can be institutionalized as a best practice, incorporated to the procedure and deployed to every participant in the process.

Lucas Rodríguez Cervera is founder of Nevant} – Methodology & Process a company specialized in human-centric knowledge intensive business process technologies. They pioneered this concept with metoCube. Nevant Methodology & process

Author: Lucas Rodriguez Cervera

Waste in Lean Manufacturing and in the Lean Office – To Eliminate Muda, Stop, Don’t Look, Listen Instead

Lean Operations
Lean Operations

Waste is anything that does not add value to a process or serve the customer.  Waste reduction is a cornerstone of continuous improvement. The first step to eliminating waste is to be able to identify it. Most people do this by observing a process and looking for inefficiency or redundancy.

Although you can learn a lot by watching, sometimes you can learn more by listening. Whether you are on the shop floor or in an office, find a safe place to stand where you won’t get in the way and close your eyes when teams are in full swing. Then listen for the sounds of waste.

ON SHOP FLOOR

Problem words
‘HEY’, ‘WAIT’,  ‘WATCH OUT’, ‘HOLD ON.” All these words point to a problem. Even questions like, ‘Can I borrow your …?’ tell you that someone doesn’t have the right tools for the job.

Hammers
Why are they being used? Often, they increase the risk of injury and indicate that parts aren’t  fitting right. In some cases, there is a legitimate use for a hammer, but more often than not, they are being used for ‘adjustments.’

Grinders
In assembly areas, grinders should not be used because they alter parts, possibly making them out of spec. In fabrication areas, they point to a problem in an upstream process.

Falling parts
When a part falls it presents a potential safety hazard and can create quality problems if the part gets damaged. It also indicates that installation or transportation methods aren’t working correctly.

Vibrating Machines
Every machine has that sound it makes when something it is a little ‘off’. Think of the sound of a dentist’s drill. ZZZZZZZZZZZZZggrrrr. That noise let your dentist know right away that something’s not quite right with what she is doing.

Even when the production team is on a break, you can hear the sounds of waste.

Fans and other motors
The cost adds up over time if machines are left running or lights are left on.

Hissing
Leaks in the air lines are often covered up by the sound of production, but when the shop gets quiet, it can sound like a den of snakes.

IN SERVICE OR IN THE OFFICE

Unanswered phones
That is the sound of a customer going somewhere else.

Angry voices
You can always tell when someone on the other end of the line is mad, even if you can only hear the person in your office. Sometimes customers are unreasonable, but generally the emotion is grounded in a valid problem that you now have to spend time and resources to fix.

Customers talking in line
Your customers can get disgruntled if they have to waste their time standing in line in a service environment. Slow lines mean you risk losing valuable repeat business.

Shuffling of papers
This indicates poor organization and ineffective 5S, and means that someone somewhere is waiting for your answer. You may also hear something like, ‘Jim, do you know where the new account files are kept?’—another indicator that things aren’t easy to find.

People walking away from their desks
When employees get up from their desks when they are not on break it often indicates layout problems. Frequently, the culprit is a shared resource that is centrally located–file room, copier, printer, etc.

The sound of warning buzzers on office equipment
Some alarms are routine (i.e. a fax machine that is out of paper), but others are an indicator of worn out equipment or poor maintenance.

Conversations with inanimate objects
For some reason, office workers like to have conversations with computers that won’t play nice. Even if the computer isn’t listening, you should.

Loud passers-by
When a person is elbow deep in a product on an assembly line, nobody seems to want to interrupt. When a person is staring at a computer screen, visitors seem to have no problem striking up a conversation. Interruptions such as these, even if they are work related, generate considerable waste. It can take a long time to reset.
Train yourself to pay attention to the sounds of waste, but more importantly, get into the habit of looking for the root cause and fixing it. The more problems you identify, the better your work area will be.

Notes for Leaders
You already have an eye for waste. Work not only on developing an ear for waste, but teaching your team how to do it as well.

Notes for frontline employees
Your company and your customers benefit from eliminating waste. But, you benefit from learning to identify problematic sounds as well. First of all, it is a low effort way to stand out. If you can identify waste on your own, your manager has the chance to observe your Lean skills and your commitment to improvement. Plus, you can correct many types of these problems yourself, even if it is something as simple as filling out a work order for a leak or helping a coworker get IT support.

The end result of your effort? It paints you, the employee, in a very positive light which can help improve your job security. An additional bonus is that problems you hear generally are ones that affect you. When you fix them your job gets easier.

© 2009 Velaction Continuous Improvement, LLC. All rights reserved.

Jeff Hajek, MBA, is author of the ground-breaking book Whaddaya Mean I Gotta Be Lean?. He is also the founder of Velaction – a company dedicated to making Lean easier, more effective, and more rewarding for Lean Six Sigma managers, supervisors, and employees in the trenches. Visit http://www.Velaction.com today to download your FREE LEAN EBOOK: The Continuous Improvement Companion. This valuable guide is chock full of ‘how to’ tips, warnings about common pitfalls, strategies to help you overcome everyday Lean obstacles, and ideas about how to increase your job satisfaction in today’s stressful, fast-paced work environments.

Author: Jeff Hajek