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There’s a popular phenomenon being shared online at the moment: “Instagram vs. Reality.” It’s two photos, side by side. One is doctored and photoshopped and filtered to look perfect. The other is what it looks like in reality. More often than not, there’s a big difference. Perfection is a far cry from reality, and not just on Instagram.
It got us thinking about operational excellence. Some operational excellence consulting firms might tell you their goal is to deliver optimal perfection in which your organization is running on all cylinders 24/7. But in our experience, reality is a lot more complicated than that. We find that operational excellence is a process. And sometimes it’s a moving target. It can change and morph, affected by myriad factors that may be out of your control, like the economy, supply chain issues, hiring problems and snafus, your best leader on the line quitting with a moment’s notice. The list goes on.
As an operational excellence consulting firm, we contend that operational excellence is a process of continuous improvement, not something static and perfect that stays that way in perpetuity. Does it exist? Absolutely. But it doesn’t stay the same.
What is operational excellence consulting?
The textbooks will tell you operational excellence is a process for improving a company’s effectiveness and efficiency — two things we happen to specialize in. The goals of operational excellence consulting read like a playbook of our typical projects: Improving productivity and throughput, reducing waste, focusing on quality and reducing defects, optimizing shifts, updating processes.
Often an end goal of Lean Six Sigma (LSS), operational excellence is a moving target. Striving for operational excellence means continuously improving, rolling with unforeseen circumstances, adapting to ever-changing tides. Here are some effective strategies we’ve honed in the pursuit of operational excellence that you can apply in your operations today.
Strive for process optimization
The cornerstone of LSS, process optimization means finding opportunities to ramp up efficiency, eliminating bottlenecks and waste, enhancing productivity, reducing defects and glitches in both the product and the process, and the whole nine yards of LSS. To read a deep dive into LSS and what it can do for your organization, download our eBook, “Lean Six Sigma: Do You Really Know These Methodologies?”
Get the right people in the right jobs…
Is everyone from the front lines to the corner office in the right jobs? Assess skills, provide training if necessary and listen to feedback so your team is ready to tackle their roles with a great work ethic and enthusiasm.
…and then empower them to do the job right
Many times, the people who work on the shop floor know a lot more about the job than the people in the C-suite. Give them the power to do their jobs and to act quickly when unforeseen situations arise.
If you’re not already establishing and monitoring key performance indicators and metrics, get on that. It helps your people know what’s expected of them, and helps you evaluate the quality of the work they’re doing. They also show opportunities for improvement.
Hand in hand with KPIs, standardized operating practices and procedures can ensure you’re getting the consistent results you need.
Manage by the numbers
It’s an oft-used phrase here at USC. Decisions need to be driven by data and hard numbers, not what’s “always worked in the past.” The data can tell you where to improve, what’s working and what needs to change.
Keep the customer in focus
Sometimes, companies can get so caught up in process improvements they lose sight of the end customer. By keeping their needs, expectations and wants in the forefront, you can be assured you’re hitting the mark.
Encourage a culture of continuous improvement
Culture change is easier said than done, but it’s a necessary component to operational excellence. Encourage innovation and ideas for improvement, and reward employees for finding ways to do their jobs better.
Above all, remember it’s a process, not a single achievement. Yes, you may have achieved operational excellence… today. What about tomorrow?
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A little goes a long way. It’s an old adage, but one we’ve seen play out, day after day, during our 55-plus years in the consulting business. It’s the notion that what may seem like small changes actually produce big results. At USC Consulting Group, one of our specialties is the “detective work” we do to find hidden opportunities for greater efficiency. Acting on those opportunities can create great change.
Here are some ways a “little” can go a long way for our clients.
Most industries that have 24/7 operations — manufacturing, mining & metals, and others — need to do planned outages, or work stoppages, for regular maintenance. It’s a practice we enthusiastically recommend. Planned outages prevent unplanned crises when a machine breaks down unexpectedly. Managing planned outages correctly is vital, because any time the operation is shut down for maintenance, that time is money.
Intricate detail and planning go into planned outages. That was the case with one of our recent clients in the mining industry. They approached USC to assist in planning and executing an upcoming plant-wide outage. Because of cost and schedule overruns year in and year out, the plant was given an ultimatum from its parent company — make the upcoming outage successful or close the plant down.
Through careful planning and execution, we shaved one day off of their planned outage. You might be thinking, just one day? That “small” improvement saved the company upwards of $1 million. The outage was successful, and the plant stayed open.
The commercial food industry has a tough nut to crack (pardon the pun) when it comes to processing and bagging their product to send to grocery stores or other end-clients that sell to consumers. Getting the most of their raw materials is all about improving yield, but it’s not easy to achieve the right balance. Let’s take the beef industry for an example. In processing beef into burger, there is a loss of moisture. That’s why when you start off with a pound of beef you don’t get a pound of burger. But, as a consumer, when you’re buying what is labeled a pound of burger, you can expect a pound — by law. To achieve that, the industry compensates for the loss of moisture and adds more ground beef into each unit. Better to pack a little too much than too little, right? It’s what the industry calls “the giveaway.” It’s essentially overpacking.
Just a little more? How big a problem is this, really? If a company is processing, say, 30,000 pounds of ground beef into burger every day, adding a smidge more into each package can be a very big problem indeed. One recent client of USC came to us when they realized they were giving away over 1.5 million pounds of beef yearly.
With process improvements, equipment fixes and increased speed and throughput, we were able to help our client strike the right balance, decreasing that overpack from 2% to 1%. Just a 1% savings? That’s a pretty small number on the face of it… until you see it resulted in a savings of $84,000 per month. That’s huge.
Not every “small” change can produce hard numbers like the examples above, but we see the benefits time and time again when we’re helping clients with change management.
We’ve learned that we can effect all the change we can muster — make the line more efficient, increase throughput, get the operation lean and mean, whatever else is needed — but none of it will stick without managing the change correctly. This part of the job isn’t about numbers, planning or complex methods. It’s about people.
Whatever the change you’re making, it’s going to involve people behaving and working in a different way. So at its core, effective change management requires helping people transform their behavior. As we all know, people don’t necessarily love that, especially if they’ve been getting the job done one way for the duration. Research shows 62% of people don’t like leaving their comfort zone.
We find that small changes really go a long way here. It’s about the CEO taking some time to walk the shop floor and talk with frontline workers about the changes that are coming down the pike. It’s about us involving those workers in the process of change from the get-go, asking for their ideas for improvements, their thoughts about what the problems are that need solving. That way, the change that we’re implementing won’t be happening to them. They will be a part of it, champion it, and make that change stick every day on the line.
One other bonus to this tactic? It creates employee engagement and loyalty. Just 36% of U.S. employees are engaged at work, and 74% are actively looking for new jobs, according to a Gallup survey. 94% of employees say they’d stay at a company longer if it invested in their career development, LinkedIn reports. With manufacturing looking at 1 million unfulfilled jobs and the cost of replacing an employee as much as twice their annual salary, those small changes can mean big numbers on your balance sheets.
This is one part of our process that doesn’t take advanced degrees, engineers or Lean Six Sigma black belts to achieve. It just takes a little time and some people skills.
Get in touch today if you’d like to talk about how USC can help your company become more efficient and effective. One small conversation can go a long way to improving your operations.
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The healthcare industry is in the midst of change and challenges, driven by a triple-whammy of technological innovation, the pandemic and the hiring and employment crisis. This triad is affecting how healthcare is delivered and who is delivering it.
Not only are wearable healthcare devices and telehealth changing the way the industry serves patients, but the explosion of this technology is putting increased demands on the manufacturers that make these devices. At the same time, the staffing shortage and pay equity debates that are hitting every other industry are bedeviling healthcare, too.
In the midst of it all, the industry is striving for optimal efficiency behind the scenes in the manufacturing sector and in the patient-facing realm as well. Not an easy task.
Healthcare trends for today and tomorrow
Let’s explore current healthcare trends and look at how USCCG can help healthcare manufacturers and providers level up with process improvements to roll with these changing tides.
Wearable devices + telehealth
These may seem like two separate areas of the industry, but it’s really a chicken-and-egg situation with wearable devices and telehealth. While they’d both exist without the other, the union of these two facets of the industry at the right time has been the catalyst for explosive change. And demand.
Personal healthcare devices are not new to the healthcare market. Internal devices like pacemakers have been keeping hearts beating for decades. So, too, diabetes checkers, wearable heart monitors and blood pressure machines allow patients to track their own numbers at home without going to a doctor’s office or clinic. But it’s one element of that — the ability to do it remotely, at home — that caused the market to rocket skyward. The catalyst? The pandemic.
When COVID hit and took hold, doctors needed ways to monitor the health of their patients without an in-person visit. Hospitals and clinics were overwhelmed with COVID cases and suddenly telehealth was the only option for people needing care that wasn’t an emergency.
The U.S. Department of Health and Human Services reported a 63-fold increase in telehealth visits during 2020, with patients utilizing wearable health devices like heart, blood pressure and diabetes monitors, among other devices. The wearable health device market is estimated to jump to $95.4 billion within the next five years.
Although this explosion was triggered by the pandemic, it is not going away as the virus recedes. Doctors found that 24/7 health data monitoring increased the quality of patient care. More information, better care, healthier people. All without the patient leaving home. It’s also a boon for people who live in rural areas without easy access to hospitals or clinics, making this trend nothing less than a blessing to the quality of life of people everywhere. It’s here to stay.
All of it is made possible by the manufacturers of these devices, many of whom found their operations overwhelmed by the increased demand.
AI and machine learning
The healthcare tech trend isn’t confined to telehealth and wearable devices. It has made its way into the clinic as well. Artificial intelligence, namely machine learning, in healthcare is growing rapidly. The market for this tech is predicted to be more than $20 million in 2023. Computer vision, pattern recognition algorithms, predictions of clinical trials and drug interactions, advanced imagery like MRI scans — all growing rapidly in this market. A bot making your diagnosis isn’t that far away. That medical device we’ve all seen on Star Trek, the tricorder? It’s basically here now. All of it can lead the industry to deliver more personalized treatments and diagnoses.
Employment and staffing
In addition to the healthcare tech explosion, the industry is dealing with a staffing crisis. A recent survey by the Medical Group Management Association found 58% of medical practices nationwide find staffing to be their biggest challenge. According to the survey, staffing outpaced the second most important concern, expenses, by an alarming 35 percentage points.
What’s behind the staffing shortages? A quick list:
- An aging population of healthcare workers retiring at the same time as the population at large — patients — are also aging and requiring more care.
- Nurse burnout brought on by the harsh schedules and hours during the pandemic.
- Not as many people entering the healthcare profession.
- Pay and benefits inequity.
All of these challenges require process improvements to get healthcare facilities and manufacturing plants running at peak efficiency. That’s where we come in.
Process optimization in healthcare manufacturing, USCCG-style
At USCCG, we specialize in helping manufacturers of all stripes transform their operations and processes into lean (or Lean) and mean operations, functioning at optimal efficiency levels.
Our expertise is working with organizations to improve business performance by increasing throughput, reducing costs, eliminating waste, increasing productivity, improving quality and leveraging existing assets.
To get there, we will typically focus on Lean Six Sigma methodologies, including:
- Reduced Waste: Aggressively minimizing or eliminating anything that does not add value
- Just Right: Right venue, right conditions, right resources
- Self-Sustainment: Culture of improvement without continuous top-level instigation
- Protected: Anticipation of unpredictable and fluctuating demand
- Provide your organization with the ability to better manage the cost component of delivering quality patient care
One key element in our approach that you may not find elsewhere: We get onto the floor and partner with your employees, the people who are doing the job day to day. And we encourage your upper management and C-suite execs to do the same.
But it’s not just about the manufacturing process. Our healthcare expertise is also about applying process improvements to hospital and clinic operations, too.
Healthcare manufacturing is not the only area that needs an efficiency boost. Hospitals and clinics are focusing on operational improvements as well.
When we work with healthcare clients, our goal is to improve and enhance healthcare facilities’ Management Operating System (MOS) — basically how they plan, schedule, assign work, follow up, report and drive continuous improvement processes.
Some of the areas we focus on:
- Customer/patient requirements
- Resources, instrumentation and technology
- Staffing levels and clinical requirements
- Planning and assignment of work
- Execution and follow-up
- Clinical and administrative requirements
- Root cause analysis and review
- Identifying the planning and tasks
- Developing a capacity model
- Reviewing of work
We help healthcare facilities standardize their processes, strive for continuous improvement and recognize operational lapses that can impact productivity, quality of care, capacity and customer service.
At USCCG, we are committed to partnering with the healthcare industry to create process improvements that ultimately result in streamlined, efficient operations. In the end, it’s about better patient outcomes. We’re proud to help bring that about.
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Leo Tolstoy once said: “Everyone thinks of changing the world, but no one thinks of changing himself.”
How true that is. Sure, he was talking about the Russian Revolution, but the words of the author of War and Peace, considered by some to be the greatest novel ever written, are just as applicable in today’s manufacturing workplaces as they were back then. It’s especially true when manufacturers are going through the process of implementing Lean Six Sigma.
When you’re talking about a culture change as big as Lean Six Sigma (LSS), it can feel a bit like your company is going through a revolution. And as Tolstoy so astutely pointed out, changing the “world” — your workplace culture, processes and procedures — is all well and good, but changing oneself and one’s role in it? Is that really necessary? As hard as it is for many managers and top leadership to hear, the answer to that question is “yes.”
It’s hard to hear and even harder to accept because, inherent in the concept of change is the notion that you were doing something wrong. People who have been on the job awhile, from the workers on the front lines to the people in the corner office, are resistant and, dare we say, defensive about that notion. But it’s not about companies doing something wrong. It’s about finding opportunities for greater efficiency, throughput and, frankly, profit.
At USC Consulting Group, we help companies implement LSS. Our Lean Six Sigma Master Black Belt, Dr. Frank Esposto, leads many of these implementations. But as Frank tells companies, LSS isn’t just about a new set of tools and operating procedures. It’s about culture change, too. And managers and top brass embracing that change is crucial to LSS success.
Lean Six Sigma 101
Here’s a quick rundown of Lean Six Sigma.
The whole concept of Lean started with either Henry Ford or Toyota, depending on who you ask. The idea was identifying and eliminating waste in manufacturing operations. Toyota called them the “seven deadly wastes” and that term stuck. At USC, we added an eighth. They include:
- Overproduction. It leaves you with unused product.
- Waiting. Waiting on the shop floor between steps on the line, or waiting on supply or even equipment.
- Transporting. Excessive movement of inventory, causing the possibility of damage, or even excessive movement within the manufacturing process itself.
- Processing. Do you have extra, unnecessary steps in the manufacturing process?
- Inventory. Too much stock on hand.
- Excess motion. Extra walking, lifting, reaching.
- Defects. Defects in product happen to the best of us.
- People. This is the eighth waste. It is about taking a close look at the untapped potential of your people.
The goal is to create greater efficiency on the line.
Six Sigma is a set of techniques aimed at reducing (in a perfect world, eliminating) the probability that an error or defect will occur in the process.
Together, as Lean Six Sigma, the two methodologies pack a punch of efficiency and perfection. LSS enables companies to produce better product faster, increasing throughput and quality.
Learn more about LSS in our eBook – Lean Six Sigma: Do You Really Know These Methodologies?
Why culture change is so important to LSS success
There’s a perception out there that Lean Six Sigma is simply a series of process improvements designed to eliminate waste and increase quality. It is that, for sure. But it also requires the aforementioned culture change. A change in attitudes and behaviors. Everyone, from frontline employees to the corner office, needs to be on board or this change won’t stick. You’ll slide back into your old ways.
It’s vital for the workers performing new processes to embrace those changes. But it’s just as vital for managers and supervisors and the top brass to change, too. Remember, you can’t change the world without changing yourself first.
What managers can do to embrace change
In order for the LSS changes to be sustainable, managers and executives need to demonstrate to employees that they’re on board. And that doesn’t mean sending out a memo of encouragement. It means changing daily work habits, just like employees are expected to do. A few ways to do that:
Walk the floor. This is arguably the most important piece of this puzzle for management. Get out of the office and onto the shop floor. Get into the trenches with your frontline employees. Show them you’re all in.
Ask senior employees for advice and input. You know who we’re talking about. The men and women who have been on your frontlines forever. Shift supervisors. Trusted workers. The people actually doing the job day after day. When you’re in the process of implementing LSS, their input is vital. Not only to the success of the project, but to their buy-in as well.
Roll up your sleeves. If it’s crunch time and you’re shorthanded, take off that suit coat, roll up your sleeves and help out any way you can.
Over the years, we’ve seen how companies that embrace change will succeed in becoming more efficient and profitable. Those that don’t may simply slide back into their old ways.
For leadership teams leading the charge for culture change, we lean on advice from Mahatma Ghandi, “Be the change that you wish to see in the world.”
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Remember the familiar line from an old TV cop show: “There are 8 million stories in the Naked City”? As USC Consulting Group’s Vice President and Senior Operations Manager Paul Harker likes to point out, the same could be said about your inventory.
Like most dramas, the story of your inventory management can take unexpected turns. It’s very easy to get lost in the din of safety stock levels vs. Lean principles, order quantities, reorder triggers and the lead time to replenish the stock. Supply chain disruptions and shortages haven’t helped matters over the past few years. The plot unravels when these stories don’t add up to a single coherent tale.
Major characters in this inventory management drama:
Operations, which sees inventory as a buffer against fluctuating demand. But how much is too much? They don’t want an excess of stock, which would fly in the face of the popular “just in time” or Lean operating method, which, admittedly took a bit of a hit during the pandemic when people panicked about shortages and bolstered their safety stock.
Sales wants product at the ready at a moment’s notice, not “just in time,” but “all the time.” They’re not overly concerned with storage space, inventory investment or production efficiency.
Finance looks at inventory as a double-edged sword. They want to reduce inventory in order to free up cash and minimize carrying costs. But inventory is also collateral. High levels of production, whether the goods are sold or not, can absorb overhead and drive better month-end results, which are Finance’s Holy Grail.
Executives are focused on achieving quarterly corporate objectives and view inventory in terms of dollars.
At a fundamental level, all of these decision-makers speak different languages, have different perspectives and conflicting messages. Of course, everyone has the same goals: efficiency and profitability. But they may be at cross purposes getting there.
The Hero: SIOP
You might be thinking: “Is that a typo? Don’t they mean S&OP?” Yes and no. No, it’s not a typo. And yes, S&OP, the business management process that involves sales forecast reports, planning for demand and supply, and other factors, is the foundation of all of this. We just think S&OP is missing something: Inventory.
When you’re focusing on inventory, it elevates the entire planning process up a notch. When your inventory is optimized, things tend to fall into place. But it is not an easy mark to hit in these days of supply chain disruption and the sometimes conflicting goals of key decision-makers. With SIOP, you can circumvent these challenges and make your inventory work for you.
“A key to SIOP is to emphasize inventory as a strategic tool to help offset variation in either demand or production issues,” explains David Shouldice, Senior Vice President and Managing Director at USC Consulting Group. “One lever of control in the SIOP process is to make inventory harder working as a strategic tool.”
As Shouldice notes, it’s about having the right conversations about the right topics at the right time.
This isn’t a one-and-done process. The SIOP planning horizon should be at least a rolling 14-month period. We recommend that our clients update their plans monthly. Some do it more often than that. The point is covering a sufficient span of time to make sure the necessary resources will be available when you need them. The plans take into account projections made by the sales and marketing departments and the resources available from manufacturing, engineering, purchasing and finance. All of that together works toward hitting the company’s goals and objectives.
Using SIOP for inventory management
Sales, Inventory and Operations Planning helps your company get departments in sync, ensures that everyone is on the same page and realistic about the process, helps you manage and roll with changes, and measures performance.
One powerful component of SIOP is that the process involves all of the key players in your inventory drama.
Here’s who we typically see take part in the SIOP process:
- Vice President, Sales and Marketing
- Vice President, Operations
- Director of Logistics
- Vice President, Engineering
- Vice President, Finance
- Vice President, Information Systems
- Vice President, Human Resources
Different languages? You bet. But getting them all working together cuts down on the noise of those different languages. One reason SIOP is such a critical management tool is that key players from many departments are working from the same plan, and able to compare actual results to plan, evaluate their performance, and prepare updated plans going forward. SIOP: The universal translator, or C-3PO, for your business.
It is a powerful tool to help you wrangle your inventory management, achieve the optimal balance between not enough and too much, and settle back into Lean (or just in time) manufacturing principles that can eliminate waste and help ramp up your efficiency.
If you’d like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”
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If you’re in manufacturing, you’ve certainly heard of two process methodologies, Lean and Six Sigma. Lean, which has been around forever and has recently migrated from the manufacturing floor into other industries (they’re even talking about Lean HR methods) and Six Sigma, a newer technique. Two sides of the same coin, Lean looks at making processes more efficient and reducing lead times, while Six Sigma focuses on cutting down on defects. Both are useful goals when aiming to optimize your processes, throughput and ultimately, your bottom line.
Lean vs Six Sigma, which is better? Which should you be investing in if you’re coming up against inefficiencies in your production, and can they be used together?
Let’s take a closer look at both methodologies to see who comes out on top in this operational improvement matchup.
The whole concept of Lean started with identifying and eliminating waste in manufacturing operations. Pioneered back in the day by Toyota… or by Henry Ford even earlier, depending on who you ask, Lean manufacturing is about cutting costs, eliminating waste in both processes and products, and generally becoming as “lean and mean” as possible to reach optimal efficiency. The heart of the process is identifying and eliminating what Toyota called the “seven deadly wastes.” (We happen to think it’s eight.)
- Overproduction. Making too much leaves you with unused product.
- Waiting. This includes waiting on the shop floor between steps on the line, or waiting on supply or even equipment.
- Transporting. This covers excessive movement of inventory, causing the possibility of damage, or even excessive movement within the manufacturing process itself.
- Processing. Do you have extra, unnecessary steps in the manufacturing process? Are you doing in two or three steps what you can do in one?
- Inventory. Too much stock on hand. During the pandemic, many companies combatted supply chain delays by stocking up on inventory. We think that’s a mistake.
- Excess motion. This means getting from Point A to Point B on the floor, extra walking, lifting, reaching. Can things be configured more efficiently?
- Defects. Defects in product happen to the best of us.
- People. This is the eighth waste, which Toyota didn’t identify. Are you using your people to their fullest potential? Or is there untapped potential for a great manager or supervisor you haven’t noticed?
Examining all of these areas of “wastes” in your operation will help you become more efficient and ultimately more profitable. In other words, lean and mean.
Six Sigma, at its most basic level, is about quality control. Minimizing flaws and defects. But it’s much deeper than that. Six Sigma is data driven, statistical and aims to improve cycle time while eliminating or reducing defects in manufacturing. It’s about using stats, data analysis and also project management techniques to improve the whole process.
The Six Sigma process is defined by an acronym: DMAIC. Define, Measure, Analyze, Improve and Control. First, you define the problem that you want to improve. Then, the team measures the process and analyzes it by using data analytics to get to the root of the problem. From there, it’s about creating improvements and fixes, and setting up controls to make sure it doesn’t happen again.
Six Sigma requires rigorous training to get the process right, so rigorous that practitioners need a certification in the process. The certifications are ranked with a belt system similar to martial arts, with white belts being familiar with the basic process, up to black belts who become masters of the process and are certified to take on complex problems and projects, and to train others in it.
Lean Six Sigma: Better together?
Should it really be Lean vs Six Sigma? Or rather Lean AND Six Sigma? Can these two powerful methods be used together? Yes indeed. In fact, they’ve joined to become one methodology in some circles: Lean Six Sigma, or LSS, which aims to cut defects and shorten lead times.
But, here’s the tricky part.
Ironically, Lean and Six Sigma can clash if not deployed correctly. Defects can be reduced by slowing processes down — reducing speed. On the other hand, you can increase the defect rate by speeding up processes.
Getting it right, striking that perfect balance is imperative. That’s why it requires training and certification in the techniques. At USCCG, Dr. Frank Esposto is our Lean Six Sigma Master Black Belt and Senior Director of Quality. He is also a certified LSS instructor.
Dr. Esposto states, “When we employ the Lean Six Sigma methodology to help our clients’ operations, we don’t simply come in and do it for them. We train clients in these techniques so they can employ them long after we leave.”
The training course Frank teaches is rigorous and hands-on. When participants complete the course, they are certified. Being certified in Lean Six Sigma is a highly sought-after skill.
To summarize, it is not Lean vs Six Sigma, but rather Lean Six Sigma – two complimentary methodologies that when balanced properly reduce operating costs, increase throughput, and achieve overall improvement to your bottom line.
Are you interested in learning more about how these powerful methodologies can work to optimize your processes? Give us a call today. In the meantime, read much more about LSS in our eBook: “Lean Six Sigma: Do You Really Know These Methodologies?”
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How well do you know Lean? The concept is nothing new. Pioneered back in the day by Toyota… or by Henry Ford even earlier, depending on who you ask, Lean manufacturing is the art of maximizing customer value while minimizing waste. It’s about cutting costs, eliminating waste in both processes and products, and generally becoming as “lean and mean” as possible to reach optimal efficiency.
Another, newer term is often bandied about when talking about Lean: Six Sigma, a methodology designed to tackle defects in manufacturing and product/service development. Two sides of the same coin, while Lean looks at making processes more efficient and reducing process lead times, Six Sigma focuses on cutting down on defects. In fact, they’ve joined to become one methodology in some circles. Lean Six Sigma, or LSS, which aims to cut defects and shorten lead times. What is it? Are they stronger together? Could they clash? Who should use it? And who shouldn’t?
For answers to these questions, read USC Consulting Group’s eBook Lean Six Sigma: Do You Really Know These Methodologies? We’ll look deeper into Lean Six Sigma through the lens of Dr. Frank Esposto, USCCG’s Lean Six Sigma Master Black Belt and Senior Director of Quality, and a certified LSS instructor. You think you know Lean Six Sigma? Download the eBook below to find out.
Dr. Esposto discusses Toyota’s classic Lean manufacturing model that identifies “seven wastes” and he recommends you expand your mind to add one more. Furthermore, he will advise you on the best strategies for LSS training, the key challenges you will face, and the factors that lead to successful LSS implementation in your operations.
Applying the Lean Six Sigma methodologies effectively in your processes is not a one-size-fits-all and may require help. Dr. Esposto elaborates on the tools, techniques, and methods to use and the benefits you will gain from it.
So, how well do you know Lean Six Sigma methodologies? A whole lot more once your read this eBook.
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Did the unprecedented supply chain disruptions caused by the pandemic kill the just-in-time (JIT) manufacturing model? We’d like to come out with a resounding “No!” to answer that question, but it definitely was a topic for discussion among many different types of manufacturers over the past 18 months. Here’s a bit of backstory on that, and why we feel Just-In-Time manufacturing will be more important than ever going forward.
Just-In-Time, or Lean manufacturing, took a hit during COVID, there’s no debate about that. As more and more critical inventory didn’t arrive when manufacturers across many types of industries needed it, it created alarming shortages and delays. Consumers started “panic buying,” driving demand into the stratosphere when manufacturers didn’t have the supply to meet it — remember trying to get toilet paper in the early days of the shutdown? It caused many manufacturers to go back to a “safety stock” method, which is calculated by looking at your average daily use of any given thing and multiplying that by your average lead time to get it. Since the lead times went through the roof with border shutdowns and other delays, manufacturers stocked up, making sure they had more than they needed to get the job done at any point in time.
But that flew in the face of Lean manufacturing principles, which, not for nothing, have been around since the 1930s. The Lean Enterprise Institute defines it this way: “Changing the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams.”
A very short history, in case you’re not familiar with how it all began: Lean manufacturing has been credited to Toyota founder Sakichi Toyoda, his son Kiichiro and their chief engineer, Taiichi Ohno. The whole point of the concept was to look at common areas of waste in manufacturing operations and eliminate them to create greater efficiency on the line. And really, in this post-pandemic age, don’t we all want to subscribe to less waste and more efficiency?
The 7 wastes (or is it really 8?)
Let’s look at the classic “seven wastes” identified by Toyota’s Lean manufacturing model, and think about adding one more.
Overproduction. This is making more product than your customers are demanding. It leaves you with unused product.
Waiting. This could be waiting on the shop floor between steps on the line, or waiting on supply or even equipment.
Transporting. Waste in the transportation stage could either mean excessive movement of inventory, causing the possibility of damage, or even excessive movement within the manufacturing process itself. Think about how close equipment is to each other, and the efficiency of movement of product down the line.
Processing. This is one area where we tend to find opportunities for greater efficiency for many of our clients. It involves extra, unnecessary steps in the manufacturing process on the line.
Inventory. Inventory problems come in the form of having too much stock on hand. The “safety stock” method contributes to it, but it can also be the culmination of overproduction.
Excess motion. Similar to transportation, the motion piece of this puzzle focuses on unnecessary or excessive movement. It’s about how the job gets done. Extra walking, lifting, reaching. Think of it as the ergonomics of the workplace. How close are tools when you need to tweak something on the machinery?
Defects. Defects in product happen to the best of us. But, there are ways to focus on cutting down defects, including detecting potential snafus before they become bigger problems.
Within the past few years, an addition to these classic “seven wastes” has been cropping up in conversations and in blogs about manufacturing.
People. This is about taking a close look at the untapped potential of your people. If your boots on the ground are just doing the job by rote, you’re not taking advantage of ideas and knowledge they may have gained for more efficient ways to get the job done. This is one of the reasons we involve frontline workers in our efforts.
Examining all of these areas of “wastes” in your operation will help you become more efficient and ultimately more profitable. In times of demand uncertainty, that’s more important than ever.
At USC Consulting Group, we’re dedicated to help our customers find more efficiencies in their process no matter what the economy is doing. If you’d like to learn more, please contact us today.
If you’d like to read more in depth about why Lean practices make sense, read our blog, “5 Reasons Why You Need to Stick with Lean Manufacturing Principles.”
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There are a host of different philosophies that business owners adopt to effectively manage their organizations. One of the most successful and widely utilized in the manufacturing sector is just-in-time inventory. Although not exclusive to manufacturers, lean manufacturing — as it’s more commonly known — is designed to improve process efficiencies by minimizing waste and maximizing output, producing just enough volume to sell quickly.
However, as the supply chain challenges of the coronavirus crisis continue to play out, with certain household products like paper towels, baking ingredients, and cleaning supplies still difficult to find, some are questioning the wisdom of this management philosophy. During the height of the pandemic amid “panic buying,” shortages dragged on for weeks at a time all across the country. Since manufacturers kept their own supply levels low and couldn’t ramp up production due to social distancing measures, stockers could barely keep up with the pace of demand. Shoppers snatched up household staples just as soon as they could find them.
Steve Cahillane, CEO for the breakfast cereal giant Kellogg’s, told The Wall Street Journal the company is considering amending its just-in-time inventory approach.
“There is appetite for more safety stock going forward,” Cahillane explained. “That is something that everybody is talking about.”
Some experts have concluded that lean manufacturing principles don’t work well within an environment with demand uncertainty. Contrary to what the critics say, this strategy remains a relevant and effective production principle during these times. Here are five unwavering reasons as to why:
1. Lean manufacturing principles are more than “just-in-time”
Lean manufacturing as a concept has been around for a while now, born in the 1930s and adopted by the automotive titan Toyota. Ninety years in the making, the thrust of lean manufacturing remains the same, but due to some nuanced understandings of lean, some organizations seem to have misconstrued what the term actually means. As noted by Industry Week, lean manufacturing isn’t just about inventory, but rather maximizing customer value while minimizing waste. Citing the definition that Lean Enterprise Institute uses, the publication noted that lean manufacturing is all about changing “the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams.”
“Lean manufacturing is about maximizing customer value while minimizing waste.”
Wally Hopp of the University of Michigan Ross School of Business goes further. He told The Wall Street Journal that lean inventory originally urged adopters to have backup plans in place to guard against circumstances preventing businesses from producing as they do normally.
“In a lot of the lean literature, that’s just stripped out,” Hopp said.
2. Lean can enhance flexibility
Another way in which lean manufacturing principles have been misconstrued is from a standpoint of flexibility. When implemented properly, through strategies like lot size reduction, level scheduling, and employee cross training, lean manufacturing is designed to help companies improve their process efficiencies. Theodore Duclos, chief operating officer for Freudenberg Sealing Technologies, told IndustryWeek that these same principles can also be applied to mission-critical equipment so these resources designed to enhance output can do more than one thing. In other words, instead of equipment being devoted to one specific task, optimizing equipment to handle multiple tasks helps to pick up the slack as a result of supply chain disruptions. It’s likely that product shortages stemmed from one dimensional equipment, thereby preventing some businesses from improvising.
3. Lean increases engagement among employees
A fundamental component of improving output in any business is engagement, which many businesses and decision makers say their company is lacking. Worldwide, it’s estimated that over two-thirds of workforces are not engaged, according to polling done by Gallup. Additionally this lack of engagement winds up costing business owners roughly 18% of their annual salary.
The very meaning of lean from a standpoint of running a business enables workers to have more say in terms of decision-making as they become stakeholders, noted IndustryWeek contributor Eli Boufis, co-founder and executive principal for Driehaus Private Equity. An engaged employee culture helps staff change their perspective by viewing problems not as stumbling blocks but as opportunities for improvement.
4. Lean improves responses to behaviors of customers
Similar to the misunderstanding of what lean means, there is also a misconception of the root cause of the ongoing shortages. There’s reason to believe it was more the multiplier effect than anything else. Perhaps the best example was what occurred with toilet paper. When news organizations reported that store shelves were increasingly bare with this staple product, many consumers responded by purchasing more rolls than they would normally, fearful that they would run out come the time they needed it. This thinking process resulted in a chain reaction in which everyone was thinking the same thing. In short, perception drove the shortage, which ultimately became a reality.
In the book “Lean Thinking” by James Womack and Daniel Jones, the co-authors write that lean as a concept and approach serves as “a way to do more with less human effort, less equipment, less time and less space — while coming closer and closer to providing customers exactly what they want.”
In short, lean practices aren’t part of the problem, but part of the solution as this approach is designed to help producers adapt and respond to changing customer demands as they occur.
5. Lean is widely adopted by industry leaders
Lean manufacturing principles are not just some idea or concept that works for some organizations and not for others. In many ways, it’s a way of life and highly prioritized. According to a joint report issued by Kronos and IndustryWeek titled “The Future of Manufacturing: 2020 and Beyond,” when business owner respondents were asked about their priorities moving forward, “lean manufacturing systems” was the second-most common response, behind only quality management systems.
Some of the most successful companies in the world have adopted lean manufacturing practices, including:
- John Deere
- Kimberley-Clark Corporation
COVID-19 and the adverse effects on the economy that resulted are real, but lean manufacturing can be a solution. USC Consulting Group can help you implement this strategy in a way that works best for your organization. Contact us today to learn more about how to get more out of your business with less.
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After a highly tumultuous beginning to the new decade, the economy is taking an unanticipated turn for the better. Economic experts forecasted joblessness as high as 15% nationwide well into 2021. Remarkably, the unemployment rate is back to single-digits as small, mid-sized and large businesses seem to have gotten their groove back. Leading the way — and defying the odds — are manufacturers. Yet with COVID-19 and product shortages still a reality, some manufacturers are wondering what they can do to improve their supply chain resiliency to prepare for present and future disruption.
“After the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work,” said Timothy Fiore, chair of the Institute for Supply Management (ISM) in a press release. “Survey Committee members reported that their companies and suppliers operated in reconfigured factories, with limited labor application due to safety restrictions.”
In a separate poll conducted by the ISM, purchasing managers at some of the largest manufacturing companies expressed ongoing unease about future shocks to their supply chain while they scramble to remedy current shortages. If your company is in a similarly tenuous situation, below are a few recommendations to help you shore up your supply chain risks.
1. Enhance communication with both customers and suppliers
Institute for Supply Chain Management CEO Thomas Derry said organizations that have been able to mount a comeback did so by touching base with partners more frequently to avoid any confusion or misunderstandings. This is true for your customers as well as your suppliers. Customers who have low switching costs will find alternatives to your product if competitors are able to more promptly satisfy demand. Customer service level expectations have been lowered for many hard to get items during the pandemic, but if your product isn’t prompt, communication should be. Courteous responsiveness goes a long way to ease customer impatience. Additionally, sales forecasts will require more frequent attention if customer loyalty, and backlogs, falter.
A strong Sales, Inventory, and Operations Planning (SIOP) process and culture will provide the information you will need to communicate quickly changing demand and depleting inventory levels to your supply base. Don’t just rely on what your MRP screen is telling you about supply timing. This is an opportunity for your purchasing team to make frequent, personal communication with key suppliers, to identify supply risks as early as possible and call in favors if needed. If product is delayed in log-jammed logistics channels, work with freight forwarders, customs brokers, and expedited freight carriers who specialize in simplifying and accelerating delivery.
2. Focus on strategic sourcing
Strategic sourcing focuses on the development of long-term supply relationships for operationally critical products and services. Start by assessing the reliability of your current suppliers. Understand your relative importance to them as a customer, as well as the risks they are experiencing with their suppliers. Assess alternative vendors and your readiness to pivot quickly to a new supplier. If there are multiple vendors for a key material, inquire regarding their capability to handle increased supply requirements. If a material is sole sourced, or otherwise considered very high risk for supply disruption, consider negotiating purchase options with credible alternative suppliers. Options might cost a fraction of lost down-time and provide your company a place in line ahead of competitors who might also be scrambling for material if a key supplier goes down.
If a component involves manufacturer owned tooling, identify alternative suppliers who can operate with your tooling and assess the lead times needed to restore supply. In the long-term, study pros and cons of investing in additional tooling and dividing production between suppliers. While sole sourcing minimizes investment and supplier related costs, it increases vulnerability to disruption.
Derry noted that firms are essentially learning from their mistakes by being more proactive in this regard and if not adding more suppliers, seeking alternative ones who haven’t come through for them in the past.
3. Stop, look, and listen
This is a common phrase heard in kindergarten and grade school classes as teachers seek their students’ attention, but it applies to manufacturing settings as well. No supply chain is perfect. Take time to walk the floor to see what could use some fine-tuning. Simply by using your senses — looking and listening — can quite literally be eye-opening.
Monitoring the shop floor can help you determine where and when maintenance is necessary. For example, perhaps you have equipment that’s making an odd noise, which is typically the first sign of a performance issue. Maintaining a services schedule can help you avoid sudden breakdowns where you have to stop everything to fix whatever happens to be the problem.
4. Increase your inventory
“Firms are also mitigating risk by carrying more inventory as a buffer against disruption,” Derry explained based on results of the poll done by ISM released in July.
Lean manufacturing and Just-in-Time (JIT) inventory principles have enabled manufacturers to significantly reduce operating expenses and increase profitability. However, JIT inventory inherently comes with increased risk of supply outages. During times of uncertainty, perform cost-benefits analysis by assessing the holding cost of increased inventory levels vs the likelihood and cost of production disruptions. How much you increase your inventory will depend on the response time to acquire new supply as well as your ability to delay customer orders without losing sales. How long you need to hold higher levels of inventory will depend on the expected duration of the heightened supply risk. During times of increased uncertainty, inventory is a first-stop insurance policy for production continuity that may yield a competitive advantage allowing your company to continue production while competitors falter.
At USC Consulting Group, we can help you build a better supply chain by applying lessons learned and instituting impactful change that lasts. If you are ready to move your supply chain from a position of vulnerability to resilience, contact us today.
This article was co-authored by USC Consulting Group’s Manager of Supply Chain Practice, David Newman.
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