Continuous Improvements

3 Tips on Measuring Your Business Process Performance

If you want to improve a part of your business, you would measure the current situation, take counter-measures to improve it and measure again to see if you made significant improvements. Right?

When I start a business process improvement project (Lean or Six Sigma) we start with the team defining the metric: what are we going to measure to see improved performance?

Here are 3 tips to help you choose your metric:

1. Frequency

Choose a metric that you can measure with high frequency, at least on a weekly base or
even daily. This will give you the possibility to react quickly when taking counter-measures. This way you can improve the process faster.

I had once a project on reducing employee illness rate. Because the reporting system generated data only on the monthly base, our team chose sick time per day (in hours) because this data was available daily.

If we would have stick to the monthly data, we had needed to wait at least 5-8 month to collect data on the improved performance.

2. Accuracy

You want accurate data otherwise you have no clue whether the data showing improvements is due to your team effort or it is only better by chance.

There are some statistical tests within Six Sigma that you can take to investigate the accuracy of your measurement system. The approach should not only apply to measurements by instruments (weight, density, length, dimensions, etc.) but also in any other situations.

In most cases, you can take a more straight-forward approach by checking out the following:

  • How many people collect data? The less is better.
  • How data is collected? Automated reporting preferred above manually.
  • Is there a written procedure on data collection? If yes, it is easier to train others and observe if procedure is followed.

3.    Output instead of input

Recently I had a project on improving the efficiency of purchasing activities of the Material department. The perceived problem was that they spent too much time on operational activities (placing purchase orders, following up shipments, reminding suppliers about due dates, checking invoices) instead of tactical and strategic activities (like selecting preferred suppliers, contracting, simplifying purchasing and invoicing activities).

We decided to measure how working time was spent concerning the purchasing activities of the people. They found it difficult to measure, often forgot to register, made many ‘guesstimates’. As a result, our baseline data showed the opposite situation than what was expected: limited time spent on operational activities. The metric was not the right one and the data not accurate.

Instead of measuring input (time spent on activities) we could better measure output, like number of invoices, number of suppliers or lead-time of purchasing transactions. These are output parameters that should drop significantly when purchasing is better organised.

Measuring the right parameter on the right way, with the right frequency helps you improve your business performance. Get your Black Belt in business process excellence.

Beat the average.

Yours,

Peter

Is Lean Six Sigma Applicable in Your Company?

Is Lean Six Sigma Applicable in Your BusinessRecently I have talked to one of my friends working at a big insurance company. He asked me…

“What are the criteria for applying Lean Six Sigma? What do you need for it?”

My answer was quite technical because I was thinking of the elements affected by Lean Six Sigma, so I said:

“If you have …

  • customers (read: someone receiving your output)
  • processes (repeatable actions in a certain order)
  • number of employees > 1 (otherwise it is difficult to work in a project team)

…then you can apply Lean Six Sigma.”

Knowing that his company is the third largest insurance firm in the world, it is obvious that all the criteria above would apply.

Reading a recent newsletter from the CEO of this firm, I suddenly realised that I forgot to mention the most important criterion:

“You see the need to improve your work”

You need to realise and admit that if you want to improve your performance and of those you are responsible for, you should approach your work in a systematic way.

Improving means reducing mistakes, improving predictability, eliminating wasteful actions in the process and reducing process lead times. As a final result: continuously improvement of the financial results.

You, your customers, colleagues and stakeholders deserve it.

Start today

Working in the business

odt-graphLook, I know you have heard this many times over: if you want to improve the results of the business you should not only work IN it (meaning: completing your day-to-day tasks), but also ON it (meaning: improving the quality and profitability by re-designing your processes).

But how can you work ON the business?

You might say: “I have no time for this.”  You’re right, you probably already have a long to-do list. But, if you do not make time to work on your processes, you will keep having a long to-do list and the results will still not completely satisfy you.

The Lean Six Sigma process improvement method is an outstanding way to work ON the business. This method becomes much easier when making use of a facilitating tool, like HerkuLess®. Either way, I’ll explain to you in a few steps how to use this to work ON the business.

Follow these steps:

  1.      Identify your biggest, most important goal

It could be anything, increased sales, reduced material cost, shortened lead times, drastic reduction of scrap or even faster employee on-boarding.

It should be important enough for you to invest 1 or 2 hours per week to work on it together with your team. I know you have very little time as it is, but it could save you a lot of time in the long run.

Recommended reading: http://peterherku.com/2016/08/30/5-ways-to-identify-your-best-lean-six-sigma-project/

  1.      Get your team together

Choose people for your team who are most familiar with the challenge or those who encounter your chosen problem daily and are therefore motivated to work on it and spend some extra time to find a solution.

The more diverse your team, the better, because the problem will be viewed from different perspectives.

My approach is to have everybody who is part of the process to be represented in the team. For example, if you want to improve on-time delivery, you should have team members from the production department, from the inventory handling group, from logistics and from quality control. I would make the Production Planner the leader of this team, because it is his most important performance indicator to deliver on time.

  1.      Define the problem and the goal

Setting SMART goals is not always easy because we tend to mention solutions, wishes and ways we would like to improve the situation.

Instead, describe the problem first as if it were a time-series chart (run-chart or individual chart) stating: average value of what you want to improve, the time period that you have measured, the high and low values in the data indicating the variation and finally the goal or the required level.

Continuing from our previous example, we take a problem statement for improving on-time-delivery performance. It should look something like this (the values might be different of course):

“Our average on-time-delivery performance (OTD) is 42%, measured in the period of January though September, ranging between 20% to 65%. Our long term goal is to achieve 90%.” This statement is reflected in the following chart:

odt-graph-before

From this problem statement it is quite easy to derive a SMART objective for this stage:

“Increase our on-time-delivery from average 42% to at least 60% by 31st of December this year.”

In my Lean Six Sigma career I have wasted lots of meetings on discussing problem statement and objectives. This is now solved and automated in HerkuLess®.

  1.      Find the most important reasons for the current performance

Using the cumulated knowledge of your team, a whiteboard and the findings of a  Ishikawa brainstorm session you can select the most important causes of why you are not performing at the required level.

In our case you brainstorm about “Why current OTD is 42% instead of 60%?”

There will be many, many causes but only 20% of those will be important to help you and your team to improve OTD by 80% (called Pareto-law or 80/20 rule).

  1.      Action!

Based on the main causes found in the prior step, discuss with your team what counter measures you can take to remove the causes.

For example, one of the main reasons that cause low OTD is that the planner does not take packaging and shipping time into account in his planning.

What can we do to change this? Your team would come up with actions like:

         The planner should investigate the time it requires to arrange packing and shipping

         The planner includes 2 days extra in the planning for packaging and shipping

Do not forget to include the name of the person that needs to take action and also the deadline for taking the action.

  1.      Measure and Control

You will not know if your countermeasures are effective until you see it in your results. Like that, the OTD should be increasing as a result of the Planner taking Packaging and Shipping activities into account. Also, other actions are usually taken as well; therefore it is often not one single activity that is responsible for the improvement but a combination of activities. The chart below shows the increased OTD in the improve phase:

odt-graph

As soon as your data show significant improvement, administrate what you and your team has done to achieve the result and what needs to be done in the future to ensure this new way of working.

You can start on working ON the business processes free for 14 days. Click here and start your free trial.

How to improve the results of an ICT Servicedesk with Lean Six Sigma

What if the customers of your ICT Servicedesk are satisfied, but your employees’ ambitions need to increase? Every ICT Servicedesk’s service should be to make sure its customers can be served with more efficient and services of higher quality. To concretize this mission, and to run the project, one could use the method Lean Six Sigma.

This article describes what one could to do improve the efficiency and quality of an ICT Servicedesk, structurally and with a long-term result, with the help of Lean Six Sigma.

The combination of efficiency and quality makes Lean Six Sigma the perfect method for running this project. Lean Six Sigma is actually aimed at optimizing the added value for customers, by reducing waste. By doing so, the quality of the service will increase and costs will go down.

Operator concentrating on client

A Lean Six Sigma Project

A Lean Six Sigma project consists of five phases (DMAIC), which stand for:

  • Define phase: Define the goal
  • Measure phase: Determine the current achievements.
  • Analyze phase: Identify the main causes of the problem
  • Improve phase: Select and Implement the solutions
  • Control phase: Verify and Control the results.

 

Define & Measure

These phases are aimed at determining the goal of the improvement and the current process achievements. In this case, improving customer satisfaction and efficiency will be the goals for the project. However, what’s maybe the most important in running a Lean Six Sigma project is that the employees themselves need to see the need for improvement.

 

Analyze

This phase in the Lean Six Sigma project has the aim of identifying the main causes that could be a bottleneck for increasing customer satisfaction and efficiency. This will all be done on the basis of process- and data information. Process information will be gathered from the chain. In this case, the chain exists of employees of the ICT Servicedesk, chain partners and suppliers. By means of an interactive workshop the main causes will be identified via an Ishikawa diagram.

 

Improve

The aim of this phase would be to select and implement solutions for the problem. Together with the employees of the ICT Servicedesk, a brainstorm to find solutions for the main causes has taken place.

Accordingly, solutions have to be prioritized to select the most effective ones. After selection, the ICT Management should be requested for the ‘GO’ for implementing the solutions.

 

Control

After identification that the solutions are effectivie, ofcourse an ICT department would want to maintain this improved level of customer satisfaction, if not even more increase. To secure the improved level, a coachproces and documentation proces could be developed to let employees extend their improvements and even enlarge them.

 

Are you interested in the methodology? Have a look at my programs!

You can also contact me for some more information on the topic or for informal advice.

Phone: +31 6 55 301094

Email: peter@herku.org

Lean versus Six Sigma

Lean Six Sigma

Which of both improvement methods is the better one?

This article focuses on two of the major business improvemen

t methodologies, namely Lean and Six Sigma. It points out the differences and discusses which method would be best for using today.

The Difference between Lean and Six Sigma

A Lean project can be done when the main causes are known, but the solutions are complex. Lean projects can be completed within 45 days and focus mainly on the elimination of waste. Among the tools that can be used to complete the Lean project are, Poka Yoke and Pareto Analysis. Six Sigma projects on the other hand, are done when the main causes are unknown and the solutions are complex. These projects can range from 3-6 months, while the focus lies on variation reduction. The main structured methodology to carry out a Six Sigma project would be the D-M-A-I-C structure, which stands for Define, Measure, Analyze, Improve and Control. So to wrap up, in a situation where the cause is Unknown and the Solution is complex Six Sigma is supposed to be used, and in a situation where the causes are known but the solution is complex a lean methodology is used.

How did Lean and Six Sigma come to existence 

During the late 1980s and early 90s Lean and Six Sigma became of great importance. The world had started globalizing. Process automation in all sectors reached its peak and due to globalization, demand was high and supply was comparatively less. As globalization started to evolve, increa

sing economic transactions globally enhanced trade and there was no sign of recession.

So the factors that required the rise of Lean and Six Sigma are:

  • Automations led to an larger output, but also to more waste
  • Therefore, resource optimization was essential and afocus on waste was important
  • So, the focus shifted from ‘output based thinking’ to ‘input based thinking’
  • Also, there was a need for a quick response tot the market
  • But multiple suppliers led to management issues and operational delays
  • So, processes were people dependent and a strong focus on a process oriented approach was required

So what is most important method for today: Lean or Six Sigma?

As mentioned before, Lean normally shouldn’t take more than 45 days, while Six Sigma projects can last for about 3 or 4 months for a successful round up. Therefore, the need for something somewhat faster and more customer-oriented emerged.

This brings us to the new trend nowadays: Lean Six Sigma –

a combination of both Lean and Six Sigma. These projects are completed quickly and the focus lies on innovative thinking. Customer orientation is the only priority of this combination of methods. These kinds of projects can last from about 1 month up to 3 months. A data driven approach is used wherever data is available to the project team and customer value will be identified to the max.

Both Lean and Six Sigma are great methodologies, which make an even greater methodology when combined to serve customer needs.

Are you interested in the methodology? Have a look at my programs!

You can also contact me for some more information on the topic or for some advice.

Phone: +31 6 54 69 40 47

Email: michelle@herku.org