cxl | Customer eXperience Leadership

Driving transformational change through Process Excellence and Lean Six Sigma.


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Optimization vs. Operational Reality


Over the years, service organizations have built elaborate optimization models to drive improved operational performance, particularly when it comes to scheduling team members or assets. Conceptually this makes a lot of sense and has driven significant savings and business opportunities. Nevertheless, I’ve seen too many cases where these models don’t adequately factor operational realities and business variability, often leaving missed opportunities on the table.

The first time I came across such a situation, an organization had invested heavily in a state of the art scheduling system that attempted to mathematically optimize various scenarios to create the tightest possible planning of an expensive resource pool. When implemented, the model demonstrated significant savings and no one questioned the validity of the approach. However, an inquisitive leader had noticed that on months where the system had done a stellar job in optimizing the deployment of resources, his month end financials were typically well above target. And on months where the system couldn’t pressurize the resources as well, his month end financials were typically better than target.

As we probed, we found that on months that weren’t as “optimized”, there were less irregular operations, less rework and less customer misses, all of which were driving up hidden costs. In other words, an optimal planned solution drove additional operational costs into the business and was more difficult to manage. As we further analyzed the data, we discovered that it wasn’t that the business was reaching a tipping point but rather there were two key locations which were stress points in the overall operations. With high volumes at key points during the day, these locations experienced very high variability in performance. To improve performance, all that was needed was to reduce pressure and build-in sub-optimal buffers at key times during the day to improve performance across the system.

A similar situation came forward a few years later. In this case, a state of the art system optimized the overall scheduling but also didn’t factor in the variability associated with key tasks and simply worked with average durations. As the variability of these tasks was driven by the time of day (i.e. traffic patterns) and the type of activities, the system would create an optimal solution that simply couldn’t be achieved at key times during the day, causing sig- nificant customer challenges. Regrettably, the optimization algorithm had been hard coded into the system, making it very difficult to adjust to the operational needs.

CONCLUSIONS

In both of these cases, there were some common elements, namely:

  • The system was too big to adequately visualize and understand;
  • There were no indicators or processes built-in to see these opportunities – in both cases they were stumble upon by accident;
  • There was no way to contrast the plan with the day of operations scenarios;
  • These systems were not self-healing or adaptive by design – in other words, never would the optimization factor in an understanding of what actually happened;
  • Front-line team members shared concerns with occurrences that they had noticed but were dismissed as there was blind trust in the system.

In a service or transactional environment, often these opportunities are not noticed as it becomes very complex to visualize these constraints. With huge amounts of data, the inefficiencies caused by an optimization system becomes very difficult to demonstrate and find while the impact on operational reliability, costs and customer experience can be quite high.

Have you encountered similar situations where an exercise to optimize caused more operational chal- lenges? H ow was this counteracted with a view of the operational reality? 


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The right tools and assessment of organizational needs


Building on Chris’ recent post, I was talking with a colleague who shared a disheartening example of a retailer that was attempting to launch a new process improvement program with a very narrow approach. The deployment leader had determined that rather than focus on a holistic approach to process improvement or even focus on a toolkit such as Lean or Lean Six Sigma, they would focus on launching a single tool into the organization. While there is no doubt that a single tool can bring value, my challenge comes from the way in which the tool was selected and whether the approach actually fits the organizational needs.

While the leadership of the organization expressed some concerns as to whether the single-focus would work, they gave the go ahead to essentially invest over a million dollars to support the launch after doing a simple pilot that yielded only moderate benefits (and not even demonstrated through a scientific method). A scan of the organization revealed that the critical challenge faced by this retailer was much broader than what a single tool could enable. Rather than focusing on key failure and pain points in the value chain or fully understanding the organizational culture, the decision was made to deploy a tool which had demonstrated results in a prior deployment in a very different sector and with a very different organizational context.

In a subsequent conversation with another leader in a different retailer, a similar story was shared in which they decided to adopt a few key tools from Lean to drive transformational change. This leader expressed great concern that such a narrow focus would likely bring limited outcomes and become the “flavour of the month” program.

In both cases, shouldn’t one ask whether:

  • There was a solid assessment of the organizational needs and culture?
  • The challenges faced by the organization have similar underlying root causes and whether the treatment of these could benefit from a singular approach?
  • Thought had been placed on long-term sustainability of the program and the necessary cultural implications?

The recent work from Mike Rother (Toyota Kata) would tend to reinforce that the real impact of Lean is not from the tools but rather the overall underlying cultural focus on driving continuous improvement at all levels.

While I hope that these two deployments are very successful I’m very alarmed as it is examples like these that bring into question the validity and importance of investing in Operational Excellence programs.

Such examples also bring into question how organizations can ensure that in recruiting a new deployment leader they can ensure that they focus on a leader that has sufficient breadth of expertise to build a deployment that truly fits the organizational needs and culture while maximizing the likelihood of business outcomes rather than rely on a few past successes. I will explore this topic in greater depth in a subsequent post.

What other examples have you seen around a narrow tool focus and the associated risks? What successes have you seen despite this narrow focus?


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Process Improvement – Is it about the tools?


I had a few interesting debates last week over whether the focus of a deployment should be on tools as opposed to desired outcomes.  While I am a huge believer in both Lean and Six Sigma (or Lean Six Sigma), I struggle with the concept that the focus of an organization should be to secure adoption to a toolkit and not a goal of driving continuous process improvement leveraging the Lean Six Sigma toolkit and approach. 

While the subtlety may seem trivial, it is central to a communication and implementation strategy and has translated itself into challenges for some organizations:

  1. A focus on finding the “right” problem to fix through a designated methodology as opposed to a business process challenge that needs to be addressed
  2. In a few organizations, it has manifested itself into two or more competing deployments focused on different approaches such as Lean or Six Sigma or successive programs due to prior inabilities to deliver meaningful value – contributing to a sense of “flavour of the month”
  3. A  narrow focus on a toolkit distracting from the most appropriate path to the desired outcome

I’m certainly not advocating that any of these tools shouldn’t be shared or communicated but rather would suggest that the primary focus of a deployment should be on outcomes and on driving a culture of continuous process improvement through a holistic process improvement toolkit.  One could argue that the integration of Lean Six Sigma might accomplish the same effect but, in several cases, I’d propose that many deployments haven’t yet leveraged the true opportunity and intended flexibility.

Thoughts, insights and perspectives?


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Welcome to my new blog…


The often-used six sigma symbol.

Image via Wikipedia

   

After years of sharing my passion for Process Improvement through training programs, Executive offsite sessions and conferences that have connected me with over 1,500 passionate leaders and team members all with a strong desire to improve their business, the time has come to create a forum to discuss and share some of the thoughts  and concepts that are essential to the success of an organizational transformation.   

This blog will be dedicated to leading organizational transformations leveraging Lean Six Sigma, Process Excellence, Process Design/Re-engineering, Organizational Development and Change Management.  As there are many great sources of information on individual approaches, my goal is to create a dialogue for those that are interested in leading broader transformations or Lean Six Sigma / Process Improvement deployments.    

While my background is primarily in Lean Six Sigma, I am a big believer of a broad-based, holistic approach to process improvement.  I intend to provide regular updates, thought leadership and dialogue on topics that regularly come up among those leading new deployments or change initiatives in addition to providing live blogging from key events in the field and examples of successes.   

As I am not a consultant nor have anything to sell or promote, posts will remain unbiased and free from pitches or commercial content.  The opinions expressed are not necessarily those of my employer.  

I welcome your thoughts and insights to make this blog as interactive and useful as possible.   

Cheers,   

Eric   

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