Leveraging Low cost automation for Cost Effectiveness

Even though the challenges for both large and small organizations are broadly same like increase in labor cost, non-availability of people, pressure on pricing, increase in expectation on quality standards and service, the large organizations are adopting automation of processes to some extent to mitigate the challenges, the small organizations are struggling to get most out of the automation.

While some of the SME business heads are getting exposed to innovative automotive trends like robotics, machine learning, artificial intelligence, and industrial 4.0; either they become scared of those developments, or some people are feeling guilty of not being updated in the organization and trying to look for automation.

In my view, those innovative trends are catching up and need to be evaluated on the investment and adaptability to small size organizations. Even large size organizations are in the investigation and preliminary implementation stages in the organization except a few, who leveraged the benefits mostly on the robotics application. We need to learn and watch the trend, and as far as small size organization is concerned, a lot of opportunities are yet to be explored in low-cost automation itself.

In this article, i have tried out to give an overview of leveraging low-cost automation possibilities in small, emerging organizations for cost-effectiveness.

Level of Automation in SME organization

I can classify the automation implementation  in SME's in 2 phases viz

• Basic Automation Implementation
• Advanced Automation Implementation

Basic Automation can be defined as the creation and application of technology, which makes equipment, process or a system operate automatically with or partial involvement of people.

Advanced  Automation systems represent a level of capability and performance that surpass in many ways the abilities of humans to accomplish the activities. 

Most of the SME's are in the stage of leveraging basic automation only and i dwell more on the basic automation and its application areas, challenges, and solution approach in implementing organization-wide basic automation system.

Why business head is reluctant to automation so far?

There are many factors that contribute to low-level interest in automation and in my personal experience, the following are the reasons

1. Lack of shifting the focus on people dependence on automation:

Most of the SME's are still comfortable and dependant on manpower even though the realization started on the need for automation wherever the repetition of the process, need of skill requirement. The business heads are feeling more comfortable and convenient to hire and deploy people than looking for automation solutions and upgrading to unknown subjects.

2. Investment:

some organizations are reluctant to the investment and comfortable with the recurring expenses.

3. Lack of supporting system:

Even though the organization is ready to move from manual to automation and for the investment, they are not getting the required support in terms of reliable sources for automation, after service and support, internal people training, irregularity on the power source, inconsistency in the parts.

Now things are changing in all the above factors thanks to compelling pressure on the competitive pricing and the change in the ecosystem for automation. But we need to go a long way in bringing in awareness and creating an environment for thinking towards automation and successful implementation.

some organizations in SME have consistently focus and investing in automation, and hopefully, this will continue, and there will be a widespread focus on automation.

Opportunity areas for automation in small, emerging organizations

Conditions under which we should consider automation?

1. Massive material movement by manually or semi-automatic  which leads to accidents, fatigue or delay or low efficiency
2. Too much dependant of human intervention in ensuring process parameters which leads to quality problems like defects and defectives, rework
3. The repetitive and standard process where fatigue seems to exist

Primarily, when there is a need for

1. Accident prevention and ensuring safety
2. Improving manpower efficiency
3. Ensuring process and product quality

Typical application areas for automation

1. Movement of materials through material handling systems ( trolleys, hand pallets, stackers, conveyors, cranes, etc
2.  Reducing the dependence on manual intervention in a repetitive process like 100 % inspection or sampling inspection, where it is unavoidable to bring it under process quality through test rigs and scanners etc

3. Reducing the dependency on manual intervention where process consistency is important like molten metal pouring, chemical, powder mixing and in some cases automating loading and unloading the components in the machine

4.Avoidance of human intervention in mere data collections like attendance, machine utilization data, people efficiency details through software, data capturing devices 

Should we give strategic importance to automation initiatives or let it be operational initiatives?

In order to bring holistic achievement in the automation, the business head should give strategic importance to the automation initiatives. I mean, the business head should look at the business processes and manufacturing process in a holistic way for optimizing the resources through the automation route. 

Instead of trying automation in a localized, opportunities areas, if the business head looks at the overall opportunities in the system, identifying potential areas, forming core groups, evaluate the cost-benefit analysis, partnering with right solutions providers, involve all the stakeholders and implement as an important initiative, the benefit would be huge compared to the standalone, ad-hoc way of initiating some automation in the system.



How to identify opportunities for automation projects?

Automation opportunities can be identified at the overall business process level and within the process, in each elemental level, automation can be identified.

This can be done using process mapping techniques and micro elemental analysis.

Process Mapping Techniques:

for example, you consider one commodity or RM, and you can map the process from the moment it enters the security gate for GRN entry to final FG dispatch as shown in typical process mapping.

In each business process, the team should ask the following questions.

1. Is there a possibility for automation to improve the safety, efficiency, and accuracy of the process?

the team should look at each process only from the lens of AUTOMATION to get the benefit of quality, efficiency, and improving safety aspects. Most of the time, we are using a different lens like waste elimination, variation reduction, people interface etc, sometimes we overlook the possibilities of automation. of course all the waste elimination and reduction methodology may ultimately lead to automation, but when we go through the process only from the automation benefits like efficiency improvement, safety practices improvement, and quality improvements, there is a high probability to find automation projects.

After identifying the potential projects, the team can do the techno, commercial benefits evaluations to select the highest potential automation projects.

Micro Elemental Analysis for identifying the  Automation opportunities:

Another approach is using micro elemental analysis in which the engineer list down the operations into elements and each element is being questioned for the improvement through low-cost automation possibilities.

For example, in one of my client operations, they engage in press shop operations and when the process engineer lists down the elements like Picking the comp, loading, pressing, ejecting and unloading the component, they identified opportunities to eliminate ejecting and unloading by providing low-cost automation which takes cares of ejecting and unloading into the container automatically once the pressing operation is over.

The point is for the small organization, we need both approaches to identify the potential opportunities for automation.

Levels of Automation :

1. Fixtures / simple low cost mechanical/ Hydraulic / Pneumatic  setups
2. Material Handling facilities
3. Low-cost Special Purpose machines
4. Standalone High-cost automation
5. Integrating multiple machines and human interfaces

A typical checklist for successful automation projects

In most of the SME organizations, one common pattern i am seeing is that the organization is not getting the benefit of the automation even though the concept or the intention behind the automation projects was clearly thought-out and articulated.

The success will be materialized only when the team ensures some of the factors right from conceptualization to operationalizing the automation in line with customer's demand or flexibility.

The following factors need to be considered in the planning and execution stage to get the full benefit of the automation.

• Clarity on the objective of automation, whether the automation is meant for efficiency or safety or quality or the combination of all.
• Conceptual idea or drawing about the automation before discussing with the external service provider
• Desirable cycle time and matching with existing and future takt time requirements
• Selection of reliable source who is having integration experience in electro, mechanical and digital space
• Ergonomics consideration
• Availability of spares requirement
• Basic maintenance guidelines and adherence
• Meeting return on investment as per organizational guidelines

Like any other initiative, when the automation initiatives are conceptualized holistically and executed correctly by involving all the stakeholders, any automation will give more significant benefits to the organization.

Managing the uncertainties in small,emerging organization

Coping with COVID 19 aftermath effect in small, emerging Organizations?

General Note :

This article is mainly for the Business Heads or CEO of the small, emerging organization with manufacturing facilities on dealing with the uncertainty due to COVID 19 lockdown and aftermath effect.

Since each organization is unique in terms of customer segment/demand pattern, operating cycle, working capital requirements, and cash flow cycle, I have given a generic solution approach only, and you can relate with your organization. Accordingly, you need to add/ modify the plan.

I have divided the discussion into three parts

1. Things to be done during the lockdown 

2. Managing the situations immediately after lockdown 

3. Learning and preparing for future-fit

As we are going to discuss the short term crisis management plan and future-fit in the long term with our limited experience in ever crisis, as we have seen in our generations. There may be changes in the demand, cash flow, business practices, or even business model, those things, in my opinion, we can tackle relatively easy with collective learning and collaboration. What is required at this moment for the leader is a healthy emotional balance to cope with the challenges.

To enhance your emotional strength, sharing some of the perspectives

1. You are destined to be an entrepreneur for a reason. As per one of the latest survey, only 5% of the 7 billion population belongs to the entrepreneur group. First, you need to feel proud of it. The purpose of entrepreneurship is more than money, i.e., fulfilling the society's needs at large or making a meaningful impact on humanity. You are one of 5 % of the entrepreneur population. When you realize this fact and feel the privilege that you have got in life, that brings you high self-esteem within you. That high self-esteem gives tremendous power to solve any challenges. First, feel good and feel responsible for being part of the solution provider fraternity.

2. Accept the reality that this lockdown or perceived slowdown post lockdown is not something you created, it happened by nature as a balancing act and you and I am part of it. Let us accept it. Once you accept, you are moving out of your denial, blaming Government, comparing other countries and you are in a position to take the challenge and look forward solution approach.

3. Also just reflect your past, even though we have not seen such lockdown and post lockdown scenarios in our lifetime, we have faced similar situations or helpless situation. 

 For example, we have been part of 2008 recession with a lot of uncertainty and other regional uncertainties like flood situations, demonetization effect, epidemic panic then and there in the last two decades. We faced all those challenges, and today still, we are standing tall now.

 Even you can relate some of the uncertainties you faced in your personal life, the moments you lost your dear ones in uncertain times, an accident happened at critical times, loss of employment and money, and so on. While those moments looked like dark, you came over all those challenges, and today you are still surviving. The point is when we are in the turbulent time, it looks like the path is dark and seems to be all is over. However, the time is potent and heels for everything. Those moments shall pass on.

4. We are better than those who lost their lives in this pandemic period, and those are struggling in a remote location, and we must be grateful for that. We need to have faith in our capability, life, and above all, the invisible force at this time.

The point is when you accept the reality, take responsibility for you and your people, your business, being grateful for everything in life and having faith in yourself and divine power that  will give a tremendous positive mind-shift to tackle the challenges. 

This mindset, courage, positive outlook, taking responsibility for everything, acceptance to reality is very much essential than any strategies, brilliance, and any other support from external.

With that positive mindset, let us get into managing the challenges in the short term and long term perspective

Short term  or during the lockdown period:

First , nobody knows precisely when this lockdown will be over, and normal life resumes even though different countries and the Government declares a different time frame. Assuming that this  lockdown continuous for another one or two months, as a business head, what you need to do by maintaining the balance between short term hard reality and the future aspiration and stakeholder's interest.

1.Taking care of your people:

                                                                          

It is the moral responsibility to take care of the people that are in your organization  as at the beginning of the lockdown. Ideally, you need to pay the salary irrespective of the rules or instruction from the Government. As I am fully aware of the pain of cashout situation without any revenue, I look at this gesture as a responsible citizen. 

Depending upon the size and mix of people category in your organization, you can have an open dialogue with the senior team. The people who are at the top of the pyramid shall be paid partial compensation with the understanding that dues will get paid before the end of the financial year if the business bounces back from the crisis then. Equally, the team's maturity is also essential in understanding the business situation. As a balancing act, they need to get what is minimum required to conduct the standard living at this point. 

You can initiate the discussion with the team and share your pain and work out the options depending upon the size of the organization. In my opinion, the bottom of org structure, say operating people can be compensated fully as their earning will ensure the standard living and also, the gesture will bring them emotionally closer to the organization, and this helps the organization in the long run.

      2.Engaging people:

As you are aware that habits die hard, whether it is good or bad. When people develop the new habit of staying home without many routine tasks, professional responsibility, and spending time in low productivity activities, bringing back to normal life, will take extra momentum. 

Also, the employees need to  be made understanding that this lockdown is a lifetime opportunity to reflect, learn some new competencies which will help them personally and professionally in the long term.

We can ask them to enroll in online courses related to their personal and professional development.I also shared some of the learning resources last week.

Alternatively, you can engage them by conducting or sharing some technical, behavioral, leadership development sessions through online thanks to technology. Some apps are offering a free or lowcost subscription for conducting webinars like zoom, GoToMeeting etc. In this process, your team members who are having an interest in teaching can take the lead and conduct short duration sessions.

Also you can ask the team members to present their functional knowledge to colleagues. This will help to improve the communication of your team members and improve cross-functional understanding.

Also, now you can develop the strategies, roadmap for improving your marketing visibilities, people development process, cost optimization potential projects , and similar activities which you have been thinking and postponing due to time constraints during regular days. You can ask your team to do the analysis and action plan in their respective areas, and you can review, facilitate in a cool manner. This way, you are making out your plan ready in your business and functional areas, and also, the team is engaged well during lockdown times. This planning process will help you once you resume the operation.

I have been insisting in my client organizations and some organizations have initiated marketing planning during the lockdown time

    3. Take a timeout for self-introspection on your leadership style :

 As a business head, your organization growth depends on your mindset, thought process and business practices as most of the time, you are the person influenced significant decisions, either good or bad, in the past. Your organization had grown to this level, predominately because of you. Now, this is the right time to think about your mindset related to you, your business, customer, process, and people. Now, this is the right time to practice new habits in your daily management, which will bring a positive culture in your organization.

I had recommended some of the resources last week which may be useful to you during this time to polish your personal leadership style.

 In fact, the working of the cashflow the requirement for the next 6 months in the different scenarios can be worked out, and the various options of mobilizing the cash can be figured out during lockdown time. This planning and risk mitigation work will give clarity of managing the reality when the operation resumes.

Immediately After lockdown:

When we resume the operations, the most likely concern area for most of the small business is in dealing with the following

1.      Demand Uncertainty
2.      Cash flow uncertainty
3.      Resources availability especially manpower

Let we understand each uncertainty in detail, and we discuss the workable solutions approach.

You need to relate with your organization and accordingly add/modify the solutions approach, as you may have all the data about your organization.

Demand Uncertainty:

The concern on the demand side is whether the demand would be similar to pre-COVID period or not?

Most likely the demand would not be prior to COVID period unless you are in the the business of FMCG product manufacturing or in essential items manufacturing category. However, the order will be picking up  gradually, and you need to think about how you can RAMP UP in line with demand. The timeframe is beyond our control, but ramping up in line with demand is still in our influence or control and with little planning, going in detail in all aspects, we certainly manage it.

How to manage the ramp-up in case you are in other than essential products?

•      First one or two weeks, you need to consume the existing RM and liquidating the current FG stocks. We need to watch the demand trend very closely, according to the pattern, we need to order the supply. Considering the lead time of your supply base, you can order within a few days of operation. The timing and quantity need to be worked out as critical action. This decision will vary for each organization as it depends on the existing stock situation, your customer segment, and the demand pattern.
•      Instead of running all the shifts and all the machines, try to go for a single shift for a few days or week, then look for shift expansion depending on the demand pattern and people's availability.
•      Instead of working six days, consolidate the demand requirements and complete in 4 or 5 days working pattern. This consolidation will help you to reduce your other manufacturing expenses by running idle as we accustomed to spread for working all the days.
•     Close coordination is required between the customer, internal planning team, procurement team, accounts team, and the business head in understanding the trend carefully and making timely decisions. Since everyone is anxious about the demand and urge not to lose the given order, there is a tendency for not going into detailing and planning on material and equipment. 
•     However, good coordination and team working, timely decisions will help the organization to come out of initial ramp-up challenges. As a business head, you need to include all the people in this process, and you need to anchor them, which seems to be new for you, and this delegation and minute reviews, facilitation need to be adopted at this point. 

Cashflow uncertainty:

This is one of the most concern/aspect of the business head in small, emerging business.

Unless  the organization is cash-rich  and  debt-free or having the discipline of parking 6 months working capital in short term investments, this period is challenging to manage, however, when you have faith in your long term health of the organization, you can manage through by taking some bold decision to mitigate the risk, and you need to learn the financial discipline from this crisis.

•     First, we need to get the data of outstanding payables and receivables. Assign your relevant team from accounts, sales, or any other related function depending upon your organizational structure as a Taskforce team to improve the collection and paying to the suppliers. (You need to consider your supplier also as they are small and in difficult situations on cashflow than you).
•      Parallelly, we need to work it out for the next 3 months with ramping up of demand, what would be the working capital required at the worst-case scenario, and an optimistic case scenario. This working will give you clarity on whether you can manage with the internal collection and payment method or should you go for the external debt assistance for pumping the money. This call needs to be taken at the earliest , and you need to make a bold decision as this will pay off once the situation improves. If you are not serving the exiting customer due to your own financial issues, you will get into the trap of losing the existing customers and at the same time paying your internal expenses without any returns.
•     This is the crucial time to meet your demand requirements and be on the flow of increasing the demand and getting the benefits. Any delay or wait and watch mode may put a risk of losing the existing order, and the future cashflow also gets worsen.
•    In fact, the working of the cashflow the requirement for the next 6 months in the different scenarios can be worked out, and the various options of mobilizing the cash can be figured out during lockdown time. This planning and risk mitigation work will give clarity of managing the reality when the operation resumes.

Resource availability, especially operating level manpower:

As discussed in the demand flow pattern, you can not expect full attendance from week1  and this also to be planned and monitored  inline with demand pattern as part of the up ramping process. Even during the normal period also, sourcing the right manpower was a challenge for small organization and post-COVID, this challenge will become severe. As most of the resources are migrant people, bringing the people to the organization by giving job security, a healthy environment, becomes an additional burden.

For some months down the line, we need to ensure social distancing, providing personal protection and other preventive measures inside the organization, which is new for most of the small organization. This will be a good measure for the individual and organizational health perspectives. Unless we give confidence to the working people on job security and the health preventive measures, ramping up the attendance would be difficult.

As mentioned in demand readiness and ramp-up, a special cross-functional to be formed to mobilize the  people from various agencies and need to be monitored on personal hygiene and protective measures for some time until normalcy restored at least.

During the first to the third week, managing resources and ensuring availability and meeting the delivery requirement would be a  prime task, and the key team must work closely, and the business head must focus only on this task.

All the above issues are look like common across all the organizations, the severity will vary between the organization depends on the existing process, customer, and internal realities. When you are mentally prepared in those critical areas, you can think and develop multiple options now.

Focus areas once normalcy restore:

The time frame we may not exactly know. However, once you are comfortable with the ramp-up, the focus must be given on reflecting the learnings and starting a new paradigm the way you are managing the business.

Key focus area must be

• Being "lean" in all aspects of business
• Bringing financial discipline 

Being lean in all aspects of business:

Irrespective of any crisis, the safest and responsible way to manage the business is " Working on the principles of CONSERVATISM".

We need to look at each business process and to eliminate and reduce the waste as much as possible. The question we must ask ourselves is whether we are using minimal resources and maximizing the output.

In some of the organization, with growth prospects visibility, we have developed the complacency in our attitude, and we got into the situation of

Excess equipment and investment

Excess debts

Excess manpower

Excess Inventory

Excess administrative expenses

While large size organizations are prudent on the expenses and conservative on the investments, return on investment, being small, emerging organizations, the way we are looking at the resources utilization needs to be relooked and re-engineered for the sustainability of profitability and growth.

We need to relook at our business processes and to re-engineer as going forward, the opportunity will be for those who are open for being smart and flexible to the demand of the external environment. 

Bringing Financial discipline:

Some business head is inherently very disciplined in financial management. When I speak to them, it seems that they are comfortable for the next 6 months, even when there are no operations. That should be the proactive practice, and this must be the focus for each business head irrespective of the business nature. If we are working only on survival mode, then there is something problem in our business model or practices or with the segment or customer, we are dealing with. This needs to be seriously relooked and re-engineered.

Financial discipline includes

1 Bringing a structured process on cashflow management

2.Bringing the culture of cost-consciousness in every activity

3.Driving cost projects as a culture

4.Debt restructuring and aim for zero debt

5.Reviewing P&L every month and analysis

To sum up,

I have just outlined the likely scenario and the solutions approach and I am sure as a business head you might have thought about all the scenario and my perspective might have helped to refine your thinking process a little bit to manage the short term uncertainty and to become a strong business on a long term basis.

Pl let me know your practical challenges and let us discuss the solutions approach.

Enhance your Planning Window for Sustainable Growth

Most of the small, emerging organizations are working on the current month or week or day and may not have much clarity about the immediate medium term. This practice results in the scenario "always busy" or "firefighting" mode to serve the customers all the time. But as a business, it will lose the long sight vision or growth potential.

One of the ways to come out of firefighting mode is to enhance the planning window.

Planning Window :

Instead of planning for the current month, extend the planning horizon for the next 3 months so that the business head and the organization will have visibility about the sales potential, working capital requirement to buy Raw material, capacity availability vs. requirement. Also, this enhanced planning will give more time to RESPOND to uncertainty.

Tool for enhancing the planning window:

The simple, yet powerful tool is 1+3 planning format. This could be used for sales projection or forecasting, working capital planning, or even for profitability projection.

For example, let us take the case of sales projection into a 1+3 format.

In a 1+3 sales format, you need to fill the data with sales projection for 1+3 months timeframe.

1 - a month is the current month, mostly firm / confirmed order

3 months can be for the next 3 months projection with firm/ confirmed order and then tentative  orders

Advantages of extending planning horizon :

1. When you see your sales projection data down the line 3 months from now, you will come to know the order position vs. target gap. That will give you response time to reach out to existing customers for more orders or pitch-in new customers for new orders
2. Since any new order requires time for approaching the right customer- processing inquiry - price finalization- proto proving- getting bulk order, this 3 months time horizon will give the flexibility and sufficient response time

3. If you know the projection for the next 3 months with some level of accuracy, that will help you to utilize your capacity well, manage the cash flow proactively.


The thought process of the business head must be proactive and beyond the current day or month for sustainable growth. This 1+3 projection will help to stimulate your thought process!

Loyalty vs Intolerance to low performance

A dilemma most of the family-owned business head has is how to deal with a mediocre performer who is coincidentally the relative or loyalist to the family.

This is a real concern for the business head as today's mediocre performer might have been with the organization from early-stage and might have contributed to the growth of the organization even at tough periods. In today's scenario, the person may not be able to cope with business challenges and modern business practices. Sometimes the behavior and performance of the person affect the decision making capability in the organization and may impact the morale of the people who strive for delivering performance.

What should be the way out for the business head to deal with those people?

1 First, the business head must realize the fact that the purpose of the business to maximize all the stakeholder's interests. The organization exists to serve all, and the organization will exist only when it is competitive.No individual is vital than the bigger purpose of the organization. This realization is a must for the organization's head.

2. Second, the business head spends quality time with the mediocre person by giving the perspective about the change in the way an organization works in early times and the now in the competitive environment. The person's challenges to cope with the current business challenges need to be understood, and the necessary exposure can be given by training, coaching, and mentoring.

3. Also, the person must be given some time to perform well as per expectation mutually set. This time duration can be a year or a couple of years, depending upon the role the person plays in the organization.

4. If the person copes up with the modern business practices and delivering the expected results, that is a piece of good news for all, and the person can be groomed for further development.

Incase even after meticulous training, coaching, and development efforts, if the person is not willing to unlearn and learn, not intending to deliver the result as expected, the business head must speak up to the person and be prepared to separate the relationship and business.

If the business head prolongs the decision to separate the business and relationship, it will inevitably affect the overall business performance, which is not suitable for anyone. The survival itself will be challenging for the business head and the entire stakeholders of the organization.

The key is balanced, quick decision making from the business head is vital for the meeting the larger purpose of the organization.

My thought process on initiating lean manufacturing in small and emerging organizations

         Lean is achieving “more with less.” That is, making more production with

given resources or increased efficiency or achieving with less cost.

      Lean manufacturing system can be understood by relating to a human body. If the person is lean means general understanding is that he is free from unnecessary FAT in his body, hence free from unnecessary side effects like BP, Pain in joints, laziness, and the person is perceived as healthy, more flexible, and active.The same way if the organization is lean means, it 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 , low cost of manufacturing and free flow of communication ( This is the way I introduce lean to new forums in my consulting workshop).Hence making the organization ( across all functions), extended supply chain system, any functional units (like machining, assembly, painting) need to be lean for increased efficiency, low cost, quality at first time and reduced lead time.

Lean is not a tool for cost reduction or cutting manpower or increasing efficiency alone, it is a culture building process or way of thinking and running a day to day business activities.When the lean is understood only as an application of tools like 5S, SMED, Visual management, poke yoke, it results in short-term impact in a particular cell or unit on a short time basis. It becomes difficult to sustain. Most of the organizations are keen on learning the tool and applying without understanding the big picture of linking with business objectives or culture building process.

Any lean initiative must start from CEO or head of the organization and more importantly, it has to be linked to the business need or goal.Moreover, lean should not be driven as separate initiative without linking with the business / functional objectives.When we drive as a separate initiative under one lean champion, lean efforts will be continuing as long as the champion is intense and driving as long as the entire team is undergoing a lean period in production or sales. Once demand /volumes pick up, the lean initiative takes back seat as it is perceived as EXTRA work for the organization.That is the reasons a few organizations are not taking the lean-to next level from grand inauguration ceremony and except few improvements on housekeeping and visual systems. 

In my consulting role, I am insisting lean implementation when there is full conviction from CEO, and there is a compelling need for driving efficiency, improving the bottlenecks for business growth and management agrees to work with us minimum six months to 2 years.
In some organizations, we failed to bring the momentum when the leadership team looks at lean initiatives as a quick remedy for their inherent problems.

To summarise, key ingredients I used in all lean initiatives are

1. Form cross-functional team
2. Involve CEO in reviews
3. Develop Business / Functional KPI's which are important for business / CEO to drive
4. Educate the team to see the waste in the system through VSM workshop or interviewing process
5. Make priority list along with the team to focus on waste elimination
6. For the identified waste, apply suitable lean tools starting from housekeeping (2S), Visual management, SMED, Best Maintenance practices, Daily work management like tracking hourly, daily output/quality issue tracking and reporting
7. Create forums for review meetings with operating team, cross-functional meeting among heads and weekly review meeting with CEO or business head
8. Review, Update KPI and tracking 

Becoming a lean organization is not a one-time event, it is a continuous journey.

Three important rituals a (SME) business head must do in the first week of every month?

Getting into business is relatively easier than running it successfully by fulfilling all the stakeholder's expectations.It requires disciplined approach in managing business processes. As we witness in most of the small, medium size organizations, the business head seems to be busy in managing the business outcome, but with little focus on the business performance review.Despite multiple priorities and engagement with different stakeholders, the business head must do some important ritual or activities which he can not entirely rely on others.

This important ritual or activities can be classified into monthly, weekly and daily basis.When the business head is missing the routine or not doing at a specified interval, it brings chaos into the system and pulls his time, energy to bring back the business to healthy.

Let us discuss only the three important rituals or activities a business head must do in the first week of every month 

1. Reviewing monthly operational profit & loss 
2. Reviewing outstanding payables & receivables
3. Reviewing the operational plan & performance

1. Reviewing monthly operational profit & loss :

Evaluating monthly profit and loss statement is the most important job of a business head as this gives the overall performance of his operations of the previous month. As this review will give clarity on what product mix made him make profit or loss, what kind of expenses he is incurring to realize the profit and losses.

Once he knows this trend or pattern on a regular basis, he can take right call on the following

1. Choosing a right product mix
2. Right initiative on cost optimization projects
3. Knowing his cost drivers and plan accordingly 

Since most of the #SME ‘s equipped with enterprise software like Tally, it is easy to fetch the P&L statements.Sometimes, it may not be as accurate and covered all the transactions as business units used to get at the end of the financial year. However, it will give a fair idea about the health of the organization on a monthly basis.

2. Reviewing outstanding payables and receivables :

      Cash flow management as this is one of the pitfalls most of the business head trap and spends most of the time to run the day to day affair.The reason could be lack of structured review and follow up on the receivables and payables areas. Timely intervention of business head on receivables and payables will help in managing the business smoothly as well improve his creditability in the suppliers.Like profit and loss statement, it is easy to get instant data on the outstanding payables and receivables from any accounting software.

We have seen from our experience, wherever business head is keen on the cash flow improvement, he runs the overall business very well.I think managing cash flow very well gives much quality time to concentrate in other value additions.Hence, this needs to be reviewed by business head at-least once in a month if he delegates to his second level on a daily basis.

3. Reviewing the operational plan & key performance indicators (KPI's) :

During the first week, it is the prime responsibility of the business head to review the previous month key performance of operations like delivery, customer ‘s service, project performance and also set the direction for the current month. It includes reviewing the operational plan week-wise, ensuring capacity availability or giving decisions on outsourcing or extending hours, etc.
This review ensures the clarity on the direction and sets the team to perform as there is certainty in the expectation. Most of the time, the team struggles on priority and decision making.In fact, this ritual plays a major role in improving the morale of the team, in turn, engagement.

Initially, this practice of operational performance seems to be difficult. However, we have witnessed in most of the organizations; it helps the team in a big way like 

1.Clarity on the target or direction
2. Improvement in cross functional engagement
3.Improvement in business performance

Ultimately, the business head should know the direction of his #business.More he does the above rituals, more control he has on the business and of course on the business performance.Re look at your rituals for better business performance!

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!

How to identify the opportunities at BIG PICTURE perspective

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

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

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

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

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

     1.By past data and experience:

With past experience and data, the team can identify the constraint facilities with the following criteria
• The facility which is giving the lowest output and affecting the plant output
• The facility which is producing a higher percentage of total revenue
• The facility which is utilized very low and affecting the entire flow
• The facility which is producing inconsistency quality output and affects the lead time

2. Applying Value Stream Mapping :

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

Using VSM methodology, when we map the activities end to end, we can identify the waste in the system.