Posts Tagged ‘Lean’

Agent00 – lean or overweight call centres

Call centres have become overweight during the last 20 years. Agent00 can help your contact centre become lean again.

Commence Lean Industrial Crm Profiled in Quality Digest

With up to 10 years of continued process improvements on the plant floor, and in back office and distribution operations, manufacturers have finally arrived at the front door of customer relationship management (CRM). Many senior manufacturing engineering and operations executives are strongly resistant and assert that lean CRM is the final frontier in the lean enterprise process. Now that the quick gains have been achieved from eliminating waste in the rest of the manufacturing enterprise, the areas most neglectedcustomer service, sales and marketingare front and center.

Achieving bottom-line benefits from the implementation of many of the CRM technology solutions that provide “electronic” connections and profound data analysis and reporting capabilities is only part of the quality equation. There are systematic processes designed to achieve significant CRM benefits including:

Planning and executing organizational and value-stream process improvements, particularly those issues affecting staff, culture and organizational issues

Applying the principles of lean enterprise, total quality management and value-stream analysis to improve customer interface operations

Justifying quality-coaching technologies, including self-organizing and autonomous agent-based solutions.

Larry Caretsky, president of Commence, developers of a stand alone industrial CRM solution, suggested that most enterprise resource planning (ERP) companies offering CRM have short-falls. According to Caretsky, “Managing the sales cycle and sales representative performance, marketing campaign management and integration with customer support are not provided by ERP tools.”

Indeed, stand alone industrial CRM solutions may also provide effective lean CRM processes as long as the vendor truly understands the nuances and idiosyncrasies of the manufacturing sector, but most don’t. Offering a glorified database satisfactory to any type of organization doesn’t address the central issues facing all industrial operations.

As Caretsky notes, “Industrial companies with complex products and solutions must be driven by quality best practices around industrial selling, rapid system start-up, effective sales team adoption and use. Each of these issues is a unique reality of quality lean principles for industrial sales and marketing.”

Manufacturing Journalist, Thomas R. Cutler recently wrote a feature article about industrial CRM for Quality Digest. The full feature article may be read at http://qualitydigest.com/QDarticles/FMPro?-db=iq%5feditorial.fp5&-lay=article%20data%20form&editorial%20type=QIArticle&release=yes&-format=QDarticle_text.html&articleID=9961&-script=cntaccesstype&-Find

Commence offers industrial companies complete “Freedom of Choice” to select the solutions and platform that best meets the business requirements of manufacturers and distributors. The comprehensive CRM Industrial application suite is available for use on premise or on-demand as a hosted service. Industrial leaders often build departmental CRM solutions with the award winning Commence Industrial CRM Framework. These choices are why so many industrial companies choose Commence as the solution for managing customer relationships. All Commence Industrial solutions support mobile or wireless connectivity and integration to back-office accounting and ERP systems.

Lean Industrial Crm Revealed in Quality Digest

Achieving bottom-line benefits from the implementation of many of the CRM technology solutions that provide “electronic” connections and profound data analysis and reporting capabilities is only part of the quality equation. There are systematic processes designed to achieve significant CRM benefits including:

Planning and executing organizational and value-stream process improvements, particularly those issues affecting staff, culture and organizational issues

Applying the principles of lean enterprise, total quality management and value-stream analysis to improve customer interface operations

Justifying quality-coaching technologies, including self-organizing and autonomous agent-based solutions.

Larry Caretsky, president of Commence, developers of a stand alone industrial CRM solution, suggested that most enterprise resource planning (ERP) companies offering CRM have short-falls. According to Caretsky, “Managing the sales cycle and sales representative performance, marketing campaign management and integration with customer support are not provided by ERP tools.”

Manufacturing Journalist, Thomas R. Cutler recently wrote a feature article about industrial CRM for Quality Digest. The full feature article may be read at http://qualitydigest.com/QDarticles/FMPro?-db=iq%5feditorial.fp5&-lay=article%20data%20form&editorial%20type=QIArticle&release=yes&-format=QDarticle_text.html&articleID=9961&-script=cntaccesstype&-Find

With up to 10 years of continued process improvements on the plant floor, and in back office and distribution operations, manufacturers have finally arrived at the front door of customer relationship management (CRM). Many senior manufacturing engineering and operations executives are strongly resistant and assert that lean CRM is the final frontier in the lean enterprise process. Now that the quick gains have been achieved from eliminating waste in the rest of the manufacturing enterprise, the areas most neglectedcustomer service, sales and marketingare front and center.

Indeed, stand alone industrial CRM solutions may also provide effective lean CRM processes as long as the vendor truly understands the nuances and idiosyncrasies of the manufacturing sector, but most don’t. Offering a glorified database satisfactory to any type of organization doesn’t address the central issues facing all industrial operations.

As Caretsky notes, “Industrial companies with complex products and solutions must be driven by quality best practices around industrial selling, rapid system start-up, effective sales team adoption and use. Each of these issues is a unique reality of quality lean principles for industrial sales and marketing.”

Commence offers industrial companies complete “Freedom of Choice” to select the solutions and platform that best meets the business requirements of manufacturers and distributors. The comprehensive CRM Industrial application suite is available for use on premise or on-demand as a hosted service. Industrial leaders often build departmental CRM solutions with the award winning Commence Industrial CRM Framework. These choices are why so many industrial companies choose Commence as the solution for managing customer relationships. All Commence Industrial solutions support mobile or wireless connectivity and integration to back-office accounting and ERP systems.

Lean Marketing Applied With Duct Tape Marketing

Lean marketing is a whole-systems approach that creates a culture of continuously improving processes. It is a system focused on and driven by customers, both internal and external. Lean marketing isnâ??t just an industry buzzword or quick-fix alternative. Increasing competition demands a continuous focus on minimal costs, maximum customer options, fast delivery, and high-quality products and services.

Todayâ??s companies must be innovative while focusing on waste reduction, improved lead-time, maximized flexibility, and upgraded quality. Remember the old adage about marketing – only 50 percent of your marketing works, you just did not know which 50 percent. Lean marketing principles will allow you to implement proven strategies. The components of Lean Marketing include Value Stream, Lean Metrics, Current State, Future State, and Kaizan Plan, and these components fit nicely with both the Marketing Plan Pro and the Six Sigma.

Value Stream

Value Stream can be matched up with the first step in building a Lean Six Sigma marketing process of defining and Duct Tape Marketing planning systemâ??s marketing vision and ideal customer. The Value Stream is defined solely by the customer. Your product must meet the customerâ??s needs at both a specific time and delivered with the required message. The thousands of mundane and sophisticated things that marketers do to deliver a message are generally of little interest to customers. To view value from the eyes of the customer requires needless messages to be reduced. Having identified your ideal customer is to understand all the activities required to explain the benefits of a specific product and, as a result, optimize the whole marketing process from the view of the customer.

Sound like a perfect world and impossible to do? Maybe, Maybe not. Many marketers need to critically evaluate their processes to determine their effectiveness in bringing maximum value to customers. Todayâ??s techniques are creating more efficient methods to deliver targeted messages in the particular manner that customers wish to receive it. It must be remembered that it is our job as marketers to deliver the message in a manner a customer wishes to receive. As an example, one customer wishes to receive less frequent information in written form while another may prefer daily bits of information delivered in a blog. As stated earlier, lean marketing is a system focused on and driven by customers. Optimizing the value stream from their eyes and in an efficient process takes marketing to a level not experienced before. Review your past sales to your ideal customers. Determine when and what was of value to them. That is your value stream and your vision.

Metrics

As stated in the first article, measuring the process and gathering the data associated with the problem is the second step in building a Lean Six Sigma marketing process. Duct Tape Marketing planning systemâ??s critical numbers coincides with this as well. The Lean Marketing uses metrics

The measurements you use determine your success. Having good measurements are the key. Six Sigma is typically seen as a problem solving tool and therefore difficult to relate to marketing.  This is where the theory of Lean Marketing will benefit you the most. Measuring simply by results is just not enough in todayâ??s world. Using Lean Metrics measured by drivers are at the heart of making your marketing plan effective.

Remember, the purpose of Lean Marketing is to reduce waste and provide to the customerâ??s needs. Marketing should be effective, efficient, and innovating, while focusing on understanding the customerâ??s needs. If we keep these thoughts in mind, we will only produce materials of value to a customer and only give the material to the customer when he needs it versus a constant barrage of information.

What about using measurements determined by shorter sales cycles and based on starting when the customer need has developed? What about measuring the amount of downloads on a whitepaper and the resulting request for information? What about workshops centered around improving metrics of your customer versus your sales volume?

Below are a few guidelines for good metrics:

· You must be able to establish a number to it.

· Are structured so the number is easily obtainable and updated.

· Do not measure everything and have key measures that are monitored closely and often

· Used to make you aware of a problem, nothing more.

Map Current State

Exploring the data to identify a cause and effect relationship between variables is the third step in building a Lean Six Sigma marketing process, and this coincides with Duct Tape Marketing planning systemâ??s Remarkable Story and Product or Service Innovation. Applying Lean Marketingâ??s Map Current State is saying you cannot determine how to get somewhere without knowing where you are.

Knowing your current state is one of the most powerful tools but is the least understood. Establishing a baseline or as it is so well put in Michael Kennedyâ??s book, Product Development for the Lean Enterprise: “The root issues must be understood from two perspectives: what is causing them and what stands between how things should be and what they are. Failure to understand will result in widespread wishful thinking and superficial solutions.”

There is a true art to mapping and takes quite a bit of work to become proficient. However, utilizing such marketing planning systems as Marketing Plan Pro will allow you to build that current state of your organization and your product or service. It is important to precisely know where you are and be able to define that to your customer.

Map Future State

The fourth step for Lean Six Sigma marketing is to develop a new process so the problem is eliminated and the new results meet the new requirements, and this coincides with Duct Tape Marketing planning systemâ??s Lead Generation. When you then add the Lean Marketing component, Map Future State, we start seeing it all come together.

This is the step everyone typically wants to jump to immediately. It is much like project management and thinking that it is just about scheduling. As a result, it is the most abused and where most of the process waste occurs. We make plans and instead of having a sound basis, we use instincts and tools that are not directed and often based on what I call “The Deal of the Week.”

An example is the practice of placing advertising to reach a mass audience. The thought process is that not only do I reach my core constituency but also others. Forget it! That simply is not going to happen. Do the math! Take your core constituency and divide that by the ad dollars spent. Now, are those ad dollars well spent? Can you do it more effectively through another media?

Using your current state map, ask yourself where would you like to be and realistically what time frame can you accomplish this?  Map the needed tactics to fulfill the metrics you developed. Take one of the metrics you have mapped in your current state and create a future state map on what is needed to be accomplished through both the Lead Generation process and the Lead Conversion stage. Take it all the way to the finished product, if possible, and then go back and remove any waste in the process. I challenge you to just try this on one metric and see how it would look ideally. Now set your timeline on what is achievable. Use this exercise and you can start understanding value stream mapping much better. Are your processes getting leaner?

Kaizan Plan

The fifth step in building a Lean Six Sigma marketing process in implementing the new process under a control plan, and Duct Tape Marketing planning systemâ??s service experience coincides with this step. We will now add the Lean component of creating a Kaizan Plan, but first we need to know what is Kaizan.

Kaizan is the Japanese word for continuous improvement. It is all about idea submission, not acceptance. Kaizan has three steps. First, create a standard. Second, follow it. Third, find a better way.  Now that weâ??ve mapped our current and future states, we must start implementing.  Weâ??ve created the plans, therefore creating a standard.  Standards will make life easier because they will create real and lasting value. But for any standard to work, it must be clearly identified and people must be trained in this method. Once the standard is in place, we will then continuously look for better ways to do the work because to be truly of lean fashion, we must realize the work is never done, it is continuously improving.

Without understanding this step in the process, people become confused with what planning and standards are meant to be. Standards are not control mechanisms. Having a process does not stunt creativity. A true standard is actually the direct opposite as it allows time to focus on the creative aspect as it is part of the plan. Standards and plans are dynamic. They let you know where the problem is quicker, where to begin a search for solutions, and prevent you from making the same mistake twice. Continuous improvement cannot happen without a standard. Continuous improvement in any part of the organization is the only true advantage that you have as a company.

So you tell me, is your marketing giving you a sustainable advantage over your competition?

Lean Six Sigma: SKU / Item Reduction – Rationalization

Project Outline

To reduce SKUs, this company used multiple sales variables (sales $, unit sales and margin $) to determine which items to discontinue.  This project was called a â??triageâ? project by the CEO of the company because our job was to quickly determine which SKUs to cut and which to keep.  The project was meant to provide quick answers on how to return to the historic SKU count.

Conducted Sales Pareto Analysis to confirm that low performing SKUs exist (We nicknamed the project team â??The Biggest SKLUsersâ? Identified what variables define a high performing SKU Calculated an â??Overall Performance Factorâ? for all items using Multi-Variable Pareto analysis based on Sales $, Unit Sales & Gross Margin $ Sorted the SKUs based on this Overall Performance Factor from best to worst Identified the bottom 25% as poor performing (These items were The Biggest SKLUsers)

While our Value Stream Mapping Study showed that SKU count had grown and sales remained flat, we wanted to know the full extent of the problem.  We conducted a quick Sales Pareto analysis.  The drop-off from the best 25% to the worst 25% was dramatic.

The top 25% of SKUs account for 70.6% of sales The bottoms 25% (or 700 items) account for only 1.5% of sales

We had SKLUsers (our nickname for low performing SKUs).  Then we used Multi-Variable Pareto analysis to identify which items were the SKLUsers based on a mix of measures.  Multi-Variable Pareto was used, versus just a straight sales analysis, because of the importance of different sales variables.

Mutli Variable Pareto Analysis

Sales $ is the most commonly used performance measure.  Others argued that Gross Margin $ should be used as this represents cash flow.  Still others thought that if an item is a low per unit price, but had high movement this should be considered because volume is a big driver for this business.

As we looked at the data, we saw that different SKUs were strong or weak in various measures.  For instance, this company loses money on some items to drive sales (loss-leaders).  These items had negative margin $â??s, but drove significant sales and units (and traffic into the store).

What defines a great or poorly performing SKU is multi-dimensional, which drove the use of Multi-Variable Pareto analysis.

Our Multi-Variable Pareto Analysis created an Overall Performance Factor.  We calculated this factor for all SKUs and sorted from highest performing to lowest.  Below are the top 10 and bottom ten SKUs.

Top Ten Items by Overall Performance Factor

SKU # 1, OPF = 7.46, Sales $3,013,442, Units 1,117,009, Margin $313,514

SKU # 2, OPF = 5.61, Sales $1,015,888, Units 953,248, Margin $453,229

SKU # 3, OPF = 5.29, Sales $1,398,854, Units 1,252,197, Margin $288,231

SKU # 4, OPF = 5.02, Sales $2,882,798, Units 8,642,193, Margin -$113,737

SKU # 5, OPF = 4.43, Sales $1,569,511, Units 1,586,938, Margin $81,269

SKU # 6, OPF = 4.36, Sales $1,566,789, Units 585,275, Margin $215,773

SKU # 7, OPF = 4.21, Sales $1,172,974, Units 520.190, Margin $293,701

SKU # 8, OPF = 3.76, Sales $1,165,273, Units 1,790,616, Margin $29,906

SKU #9, OPF = 3.45, Sales $820,379, Units 509,906, Margin $ 253,890

SKU#10, OPF = 3.43, Sales $689,507, Units 817,707, Margin $226,552

*Note: SKU# 4 was a top selling item, but was sold at a loss.  This item was a strategic loss-leader for this retail company.

Bottom Ten Items by Overall Performance Factor

SKU # 2791, OPF = 0, Sales $1.99, Units 1, Margin $0

SKU # 2792, OPF = 0, Sales $1.99, Units 1, Margin $0

SKU # 2793, OPF = 0, Sales $1.89, Units 1, Margin $0

SKU # 2794, OPF = 0, Sales $1.59, Units 1, Margin $0

SKU # 2795, OPF = 0, Sales $1.49, Units 1, Margin $0

SKU # 2796, OPF = 0, Sales $1.49, Units 1, Margin $0

SKU # 2797, OPF = 0, Sales $1.29, Units 1, Margin $0

SKU # 2798, OPF = 0, Sales $0.99, Units 1, Margin $0

SKU # 2799, OPF = 0, Sales $0.69, Units 1, Margin $0

SKU # 2800, OPF = 0, Sales $3.01, Units 3, Margin -$0.94

What was most surprising was not the performance of the top 10 items, but the extremely poor performance of the bottom 10.  These SKLUsers sold about 1 unit each over the last 12 months.  In stores and the warehouse they were just gathering dust, and eventually would have to be thrown away or deeply discounted.

Results

Labor costs have gone down by $1.3 million due to eliminating the handling of these low volume, slow moving, items.  Inventory will be down $5 million after these slow moving items are dispositioned out of the distribution centers, and not replaced.

Lean Six Sigma in Retail and Distribution: Value Stream Improvements

Project Outline

Used Value Stream Mapping, a Lean Six Sigma tool, as the foundation for evaluating costs from “Field to Table” All direct and indirect processing costs were analyzed A cross functional team of employees was formed to conduct this analysis including Accounting, Retail Operations, Distribution, Transportation, Marketing, Procurement and Merchandising All departments that had a role in purchasing, advertising, distributing, retailing and accounting were mapped Labor functions in each department were time studied Outside purchased service costs were researched All job functions in this process were unitized to a cost per case Cost categories were sorted from highest to lowest Observations and financial analysis derived from the time studies led to numerous cost reduction opportunities in the Value Stream Results were presented to senior management, who in turn initiated a Lean Six Sigma program to form teams and implement the cost reductions in these areas Projects were prioritized from highest to lowest cost savings

Project Details

The cross functional team began by creating a Value Stream Map. Using the map, they created a time study matrix.  These team members were “subject matter experts” and knew where to go, whom to speak with and how to get the time study and financial data we needed to allocate all of the overhead expenses to a per case cost.

As an example, we time studied the time it takes to unload an inbound vendor truck at the distribution center.  Based on the time it required, the hourly rate of the unloader and the number of cases unloaded, we could determine the “unitized” cost per case from unloading a truck.

Cost per Case = (Labor Time x Hourly labor rate) / # of Cases Processed

Even Accounting functions were unitized to a per case cost.  The time required to process a vendor invoice was multiplied by an accounting clerk’s hourly rate and divided by the average case quantity on an order.

For services such as shipping, freight costs to the stores and financial data were gathered and allocated by the number of cases on the truck.

In addition to the detailed analysis, the team made observations while time studying different functions or when gathering financial data.  Some of the highest priority cost reduction opportunities came from these observations.

Results

Many companies search for cost reduction opportunities by soliciting employee feedback in an ad-hoc manner.  Instead, this company used time study and financial analysis of their value stream, to calculate how much overhead functions were costing the company at the unit level.  The highest cost areas, plus observations made during the time study analysis, identified many cost reducing opportunities.

These projects were prioritized by ease of implementation (easier were higher priority) and benefit (higher savings were higher priority).  Management then began using Lean Six Sigma as a vehicle to address each opportunity and reap the savings. The easy to implement high savings projects were launched first.

Cost Reduction Opportunities Discovered

Below is a sample of the cost reduction opportunities discovered:

Checkout Productivity – productivity of the checkout clerks is below target SKU Proliferation – Items for sale (SKU – or Stock Keeping Unit) had grown far above the target Store are not optimizing ordering quantities to eliminate stock-outs and improve stocking productivity What is the optimum store-open hours related to expense to keep the store open versus sales Newspaper advertising effectiveness Optimizing transportation costs between distribution centers, to stores and backhauling product from vendors Newspaper Ads are reviewed multiple times by many executives, causing costs to increase and slowing down responsiveness Vendor invoice discrepancies – resolution costs Distribution Centers do not select items and place on pallets to enable quick stocking at the stores Distribution Centers have numerous opportunities to improve order-selector productivity

These are the top ten cost reduction opportunities.  In total we identified 30 possible Lean Six Sigma projects.  In addition, the initial projects identified other cost reduction opportunities.

Integrating Six Sigma and the Lean Manufacturing Process

The lean manufacturing process and six sigma should be used together in order to have the most effect in the bottom line of a business. By combining resources and integrating programs, more can be accomplished with less expenditure of time and money.

Are they competitors?

Six sigma consultants sometimes tend to have an elitist strain, with black belt experts poring over numbers and engaging in long term projects that can be quite far removed from the shop floor. Many lean manufacturing programs, such as those centered on Kaizen events, place an emphasis on teamwork. A recent book, “The Perfect Engine,” by Anand Sharma and Patricia E. Moody, highlights the benefits of joining forces in a sort of Lean-Six Sigma approach.

When most companies begin their lean manufacturing process, they begin with programs such as 5S, and Kaizen blitzes in order to reduce waste. Once these wastes were eliminated, a need is revealed to address the underlying problem. The need to some kind of measurable, statistical method soon becomes apparent and this is where the marriage of lean and six sigma can make such a difference.

How does it help to join together?

By combining methods, results are improved as baseline levels of performance are established. Now statistical tools can be used to ensure the greatest impact.

Now that the lean manufacturing process has revealed the shortcomings, Six sigma offers a way to solve the problems in a sequential, procedural manner. By using the DMAIC cycle (design, measure, analyze, improve, and control), realistic solutions to chronic problems can be applied.

In this way, the root cause of the problem is much less likely to be overlooked, and long term, ongoing solutions can be logically applied and progress measured.

One needs the other

If you just reduce waste you may not ever get to the underlying cause, and if you just do Six sigma, you may never maximize the full potential of your organization. Six sigma really needs lean to enable it to perform optimally.

One of the characteristics of six sigma is it’s ability to link programs together so they work in as a flow, rather than disconnected, stand alone tools.

Top management needs to be involved

Six sigma black belts must not be allowed to engage in months long programs that will not have any impact on the bottom line of your company. It can and does happen that vast amounts of time and money are spent on well-meaning programs that just don’t touch the bottom line.

On the other hand, chronic, deep seated problems cannot be solved by intuitive, short-term 5S and Kaizen programs.

By having top management working to put these two complimentary programs on the same team, you operations will run more efficiently and your profits will increase.