I have been engaged to help improve bottom line results and cash flow for small and medium sized businesses. In many situations I had the opportunity to deploy Lean Six Sigma techniques. In some cases, minimal measurements existed. While following the DMAIC steps, it was interesting to see process performance improvements just by establishing and gathering the measurements.
DMAIC
Define: Set the context and objectives for your improvement project.Measure: Determine the baseline performance and capability of the process you’re improving.
Analyze: Use data and tools to understand the cause-and-effect relationships in your process.
Improve: Develop the modifications that lead to a validated improvement in your process.
Control: Establish plans and procedures to ensure your improvements are sustained.
After defining the objectives for the improvement projects, my team started to gather measurements. In my engagements with a cabinet making company and with an Amish furniture making company, the clients began to see improvements when process completion measurements we were tracking were posted. In both cases, we just posted a simple graph that was updated at the end of each shift by the shift foreman. Shifts began competing against each other and a shifts did not want to show slippage in performance and began wanting to achieve previous highs. We saw 10% to 20% improvements from our baseline before deploying any process changes, other than measuring the process output. It was interesting to observe human behavior just by the act of measuring.
We also needed to make sure we had the right measurements that drive true profitability and cash flow. In a lot of cases, I have come across clients using disfunctional measurements that had unintended negative cash flow consequences. I have come a cross a lot of inventory and manufacturing cost accounting measurements driving poor decision making.
The important learning was to have the proper measurements and communicate those measurements to process performers.
Great comments about the "Hawthorne Effect", Steve. I guess when never really do get enough attention.
ReplyDeleteThis is something I first learned in college...about workers responding better when engineers were measuring the different effects of lighting (even when they were practically working in the dark, they improved because they were being "watched" by someone important).
The full effect of this was realized when I started having children. All 4 kids did better when I was watching too.
I wonder if we ever out-grow this? hmmm
Business Owners would be wise to hire you to help them focus on the most profitable areas of their businesses. Too often we focus on just the most problematic...and increase what we're focusing on.
Steve, you're needed by most Business Owners!!