Close the profit draining gaps and improve productivity
By Leanne Hoagland-Smith May 6, 2012 8:36AM
Leanne Hoagland-Smith. | Provided photo~Sun-Times Media
Updated: May 6, 2012 11:26PM
Businesses with less than 50 employees comprise 90 perent of all small businesses in the United States. What this means there are fewer people to handle all the operations associated with running a profit or not-for-profit enterprise.
Small business owners today are indeed crazy busy. They wear multiple hats that twirl around their heads like the three-point colonial hat. One point is for sales, another for marketing and the third for operations. With this hats twirling around their heads, there are plenty of opportunities for inconsistencies.
To improve both profitability and productivity requires closing the gaps that happen because of those inconsistencies or what continuous improvement folks call variations. By reducing the variations, quality improves and the other aspects within operations also benefit.
Some business people shy away from business process improvement or continuous quality improvement programs such as Lean, Baldrige or Six Sigma because they do not understand the necessity or they prefer not to devote the required time. Possibly by putting this into real time experiences may better illustrate the importance of reducing variations.
For example, if you are a golfer and played 100 rounds of golf per year, you would be playing at:
• 2 sigma if you missed 6 putts per round
• 3 sigma if you missed 1 putt per round
• 4 sigma if you missed 1 putt every 9 rounds
• 5 sigma if you missed 1 putt every 2.33 years
• 6 sigma if you missed 1 putt every 163 years
From another perspective, a 4 sigma quality ranking (meaning 6,210 defects per million opportunities DMPO) or 99.37 percent quality yield would generate the following results:
• 20,000 lost articles of mail every hour
• 5,000 incorrect surgical procedures monthly for a major hospital
• Unsafe drinking water 9 minutes every day
• 2 long or short airport landings daily
Now think about it if you were one of those who was waiting for that piece of mail, having surgery or taking a drink of water would you feel comfortable with a 4.0 Sigma ranking?
By reducing the variations begins by understanding the flow of all work within the organization from products being assembled on the manufacturing flow to the processing of invoices to the handling of new sales leads. One of the more common solutions is to employ the DMAIC (pronounced duh-MAY-ick) problem solving model:
The focus within this problem solving model is:
• Measure the problem by not assuming you understand the problem. Facts are used to validate the impact of the problem.
• Focus on the customer first regardless of the reason such as cutting costs.
• Verify the real or root cause of the problem as many perceived problems are just symptoms disguised as problems.
• Leave old habits of “We always have done it this way” to embrace creative new solutions.
• Manage the risks by using beta solutions to test reliability and work out all the kinks.
• Measure the results of every solution to ensure a real impact is happening (think return on investment).
• Sustainability is critical to avoid repeating past solutions and conserving resources of time, energy, money and emotions.
When crazy busy small business owners step back, take off their three-pointed hats and recognize the bottom line impact of business process improvement through the reduction to the elimination of variations, they will see improve profitability and productivity. Of course, they could continue to do what they have always done, hope for different results and continue to allow insanity to rule.
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