Oct 27, 2011 | Lean, Management, Operations
What a great phrase to start a debate around the board table, often heated, as most still see the two as a trade-off, the better the quality, the higher the cost.
How much better to beat the bean counters at their own game by quantifying it:
Quality cost = the number produced outside specification X the total cost of rework & disposal.
Simple. The cost of quality calculated, and how often will you find any added short term cost during production will be dwarfed by the costs of managing the out of spec production.
Oct 7, 2011 | Change, Lean, Management
A while ago I helped a mate move flats. He had only been there about 5 years after becoming a “bachelor” again after his family grew up, but the significant amount of clutter accumulated was unanticipated, and surprising. All sorts of proposals, manuals, brochures, old gear, and stuff that at some point passed the “might be useful one day” test had accumulated, and the clean out released lots of space, and a recognisable organisation for the remainder.
It occurred to me that businesses are the same, they accumulate all sorts of organisational and personal clutter that takes up valuable space and time, creating blockages and “work-arounds” in processes, effort that would be unnecessary in a cleaned, disciplined environment.
An aggressive clean-out of physical stuff, but more importantly redundant processes and rules from time to time would deliver significant productivity benefits, at very little cost.
Sep 28, 2011 | Lean, Management
Years ago as a senior manager in a large organisation, part of the monthly routine was to write an APP report: Achievements, Problems, Plans, kept to an A4 page, used as a scene setter for the more detailed monthly report.
At the time it was a pain in the posterior, generally done at the last minute, with the objective of getting it done, rather than communicating the context of the rest of the report.
In short, a squandered opportunity.
How much better it would have been to use the APP as a summary of the context and detail of the functional responsibility I carried, something that had performance measures built in, and that was useful. In time it may have evolved into an A3 type report that I have more recently been using as the core tool of project planning, but the attitude that it was just a pain eliminated the opportunity to be creative and constructive with it.
How many good ideas are being squandered in your environment?
Aug 11, 2011 | Customers, Lean, Sales
Last week I spent over 2 hours on the phone to Optus trying to fix something they had stuffed up, the third try, after speaking to their techies and emailing the bloke who “signed” a form letter to, thanking me for taking on the service they stuffed up. Annoying? no, bloody irritating, being shuffled around their departments, nobody taking any responsibility for the stuff-up, but reciting how important my call was to them.
With the emphasis on speed nowadays, how quick is the connection, how rapidly fulfillment happens, how quickly the email is answered, we are used to “quick” and when it does not happen, we get angry very quickly indeed.
Clearly Optus are cutting costs, employing people in their call centres who have no authority to fix a problem, or even suggest a solution, and anything not on the printed frequent question/appropriate response list gets shuffled elsewhere. They wasted a lot of time, across several departments, and I wasted a couple of hours, and need a new head gasket. No wonder these Telco’s have a lot of customer churn, how easy it would have been for the first person to whom I spoke to be allowed just a little bit of initiative and it would all have gone away in 5 minutes.
It may cost a little bit of money to enable staff to deal effectively with customers, but how much would be saved in time, customer churn reduction, and reducing the advertising and deals necessary to attract the annoyed customers of other Telco’s to come to them to replace those leaving?
This is a challenge for every organisation, as the speed of things increases, the expectation is the effectiveness of the response will increase at the same rate, and it doesn’t, so we get pissed, and everybody wastes time, effort, resources, energy and perhaps most importantly, hard won brand loyalty.
What a waste.
Jun 16, 2011 | Lean, Operations, Strategy
One of the reasons it is sometimes hard to keep a lean initiative alive, or indeed, get it past first base after the initial adrenalin has worn off is the manner in which the traditional accounting systems monitor performance. Often, accounting is the hardest function to win across, because their whole rationale is brought to account, if I may use such a bad pun.
Lets just consider a few of the more common things accounting does to (unintentionally) frustrate lean:
- Counts inventory as an asset, encouraging a build up of inventory, at best, not discouraging it
- Fails to monitor capacity, so simple improvements such as reducing downtime, reducing changeover time, speeding up throughput, do not get counted until a full bill of materials review is done, and often not then. Therefore, good work is not seen on the bottom line.
- Fails to monitor the performance, other than direct cost ,of individual steps in a value stream to understand the impact one may have on the whole value stream.
- Rarely is there a full value stream costing done, including sales and marketing costs, Accounting simply do not have the tools in their kitbags.
- Customer value is a foreign concept to accounting, “marketing takes care of that” (“by the way, what is it?”) making it easy to ignore anything outside the ledger
- Fails to understand that lean builds capacity, and the benefits start to flow only when the freed up capacity is utilised
- Fails to recognise that value streams are cross functional, and rarely fit comfortably into the common functional responsibilities and performance measures that are applied.
So, perhaps task No.1 in a Lean initiative is to get the “beenies” on board and thinking about how the impact of the initiative can be counted, made transparent, communicated, and improved upon.
Jun 13, 2011 | Collaboration, Lean, Strategy
A basic discipline of Lean Thinking is the quest for the root cause of a problem, enabling a solution to treat the disease, not just the symptoms.
The converse discipline, seeking the root cause of success so that it can be understood, articulated and used to build repeatable processes is far less commonly used, but no less important.
Many years ago as a young product manager, I was on the periphery of the creation of Meadow Lea’s iconic “you ought to be congratulated” advertising. As the success of the advertising which emerged from a brave combination of consumer research and creative insight became evident, a lot of effort was put into assembling a detailed understanding of the dynamics at work that drove the success, so we could ensure it continued whilst being expressed sufficiently differently to remain fresh to consumers .
I have never forgotten the lesson.
Unfortunately, the more recent management of the current owners of the brand, Goodman Fielder, have forgotten the lessons if they ever knew them, proving again the value of corporate memory, and the effort it takes to institutionalise it, turn it into the culture of the place, rather than allowing it remain in peoples heads, only to have them move on.
