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City folks and Country life

As a business leader, I hold a seat on our town’s Planning and Zoning board. My most asked question by neighbors and friends, “Why doesn’t the town build a Chick-fil-A or Outback Steakhouse?” And second is, “Why are there so many grocery stores in town?” The complexity and detail used in retail location and overall business success can be overwhelming. Understanding the capital investment, builder cost, store up-fit and future value are just some of the considerations.

Have you ever noticed two neighborhood grocery stores pretty much next to each other? Ever wonder why the second one chose to open yards away from the competition? If two grocery stores are right next to each other, chances are it’s a great spot to have a grocery store and many determining factors were applied, for example, scientific analysis using synthesis, mathematical and customer interview methods.

To get more in depth, one of the most important strategic decisions made by retail organizations is where to locate their operations. Customer base does play a huge part. What kind of person are they? What do they do for a living? When do they work? What do they do in their free time? This information might not seem relevant but for many businesses a great location is one that weaves itself into the average customer’s day-to-day life, their income and if they travel for work or work from home.

Another technique is Geographic Information System (GIS) techniques. Potential input variables are extracted from such data sets as Census, consumer spending categories, and point data sets representing location of competitors or location of other important facilities. Selecting the most suitable and relevant variables for further analysis is time consuming but critical in the final site selection decision.

I recently attended a conference where representatives from Starbucks Coffee, Chick-fil-A, and Wendy’s all spoke about how they use GIS to determine where to build new outlets. It was incredible how fast food chains compare all sorts of data overlays which allow them to see auto traffic, consumer demographics, safety information, commercial mix, and other factors which saves them significant money when deciding which locations to open next.

Many of the answers to why some of your favorite restaurants are not located just down the road are found online. Some franchise operations have demographic requirements of 50,000 for a market area and a location with an average daily traffic count of 21,500 to 45,000, depending on the size of the restaurant. It can cost anywhere from $1.8 million to $5.7 million to open a franchise, according to their websites. For anyone with aspirations to open a local Hooters, there’s a sizable population requirement, plus investors need to have $2.5 million net worth and $1.5 million liquid assets on hand.

So, next time you see land being cleared and a sign placed in the dirt, believe there have been countless man hours, thousands of data files, and mathematical methods used in why the location was picked. And always remember this, small towns and rural areas can be a good place for investment, because city folks are often attracted to the country life.

 

Don’t treat the symptoms, solve the problem.

root causeAs we go about our daily jobs and deal with the problems that crop up on a regular basis we have a couple of choices, put out the fires over and over or to eliminate the fuel that feeds the fire. With analysis and recognizing pitfalls we begin to see problems in our daily lives. Eliminating the fuel is the preferable route to take but is often the hardest to accomplish. There are many companies out in the world that talk about and teach root cause analysis. Root cause analysis, as it is taught, tends to be theoretical in nature. In a perfect world we follow what we have been taught, find the problem and put in a solution. However, engineers, maintenance personnel and management tend to look at a problem and want to deal with it quickly and make it go away so that they can deal with the next fire that just occurred. As management professionals we are looked at as a source of information with the ability to solve problems. Even though a supervisor’s exception report quite often ends with the sentence “further investigation required” we still need a solid understanding of what our people maybe go though investigating that problem. Solving problems means having a system, one to look at everything associated with the issue at hand.

Whether we do this in a formal team environment or by ourselves, having a system and being able to recognize the inherent potential pitfalls are critical.

Problems are everywhere in our workday. Problems are waste. There are several types of waste in our day. Waste eats up our day by consuming time, energy and resources. How often have we sat back at the end of the day trying to catch our breath and asking ourselves why does this keep on happening? Even though we may have thought through a problem and implemented a solution it seems that we are rudely pulled from a sense of security months or years later when the same problem rears its ugly head again. When this happens, how many times have the words “I thought we fixed that” been spoken? Or “we spent a pile of money on that new gadget that was supposed to eliminate that problem.” Even though we may have identified the “root cause” of the issue we were likely the victims of a pitfall.

Dealing only with symptoms during root cause will cause teams to go into directions that will most certainly create ineffective solutions. Asking “why five times” and utilizing cause and effect diagrams will assist in determining what a cause is and what is an effect. I have seen many times where a team has confused the effect with the cause and put a solution into effect only to have the issue come back at a later date.

Make an effort to make sure that everyone knows who solved the problem.

Have the general manager make an appearance and state how grateful they are for the hard work and resourcefulness shown. Buy them dinner, a hat, time off.

In my experience the best reward was the manager calling in each person and personally thanking him or her, one at a time. Done in a sincere manner and with a few details on each person’s contribution it goes a long way to encouraging others to participate.

Even if it was only yourself that had the problem, looked at the problem, fixed the problem and made it go away, pat yourself on the back, brag about it, write a paper on it, get recognized for it. Most of all “Be proud” about the effect it will have.

Organizational Assessment

Organization planAre you looking into taking your company to the next level? Have you asked yourself why your company is not growing in the ways you envisioned?  An Organizational Assessments will add focus on helping your team, department, or organization better understand those issues that are supporting good performance or hindering good performance. These tools provide a leadership team with a perspective of the current reality in the team, department or organization so they can work with a consultant in designing an approach to improve organizational effectiveness. Your “Organization Assessment” can be a comprehensive examination of results achieved,

Lean deployment, and Lean maturity of the organization. In all cases, “Master Black Belt” guides site Leadership and the “Lean Deployment Team” through the “Organization Assessment” process until such time as data indicates the team is capable of “self-assessment”. Ideally during the first two years, these assessments are conducted quarterly. This is the critical phase of the transformation wherein the groundwork is laid to successfully exit the model on schedule with the Lean expertise in place to sustain the Lean efforts and supplant the consultant.

Results are examined at the “Value Stream” level. Results reported on “Quad charts” and other designated reports (metrics, financial) are used to validate a “Kaizen’s” return on investment. Some metrics, however, are often not impacted until the second year when engagement and change pace is sufficient to impact the bottom line.

The “Master Black Belt” will assist the Agency in comparing the actual Lean activities to the Lean Six Sigma Model and determining if the organization is on track and address any noted deficiencies. This group will also examine and score the cultural elements of the Organization Assessment. Leadership, empowerment, organizational structure, human resource practices and policy, and application of Lean principles are all examined. Lessons learned are captured and necessary course corrections are identified. Roadblocks are identified and assigned to the party responsible for removal or elevated to the appropriate level for resolution.

Please understand this is a top down approach and your success rate is very low if you do not have buy in before starting….

VALUE STREAM TRANSFORMATION

VST

A “Team” is the key to Value Stream Analysis

As I have previously discussed in other blogs, improvement opportunities identified during “Value Stream Analysis” are segregated into one of three improvement process methodologies for implementation – “Kaizens”, “Projects”, and “Just-Do-Its”. Teams are formed and charters prepared to implement the VST, as appropriate.

Kaizens are appropriate in situations where waste in the value stream is obvious and the presence of Lean principles such as flow and pull are conspicuously absent. “Kaizens” are action oriented, typically 2-5 days in length. The “Kaizens” are drawn from the company developed during “Value Stream Analysis”. The teams are cross-functional and usually consist of 6-8 people each. A structured 7-week improvement cycle is employed to prepare for, execute, and follow-up on the “Kaizen”.

Preparation for the “Kaizen” begins three weeks in advance utilizing a detailed checklist that can be customized to each event. Based on the topic, specific Lean/Six Sigma tools to be applied are identified, improvement metrics are defined, and improvement targets established. “Team leaders”, and” team members” are identified and calendars are adjusted to ensure full participation in the event.

Data collection of pertinent information begins two weeks in advance and will be used to drive change throughout the event. One week before the event, affected employees are notified of the activity, participants are trained, logistical support is arranged, data collection is completed, and the “Kaizen Newspaper” is started. Regardless of the topic, the format of the “Kaizen” is typically the same. While a “Kaizen” can be completed in less than five days, the following describes the events of a five-day “Kaizen”. On Day 1, current conditions are documented and waste/opportunities are identified. Day 2 consists of making big changes happen; it is often a very long day. Day 3 is debugging and additional improvement. Day 4 is documenting/standardizing the improved process. A formal brief-out is provided to management on Day 5. The “brief-out” addresses before and after conditions, improvements realized and projected, and highlight the actions that must be completed to achieve the projected improvements. The objective of the Event week is to have a significantly leaner process in place and functioning before the close of the Event so that the organization can begin generating a return on its investment the following day.

Fundamentally, this means that less human effort will be needed for a given level of output and people may be redeployed. Debriefs are held with Leadership at the end of the first day, sometimes mid-way through, and always at the conclusion of the event. Changes to key improvement metrics are quantified daily. The status of open improvement actions on the Kaizen “Newspaper” is reviewed, roadblocks are identified for resolution, actions are assigned, and plans are developed for the following day. The “Newspaper” is used during the three weeks immediately following the event in conjunction with the follow-up checklist to continue the improvement process (“de-bugging” as needed, metrics review and follow-up, and closure brought to remaining action items identified on the “Newspaper”).

Based on industry standards, a strict adherence to the seven-week improvement cycle should recover total cost (including contractor, participants, “Lean Deployment Team”,

9 and materials) of the “Kaizen” in less than 120 days, netting a 3:1 annual return on investment. However, as the internal expertise matures, a 90-day recovery and 4:1 annual return on total investment should be expected. Initially, “Kaizens” are performed on a single value stream at one time, but as activities mature and develop more expertise; “Kaizens” can be performed on several “Value Streams” at a time.

Projects: In situations where the “Root Cause” of a problem is not readily apparent, or

the complexity of the problem exceeds the capability of a “Kaizen” to resolve, a “Project” is the appropriate improvement process. In the “Define Stage”, the problem is scoped, boundaries are identified, the business case is defined, and resources are committed.

“Baseline conditions” are documented in the “Measure Stage”, “Root-cause analysis” and possible solutions are identified during the “Analyze Stage”. Solutions are implemented during the “Improve Stage”. Standardization and institutionalization occur during the “Control Stage”.

Various math approaches to problem resolution are available. The degree of complexity will determine the appropriate tools and team selection. The “Black Belt” is responsible for assessing the degree of complexity and identifying the correct approach through the “DMAIC” process to ensure that the lowest cost solution is achieved.