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Donna Mc Coy

What is...
Strategic Process Improvement (SPI)?

Part 1

 

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By Donna McCoy

This outline is broken down into five segments:
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1 ]  Introduction
2 ] More common than you’d think
3 ]  Some thoughts
4 ]  The Outline
5 ]  Summary

1 ]    Introduction

Many companies today are opening their eyes wider than ever before (some are opening them for the first time) to the realization that they need to do something if they want to remain or become a strong, formidable competitor now and in the future. Unfortunately for many companies, instead of applying Strategic Process Improvements, this realization is met with knee-jerk reactions and little or no planning. Welcome to the abyss. Here, the typical first thought is “we need to cut costs!” This is a perilous position to be in because the root cause of most problems has little to do with costs and everything to do with flow. Many companies that bite the “cut costs” bait succeed only at cutting their own throats, thus, sending them deeper and deeper into the abyss. Making cost cutting the primary goal historically results in cutting resources, not waste, and cutting waste is where the answers to improving process flow lie. It’s like having too much garbage and blaming the garbage cans. Managed wisely, your resources are your best friend.

Adding insult to injury many companies are five or more years behind in technological advances in data management, operations and communication systems. Being behind even two years can lead to exponential setbacks. With the speed and advancement of technology, global competition, and increasing customer expectations, being behind five years today is like being behind forty years in the 80’s.

~ ~ ~

It’s important to note that, even with the most robust Strategic Process Improvement plan, working to improve any schedule, operation or function means little if the resources and commitment are not available to support it. Regardless of which department, work center, work cell, or function you choose to improve upon, it must always be known that directly or indirectly associated functions can surprise you along the way with unexpected challenges that need to be addressed on an as-they-surface basis.

~ ~ ~

Following each topic header there will either be a list of assessment considerations, a brief paragraph or two on the topic, or both.

2 ]    More common than you’d think

Surprisingly, quite a few companies seem to be stuck in the past. Clinging tightly to their Operations Management paradigms it appears time and technology have passed them by. While the transition for many will be a stormy one, the good news is that with thorough, careful, and strategically planned process improvements, even the darkest clouds have silver linings.

We need to transition to MRP

A unified commitment to maintaining data integrity and on-going preventative maintenance are the keys to any data management system. Whether you use Excel or have the most sophisticated MRP system with all the bells and whistles, failure to properly manage, care for and respect that system results in a gross loss of confidence in any output. Inevitably, and if you’re lucky, workers begin the painstaking task of strategically manipulating data to achieve desired inputs and outputs. And if you’re not lucky, the corrupt data is simply ignored. Because workers are under the gun to produce results they often resort to creating credible data by pasting bits and pieces of information together using other resources, and thus inadvertently side-step those golden opportunities for Strategic Process Improvement. As time goes by all fingers begin pointing to the “the bad system”, blaming it for all their woes.

We’ve been using Excel as our MRP

When is the right time to transition from one data management system to another? A successful transition should include Strategic Process Improvement models, Value Stream Mapping, and assessing a whole host of factors as well as establishing the integrity of the current system. Whether you’re using Excel or pencil and paper, the data you generate and plan to transfer to your formal MRP network MUST be clean. Here, the old adage “garbage in garbage out” couldn’t be more true.

In all business there comes a time for change. A time to take just a step back, look at the big picture, and acknowledge the need for change, through Strategic Process Improvements. Those who ignore the need will likely inhibit growth, lose market share and become stagnant. In other words they will change, but how they change will no longer be within their control. Companies who take that leap into change hastily and without planning will likely be bought out by one of those stagnant companies! All jokes aside, the point is just because the need to transition has been realized does not mean the time to transition is this minute, this month, or this year. Careful planning and consideration of all the dynamics that come into play are the only guarantees to successful implementations.

It is better to have planned and tread water than it is
to jump in and sink like a rock

We’re the industry leader, we have no competition

Famous last words of many companies that started out as the industry leader: Ford, RCA, Atari, Roto-Rooter, Shakey’s. Many products had their day in the sun too: 8-track players, car phones, typewriters. The belief that there is no competition leads both leaders and associates to an unfortunate false sense of security that they are somehow untouchable. This belief reinforces the conclusion that there is no need to improve or excel, no need to grow. I mean, you’ve made it to the top: What else is there to do?
But being on top and staying on top are two entirely different goals. If you’re on top and all you do is sit there enjoying the view, the only logical next step is down. Complacency poisons creativity, lowers expectations, and has a negative affect on self-esteem. One of your BIGGEST hurdles is, now that you’ve conveyed to everyone that “we’re on top”, how do you convince those same people that they need MRP, ERP, Lean, 5S, VSM, etc, etc, etc…to succeed?? Continuing down (and it is down) the “we have no competition” path can only lead to:

  • Drive and motivation deteriorate
  • Sense of urgency wanes
  • Laziness and sloppiness
  • Quality begins to suffer
  • Schedules begin to slip and slip and slip
  • Teams disband
  • Sub-cultures and cliques form
  • Complacency replaces competency

And all too often the first one to notice the change in your service is your customers. As schedules slip further to the right, customers get justifiably jittery and begin placing increasingly higher expectations on your already burdened resources and, whether realized in the short or long term, always at a cost to you. Even if customers are paying for inventory you BTS as a buffer against your poor service, you have burned resources and perhaps burned bridges by setting a precedence that says you can’t deliver. Regardless of industry, proprietorship, patents, market share, intelligence, NO business and NO product is immune to the threat of competition. The past, present and future business strategies must always be assessed and planned for as though you were #2.

We don’t need ERP, we have MRP

MRP and ERP are not synonymous. ERP is not a new and improved version of MRP. While you can successfully implement MRP without ERP the reverse is not true. MRP was born out the need to improve the material identification and acquisition process through automation (computers). MRP II came about when it was realized that resources play a large role in the success of MRP. With materials and resources now better managed, ERP came along to tie everything together and increase the overall functionality of the organization. ERP is a business tool that integrates the strategic goals of the company with operations, resulting in the translation of strategic business goals to real time planning and control.

Our on-time delivery is bad–but our sales are real good!

Sales, no matter how great they are, mean nothing if your on-time delivery is poor. It’s impossible to say the company is a success with Sales sipping champagne and Customer Service crying in their beer. The only thing that good sales and poor delivery have in common is they are both a direct consequence of a company’s actions. Good sales are good for business. Poor delivery is bad for customers. If you’re in business to satisfy…your business, then hooray! You’re probably on the right track. But if you’re like most companies you’re in it for the customer, and your customers couldn’t care less about your sales.

Click to read Part 2

 

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