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Posts Tagged ‘Eric Harris’

Lean in Shared Services Organizations – Could Deliver Big Bang for the Buck …

April 24th, 2012 3 comments

Lean in shared servicesBusiness models becoming more complex, customers asking for more and more for less and less, competition much more fierce, and an incessant demand to keep costs (headcounts) down — a new reality that is not just gently suggesting, but  demanding more effective utilization of available, and often scarcer,  resources.

Enter – shared-services organizations.  A shared services organization (SSO) can theoretically consolidate support operations into a single organizational unit and substantially improve operating efficiencies by eliminating duplication and excess overhead, and streamlining and standardizing processes.  The SSO should be able to deliver a substantially better service at a substantially lower cost.  It should be a center of both value creation and cost reduction for the enterprise.  If it can’t do this, you have to ask … what’s the point?

In concept, establishing a well-functioning, value-delivering SSO sounds really simple. BUT, reality says not so fast.  I work with companies every day, and it’s a very rare event (and that’s generous) for me to hear someone say their internal shared service organizations deliver the highest-quality, while being the lowest cost provider of services.  Why is this?  Optimized internal SSOs should be able consolidate, standardize, and optimize known best practices for the enterprise, right?  They should be able to align with the strategic direction and goals of the company, and orient service levels towards improving customer experience, right?   I mean, they’re part of the enterprise, so they should be able to do these things at least as well and an external provider of the service, right?

There’s more to good shared services organizations than just consolidating people and systems …

Often times, it does seem that a shared services organization was built simply by throwing together people and systems from different areas and groups.  All I can say is good luck with this approach.  In reality, it requires a change in mindset and an increased focus on the overall business, and a hard look at the processes that are really needed to drive the business. No more living in that isolated black box.  Successful SSO’s integrate aligned and continually optimizing processes with right-fit people, information, and technology automation to deliver a totally new level of capabilities.

Download Lean Services

 a short powerpoint overview of Lean in Services Operations …

Download Lean in internal service functions  a example approach to applying lean at an operations level …

  • Understand the value stream, end-to-end, from both the customer AND the producer perspective.  You can’t optimize what you don’t understand.
  • Establish meaningful and actionable service and process metrics that serve all customers of the service.  Make the metrics visible.
  • Focus on driving efficiency by eliminating wasteful, non-value-add steps and unnecessary complexity — from supplier, producer, and the consumer of the service.
  • Constant focus on customer experience, alignment, and process improvement.  Well-executed, targeted Kaizen events can deliver improvements in weeks or days, not months or years.  And, those improvements positively impact all customers of the service.

There are many other examples, but the point is that if you’re looking for a place from which to pull significant additional value, then you may need to look no further than then enterprise’s shared services organizations.  And Lean may be a powerful and extremely cost-effective tool to apply.  As always, feel free to contact me directly if you’d like to discuss in more detail.

Lean for Service Operations – It Really is Different …

March 30th, 2012 2 comments

Lean Services vs. Lean ManufacturingWe have many conversations with companies that want to talk about applying lean in areas other than manufacturing.  Some of these companies are manufacturers that have been doing Lean for years, and doing it well in their productions operations, but not at all in non-manufacturing parts of the business.  Others are pure services companies like telcos, banks, and insurance companies that are just now starting to explore Lean.  In many cases, they’re looking at Lean because they’re being asked to do more with the static or declining headcounts.

One of the challenges that I keep seeing is that companies try to do Lean Manufacturing in a services environment.   Let me be blunt … if you think you can blindly copy the tools of Lean manufacturing in a services environment, you’re setting yourself up for failure.  We see this happen when manufacturing companies that have had great success with Lean in the production operation try to take their Lean manufacturing experts and approaches and leverage them to roll out Lean in services operations.  These people may indeed be Lean manufacturing specialists with great knowledge, but this doesn’t mean they can effectively roll out Lean in non-manufacturing aspects of the business.  In most cases, it doesn’t work.  The same thing happens when services companies hire a Lean manufacturing expert to help them.  It just doesn’t work.  Why?   Because Lean in a services operation is just different, that’s why.

Download Lean Services

this powerpoint overview of Lean in a Services environment …

Now, we could dive right in and start looking at a lot of individual tools and see which ones fit well in a services environment and which ones don’t.  But, I think the better approach is to take a step back and look at the differences from a business perspective first, then come back and start talking about tools and approaches.  So, here are some of my thoughts on how a services environment is different, and these difference most certainly impact the way Lean should be rolled out.  I encourage our readers to chime in with their own ideas.

  • There is typically greater involvement of customers in the production process. In many cases, the customer is a supplier to the process.  Sometimes the involvement is so ingrained in the process that you really end up with co-production with the customer.
  • Since services processes are often very people-centric (vs. machine-centric), it is very difficult to get to real standardization.
  • Quality is an experience, not just a measurement against specifications.  The inability to standardize the process makes it very difficult to standardize quality.  The customer’s definition of quality is a perception, subjective vs. objective
  • There is much less visibility to what is happening.  Information is flowing, not product, and that information can be digital, paper, or even verbal.  And, HOW it flows often has little or no standardization
  • IT systems play a much bigger role.  They enable the process, but can also be a rigid constraint on the process.   There may be multiple and often un-integrated systems.  Workarounds persist in the form of excel spreadsheets, word docs, etc
  • WIP and inventory are often hidden and ignored, but they are there and can have the same negative impacts as in a manufacturing environment (e.g. wasted resources, longer lead times, more variation

These are just a few of the key distinctions, and there are many more.  But they do point out some fundamental differences in manufacturing and non-manufacturing operations.  The differences are so stark that common sense should tell you that you cannot roll out Lean in a services operation the same way you do it in a manufacturing operation, not if you want to see results, and our experience here at Qualtec backs that up.

This is but the first in a series of articles we’ll publish on this.  I invite your thoughts, comments and feedback.  Feel free to contact me if you’d like to discuss.

Compliance – A Driver for Business Process Management and Improvement?

October 27th, 2011 2 comments

Organizations that choose one-off solutions to react to regulatory and compliance requirements on a case-by-case basis, as they are impacted by them, will spend 10x as much as those who choose to design and implement business processes that have measurement, visibility, and proper controls built into them from the start ….

I believe it was Gartner that made this assertion some years back, and it has proven to be true for many.  Organizations with a solid process infrastructure already have much of what they need deal with compliance requirements. The fundamental tenets of good process management include measurement, visibility, predictability, consistency, and repeatability, and business practices implemented with these elements in place can easily be transferred into specific controls that can be measured and reported on a regular basis.    Organizations that do not have a good process infrastructure in place may find themselves expending huge resources to redesign bad processes and systems when new requirements come down the line, as they always do.  Ouch.

Download executive brief on compliance and process management our short executive brief that discusses the importance of process management in meeting compliance challenges

If your company is like most, you face growing regulatory and compliance demands that absorb time, money, and other valuable resources and, ultimately, sap your competitiveness. However painful, this is reality and faced with these realities, you want to find a way to meet compliance requirements that is objective, reliable, and efficient. Merely managing the issue by opinion can be very dangerous and expensive. Opinions, not matter how smart the “opiner”, have a tendency to not match reality. A better answer is to drive compliance to an objective, measurable specification.  Management by fear can be even more expensive, inducing you to greatly overspend on compliance and to shy away from reasonably acceptable risks that could mean far better business results.

And, let’s be clear, policies and procedures are not controls. A policy merely states an intention to do something; a control ensures that it is done, done repeatedly, and done up to standard. Moreover, policies have to be read, understood, and remembered, all of which opens many possible routes to failure.

Bottom line — work is accomplished through processes – and in no other way.  To reliably achieve compliance you must be able to improve those work processes or design new ones. In other words, the way in which you meet a requirement must be embedded in the work itself, not merely displayed on a policy document. In order to sustain compliance, you must be able to establish measurements and controls within those processes. Certainly, you may have policies that apply, but the way in which you build, operate, and control work processes constitutes how we meet a requirement.

Contact me if you’d like to discuss how basic process management and improvement approaches might help with your compliance challenges.