customer value Archives - Better Process Solutions

Lean thinking, what is it?

I mentioned the phrase, lean thinking pretty often. As I indicated before, the term was coined by James P. Womack and Daniel T. Jones. It is used to describe the process of making business decisions based on Lean Principles.

What are the principles of lean?

Customer Value
Identify all the steps in the value stream and eliminate waste.
Make the value-add steps flow.
Let customers pull value from the next upstream activity.
Continuous Improvement

The foundation of lean thinking

This list of principles is the foundation of the Lean system. It is a collection of thoughts, behaviors, or propositions that guide what we had known as Lean Thinking.

All effort directed to improve a process starts with identifying value from the customer lenses. The continuous improvement goal is to deliver the Customer the highest product or service quality, at the lowest possible cost, in the shortest lead time. Consequently, the focus of all our decisions is quality, cost, delivery, and people. In other words, the focus is on those things that the customer value.

Process Improvement and the customer

If the focus is on customer value, then it is logical that the next step is to identify the value stream. That is to say, to identify all the steps from request to delivery and eliminate waste. Waste is defined as those steps that do not add value.

The third principle is to make the value-add steps flow. Eliminating delays, waiting time, and other sources of waste, the flow improves. Therefore, the total process time would be shorter. Once this happens, let them pull value from the next upstream step. That is to say, that your clients will indicate when they need more inventory. Continuous improvement is the repetition of the first four principles. Once you improve one process, standardize, train, and start improving again.

Lean thinking vs. traditional thinking

It is necessary to put aside old behaviors and ways to change the culture by embracing continuous improvement thinking. To make decisions based on customer value and flow is not what you learned in business school. Give your team the power to change things is not common either.

The table below presents various examples of each thinking type, side by side. You will recognize some principles and behaviors that I mentioned in previous posts. For example, to empower the team to improve their workplace versus bringing external resources.

It takes time to get used to this type of thinking. However, practice lean thinking every day, everywhere, by everybody is worth it. Above all, your customers will notice the difference, and your business bottom-line will be better.

Culture Transformation Journey

Basic concepts to support the improvements

Three basic concepts that leaders need to learn

To successfully overcome each challenge presented to us, we need to know certain basic concepts. For continuous improvement, there are three concepts that management should learn and teach to their team. They are, put quality first, the next process is the customer, and speak with data.

The basic concepts and the Customer

The CI goal is to deliver the customer the highest product or service quality, at the lowest possible cost, in the shortest lead time. Therefore, the focus of all our decisions is quality, cost, and delivery.

How do you keep the focus? How can you guide others to keep the focus? There are several changes in how we work as managers that have to change. None of them represents a new management style. However, many entrepreneurs keep doing the same thing since they learn the ropes of the trade and ignore these three ideas.

Put Quality First

Quality should be the highest priority over cost and delivery but, that is not common practice. Throughout my career, I have seen plenty of examples where quality is put to second or third place while making decisions. The worst part is that the reason cited to do so was to give the customer what they want at the time they wanted it. Really? Is that the reason or that production planning does not want to fall behind on their attainment metrics? Or to avoid the inspection cost? Or maybe to evade having a difficult conversation with the customer?

Practicing quality first requires commitment from management. Alignment within the organization is critical to ensure that the customer receives a high product or service quality. When the entire management team makes decisions based on this and model this behavior all the time, the employees will understand that quality is more important than quantity or delivery and will act accordingly.

Quality is not only for the product, information, or service the external customer will receive. It also applies to the quality of the internal processes. With CI you are seeking to improve the processes with small daily changes, everywhere by everybody. You go see the process, walk the process, and understand the process to identify ways to improve it and minimize all types of waste. After improvements, you either change or create standard work for that particular process. In other words, your focus to improving process quality is the process itself, not the results of the process.

The Next Process is the Customer

Although we all know that every process has a supplier and a customer, every time we talk about customers most people’s mind goes immediately to external customers. Every member of the team should know two things, what is their role in providing the customer the value they expected and that the next process is their immediate customer. It is management responsibility to provide this information to their team.

Knowing their role within the company strategies, including customer and quality give them the understanding of how their actions affect the value stream. It is also a way to present them why their work is important. How they contribute to ensure that the company achieves its goals, by producing a good quality job or service to the next process, which is their customer.

Speak with Data

While many people like to use their experience or gut feelings to make decisions, within a CI environment you speak with data. Tools like huddle meetings, war rooms, 5S and visual management use data to tell what is going on. Visual data presented clearly and simply is important for clear and effective communication as well as alignment with company goals.

Continuous improvement uses PDCA as a structured way to solve problems. If you recall, the first step, Plan requires to define the problem or situation you want to fix. To define it you need to collect all pertinent data, no gut feelings or believes but clear, accurate data.

Summary

To support your continuous improvement journey, three basic thoughts should be part of your daily though process, put quality first, the next process is the customer and speak with data. For some people, these thoughts require a mindset change, and for others just a little tweak. A continuous improvement culture is about exploring new ways to do what we do, learn, and adjust or change. These concepts are another step on your CI journey.

Business Performance

Do you need a quality strategy?

I know I’ve said it hundreds of times, but I’m going to repeat it. The continuous improvement goal is to deliver the customer the highest quality, at the shortest lead time, at the lowest possible cost. For that reason, the focus of your CI activities is quality, cost, and delivery. We also know that continuous improvement is a people’s system. For that reason, the most influential job of a leader is to develop himself and develop the team. With those things in mind, your business should have strategies for each of those areas. A quality strategy is a must.

You need a quality strategy

Without customers, businesses would not exist, and yet, many do not have a quality strategy. Unfortunately, business owners or leaders wait until they have a customer crisis on their hands to create a quality strategy. While practicing continuous improvement, the customer defines value. There is no way to have a CI culture without a quality strategy. This strategy will provide a clear path to create products or services with the highest quality possible.

Given how important quality is, it deserves to be considered a key business strategy. The first step to create a strategy is to assess the current state and establish a vision. Part of this assessment is to understand the customers’ specific needs and desires. What do they value? What is important? Use the concept of “Go and See” to answer these questions. Visit your customer, or at least have a conversation about this. Nobody can answer what does the customer needs better than the customer itself.

Changes in mindset, be clear about your quality strategy and goals

If currently, the organization emphasizes cost over quality, leadership needs to highlight the change in mindset as part of the culture change from traditional to continuous improvement. During the period leadership seeks to understand how the current culture would affect the CI implementation, they will have to look for understanding how the company views and understands quality. Do people outside the quality department feel any responsibility for the product or service quality? Do the team members understand how their work affects quality? How their actions affect customer satisfaction? Be crystal clear about this while creating or improving standard work.

Customer needs and quality

Translate the customer needs into your business language to establish the performance indicators and to create breakthrough objectives. Your quality strategic plan will tell people how to close the gap between the actual and goals. While this plan cascades throughout the organization, make sure to use the appropriate KPIs and internal language for the tactical level. PDCA is a tool that helps to create, deploy, and implement the plan as well as reviewing its effectiveness and adjust it when necessary.

Leadership needs to learn and teach how to shift their mindset from production planning and cost decision-making to a quality driven decision-making process. The success of this new way to frame decisions rides on leadership modeling of the new behavior, just like with continuous improvement and lean Thinking. To answer the initial question, yes, you do need a quality strategy. Quality does not happen by magic; it needs to be part of your business strategy.

CI Basics

Do you still think that continuous improvement is not for you?

Some companies have been dealing with the COVID-19 pandemic much better than others, at least for now. Over the past few weeks, I have seen and shared through my Twitter and Facebook accounts examples of how lean companies have handled the crisis. The common denominator for all of them is they keep the focus on the same things, people, and customers. They also use different continuous improvement tools to learn and adapt to the new normal in record times. How did they do that? Using lean thinking and not taking their eyes from the basic principles.

The term “lean thinking” was coined by James P. Womack and Daniel T. Jones, it is used to describe the process of making business decisions based on the Lean Principles. Womack and Jones book, Lean Thinking: Banish Waste and Create Wealth in Your Corporation presented and talked in detail about those principles.

Customer Value
Identify all the steps in the value stream and eliminate waste.
Make the value-add steps flow.
Let customers pull value from the next upstream activity.
Continuous Improvement

Since the first principle is to define value from the customer point of view, it is logical to start the crisis response looking at how value changed for internal and external customers. As a leader, you are responsible for your employee’s health and well-being while they are working. To provide a safer possible workplace, revise the value stream to identify how it needs to change, how the flow will be affected and corrected, and finally implement the changes. While doing this, keep the communication with your employees and customers to make sure that you are adapting to their new needs and priorities.

Improving the process is an activity that never stops. Every day new information comes out that makes it necessary to change something on the process. Lean companies can face this challenge easier than others because they developed people to become problem-solvers. They focus on the problem cause and possible solutions using PDCA, 5 Why, and other tools. It is better to have an army of problem-solvers than just a few people, or worst, just you.

The heart of the lean system is people involvement, a highly motivated team continuously seeking the best way. To keep the heart healthy, you need to maintain a respectful, free of blame, and honest work environment where the team feels they are being cared for, and their feelings and ideas matter.

I don’t know if lean or continuous improvement is the antidote against the economic crisis, we are living in. Based on my experience, I know that it is better than traditional management, and it works for any industry, of any size. Industries with a small profit margin, like restaurants, will benefit from this type of thinking more than anyone. Changing the decision-making process and how you conduct business is a better route to become profitable and flexible.

If you keep doing what you always did, you will get what you always got. Henry Ford

Customer Experience

Customer value, what is, and how you define it?

The journey to transform your business into a continuous improvement enterprise should start with the definition of value. The CI business management model defines the value of a product or service from the customer’s point of view. How much your product or service is worth for the customer? What are the expectations?

How you find your customer expectations?

Only the customers themselves can tell you. There are a couple of ways to get their input, talking with them, or using social media. The best time for a conversation is right after they received the product or service. Ask about their experience. What do they like? Do they have any suggestions? Listen to what they have to say and watch their demeanor. Social media accounts are another way to receive feedback from customers. Review the comments and ratings often. You can also create polls to survey their opinion.

Customer Value Definition

The information from these three different sources will give you the value definition from the customers’ point of view. Value definition is a critical piece to start your continuous improvement quest. You will use it to classify each process as value-added or non-value-added. Value-added activities are those that transform input into output or change materials or information. In other words, the customers are willing to pay for it. Everything else is non-value-added or waste.

Example of value-add activities

When you go to a restaurant, you expect to receive in a reasonable amount of time the plate you ask for. You also expect that the staff follows any special instructions like cooking the meat the way you request it. You will pay for the food and the service without hesitation. If the restaurant messed up with your plate, that is a defect. Now they have to prepare a second plate, which is overproduction. Both things are waste or non-value-added activities. I bet that you, the customer, are not willing to pay for them.

Businesses need to complete various processes that are critical for operation but do not add value to the customers. Examples of necessary non-value added activities are hiring, payroll, and month-end financials.

Customer value and your business

The entire flow from the customer order to the product or service received is drawn using a value-stream map (VSM). VSM is a special type of flow chart where you can visualize the flow of information and materials. This map is a tool that allows you to see waste and plan how to eliminate it. How to create a VSM will be the subject of a future post.

The priority of continuous improvement is to eliminate waste. Waste elimination will create faster and bigger results. Second, it is to challenge and reduce the necessary non-value-added activities. Minimize the quantity of non-value-added steps will further improve flow and reduce costs. Finally, you will work on optimizing value-added steps.