15Jul 2015

Continuous Improvement Programme
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In previous posts we have talked about creating the ‘burning platform‘ and the desire for change but what do you do when you have that desire. What is the next step?

This blog considers that next step; continuous improvement programme

Money

The purpose of any organisation is to make money; this is a powerful statement it means you must understand what your customer requires, after all, they are the ones paying for your business. It is no longer acceptable to think that Profit = Cost + Margin… customers do not want to pay for your mistakes.

Let’s take an example... you are in a busy restaurant and order a steak, the waiter rushes over with your meal only for you to notice it is burnt, you complain and the waiter rushes off to get another. At the end of the meal, you notice on the bill a charge for 2 steaks when you question this the waiter explains the first steak was part of your order so you must pay for the scrap too. Would you accept this? No, and nor do customers of our organisation. Therefore we must learn to see the waste in the system, and by eliminating it we free up some of the money tied in our resources.

The traditional equation then becomes Profit = Price – Cost, in current markets you cannot always increase the price but you can always reduce the cost – the art is seeing how.

 

Discipline

Next comes discipline. You know the objective of the organisation now you need to measure the gap; where the organisation is now and where it needs to be to remain profitable and retain employment this becomes the goal. When you have a goal you then need a method to close the gap. Continuous improvement does this. The primary effort of any continuous improvement method is to uncover and fix process problems, remove waste from processes and overall reduce the cost of production. This is not about the sole destruction of operation teams everyone in the organisation plays a part, with the right method all employees can form teams to work on opportunities within the organisation. The method we use is Practical process improvement (PPI).

 

Practical Process Improvement (PPI)

Practical process improvement uses 8 logical and simple steps, with practical tools and methods that can be taught to anyone, this is a continuous improvement method that can be adopted by everyone in the organisation. This does not, however, remove responsibility for the delivery for the senior management team, the senior team are responsible for seeing the opportunity and framing it as an opportunity for teams to work on for example;

  1. Currently staff turnover is too high with the loss of 5 employees a month leading to higher costs in recruitment and training, low team engagement and poor standard of work.
  2. Currently, 6 out of 10 invoices are not paid on time leading to holding on credit with suppliers, additional charges and poor company image/loss of confidence.
  3. Currently, the time to set up a new customer account takes an average of 15 days, this is too long and does not meet customer expectation.

 

As part of the 8-steps of PPI, the team will establish a metric that can be used to track the success of the project this metric will be fed back to the senior team to show the impact that is being made on the organisations’ goal.

 

Do you have a method for continuous improvement, and does it link company objectives with the processes that are causing the waste and eroding the profit in your organisation?

 

 

 

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