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Archive for the ‘Service Organizations & Operations’ Category

When Leaders Overlook Process in Service Organizations …

March 16th, 2012 Comments off

Leadership…we want to be leaders and want leadership.  When you have a leadership role you personally grow and you can help the organizations in which you work and the individuals with whom you work.  When we are group members, leadership sets a vision and inspires us.  Leadership, like great architecture that conceives of a soaring skyline, can be magical.

Process…a series of operations which bring about a result.  It is a logical, nearly mechanical algorithm devoid of emotion.  You unemotionally define the inputs, suppliers, required actions and desired outcome in terms so you can measure.  You strive for stability so you can then improve capability as measured by customers.  Defining each brick and how they are assembled might not sound so inspirational, but you’re kidding yourself if you think it’s any less important.

Leaderships’ vision of that skyline and processes’ preoccupation with laying bricks can seem far apart and disconnected.   Yet when leadership looks past process, the results are eviscerating to any vision and corrosive to the leaders themselves.

In service organizations, processes are always driven by people, and managing the people for each process is the work of a process owner.   The process is the service and the people are the process.  So the people are the service, trying to be productive each and every day within their process.  Getting processes to work as a system is about getting people to work together toward a final objective.

When leaders ignore process they ignore the people that are the service.  And that never turns out well with your customer.  A current TV show has CEO’s come down from their lofty perches to work ordinary jobs to get a feel for the people and what they do day in and day out.   In a recent episode, the CEO was stunned at the impossibility of work processes.  Workers were stressed out, fought with each other and delivered poor service to customers.  As you can well imagine, no one believed in the CEO much less the CEO’s vision, as he soon found out!

Download Service Design - Service Blueprinting

this short .ppt overview of customer-focused process design and Service Blueprinting …

A smart CEO might hand the problem over for process redesign.  He might also say with empathy that this is just the wrong way to treat these people and the customer, and do what is necessary to make it right for both.  Theoretically, the two statements lead to the same place.  But the former continues with the same disconnected state between leadership and people while the latter begins a transformation.

The point of all this is to remind ourselves that working with processes in a services organization is about working with people.  That when we see leadership disconnected from the concerns of process we probably see leadership disconnected from people.  And when we find that situation we’ll probably find dysfunctional teams and dissatisfied customers.  BUT,  when we see leadership concerned with making processes work we will see people who find their jobs fair and who are dedicated to their mission, which should lead to more satisfied and loyal customers.

So all of us as leaders and members of a team need to think about the processes upon which our vision is built because, in so doing, we think about the people in the organization and the customer of our service.  And everyone in that chain will notice the attention, how their work is made easier and thus buys into the larger vision.  If you’d like to discuss the points in this article, contact me.

Reshoring – An Opportunity to Redesign Processes to Lower Total Cost of Ownership

March 7th, 2012 1 comment

Reshoring - Process Redesign to Lower TCOThe drive to reshore goods, and services, for the US market builds every day.  Growth in emerging markets is driving up local wages.  The decline in the value of the dollar has increased the cost to produce abroad for import back to the US.  The need to provide faster AND better delivery makes for a increasingly powerful competitive advantage.  The ability to manage shorter supply chains increases quality.  These and other factors are driving more ompanies to look at reshoring opportunities.

A critical element in a reshoring decision is a Total Cost of Ownership analysis.  Made popular by the Gartner Group when attempting to capture all the costs of software and IT systems over the product’s life, it is an excellent concept to apply to reshoring as it goes beyond a simple vendor price or internal transfer price by looking at overall system costs.  At a personal level, think how we apply it when comparing cars for purchase. We incorporate costs to maintain, operate, insure, finance and, eventually, what we get back when we dispose of the car.  Total cost of ownership …. not just purchase price.

Reshoring to Lower TCOReshoring provides a unique opportunity to lower the Total Cost of Ownership as the existing supply chain and internal production processes can be designed with a blank slate.  The iterative redesign that first occurred when it was offshored and then occurs again when reshoring can leverage past experience, and work with a blank slate.

For example, we have a client which offshored a production line to capitalize on lower direct labor costs.  After a severe fire in the offshore facility, they decided to bring the line home.  They performed a Design for Lean analysis on the entire process and lowered the cost to a level significantly less than the pre-fire offshore line.

Download Lean Overview  this executive brief for a short, practical overview of Lean

Another client brought back its customer service operations.  Again, through a redesign process and armed with clear Voice-of-the-Customer (VOC) about their offshore facility, they were also able to lower its costs and increase customer satisfaction, thus significantly lowering their Total Cost to Service.

Redesigning a production line or a service delivery process are great opportunities to really pour through VOC and design the value streams and supporting processes with a clean slate.  Clear VOC, strong design capability and application of lean skills can collectively be used to take advantage of declining costs in the U.S. and better meet customers’ needs thus lowering the Total Cost of Ownership.

If you would like to discuss these topics, feel free to contact me.

Lean as an Alternative to Global Outsourcing?

February 11th, 2011 Comments off

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.

Download our Lean Overview kit 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.

Process and Change in Service Industries – The Survivor Challenge

February 1st, 2011 Comments off

Outwit…Outplay…Outlast.  Wow, that says it all doesn’t it?  Reality TV is a kick. Throw a bunch of strangers onto an island and watch them dwindle down based on how well they can play to the desires of a group in a winner-take-all battle. Lots to learn from watching. How well and quickly can a player understand the group’s requirements? How well can they meet those requirements in a highly competitive situation? Each elimination changes the group’s dymanics so the requirements, competition and strategy all have to be adapted continuously and quickly. One slip up and you could be out. How does this relate to Service Industries?

Download our critical to customer requirements module

our critical to customer requirements VOC module

In previous articles, I’ve discussed how business and consumer patterns have gone through massive changes and how understanding the Voice of the Customer is the key to adapting to the new environment. The nascent recovery is providing an opportunity to survive and, for some businesses, to flourish. But the competition is still in the elimination phase and I believe that is very much the case for service businesses of nearly every nature.

It’s important to understand why things are different in services so as not to be lulled by more macroeconomic headlines. Before the crises, manufacturing went through years of driving productivity while services accelerated right up to the edge. The Federal Reserve’s strategy of depreciating the dollar and growing demand in emerging markets has helped the global competitive position and demand for manufacturing products while services are more tied to the domestic economy. Finally, we have a political environment that ramped regulation or restructured entire service industries such as banking and health care. And if that weren’t enough, services are going to be the start-ups of all the unemployed as they require less capital and can use the internet to gather and distribute information, the very essence of a services business, at a very low cost.

Change is not over in service businesses. Like Survivor, listening and adapting quickly to an ever changing customer is still the only protection from elimination. Several key points we consider imperative to driving alignment are:

  1. However you capture VOC, keep improving it. We propose a five level maturity model that goes from what you need to simply stay alive to what you need to be innovative.
  2. Balance how you respond to VOC with how you respond to other stakeholder demands. We have a checklist of behaviors that will give you the ammunition to point to an imbalance.
  3. Segment your VOC. Meeting every item your customer sets out for you will not yield a purchase while some will yield tremendous results. We offer a framework for segmentation.
  4. Convert what you hear to something you can measure. To make science out of art we use industry case studies and benchmarking as the best guide.
  5. Align process metrics to the chosen customer measures in #4 above. Again, use industry benchmarking and cases to apply knowledge and experience and avoid the alchemy.

Now you are ready to drive change. But there is one more thing. Let’s return to the scenario painted at the start of this article…it’s not enough to just do this. You must do it fast. We are rebounding but demand for services isn’t returning to 2006 levels…at least not until around 2016…and competition is increasing. During that time, businesses will fail, be acquired or be rationalized. But there will also be winners and, like Survivor, they will win big. We urge you to recognize what is coming and act.  Outwit…Outplay…Outlast.

If any of the pieces above would help you, let me know our thoughts.

What can Lean do for Warehousing Operations and Distribution Centers? More than you might think ….

December 7th, 2010 Comments off

Lean and CI in Warehousing and DistributionCharlie Jacobs, Director of Process Improvement for APL Logistics, recently wrote a short article for inboundlogistics.com titled Lean: The Next Best Thing to ‘Clip-and-Save’In this article, Charlie laid out 3 mini case studies of simple lean projects that yielded extraordinary results.

His point, backed up by his own results, was that it is difficult to justify NOT using Lean or other basic process improvement approaches in warehousing and distribution operations. The 3 successful cases had elements that should make them attractive to any manager:
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  • Each was implemented by the same type of personnel and talent your company probably has working in its supply chain operations. No special skills required.
  • None required so much of any one resource’s time that it interfered with their ongoing job responsibilities. Their day  job did not suffer.
  • And no one misses the waste and inefficiency they ultimately eliminated. It was a win-win across the board.

APL is a long standing Qualtec client, and we feel privileged to have been part of the success Charlie has had with APL’s ACI program. It is a model that a lot of warehousing and distribution centers might be wise to follow.

Contact me if you’d like to discuss Lean for warehousing and distribution operations.

Who ya' gonna call? LSS for Services Tip #2 – Lean Busts Halloween Ghosts

October 19th, 2010 Comments off

Lean Tools Bust Waste in ServicesAs we all know, the birth of Lean (usually with the word “Manufacturing”)  is often considered to be the Toyota Production System. Lean for Service Operations is so new it is defined on Wikipedia as the application of lean manufacturing principles to service operations. Yet when you search using Google the term Lean Manufacturing yields just over 1.5 million results while Lean Services yields a surprising 16.3 million results! The derivative outpaces the original because of its natural application. It’s as if it were always meant to be.
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This natural fit lies in the very nature of manufacturing, service operations and the strengths of lean. Lean was first easily discovered in manufacturing because waste and WIP are easily found. Like in the California gold rush, you could bend down and pick up the nuggets. Manufacturing’s physical nature provides an easy route by which to follow the flow of work. As you move along, you can see raw materials, intermediate stages of inventory and final finished goods. And also along the way, you can see bins of rework and scrap as well as WIP between stations. You physically see the work, the WIP and the waste. Certainly it took brilliance to design what to do with it but the problem was evident.

Lean Six Sigma for Services

our whitepaper that discusses how Lean and/or Six Sigma in a services environment differs from a traditional manufacturing environment

Service operations, however, by their very nature aren’t so easily observed. Work flows are unseen. Information representing WIP are sent over networks. Customers waiting on phones can’t be seen. Time lost is erased with the stroke of a delete key. Service operations, like spirits on a Halloween night, can pass before our eyes without a trace. Enter Lean. Lean with its highly visual tools like value stream maps performs the supernatural. It gives earthly form to the phantom.

As the invisible becomes visible, we make a great discovery – so many service operations occur between functional areas such that they aren’t owned by anyone. We learn that not only is there waste, but there isn’t anyone even worried about it. Thus Lean, with its visual tools, not only provides visibility to work flow, waste and WIP but raises the question of process ownership.

With processes made visible and ownership addressed, the race for improvement forces the question of where to attack first. Very simply put, once non-value added activities are made obvious by the accumulation of waste & WIP, you look for the actions and processes that drive up said waste & WIP. Therefore, when looking for projects, look within or between the processes to which waste and WIP demonstrate the greatest sensitivity. Then heavily rank that projects that improve those processes. They will have the greatest impact on eliminating non-value added activities.

People talk about the amount of low hanging fruit in service operations. It’s important to understand why it is there. People in service operations aren’t fools willing to let waste and WIP drag them down. But they haven’t been able to see the problem and where it resides. With the visibility lean brings, that has changed. And consider us your Ghostbusters! If you would like to discuss the visual tools embodied in lean and how they can help your service operations, please feel free to contact me.

Lean Six Sigma In a Services Environment – Tip #1 What Versus How to Measure.

October 6th, 2010 Comments off

When attempting performance improvement in a services organization, it is very important to distinguish between measuring the “correct thing” vs. “measuring the thing correctly”. Since people drive the decisions in service organizations more than in manufacturing organizations where machines and software limit human variance, processes are less defined in service organizations.

With less defined processes, the service world’s KEY measurement issue is finding the correct things to measure that gives true feedback on past or future performance. This “what to measure” issue is quite different than the predominant issue in manufacturing, which is “how to measure more accurately.” In manufacturing, for example, gage studies are critical; the data usage is straightforward. In service processes, however, the greater issue by far is determining a useful measure.

Lean Six Sigma for Services

our latest whitepaper that discusses key differences for Lean Six Sigma in a Services environment

A general lack of consistent, cookie-cutter measurements for service businesses demands greater time and attention is focused on developing and understanding appropriate measurement systems in specific environments. Managing a process becomes a matter of reading and interpreting a series of interrelated measurements rather than relying on a mystical “key measurement”. No one measure will identify and eliminate all problems forever. For the most part, businesses measure variables such as close rates, cycle time and on-time compliance, with little understanding of “value added” contributions to the final “product.”
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Each service-related

environment has its own unique set of problems, and each requires a carefully crafted, custom analysis that fit its top level customer and business data, its core and sub processes and its definition of critical to customer. As such, the skills needed to do this well, such as process mapping and process design techniques rise in importance.

So often when we talk to clients and prospective clients in service industries, they describe their requirements along the lines of “our folks don’t handle statistics well”, “we’d like more service examples” or “we need someone who understands our culture”. To them, that is what Lean Six Sigma in Service environments mean. All these things are true. But just as importantly, you need to understand your unique nature and adopt a different set of tools and techniques. This discussion of the importance of process is just one. In coming posts, we’ll discuss others. If you want to talk about these Service Industry points, please feel free to contact me.

What about Lean in a Services Environment?

September 9th, 2010 Comments off

Everyone knows that Lean came from the manufacturing world, and many aren’t quite sure how, or even IF, it applies to more service oriented environments. Well, rest assured, it does.  I see countless examples of Lean success stories in a broad range of services/transactional domains. Financial close, claims processing, call centers, software development, enterprise software implementations, patient waiting times, logistics and supply chain, order fulfillment  …. The list goes on and on.

Download our Lean Quickstart Presentation

Our Lean QuickStart Presentation here.

Granted, adoption of Lean in services environments has been a little slow, but adoption is happening now at a rapid pace.  Why?  It could just be the natural progression of things, but I think it’s also a function of the business environment since the recession.  Internal efficiency and productivity, doing more with less, and cutting costs are now just the way business is done, the new norm …. And that, my friends, is what Lean is all about.

Lean can deliver big ROI in services processesLean first and foremost is about the elimination of waste, and it defines 7 ( or 8 ) elements of waste. Any activity that doesn’t add value, from the customer’s perspective (internal or external), is by definition non-value-add and should be minimized (or eliminated).   Now, think about this … some very reputable research suggests that, in a typical services process, 80% of the activities are non-value add. 

Yet, all those NVA activities add time and cost, and opportunities for errors to the process. In the case of most back-office processes (e.g. Finance, Customer Service, HR, IT, supply chain, etc), any saving in cycle time / cost filter straight to the bottom line.

80% NVA activities, savings straight to the bottom line … That tells me that there is ample room and opportunity for Lean in Service-oriented processes.      Think about it and contact me if you’d like to discuss in more detail.

Join Us on Twitter for Thoughts and Announcements

September 2nd, 2010 Comments off

First, we want to thank all of you that have subscribed to our blog. We have over 1,000 subscribers and the list grows every day, week and month. We hope we are providing you relevant information. If there is anything you’d like us to bring to you, let us know. If we don’t have the content, we’ll recruit guest bloggers that do.
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On another note, we began “tweeting” about a month ago and just were rated in the top half of Twitter profiles by Hubspots ranking tool. We have grown a nice group of friends who we follow and that follow us by regularly tweeting on key subjects as well as making announcments about our complimentary content offerings. We invite you to join us on twitter at @sixsigmaqualtec.

Thanks for your support and have a great Labor Day weekend. See you on the other side.

Lean in Healthcare – A Case Study

July 30th, 2010 Comments off

Recently, I received a link from a friend about an article in the Denver Post. I found it interesting that Lean, something in which our organization believes, is being applied to solve a range of problems throughout differing industries. The applicability is endless. And, the results are profound. This just goes to show why there is such a resurgence in basic quality and process tools like Lean, and how simple, easy-to-learn skills can make a huge impact, even in organizations where change can be tough.  Let me know if you’d like more articles like this.


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