Business Process Analysis: Lean Toward Elimination of Waste

Of all the reasons to build a process-driven culture and infrastructure in your organization, the elimination of waste is a very logical and compelling reason. Eliminating waste can feel like Christmas. Your ability to deliver deep savings and performance improvement is a wonderful gift for everyone including the customer.Your prices might even come down! What might that mean for sales? The Lean Methodology – even in its most rudimentary form – is your greatest tool in identifying the waste you must remove from your process. In case you haven’t noticed, the state of the global economy is sort of tugging on your shirt-sleeve to get with the program.

Lean and Mean Metrics

I run across this scenario all of the time in my consulting work:

Client – “We want to get really efficient, Patrick. Help us reduce the waste and improve overall performance.”

Me – “Ok. How are you performing now? What are your key performance indicators and what are your industry benchmarks? How are you doing in comparison to your competition?”

Client – “Huh?”

Your obligation – whether you are the new business analyst on the team or the CEO – is to make sure that you can identify your key performance indicators and perhaps even more granular performance metrics. Otherwise, identifying waste and verifying that you are making progress is kind of tough. This is a science.

Waste: 7 Fruity Flavors

Lean tells us there are 7 types or categories of waste. They occupy a great deal of your time and represent a considerable chunk of your overall cost. Would you be more competitive if you could eliminate the following:

  1. Overproduction Waste (the biggie)
  2. Waiting Waste (time in queue)
  3. Motion Waste (moving stuff around)
  4. Transport Waste (conveyance that adds no value)
  5. Over-Processing Waste (processing the customer doesn’t value or pay for)
  6. Inventory Waste (stockpiles – see Wal-Mart for the antidote)
  7. Defect Waste (re-work, correcting mistakes)

Value-Add Your Way to Success

Value is defined by your customer. Don’t forget this very important fact. Waste is anything that doesn’t add value. Whether you work for a non-profit, a school, a prison, a high-tech firm, a hotel or a retail store, waste is a big deal. You may think you have built-in features and processes that are wonderful, however, if your customer doesn’t share your enthusiasm and cannot identify the inherent (intrinsic or extrinsic) value, you probably have waste. Get rid of it. Value-Stream Mapping is a great visual aid and a perfect tactic for this purpose but I want to warn you: don’t get lost in the weeds. If you came to my house to find waste, I assure you there a few places you could look first and you’d find 75% of my waste. It’s no different in your shop. Start with the biggest and ugliest offenders. Do it now.

Think and draw from the perspective of your customer. Ensure decision-makers are involved. Invoke tough decision-making processes. Once you identify the waste, the will to eliminate it must be there.

What’s your story? What success story can you share? What did you do and how did you do it?

Thanks for chiming in!

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5 responses to “Business Process Analysis: Lean Toward Elimination of Waste

  1. Patrick,

    Great stuff! I particularly like your specific definitions of areas of wasted time; I’ve been trying to articulate some of the same points on our own blog as of late. Can you do a post about standard types of Key Performance Indicators? For instance, what would a KPI be for a team of software developers? Customer service reps? Marketers?

    -Aaron

  2. Patrick Joseph Gauthier

    Aaron – thanks for kind feedback. Second, you ask a great question. A huge chore but a great question nonetheless.

    At one time, I ran an insurance company so I can share some of the most key KPIs we used. What’s important to note about these is that they are all driven by industry-specific standards and benchmarks so some research is really called for. For example, in customer services, we used the MTM (member touchpoint measures) used by all insurance customer service departments. There at least a dozen critical measures that include “speed to answer” in terms of how long it takes you to answer the phone, “abandonment rate” regarding callers that hang up, and “number of transfers it takes before a caller’s needs are satisfied. In the Finance department, we had KPIs (again, industry standards) having to do as much with claims processing time and accuracy as we had relating to HIPAA and national accounting standards. These changed considerably with the onset of SOX legislation. In marketing and sales, we used a CRM tool that suggested KPIs like the proportion of prospects that become leads, leads that turn into meetings and meetings that become proposals. Those proposals then turn-over into sales. Marketing impressions are big. How many eyeballs on a website, listeners on a radio show with ad placement, you get the idea. No matter what the industry, there are benchmarks (IMHO) and there are basic QUALITY (accuracy, reliability), EFFICIENCY (speed, throughput), and FINANCIAL metrics (cost, profit) to use.

    With respect to software development, consider the trade itself. Error rates are a big criteria. Time in development is big. Cost. CMMI will give you good ideas as will Six Sigma for verification, validation and configuration mgmt.

    It would be an interesting study – wouldn’t it – to build a giant dashboard full of common industry-standard KPIs. Are you familiar with ISO?

    At any rate, all the best and thanks for your feedback. I hope we stay in touch.

    Patrick

  3. Patrick,

    It’s really good topics. I found here in Indonesia a lot of SMEs have problem in line balancing, waiting waste. This situation lead them to reduce their competitiveness. Could you post on this issues, may be with an example. Thanks

  4. Patrick Joseph Gauthier

    Hello Wawan. Many thanks for your comment. I’d be happy to dedicate a post to the issue of wait-time (queue) waste with some examples demonstrating the impact on competitiveness. There’s no issue that eliminating waste reduces cost and improves the conditions for quality and customer satisfaction. With the waste reduced (if not gone altogether) prices and delivery time can be improved and when you can deliver a better product faster and at more competitive prices, people tend to support you! You sell more!

    Keep checking back and you’ll see some examples of how this works in action.

    All the best in what you do.

    Patrick

  5. Patrick,
    Thanks a lot for blogging on this issue I am a masters student and I am doing my dissertation on Waste management itself could you give me some ideas on what other types of business process are being used in this sector, I already know about 5s systems and Kaizen process is their anything else other than these process.
    Cheers

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