Waste Reduction and Cost optimization

  • Excellent companies continuously ask, “How can we do more for our customers with less waste?” These companies set up effective performance measures to assess performance and customer loyalty as they drive improvements in cost, efficiency and customer satisfaction.
  • Downturns can provide the necessary impetus to enable your company to change; allowing you to emerge with streamlined processes more capable of meeting customers’ needs. Benefits include:
    • An improved focus on meeting customers’ primary requirements
    • Reduced operational cost
    • Optimized Layout / Footprint
    • Available resources can focus on solving customer problems
    • Increased use of technology reduces defects & simplifies flow
  • Equipping teams with the right tools leverages their know-how to drive out cost in ways only they can affect.
Picture1
Picture2
  • Where do your customers complain that processes take too long or generate too many defects?
  • Which departments have the highest cost?
  • Do you have any ‘black holes’ where information or product enters but there is no visibility until it exits?
  • Where do you have rework loops set up to handle defective output generated either internally or by suppliers?
  • Why and where do things go wrong?
  • Which numbers generate the most response in your organization?
  • Customer interview and Stakeholder analysis – start with this tool to ensure you’re focused on solving the right problem. Customers are persons or organizations which determine whether the quality of your product or service is sufficient for them to continue to buy from you. Stakeholders are persons or organizations which can affect or are affected by your improvement effort. Customers can be internal or external to your organization. Not all stakeholders are customers, but all customers are stakeholders.
Pic4
  • Problem statement and project charter – focused problem statements ensure your team can impact change within a short period of time. The project charter identifies key stakeholders, team members, technology and resources required to impact the change. We will set a goal to guide our improvement efforts.
  • Value Stream Map – Looking at your processes from a birds’ eye view allows you to identify the flow of value from suppliers, through your process and to your customers. Taking a critical eye to this flow of value prioritizes the most significant waste and creates buy in for improvement efforts.
  • Key Process Indicators (KPI) Scorecards and Dashboards - Each improvement effort will have unique metrics to chart its course. Cycle time, defects, number of resources required, cost and customer impacting results are typical. Also useful are physical space utilized, process uptime, number of steps required and the rate of the operation. Once we set the KPI’s up for consistent measurement we can demonstrate improvement to the team performing the process, the leadership team and other stakeholders.
  • Process Analysis – Once Key Process Indicators have been identified, we can measure the process and see how close we are to the process’ target. The gap between the target and our goal identifies the opportunity to improve. The target can be related to cycle time, defects, cost, customer impact or process traceability and status.
  • Define, Measure, Analyze, Improve, Control Approach (DMAIC) – for teams to effectively attack the opportunity, they must be taught a methodology to improve. Depending upon complexity, teams can use a cycle of Plan, do, check act, (PDCA) or the DMAIC (Lean Six Sigma) project-based approach.
  • Piloting and Hypothesis testing – The key to accelerating improvement efforts is to enable teams to experiment, assess impact and revise. Teaching them how to effectively pilot to test their hypothesis that a certain solution will be effective enables them to move through the solution phase as quickly as possible.
  • Control plans – in order to sustain improvements, effective control plans must be documented, established and measured using the KPI approach. Doing this right the first time ensures teams avoid a continuous ‘solving the same problem again and again’ loop.

Problem: In a nationalized mental health institute hospital, weight gain while in care remained a key problem with roughly 40% of patients gaining in BMI during the first six months of their stay. This cost the hospital additional offsite visits and cost patients in terms of health & time. After analysis and discussions with stakeholders, the following solutions were implemented:

  • Performed quality review for weight data entry to monitor accuracy and consistency of data.
  • Worked with nutritionist recommendations to enhance diets to reduce amount of carbohydrates and complex sugars consumed and increase nutritional options offered in vending machines and during mealtimes.
  • Conducted a review of recreational activities and incorporated additional physical fitness activities tailored to meet needs of patients while rewarding them for partaking in these activities.
  • Developed monitoring tools to alert medical staff and clinical nutritionist(s) when patients begin to gain weight and ensure that the required data entry for weight and height is consistently maintained on a monthly basis.
Picture5

Results: Once the Hospital paid attention to the obesity issue, the obesity population among individuals in care gradually declined. Over a two-year period, the percentage of obese patients declined from 42% to 34%.

pic9

Problem: A manufacturing company of a chemical product had a high rate of returned, nonconforming product with one of their healthcare customers. The customer complained the defects required them to add resources to sort the good product from the bad in order to protect their end-customers from the nonconformance. Both organizations had a high level of frustration when interacting regarding these defects. Neither trusted the other to accurately sort nonconforming material. In response, the manufacturing company developed a rigorous internal rejection program to protect the healthcare customer from defects, but resulted in a high scrap rate, at times up to 30% product thrown away.

  • Visited customer to obtain real time and first-hand feedback regarding nonconforming material. Established a Lean Six Sigma team, including both the company & the customer to solve the defect problem.
  • Worked with customer to document standard criteria for ‘critical to quality’ characteristics to address primary concern regarding ‘debris and dirt’. Clearly communicated the customer’s definition and built the inspection process around this definition.
  • Identified primary source of debris during the manufacturing process and implemented 5S to improve cleanliness and operation of this key piece of equipment.
  • Developed protective process and packaging to shelter the product from excessive dirt during the manufacturing process.

Results: Customer rejects dropped 73% to a minimal level, from several hundred thousand dollars a month. Internal rejects for this reason code also saw significant reduction saving the manufacturing company over $670,877 annually.

Problem: A centralized billing process responsible for billing $750M of IT products and services, including Compute, AS400, Corporate Services, and Telecom services had complaints from customers that the process was not transparent, difficult to use, untimely and required significant rework.

  • Developed survey method and established monthly meeting with product owners receiving the billing to obtain feedback and address concerns.
  • Documented value stream map of billing process to identify and address manual process steps, defect causing steps, excessive resources required and bottlenecks driving high cycle time to process billing.
  • Created a governance process to ensure refund requests were handled with standard, approved process.
  • Improved reporting based upon feedback from the product community (customer base)
pic11

Results: Team was able to boost net promoter score results from a negative value to positive score within 6 months. Refund dollars dropped from $848K in January to $32K in December, a 96% drop in refunds processed.