Improving Business Performance with Ease, Part 1 by xtremelean.us
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* Welcome to Part I of a six-part video series where I will show you how you can transform your business by implementing a customized business performance measurement system that will improve your business performance to World Class levels never before dreamed of.
* Every business is comprised of many different processes, and as an example, here are the functions that make up the value stream for one particular company, and each function has multiple processes.
* There is one guarantee I can make to you. Every process or aspect of your business within your company is either improving...
* Or it is getting worse
* But it is definitely NOT staying the same.
* So how well are you tracking every aspect of your business?
* To be highly successful in business, you must have your fingers on the pulse of all of aspects of your business continually. Most companies struggle because they have no easy way to do this.
* The business decisions you make should be based on data and not on gut feelings.
* When we have access to good data, good decisions can be made. And when good data is arranged in a graphical format that is easy to understand and analyze, we can make good decisions quickly.
* Good and fast decision making means rapid improvement for all aspects of your business.
* It also means your business will be completely proactive, or acting in advance to deal with expected difficulties. You will no longer be in a reactive mode where you wait for problems to occur before taking action.
* Being reactive is also known as firefighting and most companies even have people that are experts at fixing problems after they have occurred. When you become proactive, you can prevent all of the costly firefighting.
* Being proactive also eliminates the finger pointing, frustration and chaos at all levels of the organization.
* Rapid improvement is also synonymous with making money. Is your company a money making machine where profitability is always high? Or does your company struggle with cash even when business is really strong?
* Did I mention this performance measurement system is totally automated? All you need is Microsoft Office Excel 2007.
* The bottom line is you can take the data on your company's server, and upload it into automated charts that will never need to be maintained again. The data will refresh and update the chart automatically.
* If you think this looks too complicated for you, don't worry. I will make your learning experience easy.
* The burning question is, are you ready for your business to improve to world class levels? If so, welcome to the rest of this presentation.
* The foundation of this performance measurement system will be the five phases of Six Sigma:
Define, Measure, Analyze, Improve and Control.
The five phases of Six Sigma are also referred to as the DMAIC process. The DMAIC process lends itself perfectly to establishing and maintaining a business performance measurement system that can be used to improve all aspects of your business concurrently, continuously, and with relative ease.
* Now in the remainder of this presentation "Define", we will discuss setting business goals that are key and that reflect the values of the shareholders and top management, and setting up a performance measurement system structure to support and achieve those goals.
* The process starts by determining what your business values are, and turning them into SMART and sustainable goals.
* I will then explain the support structure that directs the energy from all of your employees like a laser towards the achievement of your business goals.
* Having appropriate goals for any business is key if you want to be successful in this global marketplace. Determining goals is also the keystone of the structure for supporting and achieving your companies goals.
* Goal setting is not easy and it requires more than a crystal ball if you want to be successful. Let's say you would like to set as your goal to grow the business by 30% next year.
* If you look at last years performance trend and it showed your business was actually declining, setting a goal of 30% growth may not be attainable.
* But if lasts years performance trend showed you grew the business by 30% the year before, it may very well be possible to continue that growth pattern. The bottom line is, goal setting should be based on good information or data to establish an effective and attainable goal.
* Goals must be SMART and that means:
Specific - goals must be specific rather than vague. For example, I want to improve our on time delivery performance to 99%.
Measurable - In this instance it means you need to be able to measure what your on time delivery performance is. If you can not measure it you can not manage it.
Attainable - This is tricky. If you set a goal that is absolutely unattainable, employees will become discourage because they will feel they have failed. On the other hand, if you set a goal that is too easy to reach, once the goal is reached, people stop trying to improve.
Realistic basically means the goal is manageable and will support the high level goals of the company.
Time bound - which means giving your goal a target completion date such as by the end of the fiscal year.
* Stretch goals are objectives that seem impossible under the present circumstances, but setting stretch goals can cause people to think outside the box and develop ideas to improve performance dramatically.
* Business goals are at a very high level and should be based on what the company values and what is most important to them.
* Every company will have a different set of values and goals, but I will give you examples of some worthy goals that a company might strive for:
* You may choose any set of goals that align your company with its values.
* Let's pretend for a moment that these are your companies values. I will now show you how to turn these values into the businesses high level goals.
* Let's take one of our high level values "Customer Satisfaction" and turn it into a SMART goal.
* First our goal must be specific. Customer Satisfaction is probably one of the hardest values to measure. In this case, I would recommend sending surveys to your customers regularly, or better yet using a survey service like "Survey Monkey" to perform automated surveys regularly. Getting actual responses from your customer would be the best way to judge their level of satisfaction. So let's set a specific goal of wanting the customer surveys to come back at 90% satisfied at least to start with.
* Design the survey to the customer so their responses are measureable such as "on a scale from 1 -10 how would you rate our customer service" and so on. Also decide how often you will send the surveys out.
* Be careful when setting the goal at 90%. You want to have to stretch, but you also want the goal to be attainable.
* Ensure the goal is realistic and manageable. Does your company have the resources to create an on-line survey to send to your customers? Do you have the resources to analyze the feedback and make the necessary improvements?
* Making the goal time bound means giving yourself some time to reach the goal of 90%. For example you may say you want to reach your goal of 90% by the end of the year.
* Now let me introduce you to the support structure that directs the energy from all of your employees like a laser towards achieving your SMART business goals.
* Now that SMART goals have been established based on the true values of the company. They must be supported by all applicable aspects of the business if they are to be attained. The operational metrics are the first line of support for the goals and values of the company. What can the entire company do to help ensure the customer surveys are returned at a 90% level or higher?
* Customers are looking for just three things. They want products with high quality, with world class service at an affordable price.
* In this case, Operations can track several areas that will support the companies high level goal of customer satisfaction. They can track the outgoing quality levels to the customer and the on-time delivery performance to the customer. Product costs can be reduced many ways, but increasing productivity and reducing inventory levels just a couple of examples of reducing product costs which in turn can reduce the cost to the customer. Customer service can play an important role in treating the customer like a King and there are many ways to accomplish this. So as you can see, this one high level goal of customer satisfaction is now being supported by five clear and measureable goals by the folks responsible for operations.
* For every high level goal, there is a flow down to operations of several measurements that will support and help achieve the high level goal.
* Operational metrics or measurements seldom mean anything to operators that are actually responsible for manufacturing the products. Each cell or department must know exactly how they are performing to help support and achieve the operational metrics. Hence the need for Cell or Department measurements.
* Let's again just take one example from the Operations Metrics "Productivity" and see how each Cell or Department can support it and track their productivity separately. The Cell or Department Leaders would be responsible for tracking. And remember, each must have a SMART goal. You now have five cells that know what their productivity level is relative to their goal, and whether they are successful or if there is improvement needed. No questions. Each cell also knows how they are affecting the Operations metrics in regards to productivity and the effect it has on customer satisfaction. Operations also knows exactly how each department is doing and how it is affecting their operational goal.
* The cell or department leader must also have the ability to know the productivity of each member in their area. You can now see how each and every high level company goal can be supported and achieved by every person within your business.
* This is the performance measurement system structure that will support and help you achieve your goals and objectives and make your business a thriving success.
* Next up in our video series is the Measure section, or Part II, where we will discuss:
The sheer power of measurements by themselves
Setting up charts to make them easy to analyze while also getting the most information possible
And what can happen when charts are made visible and employees are taught how to read them.
* I hope you have enjoyed this presentation. Once again, this was Part I of Six, so stay tuned for the rest of the series.
In the meantime, if there is anything I can do to help you improve your business, visit my website at xtremelean.us