business tip

How to plan a Process Improvement Project

When planning a process improvement project the most important question you have to ask is, “What problem are we trying to solve?” This question relates directly to the first step in DMAIC ( a Lean Six Sigma problem solving tool), which is to define the problem. After you answer this question you are ready to outline the criteria for an effective process improvement plan. Projects are usually one time occurrences created to fulfill specific goals for the organization.

Essentially, Lean Six Sigma projects must have the following 3 critical characteristics to be effective: performance, cost and time.  The performance criteria allows us to understand what the project seeks to accomplish. Project expectations and goals should be written clearly, be realistic, made available to all project team members, and team members should also be held accountable for achieving them.

The second criteria, cost, provides insights into the resources needed to complete a project. Usually, money belts which are financial auditors provide an objective independent evaluation of the potential financial benefits of a project as well as the actual results achieved by the Lean Six Sigma project.

Finally, the third criteria, time, assures that team members are aware of the time-frame for the starting and ending of the project. Gantt Charts are excellent tools for monitoring all the activities associated with a project coupled with checkpoints which are smaller points throughout a project that are used to judge how far the project is toward completion.

It is imperative that all team members in a process improvement project understand the top 3 inter-related objectives of the project which are meeting the budget, finishing on schedule and meeting the performance specifications.

 

When to Automate a Process

Many Managers and leaders ask this question, “When do I know its time to automate a Process?” The simplest answer is that automation of a process is critical when the well-being of your employees is being impaired, too much time is spent on manual input and putting out fires; and less time is dedicated to strategic planning and achieving strategic goals.

Leaders must constantly measure process performance as this includes, process cycle time, lead times, and process costs coupled with benchmark comparisons to truly understand how they fare with their competitors. For example, say you wanted to automate your Accounts Payable function. You would first create a process map to identify inefficiencies in the process, test and implement new controls, track and analyze Key Measures of Performance (cost per invoice, process cost, process cycle time, days to resolve a problem, et cetera) and compare data to your competitors. If you realize that the cost per invoice and process cycle time is significantly higher than your competitors it is wise to consider automation software.

However, before integrating software to automate the process you must compare the total costs and see if new and tested controls or alternative low cost methods can reduce costs and cycle time without the integration.

A process in dire need of automation can be detected by increase in poor quality, delivery and productivity. A process can not run smoothly if any of these process efficiency characteristics (quality, delivery and productivity) is not meeting business and customer requirements.

E.O.W (End of the Week) Notable Tip: Aligning product success metrics with customer priorities and strategic goals

Happy Friday!

I hope you had a great week. This week’s Notable Tip is focused on the development of valuable and critical product KPI metrics. If you are not measuring and monitoring the most important metrics of your product’s performance progress then you are missing valuable insights that can help you optimize your product. Below I end this post with a short message on how to ensure product success with well-developed measures of performance.

As always, “Success is continuous improvement.”

“Properly designed measures of performance are aligned with strategic goals of a company as well as with its customers’ priorities. They should be to the point, clearly written, focused and measure what is of value to the customer (product/service attributes).”

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.

 

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.

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.

Save

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