Rock Around the Block - The Blog of Rock LaManna

How Lean Principles Take You From AS-IS to SHOULD-BE

Posted by Rock LaManna on Wed, Nov 14, 2012 @ 09:11 AM

How Lean Principles Take you from As Is to Should Be resized 600

It’s amazing how many people chase after new business instead of taking a closer look at their current operations. By applying the correct lean principles, you can see dramatic improvements to your bottom line. In this post, I’ll show you how one method – value-stream mapping – can have an immediate impact.

Before we dive into value-stream mapping, ask yourself the following questions:

  • Did you ever make a change to your business, and then three months later, wonder why it didn’t work?

  • Do you understand why your typical yield loss has suddenly increased (unacceptably)?

  • Do you ever wonder why some employees do a job one way, while others do it another way, and none of them seem to do it the way you want?

  • Do you wonder, “How did that defect get past all of our testing and into the hands of the customer?”

  • Do you ever wonder if customer complaints really have an impact on your bottom line?

If this is the case with your printing business, you’re not alone. In fact, you’re in a boat like so many other owners.

The cause? In lean operations terminology, you’ve got a couple non-synchronized processes on your hands, and you’re in need of value-stream mapping.

If you’re not a lean operations guru (and even if you are), that’s a mouthful. What it means is that the left hand doesn’t know what the right hand is doing, and it’s up to you to fix it. The only way this gets fixed is if you get that left hand and right hand in a room, and figure out exactly what’s going on.

How does that happen? Well, let’s start at the beginning. Let’s talk about “non-synchronized processes,” and what damage they can do to your business.

The Great Disconnect: How Easy it is to Drop the Ball

According to Ed Klaczak, a lean operations expert from EJK Consulting Solutions, Inc., the reasons why so many companies work so inefficiently are these non-synchronized processes.

Klaczak described the case where a printer was trying to handle change orders and the various departments were working independently (non-synchronized).

The business was having problems because “If there was a change, there was no way to accurately and effectively make a change and then notify the other people involved in the production schedule,” he said. Time (and production thru-put) was wasted trying to understand and implement the changes, instead of EXECUTING the production build.

This caused tremendous problems with the production schedule. If estimating was overstated or understated, it could have impacted the production capacity or backlogs.

Multiple people were involved in the estimating and scheduling process, but there was no established way to handle changes to an order. When you’re printing hundreds of jobs, just a handful of problems can cause some serious issues.

The Cost of Not Finding the Culprit

Owners underestimate how a non-synchronized process impacts their bottom line.

Let’s say a company builds widgets, and they’ve carefully developed a regular production schedule.

When a company receives a complaint about the widget, they pull someone out of the regular production schedule and build a new widget to resolve the issue. This is great customer service, but the replacement part was not integrated into the regular production schedule. There was no accounting for the deficit in person-hours, nor the altered inventory.

The owners figured this was just the cost of “doing business,” but it’s really a non-synchronized process. It’s like a fire hose that’s on full and not connected to anything, spraying water all over the place.

Except in this case, the hose is spraying cash. If that company was accustomed to producing 10 widgets in an hour, but could only produce 6 because it had to fill replacement orders, you simply multiple the revenue per widget times 4. Under this scenario, the losses can mount pretty quickly.

What are warning signs that you have an unsynchronized process? These are some of the most typical:

  • Regular stops and starts of production

  • Excessive overtime

  • Excessive customer complaints

  • Customer cancels order because of delays

  • Customer won’t return your calls

Again, I think it’s very important to try and put a dollar amount on the cost of these delays. If your capacity is to produce $10,000 per month, and you’re only doing $8,000, that’s a productivity loss of 20%.

When you can equate a dollar amount to inefficiencies, then the question no longer is “How can I afford to fix this?” It becomes “How can I NOT afford to fix this?”

Four Steps for Mapping Out a Solution

If you have these types of productivity issues, what do you do to right the ship? Klaczak recommends you follow the 4-step Value-Stream Mapping Solution.

A word of caution: Don’t begin the process until you’ve clearly identified what process you want to improve and why you want to improve it. In the widget example above, we identified widgets outside the regular production orders as the non-synchronized process.

How do you hone in on what needs to be fixed? Start by talking to your people. Spend some time interviewing all the players who are involved with the overall area of concern, and get their opinions on the nature of the problem. It should give you a good sense of where you need to focus. You’ll then be ready to begin.

Step #1 - Create an AS-IS Map. You begin by analyzing the current state of affairs. This requires getting input from all the key suppliers and receivers of each process. You’ll then want to create a process map, where you draw the entire process.

This can be a rather lengthy process, and it’s going to require discipline and patience. But it’s absolutely imperative you don’t shortcut the documentation of these steps.

Why can’t you just leap right to mapping out how the process should be? Wouldn’t that save time?

In the long run, no. The AS-IS mapping process is rather laborious, but if you jump to the next step, you may miss out on some of the disconnects. Only by methodically mapping out the entire process can you pin down where things are really going wrong.

Step #2 – Build a SHOULD-BE Map. Now the fun begins. With a clean sheet, begin brainstorming what it will take to improve on the AS-IS shortcomings. This can include everything from tweaks to your existing operation to the development of entirely new processes.

An important part of this step is to get buy-in from members of your team. When everyone has signed off on the process, there is ‘buy-in’ and they’re more apt to work within its parameters. The people who helped developed the SHOULD-BE map will be the biggest champions of change, as they are partial owners of the redesign.

Step #3 – Value-Stream Mapping Action Plan. Now its time to resolve any open items on the action plan, and put your plan into effect. Depending on the scope and complexity of the new process, this could take weeks or months. If the process owner understands the costs (waste) associated with the existing process, the prioritization of resources to fix the problem can easily be established.

A key thing to remember moving forward: Any time there is a new action or a change, you must revisit the SHOULD-BE and AS-IS maps and make adjustments. You’ve worked hard to document the process to this point. Be sure to keep it updated as you move forward.

Step #4 – Track Your Results. You’ll now enter a phase of non-stop tweaking. Closely track your relevant metrics – i.e. customer complaints, output from known bottlenecks – and adapt accordingly. This is a work in progress.

The beauty of the Value-Stream Mapping Process is that it works for companies of all sizes. Klaczak says a common misconception among smaller companies is that they don’t have the time or the resources to do this. But that’s not the case – or shouldn’t be, at least.

In truth, smaller companies tend to have tighter cash flow, and ultimately less tolerance for error. That’s why it’s mission critical that you run a tight ship, and Value-Stream Mapping can help ensure you’re moving full speed ahead.

This mapping methodology provides structured problem-solving, ‘buy-in’ from the affected parties, an accelerated deployment of solutions and new processes that won’t soon be abandoned by your team. All to increase profits and reduce Operational costs (waste) within your organization!

Here's a graphic detailing Value-Stream Mapping:

Value Stream Mapping resized 600


Photo by: siddhu2020



Topics: Lean Operations, Lean Principles

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