by The HLH Team
“The most dangerous kind of waste is the waste we do not recognize.”
-Shigeo Shingo
You rarely find the word “Lean” without “manufacturing” beside it. Lean’s origins are in the Toyota production system, but it’s grown far beyond that application. Lean is a methodology focused on increasing profits by reducing waste. While it began with manufacturing, industries from software development to dentistry have adapted it in bids to be more competitive.
Bottom line: just because you’re in an office, don’t be fooled. You’re surrounded by waste. Let’s talk about how:
Transportation:
No fleet of trucks doesn’t mean you’re off the hook for this one. From getting your paper delivered (how much does that cost and could someone pick it up on the way to work?) to the mail cart, transportation waste is everywhere.
How far are people travelling to meetings and getting stuck in traffic on your dime? How many of those meetings could be video conferences, instead? Unless face to face is critical, you can do everything remotely (even sign).
Inventory:
Just because you’re not dealing with warehouses of widgets doesn’t mean you don’t have inventory waste. Inventory is broader than manufactured items to sell. It’s the accumulation of anything that we produce, whether goods or services.
How many unfinished projects have piled up in your inbox and in your brain? They’re slowly draining your energy the longer they’re not finalized. Finishing the projects you start will keep your focus sharp and your desk efficient.
Email is a type of inventory. How many are in your inbox, either opened or no? Many of the most efficient people keep their inboxes trimmed to one page or less.
Defects:
Defects are pinholes in a boat, slowly letting the water in to sink the profitability. It’s also the frustrating waste because it’s jarringly avoidable.
A simple typo or spreadsheet formula error in an important document can cost money, destabilize client relationships, and do long term damage to your reputation. The longer a defect goes unnoticed, the more damage it tends to do.
To fight defects, don’t succumb to the temptation of not editing. A second pair of eyes costs money, but can catch the errors likely to cost you much more.
Talent:
I saved the worst for last. Unused talent is everywhere in offices. Every member of your team has skills and ways to contribute that didn’t come out in their interview. It’s up to management to create a culture where people feel valued enough to step up and use their talents to the fullest.
If staff don’t feel like their ideas matter, they’ll bite their tongues, feel unheard, and not come to you about the inefficiencies that are bugging them. Meanwhile, you’ll bring in expensive consultants to give you the same ideas.
Those ideas will flounder in implementation because your team won’t buy into them, and you’ll end up just as inefficient, thousands of dollars poorer, and downright demoralized.
So listen to your team. Take their ideas seriously. It will save you money.
by The HLH Team
“The road to success is always under construction.”
-Arnold Palmer
In the construction industry, it sometimes feels like the only way to be more profitable is to work more and more hours. But driving up revenue is only one way to make more money.
Reducing waste is the best way to cut costs. Dollars you cut from your net costs are more profitable than revenue because other factors (labour, goods) are already factored in.
Let’s talk about some ways for your business to make more and still have you home in time for dinner:
Strategic Bidding:
Are you bidding on every job that graces your desk? You shouldn’t be.
Every company has a target job and/or client, one that fits your company better than the others. Not only will you do your best work with this client, these jobs will likely be the most profitable as well.
Bidding on everything is tempting, especially with soft sales when you want to keep your guys employed. But not only will it eat your time, it also has the potential to win you jobs that lose you money because they’re a poor fit.
Figure out who your target client/job is. Define the parameters to qualify it.
Don’t bid on jobs outside your target. Monitor how close your bids come to actual costs.
Take the time to learn why a job was unprofitable in the past. Looking at your processes in past jobs will help you reduce waste and become more efficient.
Reduce Waste:
An average of 3 tons of materials is wasted building the average house. That’s about 4 pounds of waste per square foot.
Waste costs twice. You pay to buy the materials, and the insult to injury is when you pay to dispose of it. So be brutal with waste:
- Double and triple check your measurements. Challenge yourself to stay close to the rocks with your materials
- Cut back on your bulk purchases. Buying a season worth of materials isn’t worth the % you save.
- Spend the extra time to store, stack, and secure materials properly at day’s end. This becomes a training issue.
Inventory waste will devour your profit faster than almost anything. Dig deeper into inventory waste here: https://hlhcpa.com/pi-blog/inventory-8-8-deadly-wastes/
Avoid Defects:
Defects are the most frustrating of the 8 wastes. Having to rework a project is a guaranteed profit-killer via overextended schedules, increased chance of injury and long-term damage to reputation.
You can protect your bottom line and reputation with a little pre-planning:
- Do you homework with the contractors you hire to make sure they won’t be a monkey wrench in the job
- Track reworks from past jobs and why they had to happen. Identify the weak spots and focus on them for improvement.
- Look into Lean construction techniques. It’s a whole methodology designed to identify and eliminate waste.
by The HLH Team
“The more inventory a company has, the less likely they will have what they need.”
-Taiichi Ohno
The Temptation of Over-inventory:
As dangerous a waste that over-inventory is, most business owners have fallen victim to it. Saving 15% when buying in bulk is a siren song that puts visions of high markups in our heads. But as we’ve learned, that’s not reality.
Usually, the extra good sit, and sit, and sit. We pay to store them, saturate our market with them, and then put them on sale to clear them out. 15% in savings is gobbled up by 50% markdowns and waste.
In business, buying or producing small amounts, frequently, tends to be the most profitable. We pay more on the front-end, but keep control and save more in the long run.
Over-Inventory at Home:
Shop at Costco? The lure of buying groceries in bulk brings as much waste as producing widgets in bulk. A new study from the University of Arizona confirms that shopping frequently costs consumers less by resulting in far less waste than buying bulk.
Our retail economy is built on people buying more than they need. If you’re in retail, you probably rely on that behaviour for revenue even as you’re cautious with it in your own business.
Saving Money:
Buying 6 litres of milk reassures us that we won’t have to buy anymore for a while. It also means we’ll be pouring 3 litres down the drain in a week.
Over-inventory is as expensive as it is comfortable. Lean methodology teaches us that staying close to the rocks, and only carrying as much inventory as is necessary, is the path to profitability.
At home, staying close to the rocks means buying 2 litres of milk at a time, running out sometimes, and never pouring spoiled milk down the sink.
Staying Close to the Rocks:
The next time you’re in Costco or anywhere else, remember that their business model is based upon consumers falling prey to over inventory. Interrogate yourself about what you really need to buy.
You spend your days at work eliminating waste from your company. Spend your evenings and weekend eliminating it from your personal life, and you’ll save money in both.
Cites:
https://uanews.arizona.edu/story/ua-food-study-shop-more-waste-less
by The HLH Team
“Most people don’t understand the process. They get frustrated by it. Don’t Be. Focus”
― David Sikhosana
What processes have you gone through today? You brushed your teeth, put on your shoes, drove to work and checked your email. We go from one process to the other, often on autopilot, to get through our days. What would an everyday process look like if you wrote it out? Pick up toothbrush > Add toothpaste to brush > Apply water to toothpaste > Brush teeth in small circular motions, and so on. You’d be articulating brushing your teeth as a workflow.
Laying out a workflow gives you the chance to analyze and improve. Would it be more efficient to put water on your brush before the toothpaste? You’ll never know if you can’t visualize it. It’s a bit strange to think of finding efficiencies in toothbrushing, but what about in the office? What about in a routine filing process you repeat 20 times a day? Saving a minute could there could net real savings.
You don’t need specialized training or fancy software to get started. You need paper or a whiteboard (bigger the better) and a lack of interruptions so you can do something completely different: focus on one task.
How to Build It:
Don’t rush this. The magic of mapping happens when you get granulart with the details. That’s when micro-level wastes start to emerge. Whiteboards are ideal because you’ll be erasing a lot. You’re visualizing the life-cycle of a process. Start with a simple one and work up from there.
Here are the basic symbols we will use as an example:
Connector Line: connects 2 steps and shows the direction of the process
Terminal: This is a “start” and “stop.” There may be several in a process; they happen whenever the flow stops.
Activity: The basic “work” block, indicating a step in the process.
Decision: When a decision must be made.
Delay: When the process comes to a halt but doesn’t stop completely. Think “yield” sign.
Storage: Something is stored for a period of time. Try to indicate how long.
Transport: When something needs to be moved. Indicate the origin, destination, and travel time if possible.
Example:
One of the 8 Wastes (https://hlhcpa.com/the-deadly-wastes) can hide in any one of these types of steps, but they like to linger in the latter 3 the most.
Process Mapping as Money-Saving Tool:
Once you have the basic idea, bring in other stakeholders, whether it’s appropriate staff, suppliers, or even customers for their feedback. Walk out the process literally if that helps to visualize it.
Study the visualization and look for opportunities to find efficiencies. Are things being stored in a far-away location? How long do files sit on desks before decisions are made? How often does the process either stop or yield, and can this be avoided given the amount of energy it takes to build forward momentum again?
by The HLH Team
The Batching Myth:
You’re stuffing envelopes. You have 500 letters to fold, envelopes to stuff and seal, stamps to stick, and addresses to write. You’ve got 2 other people to help you and you delegate tasks accordingly.
You all want to get it done as quickly as possible. Your intuition tells you that if you fold them all at once, then stuff them all at once, etc, the work will go faster. Right?
Wrong. A key lesson in Process Improvement is that batching slows down production. This runs counter to “how we’ve always done it,” but the evidence is clear. Here’s why:
- You reduce the excessive motion waste that’s caused from moving batches to and from storage and to the next steps
- You produce finished products faster, which heightens morale and gives people a sense of accomplishment early
- Your customer gets the finished product in their hands faster than if they have to wait for an entire batch.
- No one is waiting around. With batching, workers down the line spend much of their time idle and waiting for the previous steps to be completed.
Want to learn how you can apply this method to your workflow? Let’s Chat!
What’s your Takt Time :
Decreasing the completion time for a task or process is at the heart of Process Improvement. We can’t do it unless we’re brutal with waste. When we work in batches, a couple things happen that increase our overall production time:
- Workers who are down the production line are idle while the batch slowly makes its way from one step to the other.
- Batching leads to inventory build up, while single-piece-flow is conducive to customer-pulled production
Small improvements add up to big savings. Switching to single-piece-flow, and eliminating all the wastes of batch processing, can speed up your production time by a whopping 30%.
Cash is king, and faster production times mean that you get paid sooner. Having quicker cash flow can open new options for your company about how to grow.
More than Manufacturing:
While “Lean” is often thought of as a manufacturing concept, its concept applies to every industry. Bankers, builders, butchers and beauticians all need to eliminate waste to be profitable. Every industry, whether making widgets, performing tasks or dealing with files, have the choice to batch or not to batch.
While single-piece flow saves time, it often requires a significant cultural shift to embrace it. The batching instinct is engrained in our collective corporate ethos. It takes significant managerial will to commit to making the changes necessary to fundamentally shift practice.
Once achieved, however, single-piece-flow yields lower inventories and storage, increased flexibility, less defects, and higher overall morale.
