Do you want to see simple solutions at work?

Earlier this week, I posted about using common sense, low-cost solutions to create improvements in the business operation. In this post, I want to present to you one example.

The manager of a chemical laboratory that provides service for a food manufacturing company had problems to released test results as per the customer demand. The samples waiting for analysis were piling up on the refrigerator, and the staff was working overtime to process the backlog. My friend was getting ready to hire an additional lab technician when I suggest to let me help him. He agreed to walk the lab with me at the time he was explaining what he thought was wrong.

I noticed various boxes on the floor, which is a safety hazard. The working tables looked cluttered. I watched one technician searching for the right sample for almost five minutes. They don’t have an efficient method to store them. Also, I observed another technician walking around the room to work on different workstations to complete his test. While I was watching him, somebody came to drop more samples. She just put them right on top of the piled the other guy did while searching a while ago. Within the first ten minutes, I identified two causes for inefficiency, disorganization, and ineffective layout. Everything I pointed out was waste from the customer’s point of view. All those things contribute to increasing the testing time per sample without adding value to the process.

We have a short meeting with the staff to explain the situation and invited them to be part of the solution by participating in an improvement activity called Kaizen. They were happy to do something because although they like money, they wanted to spend more time with the family.

The laboratory performs on a daily seven major types of tests. One of them accounts for almost 70% of the daily demand. We focused our analysis on that test type. The staff draws a process map with the steps to complete that test. They also measured the time to complete the test and watched the process to identify waste.

We used 5S, a housekeeping and organization program to clean and organize the entire laboratory. The staff used a drawing of the facility layout to draw all the walking between steps of the process. They also measured the distance walked. Based on their observations and suggestions, we moved some equipment and tools to have them closer to where they need them. Just by doing that, they reduced the walking time by more than 50%, which reduced the test process time as well. Other benefits of this event were: 27% reduction in over-time, 52% reduction in total process time, and 30% more on-time test results released to the customer.

They need some help to move the equipment, but the investment was peanuts compared with the benefits. After the event, the customer noticed the improvement in the quality of service, and the team was able to rest better and spend more time with their family. I will keep using this example on future posts to explain in detail how we achieved the improvements.

You can have similar results by using continuous improvement as your strategy to increase customer satisfaction. Let’s have a good old conversation about how you can do it!

Is your customer paying for your business inefficiencies?

As a customer, I am not willing to pay more than necessary. When I needed to paint the house, I compared service costs and customer reviews between service providers. Around 61% of internet users research a product online before making a purchase. These days is easier than ever to compare prices, which is why price strategy is so important. Most business owners use cost-plus pricing. This strategy sets the service price, adding a mark-up to the cost. 

This formula implies that higher costs translate into higher prices. If your service price is higher than your competitors and the service is not much better, you are at risk of losing customers. There is a simple and effective solution to reduce operating expenses. What you need to do is to find waste and eliminate it.

Waste from the customer perspective

Waste is any activity that does not add value from the customer’s perspective. For example, Company A paints with brushes and rollers while Company B paints with paint sprayers. To finish the job on-time, Company A needs more painters because their process is slower. Are you willing to pay more because their process time is longer?

Types of waste

There are eight types of waste: transportation, inventory, motion, waiting, over-production, over-processing, defects, and underutilization of people. Our friends from Company A have quite some waste in their business. The following are examples of each type.

  • Transportation: moving paint cans in and out storage
  • Inventory: keep enough brushes and rollers for 6-month service
  • Motion: walking back and forth to the truck looking for the right size brush.
  • Waiting: Waiting for the materials truck or instructions
  • Over-production: Painting the fence when it wasn’t part of the request
  • Over-processing: Paint the same wall five times
  • Defects: Use the wrong color paint
  • Underutilization of people: the new guy is wasting paint because he does not have training

Identify waste and don’t make your customer pay for it

One way to identify what areas of your business need change is by identifying waste. You can highlight the waste on the process on your process map and use the information to design a new process.

Do not make your customers pay for your inefficiencies. If you want to improve profits by controlling costs, it is important to learn how to identify waste.

This article was originally posted by Jina Rivera in Organization and Efficiency Solutions.