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.

Friday, 17 June 2016

Implication of Takt Time Assessment

As said earlier, Takt time is calculated with the input as "Customer Demand during a specific period".Assessment of Takt time against Cycle time has multiple benefits both at Organisation / Plant  Level and Function / Unit Level.

Takt Time Assessment can be used as Strategic as well as Tactic Tool 

On strategic level, it helps to plan the resources on short and medium term

On operational level, it helps to optimize the resources on short term 


Implication of Takt Time @ Plant / Organisation Level


It helps 

•To identify the constraints to deliver the customer requirements at plant level
•To plan short term and medium term plan to mitigate the constraints
•To plan the resources  or manpower across the plant activities

Implication of Takt Time @ Functional / Cell Level 





It helps 

•To identify the imbalance between the process 
•To plan short term and medium term plan to reduce the imbalance factors 
•To optimize the  resources  or manpower within the cell 




Sunday, 12 June 2016

Takt Time

Takt time  is the calculated time, that indicates us  
with what speed or pace we have to produce a certain product to fulfill the customer’s demand.

Takt Time = Available time per period / Customer’s demand per period

For example ,

Available time per period =480 min per shift
Customer demand  =500 units per shift,

Then,

Takt Time = 480 / 500 
                  =0.96 min

i.e  Every 0.96 min,one unit to be rolled out  to meet the customer’s demand

Wednesday, 8 June 2016

Understanding “Time Elements in Operations Management"

Cycle Time

Cycle time is the time required to process one piece

For example,

Grinding Cycle time = 100 sec

It includes,

Loading Cycle time + Auto Cycle time + Unloading time

=20 sec +75 sec +5 sec

=100 sec

ie Every 100 sec , we can get one component 

Throughput Time 

Throughput time = Sum of ( Cycle time in entire process of a component)

Total processing time for one component

For example,

Bearing ring throughput time = 240 sec

It means

Parting cycle time +Grinding cycle time +Turning cycle time

=60 sec +100 sec+80 sec

=240 sec

ie To process one bearing ring, total time required is 240 sec


Lead time 


Lead Time = Sum of ( Cycle time in entire process of a component) + all non value added times in the system

ie  Lead time = Throughput time + all waste / delay time in the system

For example,

Bearing Lead time = 2 days , 

It means = 240 sec+all delays leads to 2 days

Monday, 30 May 2016

Why do some organizations engage in business transformation drive and others are not...?

Unlike large organizations, small organizations are governed and managed by promoter, family members, or the CEO as hand-picked by the promoter. The growth of the organization mostly depends on the mindset, managerial style of the promoter and CEO. We can classify smaller size organizations into three types based on the mindset of the leadership team.

Growth Mindset:

 The leadership  team continually strives for growth and eventually transforms the organization from small to  mid size and large organization. They continuously engage in transformation initiatives across the organizations.

Mediocre Mindset:

The leadership  team focuses more on maintaining the legacy and feel comfort with the status quo, even though they aspire to grow. Occasionally, they drive localized, standalone productivity, cost efficiency initiatives to manage the external demand especially from its customers.

Survival Mindset:

The management team struggles for survival itself due to  deficiency of financial funding or lack of market for product etc. Sooner than never, they disappear from current business or switch to an alternative.

Out of all three types of organizations, more education, facilitation  and hand holding are required for mediocre organizations. They could not drive organizational transformation initiatives  due to the following factors.
  
Before getting into factors, let us  understand the meaning of organizational transformation drive.It is  holistically looking at the value chain of the business with the intention of enhancing value to all stakeholders. In this initiative, the business and functional process would be reengineered  in terms of  performance measurement and tracking , constraints in the entire value chain, roadmap for eliminating the constraints and improving the value, ease of communication process with  both  internal and external customers etc. 

Typically, this organizational transformation effort result in radical change in either one or all of the following aspects 

1.Increase in business sales performance and profitability on a sustainable basis
2.A major shift in delivering the product or service experience to customers
3.Shift in people’s  thinking, engagement  towards business process and results



Organizational transformation happens in stages, after which there is no look back to the previous level.

Organizational  transformation is not a

1. Small, incremental productivity improvement in a localized area
2. Standalone initiative, which brings down cost or  improves product / service quality one time


Factors affecting organizational  transformation Initiatives


The Head of the business or CEO’s belief and involvement is vital for the business transformation initiative.

The following factors contribute to the success of  organizational  transformation initiatives

1. Compelling need or urge to CEO or head of the organization to transform. This need can be SURVIVAL threat or pressure from customers to be competitive.
2. Firm belief in the future prospects of the business 3. Willingness to learn and experiment new methods or practices, ability to forego short-term losses against long-term benefits
4. Belief and support from the second level  management  team about the transformation process
5. External facilitation to teach, facilitate, guide, criticize and handhold the team during the transition.

In the absence of the above, the organization finds difficult to pursue any  transformation initiatives

Solutions approach to bring the mindset change:

There is a need for creating awareness to leadership team  about their management style and its impact on the long-term survival of the organization.

They  need to be educated to diagnose the health of the organization in a quantitative  and qualitative manner, as from our experience with many SME’s, most of the small size promoters or CEO  do  not have the exposure to look at the all business performance from long term perspectives. 

They need to be exposed to the different industries and its practices, lean system thinking, employee engagement practices, modern performance management process and customer relationship practices. Here only the role of business associations, external facilitators, or coaches comes in a big way.

In today’s globalized competitive environment, sustaining the profitability through transformational initiative is no more an option. It becomes a survival need!

Monday, 25 January 2016

How to identify the opportunities at BIG PICTURE perspective

       In organization ,throughout the value chain , there are numerous opportunities for value improvement or waste elimination / reduction.Since the resource availability and time is being constraint, it is wise to focus on the critical or constraint facilties to improve so that overall value enhancement will be improved

    Most of the organizations are tuned to do improvements , but in localized area or in assorted manner which results in INCREMENTAL improvement in value chain.

When as team from different cross functions  identify the macro level opportunities to improve the roadmap, it gives focus and direction to entire team to work upon.By this way , team engagement will also be improved.

There are Two methods by  which we can identify the constraint or opportunities at organization level

1. By past data and experience
2. Applying Value stream Mapping

     1.By past data and experience:

With past experience and data, team can identify the constraint facilties with the following criteria
Facility which is giving lowest output and affecting the plant output
Facility which is producing higher percentage of total revenue
Facility which is utilized very low and affecting the entire flow
Facility which is producing inconsisitentcy quaiity output and affects the leadtime

2. Applying Value stream Mapping :

Value stream mapping is a visualization tool derived from toyoto production system of lean manufacturing .