Friday, January 30, 2009

“5 on 5” The Continuous Improvement Cycle

When playing a game of “5 on 5” in basketball, the key to success is for the team to work well together, utilize the strengths of each of the players and repeatedly work their process as defined by the coach. As the process is repeated over and over again through the course of the season, the really great teams “develop a chemistry” which is something that is unseen and unquantifiable, but which gives the team an edge over its competition and leads to success.

The same is true in the business world for companies that want to improve and succeed. A business team needs to work well together, utilize the strengths of each of the team members and use a process that is repeated over and over. The following continuous improvement cycle used repeatedly will lead to a new “chemistry” within the organization so that the culture begins to change to one of continuous improvement.

“5 on 5” - The 5 Step Continuous Improvement Cycle

1. Identify the target process
2. Organize and improvement team
3. Describe the issues, concerns or opportunity
4. Collect current performance data
5. Create a process map

1. Identify the process customers and suppliers
2. Define the process inputs and outputs
3. Identify wastes and value added activities
4. Define the process requirements
5. Generate a list of potential improvements

1. Establish desired performance goals
2. Prioritize the potential solutions
3. Establish the selection criteria
4. Select the best solution(s)
5. Define the desired process

1. Develop an action plan
2. Develop process performance metrics
3. Document the solutions(s)
4. Test the changes
5. Implement per the action plan

1. Measure progress per the action plan
2. Compare results with desired performance goals
3. Establish ongoing feedback
4. Determine corrective actions that need to be taken
5. Repeat the cycle to define new opportunities

The key to really being successful using this process is the very last step – going back to the beginning and looking for new opportunities. Without this, it is one-time change, not continuous improvement. All too often companies declare victory when a change is complete and sit back for the new status quo to set in rather than taking another look at things to find more opportunities. By using this cycle on a formal basis over and over as problems or opportunities are addressed in the organization, inherent use of the cycle will begin to occur since people will become accustomed to it and the culture of the organization will begin to embrace the idea of continuous improvement. This resulting chemistry that begins to develop will be unseen and unquantifiable but will provide an edge for the organization so that it can succeed within itself and against the competition.

Basketball anyone?

Friday, January 23, 2009

The Strengths of Operating as a Team

Wikipedia defines a team as a group of people or animals linked in a common purpose. A group in itself does not necessarily constitute a team. Teams normally have members with complementary skills and generate synergy through a coordinated effort which allows each member to maximize his or her strengths and minimize his or her weaknesses. These can be independent or interdependent, self managed, project related, sports, or even virtual in today’s electronic age.

In business, teams have various roles to accomplish that include:
  • Problem solving
  • Looking for improvements
  • Providing leadership
  • Giving focus to specific issues or functions
  • Leading in change management

Effective teams are ones that are carefully organized, have clear rules of conduct, utilize practices for having effective meetings, and properly utilize team operating processes such as problem solving, situation assessment, and decision making. Teams also need to avoid the various dysfunctions that build on each other which include:

  • Absence of trust
  • Fear of conflict
  • Lack of commitment
  • Avoidance of accountability
  • Inattention to results

Although teams have some pitfalls as part of their nature, such as taking longer to make decisions, the benefits of an effective team outweigh the risks:

  • Teams provide a broader look at solutions
  • Teams will tend to balance out the risks
  • Teams usually provide better collective judgment
  • Group participation leads to better understanding of the problem and decision
  • Involved people will better accept the change required and lead others to the new way

Are you Best-in-Class?

Thursday, January 15, 2009

Using ERP to Achieve Best-in-Class

The current world of increasing energy and material costs and the drive to become “Lean” and stay competitive create unique requirements for special features in Enterprise Resource Planning (ERP) in order for the ERP system to be used in a Best-in-Class performance. In a recent survey, Aberdeen research has found that companies considered as Best-in-Class had performance results that include:

  • 16% reduction in manufacturing operating costs
  • 20% reduction in administrative costs
  • 20% improvement in order cycle times
  • 94% complete and on-time shipments
  • 90% manufacturing schedule compliance
  • 90% overall yield

As previously noted in these messages, the top four pressures impacting the ERP system and its use are:

  • Must reduce costs
  • Must improve customer response times
  • Must be easier to do business with
  • Need to manage growth expectations

Actions that companies can take to achieve Best-in-Class performance using their ERP system include:

  • Use business process analysis techniques to fully understand the needs of the business and how the ERP system can satisfy these needs
  • Use continuous improvement teams to fully utilize the capabilities of the ERP system
  • Take steps to reduce the dependence on spreadsheets and manual processes to satisfy industry specific requirements
  • Make integration of enterprise applications a priority
  • Connect the plant floor applications to the ERP system to increase visibility and controlImplement event management to monitor transactions and conditions as they occur

Are you Best-in-Class?

Monday, January 5, 2009

How to Fail at Implementing an ERP System

Implementing an ERP system is a daunting task for the entire organization and will be a major cost item for the year. Whether you are implementing a whole new system or re-implementing parts of an existing system, there are many ways to fail in the effort. Although there are numerous details that must be attended to, any of which can derail the effort, some of the major ways to fail include:

Don’t fully understand your requirements prior to making the selection of an ERP system. Without a detailed list of required features and functions, the system being considered cannot be properly evaluated and any request-for-quote from a vendor will only be a best guess as to what it needs to do and how it meets the needs of the company.

Don’t pay attention to the business processes of the entire organization. Not understanding and documenting the business processes will mean that no improvements to the way business is done will be explored so that requirements that help these changes are also not known. Without this understanding, assumptions will be made that may or may not be right.

Choose a system because it was successfully used by someone else. Every company has its own set of requirements and to select a system based on the fact that a friend, colleague or another company in the industry has been successful does not mean that you will be successful.

Choose a system because of how it looks. Although the user interface to the system is important, it is more important that the system does what you need it to do. Also, seeing the system simply via a demo conducted by the vendor can mask issues you may struggle with when you go to use it yourself.

Don’t educate and train those who will be using the system. Without training, users will not know how to do what they need to do and without education, they will not understand why they are having to do this. Training also needs to include plenty of practice time with real transactions so that the go-live experience delivers fewer surprises.

Don’t accept (or manage) the fact that major organizational change is about to occur. Either change WILL occur or the new system will simply replicate the sins of the old. Much of the change comes from the fact that the business processes need to change and these changes need to be addressed and managed proactively.

Overload those involved with project activities while expecting them to perform all of their regular job duties. If both project work and regular job activities cannot be done, the project activities will be sacrificed.

Implement a system without thorough testing of the software AND business processes. Many users assume the software will work as advertised (not an unreasonable expectation) but it often times has problems you would not expect. More importantly, testing the way the business will be run using this tool must be done to be sure that the business can continue once the system is implemented.

Implement everything all at once without considering a modular approach. So much is at stake with the “Big Bang” approach that any slip in the implementation can be disastrous. May of the problems will not become evident until later when accounting and finance try to piece together all that has happened through the new system. This all-or-nothing approach typically “bets the company” on being successful.

Attempt implementation without the assistance of an unbiased expert who has done it before. Without the knowledge of experience or a proven methodology, many points will be missed and mistakes will be made that could easily be avoided. Using only the software vendor is risky too since their goal will be to make your company work in the software rather than make the software work in your company.

It is most important that you get this implementation right. It is your system and you need to live with the results. You need to understand the current requirements, the business processes and what needs to change and what you want from the business in the future. If you are unsure of how to proceed successfully on your own with experts from within, be sure to contact an experienced consultant that is not tied to any software solution or system. Implementing an ERP system is a very costly proposition but it is even more costly the second or third time around.

Are you Best-in-Class?