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Casual Articles - 5 Steps to Continuous Process Improvement
It’s never too soon to start saying thanks to your clients, vendors and referral sources for what they contribute to your business. Everyone loves to be appreciated and acknowledged, so start now and do something every month.Keep in contact with your clients and vendors by sending articles you have written or that would be of interest to them. Add a little "How are you?" note to these people and keep the lines of communication open. Include current information about any new value-added products or services, such as a newsletter, or tele-class you will be presenting.Marketing doesn’t have to be expensive. You just have to do it.Communication and relationship are the keys to marketing. Attending
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is workin
There are many important imperatives and factors which are not quantified or measurable by the traditional accounting system.Human capital is perhaps the single most critical success factor for companies. But its importance cannot be captured or measured by the financial numbers. One can anticipate the failure of companies by observing the high defections within their middle and senior management ranks. The exodus of these key managers is the precursor to a much more severe problem, which can impact the continuity of execution and administration of the company.Another intangible factor of the financial health is the morale of the staff. Although good morale of the staff does not always eq
What if your sales increased from $100,000 to $110,000 per day and your profit increased from $10,000 to $11,000 – did you improve by 10%? The answer might shock you...
Because the answer is no. No improvement occurred. In fact, your process deteriorated. Sure, revenue increased, but is this really an improvement? Let’s take a look at the problem by looking at revenue and expenses.
Extra Expenses Prevent Process Improvement
Let’s examine the before and the after scenario. Say, in the before picture, you have sales of $100,000, fixed costs of $20,000 and variable costs of $70,000. Total expenses amount to $90,000, giving you a gross profit of $10,000. In the after picture, sales increase to $110,000, while variable costs rise to $77,000 in addition to $2,000 in Extra Expenses – which give you total expenses of $99,000 and a gross profit of $11,000. In the after picture, remember though, fixed costs are fixed, and do not change with additional revenue. So you should get more than 10% (11.8% to be exact) profit from 10% growth.
But in order to maintain a 10% profit we have to spend $2,000 in Extra Expenses. These Extra Expenses represent your process inefficiencies. These expenses could be sales discounts, travel, overtime, or something else. The names don't really matter. What does matter is that we are not improving.
Process Evolution Enables Improvement
Improvement results from process evolution, not from an increase in scale. What’s the difference? Scale increases when we hire another person, increase expenses, or purchase more assets in order to acquire or service more business. Process evolution occurs when we change the process and as a result can release hidden capacity and service more business without adding any costs - and this is a form of efficiency. You can measure efficiency with the formula:
Efficiency = Output / Costs
But process evolution is about more than just changing costs. It is about changing time, increasing process velocity, and getting more output from the costs you already have. Cutting costs, by itself, does not evolve a process. In fact, reducing costs, without properly understanding how those costs relate to the process, can actually decrease process evolution (devolution). Let's review an example…
A Cost Reduction and Procedures Training Case Study
A company decreases costs by switching suppliers and using cheaper materials for their manufacturing process. Now the purchasing department is happy they are saving money. The bottom line is starting to look better as profits initially increase. And so this improved the process, right? Well...
But then complaints start rolling in from the field. Products are breaking down faster. Technical support costs rise, and customers start reducing their orders. Not only do profits evaporate, but customer goodwill does too. To offset this, your first reaction might be to switch back to the old supplier. This is much easier and it fixes the immediate problem, but it won't recapture the lost sales, customers and damage to the company’s reputation.
But, again, you need to focus on the most important issue. There is a limit to the amount of costs one can reduce in any process – zero. You can’t reduce costs below zero. On the other hand, there is no limit to the process potential we can achieve. Process evolution concerns the numerator (the output), not the denominator (the costs) in the efficiency equation above.
Change in Process Evolution = New Output / Old Output (Assuming costs are held constant)
By focusing on process evolution instead of costs we can continue to increase our output forever. We just have to make sure that the output increases faster than the costs. Then what we have is incremental improvement. But what procedures can you use to achieve this?
Process Training
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is working
So you put your cash, ego and pride on the line and started your dream business. You have the business strategy that will make you rich. All you need is the cash to take your business to the next level. Your plan is to look for funding from venture capital firms (VCs) or angel investor groups. Not so fast.VCs and angel groups are like the movie stars of the financial world. Stories about the “hot” VC market and how VCs are virtually throwing money at companies sell financial newspapers like Brangelina sells copies of US Weekly. The reality is, the average entrepreneur has as much of a chance of closing a deal with a VC as they do landing a date with either Angelina or Brad.Here’s the scoop: VCs an
But in order to maintain a 10% profit we have to spend $2,000 in Extra Expenses. These Extra Expenses represent your process inefficiencies. These expenses could be sales discounts, travel, overtime, or something else. The names don't really matter. What does matter is that we are not improving.
Process Evolution Enables Improvement
Improvement results from process evolution, not from an increase in scale. What’s the difference? Scale increases when we hire another person, increase expenses, or purchase more assets in order to acquire or service more business. Process evolution occurs when we change the process and as a result can release hidden capacity and service more business without adding any costs - and this is a form of efficiency. You can measure efficiency with the formula:
Efficiency = Output / Costs
But process evolution is about more than just changing costs. It is about changing time, increasing process velocity, and getting more output from the costs you already have. Cutting costs, by itself, does not evolve a process. In fact, reducing costs, without properly understanding how those costs relate to the process, can actually decrease process evolution (devolution). Let's review an example…
A Cost Reduction and Procedures Training Case Study
A company decreases costs by switching suppliers and using cheaper materials for their manufacturing process. Now the purchasing department is happy they are saving money. The bottom line is starting to look better as profits initially increase. And so this improved the process, right? Well...
But then complaints start rolling in from the field. Products are breaking down faster. Technical support costs rise, and customers start reducing their orders. Not only do profits evaporate, but customer goodwill does too. To offset this, your first reaction might be to switch back to the old supplier. This is much easier and it fixes the immediate problem, but it won't recapture the lost sales, customers and damage to the company’s reputation.
But, again, you need to focus on the most important issue. There is a limit to the amount of costs one can reduce in any process – zero. You can’t reduce costs below zero. On the other hand, there is no limit to the process potential we can achieve. Process evolution concerns the numerator (the output), not the denominator (the costs) in the efficiency equation above.
Change in Process Evolution = New Output / Old Output (Assuming costs are held constant)
By focusing on process evolution instead of costs we can continue to increase our output forever. We just have to make sure that the output increases faster than the costs. Then what we have is incremental improvement. But what procedures can you use to achieve this?
Process Training
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is workin
Phrases like “walk the talk” and “lead by example” are commonplace management and leadership language. These phrases provide frameworks for discussion on effective leadership. I’ve even used them in past articles. That said, I want to make the case today that it is not enough in today’s marketplace to simply “walk the talk” or “lead by example”. Both of these phrases lack the intent to change and improve. Change is always happening and continuous improvement is vital to our businesses today. Consider this alternative phrase instead: “Improve to Lead.”When have you ever heard the phrase, “improve to lead”? I can’t imagine you, or too many others, are nodding your heads right now and thinking, “sure, I h
A Cost Reduction and Procedures Training Case Study
A company decreases costs by switching suppliers and using cheaper materials for their manufacturing process. Now the purchasing department is happy they are saving money. The bottom line is starting to look better as profits initially increase. And so this improved the process, right? Well...
But then complaints start rolling in from the field. Products are breaking down faster. Technical support costs rise, and customers start reducing their orders. Not only do profits evaporate, but customer goodwill does too. To offset this, your first reaction might be to switch back to the old supplier. This is much easier and it fixes the immediate problem, but it won't recapture the lost sales, customers and damage to the company’s reputation.
But, again, you need to focus on the most important issue. There is a limit to the amount of costs one can reduce in any process – zero. You can’t reduce costs below zero. On the other hand, there is no limit to the process potential we can achieve. Process evolution concerns the numerator (the output), not the denominator (the costs) in the efficiency equation above.
Change in Process Evolution = New Output / Old Output (Assuming costs are held constant)
By focusing on process evolution instead of costs we can continue to increase our output forever. We just have to make sure that the output increases faster than the costs. Then what we have is incremental improvement. But what procedures can you use to achieve this?
Process Training
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is workin
You will soon graduate and begin your professional career. Naturally, you want to experience career success and fulfillment. What follows are ten steps which will help you get your career off to a great start. These strategies and principles will also help you to be successful throughout your career and to make a significant contribution.1. Know your talents and skills.You will be most effective in a career which uses your best and most enjoyable abilities. How can you discover your talents and skills? Look for them in your favorite achievements, no matter how small the accomplishments.You can also find clues to your talents by analyzing things you love to do, love to learn, and even love t
But, again, you need to focus on the most important issue. There is a limit to the amount of costs one can reduce in any process – zero. You can’t reduce costs below zero. On the other hand, there is no limit to the process potential we can achieve. Process evolution concerns the numerator (the output), not the denominator (the costs) in the efficiency equation above.
Change in Process Evolution = New Output / Old Output (Assuming costs are held constant)
By focusing on process evolution instead of costs we can continue to increase our output forever. We just have to make sure that the output increases faster than the costs. Then what we have is incremental improvement. But what procedures can you use to achieve this?
Process Training
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is workin
I suspect that everyone has an idea of what lamination is even if you have only seen it in passing. Restaurant menus are a common example. A plastic finish is placed over the menu to protect it from food and stains. But did you know that you can laminate just about anything that is flat? If it needs to be protected and reused, it is something to consider for lamination. The laminate also makes the original material stronger and more durable. All of our signs can be laminated, but the reasons are varied and not all signs should be laminated.A number of our customers have fondly taken to our dry erase laminate. They can have engineering plans, tables, or other diagrams printed on almost any of our subs
It’s all about collecting feedback to set the right priorities for your change process. You need feedback to drive the change process. The more feedback you get the better you will be able to evolve your process. So let’s take a look at what your change process needs to include.
1. Feedback Records with Deficiency Notations
2. Trend Analysis
3. Corrective Action Process and Criteria for action
4. Audit Process
5. Management Review Process
And then ask yourself the following questions about your change process:
• Are process feedback records created?
• Have the feedback records been analyzed for process deficiencies?
• Are the deficiencies analyzed for statistical significance?
• Are the deficiencies of statistical significance written up for corrective action?
• Is corrective/preventive action implemented?
• Is there an objective review of all processes to ensure the change process is working?
• Does management review all findings to ensure the change process is working -- and that processes are evolving to meet or exceed organizational requirements?
Next week: Business Modeling
With these thoughts in mind, you can see how important it is to first define continuous improvement and note how it can actually affect your business.
But you can't gather feedback from all processes at once. If you did, that would generate a process overload. So where do you start?
Next time we will show you show how when we discuss business modeling. Business modeling prioritizes which core processes you should improve. It tells you which processes are most important to not only achieve your company goals - but also to survive as a profitable business.
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