Sep 9, 2010 | Management, OE, Operations, Small business
It seems almost all improvement programs I see have as a central objective the reduction of inventories. That is pretty easy to achieve, order less, less often, and in smaller quantities, objective achieved.
However, when you count customer service, and cycle times into the equation, something the financial inventory measures do not do, reduction of inventory can have a catastrophic impact on financial results, as if nothing else changes, you just fail your customers.
Reduction of inventory is usually an outcome of the reduction of waste, but should not be the objective, waste reduction, waste in all its forms, should be the objective.
Jul 18, 2010 | Demand chains, OE, Operations
Two differing approaches to management improvement you may think?
Not so.
Both require extensive:
* Collaboration,
* Transparency,
* Robust processes,
* A set of values imbued through an individual organisation, and group of organisations in a demand chain,
* Respect for the capability of operator level employees to make contributions to improvement, innovation, and a,
* Safe, sustainable and productive workplace.
So how can they be so misunderstood by so many supposedly informed and perceptive commentators?
The Wall Street Journal recently published an article that stated in part “Companies like Apple and Nissan are seeing the drawbacks of lean manufacturing methods, which call for carrying little inventory but make supply snags tougher to offset”.
This statement, a highlight of the article, demonstrates profound lack of understanding of lean manufacturing and the role that customer demand plays in creating a “demand chain” that works to satisfy that demand by removing waste of all types, something most sensible customers would baulk at paying for if they knew, and had the choice.
The businesses cited, several to my surprise, have clearly not absorbed the huge difference between responding to a forecast, and gearing their operations to respond to the drivers of demand with continuously improving capability, innovative solutions to problems, and a vision that engages for the long term, rather than focussing on the latest periods financials.
Jul 7, 2010 | Innovation, OE, Strategy
In the last federal budget there was money allocated to the task of digitising health records allocated, and there was some pretty unedifying comment on the amount, the progress to date, and the implications on privacy.
What dross.
Australian health costs are huge currently, and rising at a far greater rate than the economy expanding, creating a substantial emerging “hole”. Digitising this data, and making it available for improvement initiatives across our health services is imperative.
It is accepted that data is the first step on the road to improvement, without data, everything is speculation. Here is one of the greatest tests of public policy for the future, and we hide away from the blindingly obvious benefits that can flow from process improvement and innovation to protect existing vested interests, and unrealistic, unsustainable concerns about increasing the degree of transparency.
If the public sector was a business with a bottom line, and there was a competitive need to improve and change in order to survive, instead of a monolithic testament to the past, the efficiency of our current expenditure would be increased by probably 50%. Sounds unrealistic, but businesses that have effectively implemented real Lean principals into their operations and demand chains have found 50% is readily achievable.
Note that I have specifically indicated that the efficiency would increase 50%, and not that costs would be reduced 50%, although cost reduction is the corollory. There is a real difference, and the difference is the one that appears to separate the successful Lean implementations from the unsuccessful, because success in Lean is about behaviour change and productivity improvement, not slash and burn cost reduction. Reduction in unit cost comes about only when extra capacity, freed up by the elimination of waste, is used, and is effectively for free, as the piper had already been paid.
Jun 30, 2010 | Leadership, Management, OE, Operations
Many businesses offer cash for suggestions, put a suggestion box near the canteen, and wonder why most of the suggestions are physically impossible, morally debatable, and often both.
In the end, successful suggestion programs offer the reward of personal satisfaction and recognition to those making them, any financial incentive is usually secondary. The $50 in the paypacket for a successful suggestion is nice, usually appreciated, but not the reason the suggestion was made.
People who are members of a “community” and a workplace is a community, normally want to contribute to that community, unless it is dysfunctional in some fundamental way, and those contributions build connections and mutual obligations, that are the glue of any community.
Many suggestions will be worthless, but offering recognition and feedback to all offerings creates a sense of personal connection. Create that, and the suggestions will increase in value progressively, and ultimately, very few will have anything to do with deviant behavior, and you will quickly be able to do away with the anonymous box, and have the feedback directly, person to person.
Jun 17, 2010 | Management, OE, Operations
It is pretty easy copying the machines, layouts, and the physical things that go towards producing something, and there are consultants by the thousand who will help if you need it.
What you cannot duplicate easily are the management systems that are deployed. You might get some, or even most of them, but copying their deployment in your circumstances, they will not work the same way. All the connections will not be the same, this is why you can read all you like about Toyota, or 3M, or Google, go and see the way they do things, and copy all you can, but it will not work the same way when you get it home.
Time and time again, I am asked to assist deploying the tools of Lean, 6 Sigma, TPS processes, and other tools, and to an extent it will deliver positive outcomes, but never as much as there is potential so long as it is an outsider driving the delivery.
This stuff has to be internalized and modified to suit the culture and processes in a business, and by the modification, carve your own path. Therefore, I find that most times, when there is a genuine wish to change, and thereby improve, rather than just a financial imperative to reduce costs, which is often the starting point, I find myself digging around in the bowels of organizations, looking at accounting systems, performance measurement, customer facing processes, and innovation processes, in an effort to modify behavior to accommodate the philosophies of improvement, and deploy the appropriate tools in a manner tailored to the needs of the organisation.
Jun 16, 2010 | Management, OE, Operations
The variety of approaches to problem solving appear to form a continuum, that looks a bit like:
- The “workaround” where you find a way around the problem, hoping by magic it will go away.
- Further along the continuum we have some sort of score chart which logs the progress of the symptoms of the problem without actively looking for the cause.
- The next stage is an effort to solve the problem and put in some sort of remedial action,
- Then we have a continuous improvement project that seeks to identify problems and improvements on a continuous basis.
- Finally we have a Kaizen culture, where the standard is revised and improved on a continuous basis by those with the hands on responsibility for the process, with the active support of all around them in the organisation.
I often see the first step, usually the second, sometimes the third, very occasionally the fourth, but I have never seen a culture that actively feeds (rather than just supports) continuous improvement as a underlying value in the business.
Where do you fit?
