Your business has been going a few years and you now think its time to just need to sit back and reflect on your business model. Is it working as effectively as it was at the beginning? Is there anything you could do to make it more efficient?
After all, you now have a little bit of cash-flow in the business, and are thinking about implementing systems to make it work even better..
The trouble is, you don’t know where to start… Do you start with your strategy, your systems, your sales funnels? Well, actually you need to look at them all… at the same time. Are they all working together to make your business run quickly, easily and most importantly, giving you back time to spend on Yoga, taking up horse riding or whatever it is you choose to do in your spare time!
And I know that people think that the lean methodology is just for manufacturing, but actually, theres no reason you can’t use it in the service industry or even on your on-line business. There are a number of different models such as value stream mapping (VSM), The Five WHYS, Five S’ etc which can be used to review your business and today I’m going to look at how you can use the seven wastes framework.
This looks at where you’re business model is not working as good as it should. You are using more time, more resources and more importantly, more CASH than you need to be spending.
I learnt about the 7 wastes when I worked in the automotive industry a good few years ago! We won a contract with Toyota, which was a big deal for the company as at the time the Japanese market was expanding and it was seen as a great opportunity, not only to supply to Toyota, but potentially Honda and Nissan.
However, they did things differently than the traditional British car manufacturers that we were used to, with small batch sizes, Kanban systems to schedule supplies and Kaizen activities, designed to reduce costs over the life of the contract.
So we needed to learn about these different tools because the customer expected us to have a continuous improvement culture and be able to find regular cost reductions, which we would share with them.
An important activity was to review our systems and processes to see where we could reduce wastes, as waste is something that adds no value to the final product and therefore is not something that the customer is willing to pay for.
TIMWOOD was first offered as a way of remembering the 7 wastes by Standard-Cooper and remains a popular mnemonic to remember the 7 wastes.
- Transportation – Unnecessary movement of people or parts between processes
- Inventory – Raw materials, work in progress or finished goods/services not currently being used
- Movement – Unnecessary movement of people or parts within a process
- Waiting – Unnecessary waiting of people or parts between processes
- Overproduction – Produce sooner, faster, or more than customer demand
- Over-Processing – Making a Rolls Royce when the customer only wants and needs a mini
- Defects – Not getting the final product right first time, resulting in rework.
The worst of which is considered to be overproduction because it includes all the other wastes, in having to produce goods/services that aren’t actually required.
But why remove waste, if it takes additional resources to do it?
For any company to survive, it needs to make a profit. If you are spending time and valuable resources on these 7 wastes then you need to recoup these costs from your customers. The only way to do this is to incorporate the costs into your product, which increases the cost of the product to the customer. If your competitors can produce the same product at the same level of quality, but at a lower costs, then your customers are likely to go to them instead of you! They also want to know that they can rely on a product that is right first time and are delivered when expected. Removing these wastes help you to be able to fulfil these requirements.
So lets go into detail on how you might reduce/remove these wastes:
Look at where you keep your materials? Are they to hand?
Do you have a desk, where you keep all your paperwork, all your client information etc, so you’re not continually having to move stuff around in order to produce your offerings. If you don’t have everything to hand, then you spend time taking your laptop to your printer, or getting your notebook from your office, and all the while you are not adding value to your customers.
This might be as simple as having a bag with all the raw materials in to produce your widgets or, like in my case at the moment, I’m laid up on the sofa with a busted ankle, so I have a box by the side of me with everything I might need… just so I don’t have to go up and down the stairs to my office!
It could also be how you deliver your products?
Are you using the most efficient process?
If it is an e-product are you having to do anything manually to make sure the client gets what they’ve paid for? Could you be automating more, getting your systems to do more of the heavy lifting for you?
If its a physical product, how do you get it to the client? Do you have the most efficient logistics process in place?
Processes need to be as close as possible to each other, enabling material flow directly from one process to another. It can be caused by poor layout, stores of raw materials or work in progress not close to your production line, producing more than the customer requires, so instead of despatching directly to the customer, you have to move the product into a storage area. This can be very expensive, as you have to pay for extra warehousing, employing staff and machinery to move the products and none of this is adding any value to the end customer.
This is related to transportation. If you have inventory, then you need to spend time and money storing the materials.
And as well as physical stock, that you hold waiting for the client to want it, it could be the programs you’ve created, but actually haven’t monetised yet.
Either way… STOP. You need to minimise your inventory.
CASH is king, and if you’re putting you money into things that the client hasn’t actually said that they need yet, then you are WASTING your time, your effort and your money… Why would you do that??
Obviously you may need some stocks in place to enable you to be able to satisfy customer demands, but excess materials add no value and should be at the lowest possible level.
This does need to be balanced with the costs of transported lots of small deliveries with those of larger, less frequent deliveries and thought needs to go into the location and costs of delivering different products.
Identify what stock you’re currently holding and look at HOW you can minimise it.
You could actually launch those programs and get an income stream, or maybe have a sale to reduce your stock holding, as well as increase your client base.
This is especially important if you hold physical inventory and are paying for storage. If you can produce more on a “JUST-IN-TIME” basis, you won’t have to pay warehousing costs, you will also reduce the likelihood of defects, and having to move stuff around so that you have good stock rotation.
Look at your customer journey. Is it easy for the client to go through or Is your client experience too segmented?
Are they likely to give up half way through because they have to jump through hoops to buy and use your products?
Make it simple for them, Look at how many clicks they have to go through to purchase your product?
If they are on your membership site, can they find everything easily?
Is it indexed clearly and the search functionality there to enable them to easily satisfy their requirements.
Can they get to your website via your social media, or do they have to work out what your URL is.. ?
TRUST me, they will get fed up, they will go elsewhere and find someone who makes it easy for them to buy and to use their services.
And while its good for you to get away from you desk every 20 minutes or so, are you having to continually go looking for that piece of paper, that document, the highlighter, dictaphone, whatever? This can be a huge waster of time.
In an office environment, this equates to having a place for everything and everything in its place so that you can be as efficient as possible. This is related to transportation, but is about unnecessary movements within a process as opposed to those between different processes, so questions to ask:
- Are your raw materials close to hand?
- Are all your tools available?
- Can you complete each part of the operation without having to move from your workstation?
One tool to help you with ensuring you have everything to hand is a shadowboard. You can immediately see whether all your tools are available before you start.
How often do you sit around waiting for someone to get back to you, for a delivery or even waiting for your computer to boot up?
Perhaps you have to wait while you transfer information from one platform to another!
Well some things you can’t do anything about, but others can be controlled.
Agree a service level agreement with your suppliers and customers, so that you can plan around them, ensure that process changeovers are as short as possible and deliveries are made on a just in time basis.
BATCH your work, so you’re not constantly swapping from one task to another. Schedule a number of different social media posts at one time so that you work as efficiently as possible.
Write a “To Do” list and manage your time according to those things you can control, while those you can’t can be slotted in at a later date.
This can be actual overproduction. You create 5000 products, but currently theres only demand for 2000, or it can be that analytics report for your client, that has so much more detail than they were looking for.
Perhaps your systems don’t talk to each other, so you spend all your time inputting data into different platforms, or you write loads of blog posts, but no-one is reading them.
Think about what you are producing. Is it all being consumed? If not, why are you doing it?
Producing more than you need means that you have to hold inventory, which then needs to be transported to a warehouse, where it waits to be used. While it sits in stock, it might be difficult to get out of stock when required, defects may occur, which then need further processing, therefore it is important for you to really understand whether you are producing to customer demands, and whether you need to reduce production or if you can increase customer demand.
And while you may not hold inventory of reports or documents, you may produce a draft prior to customer expectations, they may not have time to review the document and therefore you spend time waiting for feedback, which can have an impact on your workload and well-being, so this is an area where you might want to focus on, even if it’s only to diarise when you do expect feedback and put thoughts to the background until that deadline occurs.
Just STOP.. look at what is working and do more of that, rather than waste time doing something the client doesn’t value.
Look at everything you are doing, and apply the SO WHAT test.. If the client is taking what you are producing … GREAT.. if they’re not then question why you are doing it.
Do you put lots of data into your system that you don’t use?
Are you over analysing your google/ social media figures and just looking at the vanity metrics?
Have you got a system in place, but use hardly any of the features?
Do you provide the Rolls Royce of solutions for your clients, but actually they just wanted a mini?
Are your processes overcomplicated so that you spend more time on admin than satisfying your clients needs.
Ways to deal with this are to really understand what the client wants. Have a specification, understand what is the “Must Haves” and the “Nice to Haves”.
There’s nothing wrong with under promising and over delivering, but you need to understand what costs or resources it will incur and what the additional value the client will perceive, because if they don’t appreciate the extra features and aren’t willing to pay for them, then it is your profit that will suffer, which eventually will need to be passed onto the client
Another way that you may over process is when your business starts to grow, the number of processes increase and consequently more documents are produced. If you write these in isolation, there is a danger that the interactions between processes are written in a number of documents, taking resources that could be better used to provide value adding services to the customer. So have a look at what you have in place, and make sure that the flow of goods, services and information is as efficient as possible.
This is when you don’t produce right first time. How often have you created something that wasn’t fit for purpose? That didn’t meet the client’s expectations? It could even be an exercise routine, that actually didn’t deliver the results you thought it would. .
It could be that post you wrote that the client felt didn’t fully meet the spec they had laid out, or the post was full of spelling mistakes.
Every defect requires rework, which takes additional time and resources. Just as importantly, they can have an impact on customer PERCEPTION of the quality of your work, be that a widget or a report.
If you spend a bit more time in the planning stage looking at:
What is your business model.
How do you produce your offering?
It it on brand?
Does it talk to your client’s pain points?
What tools or systems do you need to put in place to make sure you can rinse and repeat?
And I know they are boring for most people, but procedures.. instructions.. documents that tell you AND your team how to successfully complete each step in your customer journey help you create robust offerings that your clients will adore!
Prevention is the lowest cost method of reducing defects, so if you can identify the risks, understand what controls you have in place to reduce the risks (you can never fully remove a risk.. otherwise it wouldn’t be a risk, it would be a certainty!) and then take steps to ensure that you can prevent as many defects as possible.
So how do you actually follow the 7 Waste method?
Firstly review what you currently have in place.
Then look at where you add value to the final product
Identify the non-value adding processes and eliminate as many as you can
Then you need to make the remaining wastes that you can’t remove, perhaps because they are not under your control as efficient as possible
The best way to do this is to understand your customer requirements and implement processes that meet these needs in the most efficient and effective manner.
Of course, this is just one framework that you can use to review your business model, there are loads more… and thats the beauty of having models.
You can choose the one that fits your business best. You can use parts of different models to look at your business from different angles and you can adapt models to reflect your own very unique requirements
If you need more info.. please feel free to give me a shout 🙂