A contribution to cost reduction and process harmonization
In the HR, Sales, SCM, Marketing, Financial Accounting and Central Administration divisions.
My clients often ask me how they can cut costs or how they can optimise the existing processes (apart from production) in their organisation.
In successfully completed contracts of the last years, a standard (DMAIC-based) project procedure has emerged using Lean Six Sigma methods. I would like to briefly introduce this.
Define the problem
Many of my clients bring up such problems as ‘overpriced,’ ‘overgrow
n,’ or ‘everything is taking longer’. Because such problems cannot be quantified, they are difficult to correct. With such statements, a ‘before-and-after’ consideration is not possible.To begin with, I attempt to present the problems via the SQCDP key figures (On Time, On Cost, On Quality, etc.).
The information for the calculation of the current situation including history can often be extracted from an ERP or time recording system (‘coming and going, with or without cost unit accounting’).
For one of my clients, I was able to quantify the problem ‘overgrown’ by evaluating the information from time tracking software.
If the hours worked within the department are divided by 8 (8 hours normal workday), you get the ‘headcount development’ from 2005 to 2013. In this case, ‘overgrown’ means tripling.
Analyse the problem
My clients expect results as quickly as possible along with complete transparency regarding the procedure used.
I have thus far experienced the highest client motivation and enthusiasm when the client could monitor the problem analysis. Therefore, I use Excel and/or PowerPoint to document the results of the process analysis. This facilitates the client’s access to the intermediate results without having to consult an IT department for the installation of proprietary tools.
I use the LSS tools SIPOC, RACI and YAMAZUMI for problem analysis (actual situation) in the affected and adjacent organisational areas.
Task 1
Admission process ‘ACTUAL’ within the affected departments and in collaboration between the departments.
- Document the individual processes or process steps in a ‘SIPOC process folder’; record the time for the execution of the individual process steps; document responsibilities for each process step with a RACI diagram.
- Document the activities of individual employees including duration using a Yamazumi diagram.
- Confirm the correctness and completeness of documentation (signature) by employees involved in documentation.
Yamazumi sample catorized
Task 2
Analyse the recorded process (results).
For the potential analysis, I categorize the recorded process activities and tasks in four categories: ‘non value add’, ‘value add’, ‘value enabling’ and ‘waste’.
Concretely:
- Evaluate (‘non-value add’, ‘value add’, ‘value enabling’, ‘waste’) the individual process steps including duration and responsibilities.
- Evaluate (‘non-value add’, ‘value add’, ‘value enabling’, ‘waste’) the individual activities of employees including duration.
- Substantiate the individual evaluations.
- Evaluate the maximum harmonization potential in hours by avoiding ‘waste’, ‘non value add’ and ‘value enabling’ process steps and employee activities.
- Evaluate the corresponding SQCDP key figures (e.g.: OTD, Head Count and FTY); quantify the potential for goal achievement.
- Discuss results with relevant employees or managers.
- Present results to the client.
Yamazumi sample catorized
Analysis results
The greatest challenge after categorisation is agreeing on evaluation with the relevant employees and managers of the organisational unit together with the client's management.
Different opinions or historically grown activities can complicate the conversation.
Suggest improvements for the implementation of harmonisation potential
Determine
After finding a consensus among stakeholders on the existing problems in the organisation and prioritizing issues in consultation with the stakeholders, I begin to draft suggestions for improvement.
Concretely:
- Develop solutions to avoid ‘waste’, ‘non value add’ and ‘value enabling’ process steps and employee activities.
- Define process (employee activities) ‘TARGET’.
- Agree on solutions with employees and the relevant manager.
- Draw up a schedule for the implementation of individual measures (PDCA projects for new ideas, DMAIC projects for deviations) and coordinate with employees and the relevant manager.
- Present results in the relevant organizational unit; obtain appropriate release for implementation of individual improvement measures.
- Adjust or create SLAs between departments.
- Recreate or adapt SOPs for the individual areas of activity (professional groups).
Presenting and coordinating the corresponding measures with the affected organizational units is the basis for the creation of the project roadmap for implementation of the respective suggestions for improvement.
Implement
The sequence of individual improvement projects depends on the impact of the individual measures on the desired company result.
Visualization with an Ishikawa diagram helps my clients understand the percentage distribution of the effects of the different measures on the result.
- Implement the defined PDCA projects; visualise results.
- Implement the defined DMAIC projects; visualise results.
Depending on the result, PDCA or DMAIC projects are commenced for each measure.
Mit dem Bild verdeutliche ich meinen Kunden meine Verfahrensweise.
Establish measures to monitor compliance with harmonized processes and employee activities
Some people’s driving is exemplary after they have been photographed by the police. 4 to 5 weeks later, their old driving behaviour returns. So, I explain the need for regular monitoring to my clients:
- Define auditing process with support of key figures.
- Define auditing intervals.
- Train employee or auditor.
In diesem Beispiel aus einem Kundenprojekt (Überstunden pro Woche – SCM-Abteilung mit 12 Mitarbeitern) ist der späteste Zeitpunkt des Eingreifens erkennbar.
To optimally determine when auditing is required, use the control chart with key process figures.
