Four Challenges of Managing in a Lean Environment, Part 1
If we have an overarching goal as an organization, wouldn’t it be ‘habitual excellence’? How do we adopt that habit? Since the success of every project, every initiative, every department-wide goal depends upon executive support, it follows that excellence itself depends on management. If we want to create an excellent Lean organization, we have to manage that way – there must be a corollary to Lean operations. We must manage a Lean environment using Lean principles.
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Four Challenges of Managing in a Lean Environment, Part 2
Planning - The Eye of the Storm
Challenge: Maintaining a plan in a dynamic environment
While Leading is the most visible role of the Lean Manager, Planning is often the most invisible. It requires a mix of experience and attention to detail, taking into account the current state and potential or likely changes in the environment.
How Do Momentum and Feedback Factor into Lean Management?
The Lean Manager is a student of the game. S/he understands physics and systems theory – recognizing that the conservation of momentum and the feedback control loop are two of the most important laws in management.
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Supplier Evaluation with KPIs
Measuring supplier performance is something that is often done discontinuously, for example, whenever you think performance is lowering or you feel dissatisfied with the supplier.
However, a constant measurement of supplier performance is very important because it allows you to react to problems, prevent disasters, and set new goals. Measuring performance is not just a way to criticize or obtain cost reduction/refunds because of quality problems; it should also be a tool to help suppliers maintain service and build improvement plans.
Moreover, as discussed in the defining requirements post, a requirement can't be expressed just by feelings, because you need to justify what you are telling the supplier and avoid false alarms that can make the supplier judge you as unreliable. Because of these considerations, the starting point is that you and your suppliers need to speak a shared language, embodied in the key performance indicators, or KPIs.
A KPI is a numerical objective measurement that expresses performance from a single point of view. An example of a KPI might be “defects per thousand parts” or “percentage of delays per month”.
The Dimensions of Supplier Evaluation
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Process Evaluation for Waste Reduction
In this post I want to show a method to check whether or not your process is creating value, so you can easily recognize what are your improvement possibilities to eliminate wastes.
This method can be easily used on micro-processes since it is useful to identify all possible wastes.
This method consists in building a simple list of tasks to accomplish in order to get our job done. Then you must assign a category to each one of them.
Categories are aimed to check what is waste and what is not, and what kind of waste they represent.
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Four Challenges of Managing in a Lean Environment, Part 3
Challenge: Knowing when our work is meeting customer needs in quality and quantity
The final task of the Lean Manager is to monitor and maintain performance by measuring it. You may have heard the adage, “what gets measured, gets done.” Unfortunately, the measures typically in place in government are overall costs and little else. Using total cost or total FTEs as a blunt instrument, budget reduction efforts may ensnare your organization in a cost-cutting spiral without a way to defend yourself. What you need is a way to tie outcomes to process measurements. Thankfully, this is how to improve performance as well.
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In our daily work, we all know our duties and how to do our job, but often, although the procedures are not well-defined, we do our job a particular way because "we have always done it this way".
In the last posts (Kaizen in Time Managing and Kaizen in Time Managing - 2) we improved our daily job, managing it with daily-planned tasks, dividing our jobs in "categories" or "process" and planning our working hours to reflect our tasks-categories, so we split the day in standard work time-spans. Also we learned how to eliminate fire-fighting habits related to emergencies.
Now it is time to standardize each of our own processes.
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Need to Develop an Outsourcing Governance Team?
Many of our clients, after completing an outsourcing contract, realize that they need to get down to the business of creating a governance organization to oversee the scope of the contract. Sometimes, our clients believe that a single person can perform all the activities associated with the new delivery model. Occasionally, with very small deals and a very experienced person, that may be the case.
But in most situations, this is just too broad a scope of activities, and requires experience in areas that are too specialized for one person. Here we outline a sample of a governance organization, with roles and responsibilities and skillset requirements.
The basic template below can be used to design a customized organization for your outsourcing agreement.
This, of course, is just a starting point. You must analyze your outsourcing agreement and customize the organization to meet the special needs of your contract, including scope, relationship intent and organizational maturity.
DENVER (November 28, 2012) – WillowTree Advisors (WTA), a woman-owned business transformation consulting firm, has announced a new service offering specifically designed for Outsourcing Service Providers.
This service offering, 360 Sales Revitalization TM focuses on helping business development and sales organizations to enhance sales effectiveness and strategic focus. Through its proven methodology, WillowTree decomposes the sales cycle and associated processes to reveal opportunities for improvement. WTA collaborates with the sales team to assess and improve the key sales areas of Pipeline Management, Sales Team Alignment, Communications and Incentives, Sales Opportunity Assessment, Sales Methodology and Competitive Analysis.
“We’ve worked for many years on both the provider and buyer side to facilitate outsourcing relationships ” said Kathryn Douglass, WillowTree Advisor Managing Partner. “We believe that we can apply that knowledge to helping outsourcing sales and pursuit teams be more successful, reduce their cost of sales, and increase their win ratio.”
Douglass launched WillowTree Advisors in 2009 and has 25 years of program management, sales and executive leadership, IT and operations experience. Her team’s value proposition rests on the delivery of big firm results on a cost effective and flexible platform.
In the book, Leading Change, noted organizational change expert John Kotter notes that there are five prerequisites required to achieve any type of organizational change:
n Establishing a Sense of Urgency - Individuals or organizations do not change without a sense of urgency to do so.
n Creating the Guiding Coalition - Put together a group with enough power to lead and guide the organization through the change. This group should represent a cross-section of the organization.
n Developing a Vision and Strategy
n A vision is a broad description or picture of the future state of the organization. Create a vision to help direct the change effort (this is completed in Policy Deployment).
n Developing strategies for achieving that vision that include both marketing and operational activities (this is completed in Policy Deployment).
n Communicating the Change Vision
n Use every verbal and visual vehicle possible to constantly communicate the new vision and strategies (this is completed in Policy Deployment, Step 7 enabler projects).
n Empowering all associates (developed in Lean Culture)
n Get rid of obstacles that prevent associates from participating.
Change systems or structures that prevent associates from creating the change vision. Encourage risk taking and nontraditional ideas, activities, and actions.
Experience has shown that adopting Lean requires, right from the beginning, a strong "sense of urgency" and commitment from the Leadership Team to the organizational change required to successfully implement Lean. This commitment to change must include the area where generally the greatest change must occur--the Leadership Team.
For more by Larry, see his blog.
The September 30, 2011 edition of Manufacturing and Technology News magazine presented an article entitled, Lean and Six Sigma Are Not Leading To Breakthroughs In Corporate Performance. This article (the result of a survey of 100 business executives conducted by Alix Partners, a business consulting firm) highlighted some problems with Lean and Six Sigma implementations, including:
n 70% of respondents reported a less than 5% improvement in manufacturing costs as a result of Lean.
n 60% of respondents said their previous Lean improvements were not sustainable.
n Only 17% of respondents reported seeking long-term culture change in their organization.
Alix Partners made observations about the survey that are summarized here:
n Most companies are getting a poor return on their investment in Lean and Six Sigma.
n Companies are far too focused on implementing Lean tools and processes rather than on basic execution.
n Organizations need to dramatically rethink their Lean strategies by focusing on cash and finding the biggest opportunity to improve, and then deciding which Lean tool(s) will help them achieve that result.
n Company Leadership Teams must take responsibility for the Lean implementation, rather than trying to push this responsibility down to the Lean facilitator.
This data supported a report completed by Industry Week magazine in 2007 that reported the following Lean results from American business:
The Affordable Care Act has created angst among health care workers and administrators, not because big changes are coming, but because the impacts of those changes and their accompanying rules are not yet clear. For administrators, this level of uncertainty makes planning seem nearly impossible. Yet, healthcare organizations such as Mayo Clinic and Thedacare are currently developing robust plans for tomorrow, streamlining existing workflows, and delivering better outcomes in care—all while cutting costs, increasing cash flow, and growing the bottom line. How? Lean Six Sigma.
A Transformational Approach
Lean Six Sigma improves hospital operations with data-supported decision making. The goal is to drive continuous improvement throughout the organization, and in a way that aligns with the hospital’s strategic plan.
In health care, Lean Six Sigma focuses on both the process (workflow) and the service itself. When implemented properly, these practices train health care teams to react and adjust to changes efficiently, and even proactively create solutions to future problems. Typically, Lean Six Sigma projects yield between three and ten times the health care provider’s investment, as well as a 50% improvement in quality of care.
Financial Gains from Lean Six Sigma Result from:
n Eliminating rework, materials, and inventory
n Avoiding or reworking problematic processes
n Enhancing productivity and patient care quality
n Improving patient flow and cash flow
Lean Six Sigma methodologies make delivering and planning for high-quality care possible, even in the face of great change. Further, these practices prepare hospitals and staff for the coming changes while incorporating existing requirements from Medicare/Medicaid, ACO, avoidable adverse events, and much more.
To Read a Success Story, press the Read More button below:
Starting the Lean Journey.
When I speak with people about Lean programs, I am often asked, “Where should we start?” While this sounds like a very simple question, it actually requires a lot of thought. However, the simple answer is that you must first decide where you want to go before you know where you should start. Think of it like this: If you don’t know where you want to go, it really doesn’t matter if you have a map.
I have a GPS for my car that is pretty high tech. It communicates with satellites that are orbiting thousands of miles above the Earth. It can tell me where I am, give turn-by-turn directions and even tell me how fast I am going. However, with all of that technology, if I can’t put in a final destination, the GPS is pretty useless.
The same is true for Lean, Six Sigma or whatever you call your continuous improvement effort. If you don’t know where you are trying to go, even the best Lean program won’t help very much.
There are mountains of information about Lean, Toyota Production System, and continuous improvement programs. You can read a book a week and probably spend several years digesting just what has been written so far. You can hire consultants that can make a process Lean down to the tenth of a second, and you can save a lot of money. You can even teach some of your folks about Lean in the process. All of these things are good, but they are not exactly what we are after – yet.