Wednesday, 24 May 2017

Importance of Key performance indicators (KPI’s) for organizational transformation and the role of business head

As renowned management guru Peter Ducker says “what gets measured gets improved.”

In an organization, there are so many interactions, activities, transactions are happening across the functions or value chain.At the end of the day, only a few activities result in performance. The performance could be productivity improvement, profitability increase, sales increase, morale improvement etc.Some performances are not negotiable, vital for organizational profitability and growth and those performances are called Key performance indicators (KPI's). That means those performance indicators measure the organizational health. 

Even though key performance indicators will vary industry to industry and organization-specific, but most of the KPI’s fall under the broad categories of productivity, quality, cost, delivery aspects only.

Why is Key performance Indicators (KPI's) required?

Identifying and setting the KPI targets helps the organization 
1. To focus on the important deliverables
2. To bring the people together towards one goal
3. To improve the accountability
4. To improve the communication among the stakeholders
5. To know the reality against the desirables target at any point in time
6. To take course correction based on the reality vs target

How to implement Key performance Indicators or performance management for the organization?

Even though KPI and target setting can be done at the business level, functional level and individual level, the organization (especially SME organization) can start with business level .Once the organization becomes familiar with the business level performance management system, they can further deploy down to functional and individual level.

Assuming that SME organization like to implement the Performance management system at the organization level, the following steps would be useful.

1. Identify the Criteria under which key performance indicators (KPI’s) are measured. For example, SME organization can classify the business objectives into criteria like Productivity, Quality, Cost, Delivery, and Engagement.
2. In each criterion, identify the key performance measurements which are important to the business. For example, under productivity, one of the key performance indicators could be OEE (Overall Equipment Effectiveness) or sales per employee.
3. For each of the KPI’s, realistic target can be fixed.This target can be arrived based on historical performance or futuristic aspirations.
4. For each KPI's, people responsibility can be assigned 
5. Once target is fixed for all key performance indicators in each category, it can be tracked every month against the reality or actual performance

Role of Business head or CEO in performance management 

Setting the business goals and showing the direction is one of the prime responsibilities of the business head or CEO.While setting the target, the head must have done his homework and set the target with conviction. The target should not be too much aspiration and unrealistic, it must be achievable by the team in a given time, resource and capability. Also, the target should not be too lenient with incremental increase as this may not be too much motivation for the team to work upon.

In most of SME’s as we use to observe that the CEO or business head himself not convinced about the target, but would like to push the team by giving too much unrealistic target and sometimes he is also pessimistic about the target achievement and set very low. In both cases, CEO or business head’s communication tone, body language would reflect his uncertainty mindset to the team.

If CEO or business head set the target with conviction, he would be more certain about the target and he would drive them by any means to achieve the target. In addition, his conviction would help to grab the opportunity to meet the target. In addition, the team gets motivated when they are working for real, aspirational goals under the visionary leadership.

For example, in one of our SME client organization, the business head set the production target as 10 T / day with conviction and taking into the confidence of his entire team.In the mid of the financial year, when uncertainty happened in the existing customer's demand, his business plan got disturbed.Since he was very firm and convinced about the production KPI of 10 T / day, he went ahead with a different approach with his new customer in a short time to achieve the target of 10 T/ day.That achievement increased his confidence as well as improved the morale of his team.

       Eventually, Performance management helps to build an organization culture with the winning mindset towards solutions, performance and this will become a competitive advantage to the organization.

Tuesday, 28 March 2017

Business (Head ) Transformation - New Book

Saturday, 25 March 2017

How to develop problem-solving competency inside the organization?

Irrespective of industry and size of the organization, one of the common scenarios we observe in most of the organization is the inability to converge into the solutions approach for the chronic problems. Alternatively, we can say that most of the organizations lack on the problem-solving competency. When we say competency, it encompasses the knowledge of recognizing the problem, analyzing the causes from the reliable data, proposing the actions plan, implementing the measures and ensuring the problem does not recur.

Organization differs on the level of competency steps. If the senior management brings this one competency across levels and functions, then the organization sails through any business challenges.

In most of the organizations, we observe that lack of problem-solving competency prevails not due to lack of awareness on the problem-solving methodologies or tools and techniques. In fact, most of the organizations are aware of structured problem-solving methodologies like QC tools and its applications, 8D approach, A3 approach, six sigma methodologies, etc.

In my opinion, the inculcating problem-solving competency is more of mindset and culture building issues rather than on awareness issue. It is due to the lack of conducive environment or winning mindset culture as developed by the senior leadership team.

Clarity on the term “problem.”

Any gap between the target or desired status and reality or current status is a problem. The problem can be into tangible targets vs. actual as in sales turnover, profitability, launch timeline, etc. or in intangible areas like people expectations and the reality.

Whatever may be the gap or problem case, people across the functions and levels of hierarchy in the organization must have the mindset, competency to solve the problem. But in reality, in most of the organizations, senior leadership team struggles to bring the culture of continuous problem solving inside the organization.

Reason for not able to create the problem-solving culture

Some of the factors or behaviors of senior leadership team do not allow the people to get into structured problem-solving mindset.

1.    Not realizing the problem or trend 
2.    No structured, authentic data 
3.    Culture of jumping to quick solutions, once problem is identified
4.    Busy in firefighting and “somehow” resolving issues
5.    Hesitate to conclude the solutions approach or options
6.    No facilitation on arriving solutions approach
7.    No risk taking or rewarding risk takers

Solutions approach to create problem-solving mindset and culture inside the organization 

Obviously, the people have to be given education exposure to different problem-solving methodologies, tools, and techniques. Assuming that education or awareness part is taken care, the senior leadership team has more responsibility to create a conducive environment or demonstrate consistent behavior towards solving problems. The following solutions approaches are recommended

1. Building an environment to collect authentic, consistent data from source
2. Encouraging discussion based on facts rather than opinions.
3. Creating a routine forum or reviews to discuss the problems and solutions approach
4. Encouraging open debate and idea generation by keeping ego aside
5. Allowing others to talk and listen more for insights
6. Encouraging people to take risk and experiment with solutions approach
7. Differentiating and recognizing problem solvers 

In today’s competitive environment, one of the differentiators and competitive edge for the organization is to create more problem solvers and to create a culture of problem-solving mindset across levels and functions!

Wednesday, 22 February 2017

Holistic Lean System Thinking approach for business profitability

The objective of this presentation is to create awareness to SME business owners on the following. 

1.The reason why do your business struggle to deliver profitability? 
2. Solutions approach to improve profitability and growth through proven , holistic lean system thinking approach 
3.Case study examples of business transformation using lean system thinking approach.

Thursday, 26 January 2017

Understanding Operations Excellence

Operations Excellence is a journey towards creating a continuous improvement culture inside the organization to meet the customer's requirements consistently.

For any business, the customer is the central focus point. The customer's expectation from the organization is to provide the product or service on time, with quality and reasonable price point. To meet this customer's needs, internally the organization must have dynamic, capable team to deliver. 

Hence, Organisation's initiative must focus internally organizational capability to deliver the customer's requirement consistently. That is operational excellence which is the continous effort by nature.

Tuesday, 29 November 2016

Important Management Concepts,Tools and Techniques for Profitability and Growth

Overall Equipment Effectiveness

This is one of the performance measures to assess the effectiveness of your critical equipment or manufacturing line. Through this one measure, you shall holistically understand the utilization, people efficiency, and quality of product. One of the powerful operational excellence measurements

ABC Analysis

This analysis helps to put the different control mechanism of your inventory.Basically, this helps to classify your inventory into high value consumption items, low value consummation items and medium value consumption items.Based on the classification, you can implement different inventory control measures like norm settings, storage Qty, ordering frequency, reporting and reviews etc. 

Root Cause Analysis

For any problem, there could be many causes contributing to the effect. This root cause analysis helps to list down all the possible causes in structured formats and then validating each cause, filtering the possible causes into probable causes and each probable cause, going in-depth to understand the root. Some of the tools and techniques are used in Root cause analysis are brainstorming, cause and effect diagram, why why analysis etc.

Total Employee Engagement

This is a concept to involve or engage all the employees towards contributing the organizational goal. Each level of employees needs different engagement, motivation and their contribution level towards an organizational goal is different, this involves designing and execution of various engagement drives, forums, initiatives, rewards and recognition etc... Some of the popular engagement initiatives are suggestion schemes, small group activities, cross-functional team participation etc.

Small Group Activities

As part of total employee engagement, in these small group activities, employees are encouraged to form a team to solve particular organizational problems, plan and execute the solutions to the problem, being recognized and dissolve the team. Primarily it is targeted at front line operators and administrators to resolve the problems relating to their work areas. areas. Most of the small group activities use simple, structured problem solving methodologies, tools and techniques under the guidance of a leader.

Key Performance Indicators (KPI)

There could be so many activities you may be performing and watching.But at the end of the day, only few activities, and its effectiveness matters to organizational profitability and growth. This Key performance indicator (KPI) as the term itself implies identifies important parameters at business level, functional level.Those parameters are specified with the right unit of measure, current level, and desired target level.

Quick Changeover Techniques

One of the wastes in any manufacturing or service system is time loss due to change over from one product type to another type. This changeover loss can happen in a machine like die setting, tool settings, comp replenishment in assembly and so on.Changeover loss is the time loss between producing last pieces of product A to the first good piece of product B. This changeover loss is significant in certain manufacturing or service system. This quick changeover technique comes with a structured way of organizing the changeover process. Some of the concepts are single minute exchange of dies (SMED), one touch exchange of dies (OTED).

Structured Problem Solving Methodologies

The tendency to solving problem is quick fix and move on, later stage again working on the same problem as fire fighting mindset. This structured problem solving methodologies comes with a systematic process of solving any problem. The typical steps include defining the problem, data collection, prioritization, analysis of causes, root cause analysis, defining action plan, implementing the action plan, check the results, and then again take the counter measures until reaching the desired solution.
There are various methodologies and approaches available to solve problems like six sigma approach, 8D, traditional problem solving using QC tools and techniques.Fundamentally, all the methodologies use the P-D-C-A approach only  
Pareto Principle

This principle is also known as 80 / 20 rule for approaching any problem. It is based on the assumption that roughly 80 % of the effect come from 20 % of the causes. This principle can be applied for any problems like revenue maximization, cost reduction, quality improvement etc.

Mistake Proofing Techniques

In any human work, there is chance for making errors. This mistake proofing techniques aims to prevent the error at the source or at least detect the error after it occurred so that it would not be passed to the next stage or customer. This technique comes with different ideas to prevent or detect the error at the source. This can be applied any environment where there is scope for human error.

Visual Management

One of the powerful concepts in management is visual management. It consists of visual display, visual metrics and visual controls. Effective planning and implementation of visual management systems helps in improving communication, problem exposing and solving at the right time, improving the people engagement across the organization. It can be applied in both manufacturing and service areas as well

Principles of ergonomics

One of the micro productivity tools is an application of ergonomics. This discipline mainly concerns about the human and work  relationship.Mainly its focus on optimizing the four factors like person, tool, work and environment.
Talent Mapping
One of the strategic and tactic tool for people development. This will help to map the people on potential and performance basis. This will help to diagnose the organizational person's strength as well as to plan the development plan for the individual.This mapping requires a high level of maturity and judgment.

Competency Mapping 

One of the tools is to assess and map the skill, knowledge, and behavior requirement for a particular position and the incumbent existing level. This will help to develop the competency of individual through either online or offline training, coaching, mentoring etc.

Value Stream Mapping

This lean visualization technique will help to map the entire supply chain process from end to end. This will help to see the current state of the material flow, process flow and information flow across the organization. It also helps to identify the waste elimination or reduction opportunities at the big picture level. This can be used as a blueprint for future improvements of organizational supply chain activities.This is the basis before starting any lean initiatives in the organization.

Project Management

Other than operational activities, all activities can be considered as a project. This project management discipline comes with a set of techniques, methodologies to plan and execute the projects to achieve planned, on time execution, planned quality achievements, and planned. Cost targets. The knowledge, tools and techniques of project management can be applied for new product development, new plant expansion or initiating any new change management initiatives.

The Cost of Quality

This one of the holistic measures of cost associated with product and service quality in the organization. This measure helps to see the cost associated with quality in different perspectives and helps to drive the organization holistically on improvising the quality in each stage than looking at the cost of quality in isolated functions or areas.

Maintenance Management

This management is all about effective usage of assets like machinery and utilities. This covers the aspects of breakdown maintenance, preventive maintenance, planned maintenance, empowering the operation people to own the equipment, spares management, reliability maintenance etc. 

Quality Assurance

This is more about ensuring quality built at each stage of product development and manufacturing process rather than controlling the quality at each stage.It is more about engineering, problem solving at source, culture building on continuous improvement, proactive management than reactive management.

Inventory Turn

One of the basic measures of inventory management. It measures the efficiency of inventory level w.r.t organizational sales level. It is measured as the ratio of sales Qty to average inventory level at a given time. This measure helps to track how efficiently management rotates the inventory stock w.r.t sales 

Break Even Analysis

Break even analysis is important to plan your finance and cost management.The breakeven point is when you get neither profit nor loss, beyond break even, you generate positive cash flow or profit. This analysis is required whenever you are planning for expansion, new product introduction or even in your existing business. This will help to plan your production or sales, expenses and even your working capital.

Lost Order Analysis

Lost order Analysis is all about  analyzing the past orders, which you lost to competition. This analysis on a frequent basis will help you to get new insight on competition, pricing, internal flexibility and from that learning, you can change your strategy and tactics to convert the potential customers into regular ones.

Flow Manufacturing

One of the lean manufacturing concepts, where in you are converting RM into FG with minimal or no delay in the flow. Single piece flow is one of the idealistic measures of flow manufacturing. To bring the idealistic state of single piece flow, you need to improve on imbalance factor in your production rate, rejection control, equipment utilization, and work standardization, plant layout improvement, communication improvement etc.The ultimate business measure is lead-time reduction from the day you receive order to fulfilling the order to customer.

Line Balancing

One of the flow manufacturing techniques is balancing the production line or cell w.r.t Takt Time or customer pace.

Takt Time

TAKT time is defined time at which rate customer is expecting his product to be produced. For example, if takt time is 1 min, the customer is expecting one product must be rolled out every one min.Accordingly, you need to internally balance your entire manufacturing process within or equal to 1 min.

Lead Time

Lead time is the time  the system takes to deliver the product or service from the moment you receive the order to deliver to the customer. It comprises both value added and non value added activities . This lead-time reduction must be one of your key performance indicators as this reflects the system efficiency in totality.

Cycle Time

This is the time taken to produce one item. It consists of value added time. Your focus must be on reducing the process cycle time if it is constraint for delivery 

Changeover Time

The time elapsed between the good products produced of comp one to the good product produced of comp 2. It includes setting of tools/ dies and adjustments of equipment or tool to achieve the quality requirement of the product.

Product Vs Process Layout 

The way the plant  equipments, processes organized in terms of process or product layout has major implication on your material flow, lead time  and information flow.The plant layout has to be  reloaded depends on the product varieties and volume.

Housekeeping Principles

The fundamental of operational excellence is keeping the house in order. The important principles of housekeeping are as follows
Keep what you really need
Provide a location for each part
Provide identification for each part
Establish process for cleaning and sustaining

Failure Mode Effect Analysis (FMEA)

One of the quality assurance tools which can be used for existing and new design and process. It is basically looking at the risk associated with the design or process from the customer‘s perspective. The risk can be primarily related to quality and safety. This tool can be used in design, process and service area as well.

Statistical Process Control (SPC)

Statistical process control is a method of quality control, which uses statistical methods to monitor, and control a process.SPC can be applied in any manufacturing process where the process parameter can be measured against the target specification. This can be taught to operating people and quality can be controlled at source level.

Control Charts 

Control charts are  Statistical process control (SPC) tool used to determine if a manufacturing or business process is in a state of control or not. There are various types of control charts depending on the process observation type viz variables and attributes. This can be taught to operating people and quality can be controlled at source level.

Gantt chart

A simple visual tool that shows the plan vs actual status of any activity at any given time.It can be used for tracking the progress of actions in project environment as well as in an operational environment.

Why Why Analysis

One of the technique to find the root cause of the problem is why why analysis. In this method, each probable cause will be questioned to deeper level to get the root cause of the problem.

Factory Master Plan

The factory master plan is a strategic planning process in which you are planning your future business, say 3-5 yrs timeline from all perspectives. This will help to plan your resources like finance, people, capability improvement etc. This is a dynamic process and needs to be done periodically

Lean Manufacturing

Lean manufacturing system can be understood by relating to the human body. If the person appears “lean”, then  the general assumption is that he/she   is free from unnecessary FAT in the  body, hence free from unnecessary side effects  like BP, Pain in joints, laziness etc.  And the person is perceived as healthy, more flexible, active etc.
 The same way ,Lean manufacturing  means , manufacturing system  is free from unnecessary fats like high inventory, high rejection, high breakdowns or line stoppages factors etc  which leads to more flexible in delivery, less lead time, first time right , low cost of manufacturing and free flow of communication etc .

Lean System Thinking

Lean System or Lean Organization means free from unnecessary waste in the entire value chain starting from extended supply chain system to the customer, even after sales service system. 
Lean system Thinking is more than the application of Tools and Techniques. 
It is a culture of continuous improvement   or a way of working or winning mindset of everyone working for the organization.

Value  Chain analysis

This is one of the management initiatives to understand the cost stack up in each product and analyzing the opportunity to take out the cost through kaizen, process improvement, waste elimination or reduction, material yield improvements, supply chain initiatives etc. 

Product Pricing Analysis

A  Systematic analysis of cost stack up in product cost and identifying opportunity for cost takeout without affecting the customer’s deliverables

SWOT Analysis

A systematic assessment of organizational strength, weakness, opportunity and threat from marketing, product, people, resource point of view. This is strategic, dynamic process and needs to be done periodically by the senior leadership team. 

Monday, 27 June 2016

Growth Vs Survival Mindset

     As head of the organization, your belief  about your business either as growth oriented or survival oriented  determines your business growth.

     If you look at your business only as profit making motive, you tend to make profit somehow, irrespective of adhering to process,ethics,considering the interest of all stakeholders, long-term sustainability  of business.

      Instead, if you can change your perspective  to look at the  purpose of business as to  “Enhance the value to all stakeholders”. This will improve your thought process towards long-term sustainable business decisions. As there are many stakeholders like employees, customers, suppliers, banking finance institutions, promoters, Government ,society etc  and each stakeholder has different interest or value expectation from the organization. For example , as employee, the value expectation would be good pay, learning, and growth opportunities, as customers, the value expectation would be best product or service for the money, as suppliers, the value expectation would be regular orders, on time payment etc. It is your prime responsibility to enhance the value to stakeholders in a sustainable basis for which sustainable wealth creation is the path.

     If you have this perspective about the purpose of the business, your  approach and thought process would be on building solid foundation on process, systems, technology and talent management , in turn your visionary approach would be long term oriented even though sometimes you lose in short term. That is the Growth mindset of a a CEO of successful organization in the world.