Self Improvement

What does “Value added” mean when improving your process?

Value added is an often-used term in many situations. In Finance and Economics it is used to refer to the profit: sales minus total costs. We also use it when talking about our products or services: they should add value for our customers.

But how do you decide what adds value for our customers – both internal and external – when trying to shorten our lead-times?

Everything that we do in our work adds value OR does not add value for our customers. And, as always, there is a “grey area” in between, so-called business value added activities.

Value added activities are those that the customer would want to pay for. For the rest, he/she won’t.

So if you spend your time searching for data, looking for documents, asking your colleague to answer your email because she forgot, getting internal approvals, filling your monthly travel expense forms, correcting some faulty data in your system, meetings, etc. are examples of activities your customer would not want to pay a penny for if you present them on your invoice. They are not adding value for the customer.

The reality is that you let them pay for all those activities anyway, but you do not itemise them on the invoice.

We let our customer pay for our inefficiencies. What can you do about it?

Option 1: do nothing.

You keep your inefficiencies, and keep therefore your costs high, so you have to charge your customers higher prices in order to create your own financial value added (profit). When your customer has not much choice, she will still do business with you.

At the end of the day, your margins are smaller, you charge your customer higher prices, and you need a higher sales volume to compensate for the smaller margin.

Option 2: reduce inefficiencies

If your aim is to provide value to your customers, it is a logical step to reduce and eliminate inefficiencies in every part of your business. You can learn how to do it in a practical, structured and measurable way at www.LeanSixSigmaBelts.com/black-belt.

This effort reduces your costs, increases your margins and you become more competitive on the marketplace.

Reducing inefficiencies (wastes) creates free capacity that was formerly occupied. As a result, you increase the capacity of your business: you can do more, serve more customers, deliver more products and services with the same resources.

This should be always our duty, in good times and in bad times. Don’t you think?

Beat the average.

Yours,

Peter

The 4 Biggest Mistakes I Made as a Manager

I made many more than 4 but let’s start with these ones…

Imagine that you could solve very difficult business problems at your work. Problems that are not even being noticed anymore because there were so many attempts to get them out of the way without success.

Problems that are often discussed but nobody could solve.

Problems that are now “part of the business” meaning: everybody has learnt to live with them.

They became a part of your company costs structure.

Imagine if you would be the only person who could solve it. Kind of a hero…

Once I wanted to become such a ‘genius’. Since my study of Chemical Engineering I was always triggered by process PERFORMANCE. I was interested in process optimising a lot.

I ended up working in Finance at the world’s largest oil and gas company.

There, again, I was fascinated with predicting financial performance of the company and their customers.

Later when I was a Finance Manager at other companies, my object was to improve the business processes and therefore create efficiency and reduce costs.

The problem was I had no clue how to start…While figuring out, I have made these 4 mistakes among others:

#1 Push info instead of Pull

I made a bunch of reports, analysed operating results, pieces produced, production-lead-times, on-time-delivery rates etc. and tried to push my colleagues in the operation to streamline how they worked. I did not ask them what information they needed. I thought I can figure it out myself. As a result I have “buried” them with lots of data and they did not know what to use and I did not know what information I should stop producing.

#2 Thinking for someone else = not respecting

I interviewed operators and supervisors and designed their new processes behind my desk. I thought because of my title, being their manager, I ought to set up their new process. The fact is I did not know enough about the day-to-day operation, knew nothing about the details because I was hardly ever on the shop floor. Actually, by creating a new process, I took over their responsibility not giving them the credit and respect for their position.

#3 Emphasis on end-control

Because I did not know at that time that controlling only the end result creates many possibilities on the way for mistakes to happen, I put up all sorts of control procedures to avoid mistakes and force people to do a better job. As a consequence operators were not putting enough effort in ensuring right quality during production steps so mistakes were carried through the process and cumulated until it was too late or too expensive to correct it.

#4 Re-designing without involvement

When redesigning a process, I did it on my own instead of involving those being part of the process and letting them come up with new ideas and solutions. Because the participants were not initially involved in the redesign, they were eager to proof to me that my solutions to improving the process were not the right one.

Avoid these mistakes and learn how to become an expert Black Belt in process improvement at LeanSixSigmaBelts.com

You get one-on-one coaching to make sure you 10X your ROI.

“Beat the average.”

Yours,

Peter

how to attack your biggest challenges

 

 

Is this you?

 

A real-life situation: you have made mistakes in the time sheets on which your invoicing is based. Your customer complains about the incorrectness, therefore you have to change your invoice, and anticipate $2 million reduction of your sales revenue. This does not happen only once, but year after year.

 

Is this bad? What would you say?

 

Sure it is.

 

If you were in charge of the time sheets, what would you do?

 

To improve this process, this is what is happening now as we speak:

 

  1. Screening the administrative capacity of the secretaries appointed to record the activities on the time sheets
  2. Additional training for the secretaries
  3. Updating of the system to improve data quality and consistency
  4. Installing system add-on, highlighting data inconsistency on a daily basis

 

 

This might work… sooner or later it will probably help, but do you have enough time?

 

My concerns are…

  • Are these actions tackling the root cause of the problem?
  • Are these actions defined by those having the most knowledge and experience of the problem with time sheet registration? This to increase the likelihood of success also for the long run.
  • Do you have a base line and a measurement system for the KPI (indicator) showing improvements as you carry out these actions? Or do you only have the yearly check, living in the past?

 

The biggest problems I see in businesses, especially in Dutch Healthcare companies:

 

  1. Problems are not addressed by the right people – a manager tries to solve it because “he supposed to have the answers”, without consulting the workforce
  2. Problems do not get the proper attention – the issue may costs millions, but it gets as much attention and focus as selecting this year’s Christmas card
  3. Lack of time is used as an excuse for almost everything – look, guys at Apple or Google have the same 24 hours per day…
  4. There is no structured approach to attack such a problem – no method is being followed from start to finish
  5. There is no real analysis of the root causes to identify the right solution – someone has an idea, a wild guess or past experience and based on that actions are defined

 

This lack of structured problem solving is costing you millions and millions. You and your employees know it and do not like it. What can you do?

 

If you want to stop wasting money, stop wasting time and frustrations and start building and improving your business, start with HerkuLess® now. You get our dedicated support to stop your losses.

 

5 tips to make a better annual plan

game of chess

5 tips to make a better annual plan

When coming back from your summer vacation, the next big task that is often waiting for you is drafting up the annual plan for the coming year.

Drafting new plans already? The plans for this year haven’t even been executed yet and the expectation is that they won’t before the end of this year. So, even more plans and projects will be added then and the pile will just keep getting bigger.

How do you prevent your projects and plans to keep just piling up endlessly instead of being able to finish them timely?

In this blog I’ll explain in a few steps a planning process to you, that could provide focus and efficiency for the coming year.

Tip 1: Take a helicopter view – Long term goals

Begin high and descend afterwards. First, take the mission and vision from your organisation and ask yourself: what are the long term goals?

If you’re working in a health institution, then you might already have a strategic paper for the coming year wherein the most important directions are expounded by the management.

Afterwards, determine with this information what the long term goals are of your department. Where do you want to be in 4-5 years? Make it tangible and measurable.

Example: 10% higher client satisfaction compared to 2016

Is this formulated in a SMART way? Yes, because it’s specific, measurable, challenging but still achievable, it’s relevant as long as you have customers and it’s time-bound (before 2020).

Keep this list short. I advise a maximum of 6 goals – that’s 2 per theme: customers, employees, organisation/finances.

Tip 2: Take a baby step – Short term goals

What do you want to achieve in the coming year? You can approach it in several different ways and they’re all equally correct:

  • Linearly: divide 10% by 4 years, so 2,5% per year
  • Exponentially: increasing satisfaction will become easier
  • Logarithmically: decreasing growth -it will become more difficult to improve

whatever you choose, it will be your plan for the coming year.

Example: 2,5% higher client satisfaction in 2017 as compared to 2016

Tip 3: Be honest – your challenge

List all your obstacles, difficulties and challenges that are momentarily standing in your way to achieving 2,5% growth for the coming year.

Out of my experience I often hear challenges like:

“Our last measurement was in 2014. I don’t know where we’re standing at this moment”

“We lack a measurement tool of our own for continuous measurements.”

“Our measurements don’t show us clearly where we can improve ourselves”

Tip 4: Determine your SMART projects/actions

They are more likely to be projects than actions, as you  can’t usually settle matters on your own with simple actions.

So, make a list here with the strategically important projects to deal with the challenges mentioned earlier. Make them specific, with a measurable objective and a clear deadline.

Staying with our example to increase client satisfaction and considering the listed challenges at the previous point, you can imagine the following Lean Six Sigma projects:

  • Researching an available and/or setting up an own measuring instrument for client satisfaction before March 31st.
  • Measuring and improving client satisfaction on pilot location X before June 30th.
  • Introducing our own measuring instrument for client satisfaction, including working method, for all teams before December 31st.

Tip 5: Focus, focus, focus

You now know what your plans are for the coming year. Note the deadlines in your agenda in advance. In addition, plan the monthly evaluations as well: What’s the status of the project, who is doing what, is there extra support needed, are there urgent, but not important matters that are taking up time from these strategic (important but not urgent) projects?

When following these steps you will have the strategically important projects  in your annual plan. With these you take on the challenges so that you can meet the objectives for the next year, on the way to the long term breakthrough goals!

This is what EXCITES me…

I dont know about you, but I LOVE the HUGE impact Lean Six Sigma has on ANY organization I work with.

In one company, I have 13 project teams with 5 members per team on average. About 65 people are participating weekly in my coaching sessions. And they all show up every time. It’s amazing. No excuses, no cancellations but focused Lean Six Sigma work!

As one of the participant said: “I’ve really enjoyed working with the team and using Lean Six Sigma.”

Make the organization a better place to work. Enjoy serving your customers, patients, clients.  Deliver your products and services efficiently by reducing the process steps that ad no value for the customer.  That’s what we’re doing with these 13 teams every week.

We do this continuously. We start and finish projects every 4 to 6 months.

The results?

The results are ALL measurable…just like everything in Lean Six Sigma.  They deliver hardcore financial benefits: just the last 3 projects have added $ 290 K to the bottom-line of the company – every year.

Most important result: both employees and customers are happy with the improvements.

Honestly, could you wish anything better than this to any company, organization, or institute?

You can achieve this as well.   Start RIGHT NOW:

www.LeanSixSigmaBelts.com

Is there anything else that holds you back? Is there anything more important?

Here is why this Lean Six Sigma program is so much different than other programs:

1. Quality and efficiency issues are both solved together…saving time and money for you.

2. Focus only on the most important and effective easy-to-use tools that work in the real world.

3. More concentration on actual application in your business instead of theoretical stuff about statistics.

4. Not a one-time tool, but a way to empower your team for continuousgrowth and improvement.

5. Easy-to-understand and effective training material even for those less skilled so the entire company can benefit.

For more details visit www.LeanSixSigmaBelts.com

Warm regards,

Peter