Lean Six Sigma for Business Improvement

Simple Business Approach to Continuous Improvement

noreply@blogger.com (Help Save Earth) — Tue, 14 Jun 2011 00:57:00 +0000

As we rolled out our Six Ideas to Improve Your Business Today, we got some feedback that businesses are looking to go to the next level, and are looking for an easy approach, without using Lean Sensei's and Six Sigma Black Belts.

We continued with the theme of using layman's terms, and got rid of the consultant "lingo", to bring you an approach that anyone can use to better plan and prioritize their improvements.

We defined a 10-step approach. Here is a quick summary of those steps.

1) Gather customer complaints
2) Gather employee complaints
3) Review business finances
4) Determine top 3 issues
5) Determine importance of each issue
6) Get to root cause of each issue (using worksheet)
7) List potential solutions
8) Assign actions
9) Verify improvements
10) Communicate and celebrate (and go back to #1)

The process is simple, as you can see. Basically, a simple workbook that you can print out, fill out, and guide your business towards long term improvement. If you focus on the right things, this will either save you money, bring in more revenue/business, or both!

The best way to show you is to have you download an example form of how this form should be filled out. We used a small family restaurant as our case study.

Ready to begin filling out your own form? We have blank forms available for free download, including the Problem Solving Worksheet.

If you'd like to customize it with your own business logo, contact us and we'll modify it for free.

Six business improvement ideas you can implement today!

noreply@blogger.com (Help Save Earth) — Mon, 13 Jun 2011 23:52:00 +0000

Sometimes us consultants get a bad reputation for making things more complicated than they need to be. We turn people away when we don't put process improvement tools in layman's terms that anyone can understand.

I was reminded of this when working with a small family restaurant recently. If I mentioned standard work, theory of constraints, 5-S, kanban, or PDCA, I would have been escorted out the door. They aren't used to hearing these terms, like some of our larger manufacturing clients are.

I needed to explain it to them, without the consultant "lingo". In fact, we applied every single one of the tools mentioned above, but we didn't call them by their name.

As I mentioned in my last blog, there are simple tools that any business can start with, that almost always gain some improvements.

We decided to package them into a one-page sheet. We identified six different suggestions for businesses who aren't sure where to get started. You can download a copy of them at the bottom of the page.

1) Workplace organization, cleaning and labeling – With your staff, get rid of everything you don’t need very often (put it in storage or recycle it). Everything that remains should be stuff used quite often. Label it and make sure there is room for it somewhere. Clean up the area, to make it shine, so that it looks like a brand new area (this gets the workers excited). Setup a process to put things away after use, and maintain the cleanliness and organization, so it doesn’t go back to the mess it was before.

2) Customer Surveys - send out a survey to your customers, and ask them how you can improve your products and services. Be open to input they receive, and gather the top 3 ideas for implementation.

3) Employee Brainstorming - Gather your employees and “brainstorm” ways to improve the business. Your employees hear the complaints and deal with the inefficient processes, so listen to what they say. Make sure you ask them about risks of problems, not just those that have actually happened (employee turnover, close-call accidents, anticipated issues, mistakes that almost made it to the customer, etc).

4) Reduce backups - Look for areas in your business processes where the work piles up or gets backed up(called “bottlenecks”). If you can improve the efficiency in that area, the results are often seen immediately with your customers.

5) Document tasks - develop a standard and consistent approach for doing key activities and tasks in your business. Write them down, so everyone knows how it should be done. If someone comes up with a better idea, update the steps. Provide as many photos and pictures as possible.

6) Cross-train employees - train other employees to be able to do multiple tasks and skills (not the same as multi-tasking, which tends to be inefficient overall). This gives you a more flexible workforce, so in case you get overloaded in one area, or someone is out sick or on vacation, you aren’t keeping the customer waiting, or providing poor service, or not responding to them at all.

Even really mature and highly efficient companies go back to these basic improvement approaches over and over again. They are critical for success.

Download a copy for free! Six Ideas to Improve Your Business Today!

Cost savings from process improvements can be misleading

noreply@blogger.com (Help Save Earth) — Mon, 25 Apr 2011 01:49:00 +0000

I've been to many conferences, and have seen lots of companies claim cost savings and metric improvements that are very impressive. However, the more experienced I get, the more skeptical I get of these claims.

First off, let's define what process improvement savings should be. It should be the elimination of waste in a process (removing non-value added work), improving quality to the internal and external customers, reducing the time to complete value added tasks, or redesigning a process to provide more value to a customer.

Savings should not be the outsourcing of processes to another country to save money, or cutting heads and expecting them to "be lean" in order to make up the gap in resources. These are usually short-sighted decisions that end up costing the company more money in the long run, and risk negatively impacting the customer. But for this discussion, we will focus on one more incorrect savings: when the bottom line benefits do not actually exist.

Let's talk about one scenario that I've seen. Short term savings.

Let's say the process is tracking the Work in process (WIP) for approving charge numbers, so employees can start work on a new program or project.

Refer to the table below

Starting at Day 15, the number of charge numbers waiting for approval is 108 (red line). Each day, that total grows larger, as the amount of time available to complete these approvals is not sufficient to keep up with the new requests. This means the process will never be able to cut into the existing WIP. At some point, shown at Day 40, the management gets too many complaints about charge numbers not being available, and they work overtime, and add more resources to complete a bunch of them over the next couple days. They complete 350, 400 and 75 over the three days (blue line), compared to a typical day of around 20-30.

If we were to capture the savings from bringing the total number of charge number requests from 772 to 71 by Day 42, you could conclude a huge reduction of 90%, or 601 requests. If we determine that each request is $1000 per day in lost productivity, then on Day 39, we have around $772,000 tied up in the process, and it is reducted to $71,000. A savings of $601,000!

However, we didn't do anything "lean" since we spent additional money on labor to get the number down. We haven't actually addressed the time available or cycle time per request. Of course, the extra labor should be subtracted out of the savings, so we'll take out $10,000 for the extra labor/resources.

Next, we assume that this is actual bottom-line savings. In order to claim this as savings or growth, we would have to assume that all employees are not using any other charge numbers, and are charging to an overhead number, and therefore the company is losing money by employing them without work to do. This is highly unlikely. Let's be conservative and assume that 10% of the employees would be in that situation, so we'll claim around $60,000 in additional sales/work, not $600,000.

The next assumption is that the 772 open requests would have stayed at that level for an extended period of time. It does appear that this number was continuing to climb, so the number of new requests would have to be reviewed, to see if that was true assumption for the future. If the requests drop off, then they might have been able to catch up on their own.

Finally, we must assume that they can maintain the savings at the low level of around 70 requests for an extended period of time. If we look at the data in the future, you can see that the requests climb back up again. Again, this shouldn't be a surprise, since we didn't do anything to address the original problem, that we cannot keep up with the request demand for charge numbers.

Let's assume that they actually "lean" out the process and are able to keep up with the demand now. One final problem with cost savings is the impact of the improvements to the bottom-line financials of the company. For example, if the process was able to keep up with demand, and a resource was able to be freed up to do some other work, then if that resource isn't actually given value-added work, the savings won't actually show up in the bottom-line. You should be able to see an increase in output or work as a result of the freeing up of the resource, which is where the true savings hit the financials. This step is critical, and should be verified after any claimed improvement.

So next time you see some cost savings presented, think about these key points:

1) Did the baseline data represent the true situation if no action was taken, or was it an unusual time period and not representative of the typical situation for that process?

2) Was waste taken out of the process to improve it, or were more resources and cost thrown at it?

3) Were the improvements maintained over a long period of time (6-12 months)?

4) Did the savings actually flow down to the bottom line?

So be careful what you read about lean or six sigma cost savings, and be diligent if you are involved in a project or event to report the correct and most accurate numbers you can.

Start simple before you map your processes

noreply@blogger.com (Help Save Earth) — Sat, 05 Mar 2011 21:35:00 +0000

We see a lot of different processes at various levels of process performance. Some are running near six sigma levels, while others don't even think they have a process that they follow.

The maturity of the process should determine the type of tool to apply.

If your process is just getting started with process improvement, has no metrics, have never defined a common process, and doesn't know where to begin, start simple. The two tools we recommend are 5-S and standard work (actually let's call it consistent processing, since standard work is more complex than it seems).

5-S is a way to clean and organize the workspace, so that unneeded items are removed, needed things are well-labeled, easy to find, everything has it's place, so it's easy to see when there are problems in the workspace. To maintain these methods are difficult, but the first couple phases are easy and can gain some quick efficiency gains, along with a pleasing appearance.

Consistent processing is about defining a process that can be followed by everyone involved in the process, so that the problems created by differences in approaches can be reduced, and the new process can be adjusted according to problems that occur going forward. It's too confusing to try and improve a process that doesn't have any repeat performance. When you look for root cause, there are often so many process issues that can "muddy up the waters".

I recently helped with some yield problems at a facility. We had the failed unit hooked up to the test equipment, asking all kinds of questions, testing different scenarios, trying to identify what could be the problem. When we finally decided to open up the unit, it was missing a major part! You end up wasting a lot of your time investigating the simple stuff, and it slows down the improvement process (instead of working on the major issues). Establishing some standards for assembling, repairing, reworking, and verifying processes is a must!

You might also be concerned that workers will feel "confined" by a standard.

Here is what you can do to alleviate their concerns:

1) Involve them in developing the process, so they own the process, and feel a part of its development.

2) Reiterate that the standard is the safest and most efficient way to do a process TODAY, but can be improved or changed at any time.

3) Recognize those individuals who helped establish the best process, and those who improve it, to encourage others to come up with better ways of doing something. If they get some motivation from being recognized by their co-workers and leaders, then they may spend time trying to think of better ways to improve the standard.

If you can instill that kind of thinking in your people, you are really maturing as a company.

Annoying tourist photos have wrong business model with lots of waste!

noreply@blogger.com (Help Save Earth) — Sun, 09 Jan 2011 05:18:00 +0000

While on vacation recently, we were overwhelmed by the number of attractions with a photographer service, who make you take a photo and then try and sell it to you afterwards for a ridiculous price. It has gotten so prevalant that you get worried when you don't see anyone waiting to take your picture.

They must be getting enough people to buy these expensive photos, otherwise they wouldn't be so popular at these attractions.

I give them credit for identifying a need and taking advantage of it. Often times, I'm not in a position to have a photo of me and my wife snorkeling, or getting off a boat, or in the middle of a ride. However, when you look at the prices, it is unbelievable how much they charge. The majority of the time we decline on price alone.

My problem is customer value. I think the current model is terrible, and needs to be fixed.

Let's say that I'm in the majority, and only 10% of the customers actually purchase the photos. If they charge $20 per photo, and take 1000 photos, then they make $20x100 = $2000 per day. The other 90% walk away muttering about what a rip-off it was, and disappointed that they couldn't get the photo, and the 10% who bought it try to justify in their heads why it was worth the money to spend for one photo.

Many of these places pre-print the photos in hopes that people will feel guilty and buy them. If they don't buy it, then the photos get thrown away. What a waste! All that effort taking the photo, processing them, printing them, and even time spent trying to sell the customer on them is wasted!

Here is a better option, that could improve the experience for everyone.

What if the price was only $5 per photo, which I think is more reasonable. If this increases the chance of buying a photo to a conservative 50%, then let's look at the business model now. If we use the same numbers as before, $5X500 = $2500 per day. Now 500 people leave the attraction with a good experience, and a photo to go with it. I would also argue that it would cost no additional amount of work to process the 500, then it does currently to handle the 100 people in the prior model. The people who buy can also post or share the photo with family and friends, and provide free advertising for the attraction. Everyone leaves feeling good, since they paid a fair price for something they wanted, and more people were able to take advantage, providing customer value to many more people. I would even argue that the % would be much higher than 50%.

Even if the companies who run this service see no immediate improvement in sales with this model (doubtful), the free advertising and increased satisfaction (part of the whole experience for the customers) would provide long term growth for these companies, which would eventually give them the sales growth they are looking for.

Prevention not as tough as it seems

noreply@blogger.com (Help Save Earth) — Tue, 07 Sep 2010 12:53:00 +0000

Often times, we ask our clients what their proactive or preventative activity is. Most of the time, we get a blank stare. Others provide a list of risks, but no real activity geared towards mitigating those risks.

In the past, we would push the use of Process Failure Modes and Effects Analysis (PFMEA) as a method to achieve a prevention or risk mitigation plan. PFMEA is an excellent tool for doing just that, in addition to tying those risks in with the current issues, to figure out what is most important to be worked on. You can learn more about PFMEA's through our training material.

However, we are taking a step back, instead of jumping right into an FMEA approach. There are easier steps that should be taken first.

First, gather up the stakeholders, customers, and process experts, and facilitate a group discussion on what things could potentially cause problems in the near future. This is essentially a brainstorming exercise. If you get stuck, you could look to the Cause and Effect Diagram approach, and talk about the People, Machines, Processes, Environment, and Materials, and how they can bring about new problems. Once a list of risks are generated, the team should try and informally rank them, and develop an action plan for the top 1-3 issues only. Any more than 3, and you shouldn't be surprised when nothing gets done. Another rule of thumb we like to hold to: no more than one action per person at a time. Again, any more than that, and your asking for those items to be deprioritized, so that nothing gets completed.

After the list of risks are identified, the group should look at the list, and decide if they covered most of the risks or not. If they feel they did, and the list is manageable, then setting up a regular cadence to review these items is probably sufficient. If the team feels that there are other risks out there, then it may require additional sessions. Here is where the FMEA approach can help. It is an effective tool because it walks systematically through the process under evaluation, and forces the team to review the ways each process can fail to meet its intended output. This makes it less likely that an issue will "slip through the cracks". Again, after the list is expanded to include these additional risks, the list can be re-prioritized (this time more formally using Nominal Group Techniques, multi-voting, etc).

Finally, if the list identifies many additional issues, and the team is having a hard time prioritizing the top risks, a formal PFMEA may be needed, to iron out the details, and provide a more objective assessment of which risks are the highest ones needing an action. This is also useful if the team feels the risks are not fully captured, and the formal FMEA approach would bring these risks to the surface.

Again, the key to all of this is to align the complexity of the process to the complexity of your risk assessment. If you have a simple process, a simple approach may be sufficient. If your process is complicated and risks are high, then a more formal risk assessment may be needed. We recommend starting small, and expanding as the list of risks expands and gets more complicated.

When you jump right into a formal FMEA event, and want to spend hours of a team's time and energy, it's often difficult to justify the need to go through that much detail of a process. However, when you start small, it's easier to later justify the need to dig deeper, and get more formal with your risk analysis, once the team sees how much risk is out there that is not being managed.

The key to success is that the risks are added into a regular review or cadence process, preferably the same place where the regular activities are being reviewed. For example, if you have a staff meeting, devote 5 minutes to risk actions. If you have a program review, add 2 slides to discuss risks and actions taken on those items. Maybe start by looking at your personal life. Do you own a house? What actions do you need to complete to prevent a major issue at home? Are you keeping up with your vehicle maintenance? Are you anticipating and planning for upcoming or suprise bills?

The only way you can move away from a "firefighting" mentality is to allocate some of your time working on actions that are proactive or preventative in nature, otherwise you will continue to react to everything that comes along. Discussing the risks, assigning actions, and reviewing those actions are the key steps to make that transition happen. Just get started doing something, then worry about whether it is the biggest risk later on...

Don't "check the box" with soft improvement tools

noreply@blogger.com (Help Save Earth) — Thu, 07 Jan 2010 03:48:00 +0000

We recently were reminded of a problem that comes up every so often in regards to process improvement tools. The "check the box" mentality.

You train, teach and mentor individuals on which tools to use, and when they finally decide to use the right tool at the right time, they try to shortcut the process just to get it completed, missing the entire purpose of the tool!

Let's use the fishbone diagram. Our clients will identify the need for a fishbone or maybe we'll have to suggest it. Instead of gaining the benefits of the team discussion and brainstorming, someone sits down at their desk and starts to fill out the diagram.

"I worked on that last night, and finished it, then emailed it to everyone. Now which tool do we need to do next?"

Process Improvement tools, like fishbone diagrams, are not the end result. The purpose of the tool is to provide a framework in order for the process of evaluation to take place. When we perform a fishbone diagram, we are actually doing many different things without realizing it:

1) we gather up the right resources from cross-functional areas
2) we clearly define the problem statement (often overlooked)
3) we openly talk about problems and variables that cause the problem we are trying to solve
4) we brainstorm why it could be happening (without fear or insults) using commonly used categories (Man, Method, Material, Machine, etc)
5) we generate a very thorough list of potential variables to go investigate

The REAL output of a fishbone diagram comes down to two main things:

1) a plan to go investigate some of the most likely variables
2) an opportunity to interact with a diverse group of stakeholders in the problem, get to know them, and see their unique perspectives and hear how that problem impacts them

Notice we didn't mention a nice looking fishbone diagram with a fish outline around it, with color-coded labels for each category.

Even if NOTHING is done after the fishbone diagram meeting, there still was value in creating the fishbone. Most likely, you will have actions that come out of the effort, but don't overlook the PROCESS that took place to create it, which is where much of the value came from.

We use the fishbone diagram as an example, but it applies to many of the tools, especially ones we consider "soft" (little to no data analysis involved).

The inspiration for this article came from a group we worked with that was trying to quickly complete a Current State Value Stream Map (VSM) because they were running out of time before the scheduled Future State Mapping event. This event had a hard date due to individuals who were flying in from out of town. The team was suggesting that they could quickly draft the Current state map on their own, then have the actual owners of the proceses review it right before the next event, then jump into developing the Future State.

We politely reiterated that the completion of the current state map is not the end result. It is the PROCESS of developing the current state map where the value is created. The most important part is the time spent with a concurrent group of people defining the process, talking about the issues, understanding that the process is broken, and hopefully building relationships with these other stakeholders. Those relationships are really the key to the VSM. Now when future issues come up, they can be avoided or better anticipated, since the perspective of others are now better understood, and they can include or discuss the impact with them BEFORE a change or issue occurs.

For example, during the VSM, you might discover that leaving off the account number on a form causes 10 minutes of work for a later process run by Judy, who was at the event. After the event, you run into an account number that looks unfamiliar. You call Judy and discuss, and she recommends you return the form to the owner before processing it. You've saved yourself time processing it, and cut the wait time from when you completed the form, until she would find the error, and have also given instant feedback to the form originator that there was an error. You also saved Judy time reviewing the document to find the error. Obviously, you would want to permanently resolve this issue. However, this probably was not even a major issue that came out of the event, yet the benefits are already being seen because of the VSM event. If you and Judy had not gone through the VSM process, you would have never been able to anticipate those kinds of issues.

Spending time in an event will also give people a chance to think clearly about how they do work. It will also allow them time to digest the fact that the process is indeed broken, and that they will have to change the process in order to make it better, especially if their process is the one causing the most problems. If you speed through this process, you'll miss the entire change management process, and you won't have the commitment you need going forward.

We also see people get wrapped up over the format of the template. On an FMEA, they argue over the title of a column (Key Product Characteristic or Critical to Quality), or whether the Severity ranking is a 6 or a 7. The FMEA creates a nice spreadsheet for prioritizing the effort, but the value lies in the concurrent discussion between all stakeholders. After the event, the individuals in the event are much more likely to think differently, and talk directly to each other about other issues they encounter, than they were before the event. The FMEA was just a process developed that forced this group collaboration to take place.

In a perfect world, all processes would be linked together where this communication and discussion was happening constantly between all stakeholders, but we know that's not realistic. Companies get siloed away from each other via departments and budgets and physical locations. These soft tools are necessary to bring thsse groups back together, even if for just a day or two.

The tools that are more about the process, rather than the actual end result include: FMEAs, 5 Whys, Affinity Diagrams, Force Field Analysis, Process Flow Diagrams, Value Stream Maps, and Fishbone (Cause and Effect) Diagrams. This doesn't really apply to the "hard" analysis tools like control charts, histograms, statistical analysis, etc. Those can be performed by an individual without a team, as long as the results are shared and digested as a team.

Bottom line: The process improvement tool is not usually the end result. The process to get there is where most of the value is created and discovered, so don't try and shortcut the process just to "check the box".

New spin (literally) on an old quality tool

noreply@blogger.com (Help Save Earth) — Sat, 21 Nov 2009 19:30:00 +0000

I love the Pareto chart. It's one of the simplest quality tools, yet one of the most powerful, and underused tools out there. It's so easy to get buried down into an issue, and forget that it's not the one that should be focused on.

However, when I recently presented a Pareto chart to a Senior VP of an organization we are working with, I noticed everyone in the room had tilted their head to the side, in order to read what each category said underneath each bar.

It quickly occurred to me that anytime you present a Pareto chart with more than a couple words per category, you should flip your Pareto chart on its side, so that the categories are easily legible, and you don't give your customer a sore neck (since you're already a pain in their neck as it is!)

Have any other helpful tips? Let us know...