Warehouses and distribution centers are more and more being thought of as very strategic aspects of the supply chain and can be a gold mine for process improvement efforts.  Think about it, the warehouse directly shapes the experience customers have with your company.  Are products they need in stock? Are they getting what they ordered, when and where they need it? Does their product arrive undamaged, with an accurate invoice and documentation?  The bottom line is that your warehouses and DCs are definitely on the critical path to your customer.

What about other business-centric issues?  Production losses, inefficient pick and pack methods, inefficient use of labor, poor warehouse layout, etc all drain time, resources, and money. Lean, and a well-executed CI program in general, can help you get control of ALL of these things to streamline the entire order fulfillment process, from order receipt to the time of shipping. You can reduce cost, reduce order cycle time, and optimize labor …. And that is a WIN no matter how you look at it.  We’ve worked with a number of warehousing and distribution operations and have seen first-hand the impact that Lean and CI can have.

this short Executive Brief that discusses the importance of CI for companies whose business success is a clear function of effective and efficient warehouse and distribution operations – namely 3PLs.  Relevant reading even if you’re not a 3PL, but have warehousing and distribution operations.

I would argue that it’s difficult to justify NOT using Lean or other basic process improvement approaches in warehousing and distribution operations, as long as you keep it pragmatic and practical:

• Leverage the personnel and talent you likely already have working in its supply chain operations. No “super skills” should be required.
• Do it in a way that your people can coordinate and manage with their “day job” responsibilities. Don’t set up recipe for failure by making it too burdensome
• Make sure eliminating waste and inefficiency is viewed as a major positive, a win-win across the board, not something people fear is going to cost them their job.

Contact me if you’d like to discuss how Lean and continuous improvement might be applied in your warehouses and distribution operations.

Organizations are increasingly adding tried and true Lean principles, tools and techniques to their continuous improvement initiatives to eliminate waste, improve customer satisfaction and reduce unnecessary costs.  And rightly so.  Successful Lean routinely reduce operating costs 20% – 40% and cycle time by even greater margins, and those cost reductions often go straight to the bottom line.

Traditionally, in applying Lean, trained teams identify then eliminate or significantly reduce the non-value added activities and related costs for specific processes within their operation.  But what if there are no “trained teams”?  What if process boundaries are unclear in a functionally silo’d organization?  Does this mean you can’t do anything to get results until significant infrastructure is in place?  I think not.

a short overview of our approach to applying lean at an operations level to internal service functions

We’ve found that Lean concepts and tools can be leveraged at a higher, function or operation level  very effectively.  The good news is that this approach delivers impressive business results on its own in the short term AND sets the stage for even more impactful process level improvements.  This is especially true for back office / internal service operations like HR, finance, IT, sales and marketing, supply chain management, etc.

Lean applied at an Operation Level for internal service and back office functions like HR, Finance, Procurement, IT, Marketing and Sales, and Supply Chain Management can make an immediate business impact …

The idea is to identify a complete business operation‘s most impactful cost drivers, BEFORE tightening focus to any process/subprocess in the value stream.  For those of you that have done Lean at the process level, I know this sounds a bit strange and your first thought may be that the scope will be too big and nothing will get done. But, our experience is that this can work very well and be very impactful:

• It can serve as a front-end audit function, greatly helping to identify next tier focus areas.
• It recognizes and works within functional boundaries that exist in the enterprise, as opposed to attempting to force artificial process boundaries that, while may be desirable, do not exist
• It maps and costs all key value streams of a targeted business function or sub-function, a necessary prerequisite for lower level improvements
• Attacks waste organization wide,  in both the supply-side (internal function itself) and demand-side (customer, consumer of the output).
• It consistently identifies low hanging fruit opportunities that can be realized immediately
• It can be used to jumpstart a new lean initiative or address unrealized opportunities from earlier lean events.

Lean Operations (lean applied at an high-level operations level) can definitely be a powerful tool for enterprises that are looking for immediate cost savings and/or performance improvements in internal service operations, but don’t have the desire/bandwidth/budget to start up a formal Continuous Improvement program.   It can be applied to an entire operation (e.g. HR, finance, Legal, IT, etc)  in a relatively short time period, and it does not require a big investment in training and infrastructure.  For those organizations that do want to move to a more structured Continuous Improvement program, it can be an excellent way to jumpstart a BPM, Lean, Six Sigma, etc. program

Need to improve performance or lower costs in internal service functions like Human Resources (HR), Finance, Procurement, Supply Chain, IT, Marketing and Sales, or any other back office type function?   Contact me to learn more about our approach to applying lean at an operations level.

I talk to companies every day about how they can best roll out business performance and process improvement programs.  Now, just to level-set, we aren’t zealots here pushing any one-size-fits-all model for programs. We do have some key principles that we adhere to when designing programs though. One of these is that it’s likely not feasible to have a program that builds infrastructure and trains for many months, before ever delivering any quantifiable return. That is simply not the world most of our clients live in these days.   Our philosophy is that it is always advantageous for the program to deliver near-immediate, visible, and quantifiable impact.

When looking at an enterprise, more often than not, we find that basic process management/improvement and Lean (i.e. Lean Enterprise, Lean Process, Lean Manufacturing, Lean Product or any of the other labels floating around out there) can solve a lot of high impact business problems, without incurring high training and infrastructure costs, and are the right place to start.

Lean Process Improvement efforts can yield big results fast, without big investment or big risk …

However, I get a lot of questions dealing with how an organization can get started with basic process management and Lean Enterprise, and how to fit in to an overall, enterprise wide process improvement / CI program strategy.    This is a good question in that, in the past, it was almost always preached that Process Improvement deployments (Six Sigma, Lean, etc) had to be top-down.  Start with executives to get support, develop champions, select projects, train black belts, build a 3-year plan, etc, and grow from there.  The challenge with this approach is that it requires a hefty up-front investment and it takes a long time before results are seen.  Read ….. high cost .. high risk!

our new Lean QuickStart powerpoint presentation.

In today’s business climate, this is simply not palatable for a lot of organizations.  For them, an approach that is much less top-down, and much more focused on near term, bottom line results may be far more attractive.  So, here is an approach sequence that I’ve seen effective over and over

1. Work with business leaders to identify pilot areas of the enterprise
2. Identify specific focus areas and business cases in that area(s)
3. Refine those down to a set of well-defined project charters, segmented by the nature of the problem (defect, cost, cycle time, etc), scale, and perceived complexity.
4. Select a set of low-hanging-fruit projects that can likely be solved in a relatively short amount of time and with basic lean and quality toolsets
5. Run 1 or more workshops with specific project teams, with specific well-defined projects that can be executed in 2-5 weeks.
6. Track real savings and ROI on projects, and publicize/promote heavily internally
7. After one or more workshops, train champions /sponsors and develop a formal project selection and prioritization methodology (see my recent post on this).  Refine continuously.
8. Continue with more workshops, to a broader segment of the enterprise

Processes are cleaned up, waste and complexity removed, measurement systems are put in place, and real bottom-line results are realized.  Results drive interest and commitment, so it becomes easier to get the broader organization engaged.  For enterprises that have done little formal process improvement work (or a lot for that matter), there will most assuredly be many Lean projects to be executed, yielding fast and consistent results. And, soon enough, larger and more complex problems that require higher level capability (e.g. six sigma) will show themselves.  Then, and only then, do you bridge up to and invest in the next level of capability …. Pay-as-you-go.

These efforts can easily and painlessly run in parallel with and, indeed, support and pay for the broader activities that are required to make the overall process improvement effort successful long-term, namely identifying CTQ measures for voice of the customer (VOC) and voice of the business (VOB), characterizing value streams and establishing process indicators and metrics, building a mechanism to constantly identify high value improvement opportunities (i.e. project pipeline), and constantly defining and executing improvement projects.

Contact me if talk about whether this model could work for your enterprise.

We have many discussions with organizations where Lean, Six Sigma, and other performance improvement efforts have outright failed, or maybe have just started to lose their impact.  In an earlier article, we talked about the importance of alignment and how important it is to have clear line of sight to the performance gaps that matter the most.  But, in some cases, scorecards and dashboards are there, with well-defined KPIs pointing to high-value targets, yet improvement efforts still yield less than desired results. Why?

Of course there can be many reasons, but lack of discipline around project definition, or project charters, is something we see consistently in these problem situations.  Poorly defined projects are without a doubt a recipe for disaster.  You may be focusing on exactly the right problem, but, if the project’s problem statement and objectives are not well-defined, your chances of success in making an impact fall dramatically. So what are the key elements of a good project definition and charter?  Here are 5 big things I think should be present in all improvement project charters / project definitions:

1. A clear Problem Statement that defines the business problem in specific and quantifiable terms.  Done well, it will answer the following questions clearly and concisely:
   • What is the primary metric, or needle, that I’m trying to move?
   • What is the primary metrics current, or baseline, value?
   • How did I measure the primary metric’s baseline value, and over what period?
   • From the business’ perspective, what is the target value for the primary metric?
   • What is the gap between current performance and needed performance levels for the primary metric?
   • What is the value (in $’s if at all possible) of closing that gap?
   • What areas of risk do I need to pay attention to as I try to move the primary metric? These will become your secondary metrics. For example, if you’re trying to reduce costs in some customer facing area of the business, you need to pay attention to such things as attrition rates, customer satisfaction scores, etc.

 

2. A clear Objective Statement for the project.  It is unlikely that a single project can close the entire gap for the business problem defined in #1.  It is more likely (and usually preferable) that a project focuses on a sub-process, or segment of the overall value stream, and it targeting only a portion of the overall gap.

 

3. A clear understanding of the Start and Stop points for the project.  Related to #2, be very clear on exactly which segment of the value stream (subprocess) the project will be restricted to.  This is about scope, and avoiding the ever-present scope creep.  It may need to be adjusted as the project progresses (and/or evolves), but make an effort to define start and stop points up front.

 

4. A clear definition of the Team that needs to be involved in the project.  Team members may be actively working on the project analysis, or they may just be subject matter experts that are called upon to gather information and feedback.  They may work in the process/sub-process being analyzed, or they may be customers of or suppliers to that process.  Take time to think through who really needs to be involved, and engage them early.

 

5. Explanations of how things like are computed and derived.  For the gap values in problem and objective statements, how were those values derived?  There will always be questions of value, and it’s better to have explanations right in the project definition. The same goes for primary metric baseline values?  How were derived?  Show the data that was used, identify any assumptions that were made, identify any anomalies in the data, etc.

Project definition (project chartering), done well, takes time and effort, but I can assure you that your project outcomes will suffer if shortcuts are taken here.  I do realize that there is a lot of ground covered with these 5 elements, and that there is a lot of detail and nuance in each.  In an upcoming post, I plan to present an example and walk through each of the elements in some detail.

a short presentation on project identification and definition ….

Feel free to contact me if you would like to discuss project chartering and project definition for your organization and its improvement efforts.

The last few years have witnessed big changes in the business climate, and continuous improvement (CI) efforts have certainly seen their share of change.   I talk with companies every day and, without a doubt, there has been a fundamental shift in thought on how to best make meaningful process improvement happen.

Prior to 2008, there was significant interest and buy-in for large-scale, top-down initiatives. There was a willingness to set aside large budgets and free up significant resources for the CI initiative.   Training increasingly large segments of the workforce was front and center.  Detailed, multi-year plans were put in place.   The CI initiative was heavily promoted, internally and externally, and employees were strongly urged to participate.

But, did those big initiatives deliver results?   Undoubtedly some did.  But, many more, when you really check the numbers, did not.  There are many distinct causes why they didn’t work, and I won’t try to dive into that here.    But, with the meltdown in the business climate, many leaders took a look in the rear view mirror and didn’t like what they saw …. big dollars and resources consumed with little evidence of concrete results.

Now, does this mean that CI and process improvement is useless and should be abandoned?  Of course not.  Businesses live and die today based on the strength and adaptiveness of their processes, as compared to their competitors.  Does it mean that the tools and methodologies used (Lean, Six Sigma, BPM, etc) are not good and should be replaced with something new?   I think not.  The tools and methodologies can certainly be improved and expanded (and are), but they are proven to work.

So what’s happened?  I believe that, for a lot of companies, there was too much focus on the initiative and not nearly enough focus on results. And based on conversations I have with business leaders every day, I think many have drawn the same conclusion.

So, when smart people see the error in their ways, it typically leads to change.  The change that I’ve seen happen for CI is a move back to the basics, and a focus on bottomline, business results.  It may return, but for now I see very little interest in big change initiatives whose results are measured over the very long term, if ever truly measured.  I see a much more tactical view of CI, focusing on solving specific business problems quickly,  as opposed to general quality improvement.  CI programs are more likely to be looked at from a bottom-up or grass-roots perspective.

Smart leaders are now letting the specific needs of their business drive what the CI program looks like, what methodologies and tools are applied, how results get measured, what technology platforms are deployed, etc.  To borrow from Lean, the business is pulling CI capability, as opposed to it being pushed into the business.  In the real world, what does this mean?

a short executive brief that provides a good overview of the basics of lean

Well, I can only give you my perspective from talking with leaders at companies of all sizes and in many different domains, but what I see is a clear move back to the basics of business and process improvement.  Basic quality and process tools as employed in Business Process Management (BPM), Lean, and basic quality tools (Yellow Belt) are getting a second look.

Why?  Because, for many businesses, the basics will help solve 95% of the real business problems, get results fast, and they can be introduced into the organization for a very low cost and very low risk.  The basics also build a solid foundation on which advanced capabilities like Six Sigma and DFSS can be effectively built and deployed to deliver even more dramatic business results, with much less risk.

So, what do you think?  Is this just a reaction to circumstances and will large-scale, top down change initiatives return.   OR,   is this the new normal for companies when it comes to business and process improvement? Feel free to  Contact me if you’d like to discuss.

It sounds so simple. Lean eliminates waste defined as any activity that does not provide value to the customer. Eliminate the waste and you will bring products and services to customers better, faster and at a lower price. Finally, combine it with Six Sigma to reduce variation and defects, and you make breakthrough results.

We all start by understanding that value is defined solely by what the customer actually desires and for which they are willing to pay and that value enabling activities, while not adding direct value, are necessary. We all then look for the true non-value added activities that add waste in the form of unnecessary time, effort or cost. We learn to seek and eliminate those non-value added activities.  That is the essence of a lean project.

So what is the lynchpin that makes this elegant equation work? Identify what your customer considers of value and how you deliver it. Once you have that line of site, if you maintain efforts to continually improve, you’ll get there. But without that clarity, your improvement efforts are a march to nowhere.

It is important when developing that line of sight to define value from the perspective of the customer, the Voice of the Customer (VOC). Understand clearly and exactly what product or service the customer desires, when it is to be delivered, and at what price.

Download a training module dealing with Critical to Customer Requirements, a key element of VOC

To understand how your company actually delivers what the customer considers of value, leverage lean tools to precisely map the set and sequence of all specific actions done to bring the product or service from conception to final delivery. This provides a visual display of exactly how a particular process is carried out. Mapping this “value stream” enables you to identify value-adding and non-value adding activities from the customer’s perspective thus setting the stage for improvement.

Along with providing a sense of alignment between your goal of delivering value and your opportunity for improvement, this exercise also carries the message of how problems and solutions are cross-functional in nature. If process owners participate in this process with an open mind, they will learn the futility of looking for a solution from someone else independent of their efforts. Thus, not only does value stream mapping provide alignment from the customer to performance improvement opportunities, but it continues through to an individual’s actions.

Yes it can be a simple equation – understand what your customer values (VOC), eliminate waste (Lean) and be more competitive. But to do that, make sure you get the front end right using VOC and value stream mapping to get the target and alignment to individual actions.

Feel free to contact me if you’d like to discuss ….

I talk to people everyday in all kinds of industries who, for whatever reason, have decided that they need to do Lean.   As often as not, they quickly jump to something that  I think is just not THE critical success factor for Lean success – TOOLS.

Now, before I get “purists” thinking I’m completely nuts, I’m not saying that tools aren’t important. Tool knowledge is obviously necessary, but it is not sufficient. Let me explain my thinking.

First, what is success, or maybe better, what is not success?  Success IS NOT training 100 people across 5 operations in Lean. Success IS NOT about skills certifications. Success IS NOT completing 20 projects last quarter, all with slick final report outs.

our Lean Overview and Primer ….

In this new business world we live in (and, realistically, in the old as well) success can only be defined by RESULTS, results that can be measured. Am I improving service to the customer? Am I pulling cost out and improving margins? Am I doing a better job of retaining revenue streams? Am I doing a better job generating top-line growth? Anything else is just academic, and I can’t think of a single business today that is interested in academic exercises.

To get RESULTS and to get them consistently and over the long term, there is much, much more involved. I think it can be boiled down to a simple and probably over-simplistic analogy though: Acquire your target, aim the weapon, then fire. And do it consistently.  All to often the acquire and aim components are put on the back burner in favor of fire events like tools training and kaizen events.

There has to be a business system in place to make sure that all three of the elements happen. Why? What happens if the acquire and aim components are ignored? You’ll get squeaky wheel projects being worked on that, while they are interesting and do improve stuff, really don’t make any measurable impact to the business. Training for the sake of training and projects for the sake of projects …. a recipe for a Lean train wreck.

Acquiring targets is about aligning the lean effort with the REAL NEEDS OF THE BUSINESS. Aiming is about defining and scoping projects so that they are manageable and that results are predictable. Combine these with good training and Lean project execution and success in terms of meaningful results is within reach. Ignore them and, well, you’ll have a lot of people trained and executing projects ….. but you’re unlikely to see any real improvement in your business …..

Thoughts?  I’d like to hear from you …..

It may not be completely intuitive, but  a recent article on SupplyChainBrain.com posed this very question.  The article talks about how manufacturers have, for some time, being willing to rely on extremely cumbersome and sometimes risky global logistics processes in order to achieve a single objective:  to save on manufacturing labor and increase their ability to compete.

However, there is a realization among more and more manufacturers that there are some very real downsides to these complex global supply chains and that an alternative approach is viable  – an approach known for many years as lean production.

our Lean Primer kit now…

When I saw this article, I remembered an interview I saw on CNBC earlier this week.  The CEO of Boeing discussed how too broad of an offshore, horizontal supply chain that incorporated too much engineering was to blame for the massive delays in their new 787 deliveries.  He talked about how he would be on-shoring more of his supply chain.  He didn’t use the word lean, but he was talking about exactly what this article discusses.

Give it a read and let me know what you think.

With today's lean workforces, outsourcing important process improvement activities to a specialist partner may be the path to results ...

One trend I saw throughout 2010 (and 2009 for that matter) was a intense focus on doing more with less.  Business is picking up substantially for many companies, BUT the willingness to hire certainly has not.   Personally, I think this trend will continue unabated through 2011.  Companies are very lean and have realized very high levels of productivity (and profitability), and are simply unwilling to go back to the old ways of thinking (i.e. “bloated” workforces).  Outsource certain activities to specialist providers, and figure out how to do more with the same resource levels internally.  As I see it, that is the new norm.  And, one of the fundamental ways you do this is by improving processes.   

But, if the workforce is very lean, running at very high levels of utilization and productivity, how then do you find the bandwidth to do meaningful process improvement activities?  A difficult conundrum, without a doubt?  The old approach (if you consider 2-3 years old!) of setting up a formal top-down initiative (i.e. BPM, Six Sigma, Lean), training a large number of people in one or more problem solving methodologies, and then sending off your new process improvement army to fix stuff is simply not feasible for many organizations.  Even if they want to do this, their people are so busy that there is no bandwidth available, and any kind of a training centric approach like this would likely fail. And, hiring to build a dedicated process improvement organization is just not likely.  So, what is to be done? 

our Lean Primer Kit for an overview of Lean and how it can be leveraged to improve results

I would argue that the way to do it is to outsource process improvement activities to a partner that specializes in Process Improvement. This is a standard outsourcing value proposition where, instead of building up an internal CI organization, you establish a strong relationship with a specialist partner, and leverage their products/services on an on-demand, as-needed basis.  Fixed overhead now becomes variable cost.  Done well, it’s actually better in that ANY $’s expended on process improvement with your partner should yield a significant ROI.

Does working with this specialist partner mean that internal resources are completely isolated from process improvement activities?  No, of course it doesn’t.  But their involvement shifts to a subject matter expert role, rather than a process engineer.  Key stakeholders are involved every step of the way, from characterizing the current state of the process, to identifying problem root causes, to solution identification and prioritization, to management and control plans.  BUT, they are involved in a way that doesn’t drag them into the weeds and allows them to stay focused on their day job.   Process improvements get done in an efficient and cost effective way, and day to day business activities don’t suffer.   Not bad …     

Here at Qualtec, we are already seeing this type of shift happen with many of our clients and have adapted our business model and offerings to accommodate.  AND, we are seeing it work, very well.  So, if you have a real business driver for process improvements, but don’t and will not have internal resources to execute, think seriously about and outsourced approach to process improvement activities.  You may be pleasantly surprised with the results.

Feel free to contact me if you’d like to discuss.

Several years ago I wrote an article for iSixSigma entitled “Ask the Expert: Six Sigma and ROI” on the causes of falling ROI’s of Six Sigma programs. It was at a time when centralized Six Sigma programs were growing dramatically and possibly losing focus.

Recently iSixSigma republished the article on their website.  Let’s use the terms Performance Improvement or Operational Excellence, instead of Six Sigma, to reflect a broader view of improvement activities.  Then consider the focus on ROI is now driven by intense scrutiny of any corporate expenditure rather than declining returns on too much expenditure.  Add the two together and you realize the old ROI article is as applicable today as it was when written.

our short ROI and Six Sigma executive brief.

If you don’t have time to read the article, let me at least give you a short abstract from it which I believe was the most salient point. It is as follows: