Does investing in process improvement (doing what you do only better) really pay dividends? Yes, big time, if done right; and No, not at all, if done wrong. Sure, we have all heard that old line about the difference between an expense & an investment is whether you get you money back or not. But how does this apply to Process Improvement?
Process improvement is upgrading the way you do the things that make you money in your business. From taking an order to processing it to collecting the money owed you, everything is a process; and every process can be made better. Really? Yes.
How? 1) By documenting the way you do something now; 2) documenting the ideal way it should be done if you had no limits & 3) creating an action plan to bridge the gap. This takes a little time, effort, direction & commitment, yet the results can be surprisingly positive.
I recently consulted with a manufacturer who had the most inconsistent manufacturing process I had seen in years. When we dug a little deeper it turned out that the culprit was not even the manufacturing floor; it was the planning input.
Let me give you a little background here. When we were engaged to help them fix the problem we started by walking them through drawing their value stream map (VSM). A VSM shows all of the steps (both value added and nonvalue added) required to get your product/services from taking the order to delivering to the customer.
The VSM method usually shows tremendous wasted time at several steps (processes). This client was quite surprised at the wasted time that was uncovered so they decided to drill down. The next step was to draw a process map (PM) for 3 of the most critical processes to try to find the main culprit in each.
As they gathered the team together to discuss how they would begin the simple steps of drawing the PM it immediately became apparent where the initial problem was. Everyone performed their input slightly differently. Different inputs, different outputs. Problem not solved, but they were on their way.
Phase 1 was to get the team to come to a consensus as to the best sequence of steps they take when inputting today; the current state. Phase 2 was to discuss & agree upon the best way is should be performed; the future state. Phase 3 was to develop a series of action steps to take the process from the current to the future state.
It took about 3 months to go from the current state to really approaching the future state. The result in that time was a more consistent production flow, a reduction in wasted time, materials & labor. With approximately $75,000 saved in 90 days, they are well on their way to improving their bottom line by $300,000 this year. Not bad for a $17,000 investment! Is that a 1765% ROI?
* If you want more details on how to get these types of returns for your firm please contact me at dsfeiman@BuildItBackwards.com