Culture Engagement Starts with Top Management

Creating a Word or PowerPoint Culture reference material and distributing to employees on on-boarding day and briefly talking about it in your Monday morning meeting because you feel your employees are not “getting it” is not going to drive any significant results. Human Resources is not the captain when it comes to engaging employees in the company’s culture. Culture is top management responsibility.

Effective leaders are known to practice and support their culture on a daily basis. They integrate visual controls and visual KPI Metrics so that quality, productivity, cost goals and objectives are visibly clear. To quote Dwight Eisenhower, “They never listen to what I said; they always watch what I do.”

For example, if a Procurement Manager sees the CEO ignoring client calls when the culture document states, “Serve the Client”, it would now seem that the culture document is void because the CEO is not practicing it. The Procurement Manager now thinks its okay to ignore vendors/clients because the CEO does.

Leaders should engage with their employees everyday instead of only appearing when there is a problem. By actively participating in all the departments of the company and listening to employees, leaders can use the Voice of the Employee to identify bottlenecks and improve overall employee satisfaction. They also include all employees in the decision-making process by making strategic plans visual and accessible to all employees; and ensure their actions correspond with the company’s written vision and mission statements.

The fault lies with leadership when the employee does not know what she/he is supposed to do, does not know what is expected of them, has no means to assess if the work is being doing properly, nor has the authority or means to correct the process when something is wrong. Effective leaders know the importance of translating the vision and mission of the company into daily activities. They set realistic goals for their employees and provide timely rewards to those who meet them. And offer educational and training opportunities to enhance their employees’ capabilities.

Simple Procurement Hacks to realize Savings

To elaborate further on previous article,  “Price focused Sourcing is bad for Business”, I have created a list of procurement hacks for realizing savings. saving-clipart-yTkeraBAc

1) Audit invoices and purchase orders to identify unapproved vendor charges, price discrepancies, and unapproved purchases.

2) Audit vendor database to ensure accurate data, remove duplicate information and ensure vendor has proper approval.

3) Share sales demand and budget data with procurement team.

4) Share inventory data with suppliers and have them do the same.

5) Develop a quality plan.

6) Focus on total cost instead of price.

7) Build strong supplier relationships by working with vendors to improve quality, delivery and logistics; and encourage the use on long-term contracts with quality stipulations and year by year locked in prices.

Are your procurement expenses deteriorating your bottom line? Could your sourcing process use a re-design? Contact me now http://bit.ly/2prHowW

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Lean Wednesday Tip: Issuing Section 1244 Stock

“Small C Corporations benefit from issuing Section 1244 Stock as it offers shareholders better tax treatment if they lose money on the disposition of their C corporation stock. It is best to create a written corporate resolution that specifically states that the shares are Section 1244 stock. Also, make sure to authorize more shares than you’ll sell.”

E.O.W (End of Week) Notable Tip: Key Performance Factors for effective Supplier Selection

Happy Friday! Hope you all had an amazing week!

Today, I want to discuss the 12 most important factors you should consider when choosing a supplier. These are important because they ensure supplier selection success and help you realize quality opportunities. Without further ado, please read below for the top 12 factors to consider when choosing a supplier, and as always, remember, “Success is continuous improvement.”

  • Type of product (new tech vs mature product)
  • Quality
  • Quality Assurance (certifications, audit processes)
  • Flexibility
  • Reliability
  • Location
  • Price
  • Delivery Capability
  • Lead times
  • Financial stability
  • Length of time in business
  • Relationship strength
  • *Of course, you can always add to the list based on your business requirements*

Lean Wednesday Tip: Client Relations

“Never let a client treat your employees badly and if such incident does occur fire the client immediately. It is of most importance that the clients you work with have cultures that naturally sync with yours. A sale is never worth the mistreatment of your employees.”

IT Asset Management Checklist

It is important that you are periodically auditing and logging critical IT assets for the purpose of minimizing security, conduct and financial risks. Below I have noted the most important assets that should be properly logged and have auditable documentation.

IT ASSET MANAGEMENT CHECKLIST:

  1. Hardware and Software
    • computer user, UPC, location, model number, et cetera
  2. Network and communications infrastructure, servers and apps
  3. Alarm systems
  4. Telephone circuits
  5. Vendors and Service Providers
  6. Licenses
  7. Purchase and disposal info
  8. Computer and Laptop software upgrades
  9. List of all apps in laptops or computers for each employee including authorization and security information.
  10. Cloud Data backup hardware (e.g.; external USB drive)

By using this checklist the next time you conduct an IT Asset audit you’ll be able to identify vulnerabilities and exploits that were not previously known to you. For example, let’s say your policy states that there should be 10 laptops kept in the supply room at all times but when you conduct an audit you find only 8 and employees have been careless with the laptop request form. The laptops also have not been entered into the tracking system making matters worse as now you have to dig through invoices to identify the two missing laptop model numbers and SKUs.

An IT Asset Policy is not effective if it is not enforced regularly. Employees must be reminded of them everyday and trained periodically.

 

E.O.W (End of the Week) Notable Tip: Decision Making

Happy Friday! I hope you are all doing well.

I’ve been currently reading, “Business Adventures” by John Brooks and am fascinated by Xerox’s culture during the late 1940s. I learned that employees put up their mortgages to ensure the success of the company. Will your employees be willing to do that for your company?!

Nevertheless, today’s E.O.W Notable Tip is about how to make quicker informed strategic decisions. Like always, remember, “Success is continuous improvement!”

 

“To reduce the decision making cycle time opt for collaborative discussions and brainstorm sessions, create a small team of key people from each department ( 4-5 max) and ask them to create industry and customer value maps with a competitive analysis comparison with recommendations per insights gathered, visually display these maps to the whole team and have them vote for the best profitable strategy that suits your company’s current capabilities.”

Lean Wednesday Tip: Accounts Payable Performance

 

“By encouraging your A/P team to report and make critical department KPI metrics visual, such as, process cycle time, activity lead times, and cost per invoice with industry and competitor comparisons you realize the opportunity to reduce costs, increase productivity and streamline processes.”

How to stop Freight Charges from eating away at profits

The shipping and delivery cycle time race amongst valuable brands like Amazon and Walmart is a fierce one. Many parcel companies like UPS and FedEx may offer discounted rates for delivering on time but the real question is, “Are they actually delivering on time?”

By implementing effective visual internal controls, your company’s accounts payable team may be able to identify delivery discrepancies per regular parcel audits and if they are found you are not required to pay them.

Other things to look for while auditing would be:

  • Duplicate Invoices: Parcel vendor may generate duplicate invoices with different purchase order numbers, tracking numbers, invoice numbers, et cetera.
  • Discount Rate Verification: Thorough analysis of the invoice is critical for the purpose of ensuring that the proper discount rate was included.
  • Improper Billings: Sometimes there are multiple parties involved and you could be billed for the shipment when your contract specifically stated that “Vendor XX” was responsible for payment. You should integrate freight audit software into your accounts payable process to mitigate this risk.
  • Rate Verification: Essentially, your accounts payable team should be ensuring that the rate base, math, mileage, product classification and weight all match your purchase order and contract agreement, otherwise you are overpaying.
  • Fuel surcharges: It is important that this charge matches what is in your contract and not the current market rate.

Auditing offers the opportunity to gather critical data, such as, shipping spend by origin, destinations, general ledger codes, customers, fuel charges, vendors and carriers. This data can be used to improve your financial planning and analysis, and offer opportunities to streamline processes and realize cost innovations.

Notable Friday Chat: Fraud Risk Management

Happy Friday! I hope you’ve had a great week. With that said, I want to leave you with a short message about Fraud Risk Management. Until next week, have a wonderful weekend and remember, “Success is continuous improvement”!

 

“To minimize fraud risk, top management must be committed to a Fraud Risk Management program, implement visual controls and employee guides, have clear reporting procedures and whistle-blower protection, have an efficient investigation process, and most importantly, translate policy into daily activities.”

Preventing Process Failure with FMEA (Failure Modes & Effects Analysis)

FMEA (Failure Modes & Effects Analysis) is a Lean Six Sigma technique for identifying both the ways that a product, part, process or service can fail and the effects of those failures.Once these failure modes are identified, they are rated by the severity of their effects and failure probability. This is critical to the design of any system, process, service or product.

FMEA-Round-1

Sample FMEA GRID

There are 3 types of FMEA’s; system, process and design. However in this post I will only touch upon the Process FMEA. Process FMEA’s identify the different ways that a process could fail and the effects of those failures. They are often used to identify and rank process improvement opportunities. For the lower risk failure modes preventative plans are put in place to ensure minimal impact to productivity, costs, and delivery.

For example, say a Health Tech Startup, creates an app for patient on-boarding with a plethora of functionalities that they consider to be in the “cool factor”. However, this overload of features could overwhelm the user and miss the value curve completely.  With an FMEA analysis they would be able to identify the most critical features, risks, and problems with the product before they take it to market, in turn, significantly reducing rework, product, and process costs.

Contact us now to learn more about how to minimize rework costs and identify problems in processes, systems or products before they are used or put into production.

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Lean Wednesday Tip: Customer Focused Process Improvement

 

“Effective Lean organizations study their processes from their customer’s point of view and align their processes to meet their customers’ needs the first time and every time.” – Donna Summers