Uncategorized

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

Case Study: $106,971 Waste Material Reduction In 5 Months

You too can increase your personal value and save money for your company while you study Lean Six Sigma at your current location.

 

– No traveling to a training location.

– No accommodations required.

– Your boss does not miss out on your productivity.

– No expensive consultants getting in the way.

Background

One of my online Green Belt students, LS, entered my course end of January this year. He is working as a Lean specialist in an African affiliate of a Fortune 500 company with a HQ in Florida.

Although LS already had some background in Lean Manufacturing, he did not know Lean Six Sigma and definitely not the Herku Method (80/20 rule applied to Lean Six Sigma itself).

He enrolled to my Certification Program (see Option 2 at http://www.leansixsigmabelts.com/GreenBelt) and started his project together with studying the online training material.

The Problem

His project was about to reduce copper waste remainingon spools after the production of specific cables. LS measured: on average 26 kgs of copper per spool was scrapped.

This problem was present for a long time causing the company $138,000 each year due to high scrap. In addition to this material costs also handling costs are present.

The Solution

LS, following the Lean Six Sigma online Green Belt training, proceeded step-by-step towards the solution. After completion of each stage during the DMAIC roadmap (Define, Measure, Analyze, Improve and Control) he submitted his presentation material to me.

Once LS responded to me like this:

“I will tell you one thing that many were taught DMAIC but not the way you are doing it. Yours is practical unlike the theoretic one many did but has never brought out any fruits. I am so sure once am certified be least assured that at least 3 from the team will enroll. I intend to request my boss to recommend even to HQ in Miami so you could do it for others within our sister companies.”

After improving the measurement device (due to the Measure Phase) and identifying the main cause to high scrap (uncontrolled wiring of spools), LS has requested his manager to invest in an automatic stop switch.

The results

After installing the new digital scale and the automatic stop switch to avoid superfluous wires when producing the spools, LS was able to achieve a tremendous reduction of waste copper (see right part of the graph).

On average he reduced the copper waste by 88% from 26 kgs to 3 kgs per spool in 5 months!

After deducting the $6,000 and $997 from the gross annual savings, LSS has made a $100,000 savings for his company.

This savings is next year, the year after, and after… will amount $ 106,971 investments were already made.

Additional savings are 18 man-days per year due to less waiting and handling time by the operators.

You can achieve similar or even higher savings and improvements if you join now at

http://www.LeanSixSigmaBelts.com/GreenBelt

 

Warm regards,

Peter

PS: The ROI of this program in this particular case was 100 X the investment.

This company is planning to enroll 3 more students.

Number of seats are limited.

+31 55 737 00 02

+31 655 30 10 94

 

What Is Lean Six Sigma Green Belt Good For?

“Why should you get Lean Six Sigma Green Belt certificate?

Here is my answer…

Green Belt certificate is the first level among the others (White, Yellow, Black, Master Black) that enables you to lead a Lean Six Sigma project team solving a major problem in your organization.

While White and Yellow Belts are having increasing level of understanding of the tools and methodology of Lean Six Sigma, the Green Belts are actually applying the methodology in a real-life situation.

Your first typical projects are:

– Reduce workload of ABC department
– Improve utilization of machine XYZ
– Minimize waste material during production step X
– Reduce set-up time at assembly department for shift A
– Improve housekeeping of stock-room

Those projects are easy to do with minimum number of Lean Six Sigma tools.

The financial impact of an average Green Belt project is $10,000 to $50,000 per year.

The Green Belts are part-time project leaders in Lean Six Sigma: next to their daily job they run improvement projects in about 20% of their time.

Because the Green Belt training and certification is less expensive ($1,000 – $2,500) compared to Black Belt training ($5,000-$10,000) and it takes less time to accomplish, the ROI (return-on-investment) is much higher.

For example, one of my online Green Belt students is about to finish his first project, saving $52,332 on a yearly base. His manager paid $997 for the certification program. That gives an ROI of 52x in just the first year!

Important: the cost saving is not only in the first year but in every year, therefore the ROI is even higher.

What’s in it for You?

If you get your Lean Six Sigma Green Belt Certificate you become a very valuable member of your organization because you can solve, as a team leader, difficult problems quickly and easily.

You learn how to deal with resistance, how to quantify problems, how to measure and analyze data to find the right solution together with your team.

Consistently applying Lean Six Sigma not only in your project but in your daily work, will completely transform you into one of the most effective and efficient people in your organization.

This unmatched advantage you take with you where ever you go and will give you better career opportunities, higher salaries and more recognition.

What’s in it for your boss, manager, supervisor?

He/she gets 2 for the price of 1: for the same costs you are also running Lean Six Sigma improvement projects during your work hours. These projects are delivering tens of thousands of dollars of financial benefits to the company, organization, institute or practice.

Those in the Lean Six Sigma project team are also learning a totally new approach to any business challenge.

As a result the organization is stepping up in terms of efficiency, improved quality and better customer focus.

Dear Managers, can you wish anything better than that?

Enroll now at http://www.LeanSixSigmaBelts.com/GreenBelt

Warm regards,

Peter

 

Why Lean Six Sigma Is Gaining Popularity?

Comparing the search terms on Google Trends you will see that Six Sigma is losing the interest of the searchers.

On the other hand Lean Six Sigma is getting more popular:

Why is this trend?

Here are the reasons:

Reason #1: Faster Results with Lean Six Sigma

Sign up for prior notification for the upcoming Green Belt training.

Delivering significant improvements quickly is in everybody’s favor: the customer is happy, the managing director is happy and the team as well.

And this is achievable with Lean Six Sigma. Here is the proof:

Just recently I have coached 3 project teams of nurses and their supervisors on Lean Six Sigma projects. They had no prior experience with Lean Six Sigma. They had no statistical background and never worked in any improvement projects.

Using the practical Lean Six Sigma method, we have achieved the following results in 3,5 month time:

1. Reduced admin time of nurses by 67% so they can spend more time on value-adding activities (care).

2. Increased productivity of nurses visiting patients in their home by up to 15% so they can spend more time on value-adding activities (care)

3. Reduced overrun of direct care hours vs. budget by 42% to save costs because overrun hours are not financed by the insurance company.

We have achieved these results in 3,5 month where normally it would take at least 6 month.

And one very important aspect:

Some of the team members said that it was a petty that we are already done with these projects because they have like this kind of work so much.

Reason #2:  Customer Satisfaction Requires Not Only Six Sigma but Lean As Well

What do I mean? If you join the Lean Six Sigma Green Belt training you will learn exactly what it takes to satisfy EVERY customer. I’ll explain it to you during the Define Phase of the training.

The tool you learn about customer satisfaction is called CTS Tree (Critical To Satisfaction Tree). The point is that every customer’s satisfaction depends mainly on 3 elements:

  1. Critical To Quality
  2. Critical To Delivery
  3. Critical To Costs

Without going into details, you know that Six Sigma is focusing on improving quality by reducing variation.

But that is only one aspect: Critical To Quality.

With Lean Six Sigma you’re able to solve time related problems, therefore fulfilling the 2nd element of customer satisfaction: Critical To Delivery.

How about the 3rd aspect, the costs?

Reducing variations, reducing mistakes (Six Sigma) and shortening lead times (Lean) you’re continuously reducing the costs of your products and services.

Companies realizing that to improve customer satisfaction it takes Six Sigma AND Lean not one or the other.

Reason #3:  Complicated tools of Six Sigma requires more statistical background

I studied math and statistics in college, at the university, during my MBA and still my the 4 out of my 5 weeks Six Sigma Black Belt education has challenged my statistical knowledge.

On the other hands, Lean (Lean Manufacturing, Lean Management) consists of more, easy-to-use tools and techniques.

Combining Lean with the most effective tools from Six Sigma and you have an easy-to-explain method.

The training I’ve put to gather was inspired by the fact that I wanted to reach every level of the organization IF you want to achieve culture change towards continuous improvements.

That means the training must be easy to understand, no high-level statistics, etc. Practicality is the keyword.

If you want to learn the PRACTICAL Lean Six Sigma to be able to solve almost any business problem and get what it takes to turn-around ANY organization, join now the Lean Six Sigma Green Belt Certification Program

…and you will be let in before anybody else.

Warm regards,

Peter

Case Study: 96% Reduction of Set Up Time

Applying Lean Six Sigma to your bottle neck processes will deliver you multiple results.

Not only can you reduce to process time, eliminate mistakes but also find innovative solutions to problems that might be as old as the company.

Next to operational improvements you can address the health and safety issues in many cases.

And lastly, all of these improvements has a financial benefits in terms of cost reduction and/or sales increase.

In the following interview with John te Riele, Production Manager at Voith Paper Fabrics B.V., Haaksbergen, Netherlands, we discuss one of his Green Belt projects.

Listen here: Case Study – 96% Reduction of Set Up Time

The objective of his project was to reduce the set up time of an assembly table where dryer felts are assembled from spirals. Dryer felts are kind of convey belts running on the paper machines. Spirals are made of polyester yarns at high temperature by twisting the yarn around a metal pin.

Although John is a Certified Lean Six Sigma Green Belt, therefore he has lots of other daily responsibilities next to Lean Six Sigma improvement projects, he was able to achieve the following excellent results:

1. John and his project team reduced the set up time by 96% from 148 minutes to 6 minutes.

2. Reducing set-up time created 935 work-hour additional capacity.

3. John has also created a new, bigger tubes to hold more spirals, therefore reducing the change-over time

4. John also solved the problem of finding the end of the 10.000 meter spiral by fixing the end in a trench (deep, long cut) on the upper part of the tube. No searching any more.

5. A new trolley is designed with the results of easier transport, no lifting, easier exchange tubes , easier storage , improved overview stock, less walking.

6. Net financial savings: 13.000 Euro per year.

You could say “that’s not much money”.

Right and that is the wrong approach when you primarily focus on the savings with Lean Six Sigma because all the additional benefits would be neglected.

Would you cancel John’s project if you knew point #6?

What’s your opinion?

Peter