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The+Value+Chain

By Tommy Hicks,2014-04-19 10:38
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The+Value+Chain

“For Australian business to be globally competitive industries and

    organisations need a different and more effective way of delivering

    to local and overseas customers."

    The following article by Intelog Business Performance Group is presented

    as a thinking challenge and solution based on its experience in working

    in many industries and its association with leading overseas applied

    research.

    It is our contention that greater competitive capacity will only be

    achieved with a radical change in thinking and understanding by an

    organisation’s stakeholders, from a customer’s and consumer’s

    perspective, of where and how is created.

    We include the customer’s view as they can be a key link to the consumer

    eg, the retailer, although we advocate that true competitive comes from fulfilling consumers’ perceptions.

    This change in thinking is achieved by applying frameworks and

    methodologies that enable “collaborative and collective capability”.

    We see it as engaging a stakeholder group in seeing and

    understanding the current state at a and individual level and then

    developing a future state based on consumer perceptions. Stakeholders must understand what is non- adding activity and waste and how to eliminate this by focussing on what creates and delivers

    from a consumer’s perspective.

    This focuses people on flow and this creates the realisation that real

    competitive advantage will come from not just doing things better but by

    doing better things.

The new proposition then comes from innovation at a product or

    service offer, packaging, supply , process performance and pricing and presentation level a total proposition. This is achieved by engaging all the key stakeholders in developing solutions and outcomes across the whole , as well as at the key processing or service development activities that improve

    productivity, reduce costs, eliminate non- adding activities and improve the customer proposition.

    This creates a model for those engaged and the industry; as well as

    improving supplier and customer relationships.

    It is our contention that the application of such things as Lean tools,

    Six Sigma and the Theory of Constraints is compromised if this stakeholder

    engagement and understanding of the waste and non- activity that stops or limits flow and creation, is not the first learning stage.

    The Stream Engagement model is based on the proven Lean Enterprise

    Thinking "best practice" models and methodologies of:

    Engagement of the key stakeholders - management and frontline process

    owners "Seeing and Understanding" the current state of the whole

     the way it works now

    Developing a Future State based on an IDEAL vision (the elimination of

    all non- adding activity)

    Implementing significant and sustainable performance improvements based

    on "learning by doing"

    Creating a shared outcome model that all the stakeholder organisations

    can deploy in their own business.

    The program is in three distinct phases - Program Initialisation, Learning

    by Doing, Improvement Project Development.

    Program Initialisation - Seeing and Understanding

    In a recent presentation Jim Womack, co-author of Lean Thinking Banish

    Waste and Create Wealth in Your Corporation, said that every organisation

    must address the Purpose, the Processes and the People.

    He believes that most organisations struggle because the purpose is not

    clearly defined, the processes are not clearly specified and the people

    are not fully engaged.

    Accordingly the program initialisation is divided into two sections.

The first phase is to Engage the Senior Management, where senior managers

    from each of the key stakeholders attend a workshop that will engage them

    in understanding how Lean principles are applied to organisations and

    end-to-end Chains (supported by appropriate industry case studies), gain agreement on the current state of the selected supply and the

    opportunities for improvement, and set the direction for the program and

    establishing the targets and the measures.

    The second phase is to Engage the Stakeholder Process Owners, who are the

    middle managers and key frontline staff who understand the operations and

    the performance.

    Following the introduction to Lean Thinking and its application in their

    industry, they map the current end-to-end from source of

    supply to the customer/consumer identifying the issues and opportunities

    for improvement.

    They then develop an action plan for more detailed analysis and mapping

    based on the program direction, objectives, targets and measures set by

    the senior management.

    One of the current problems is that traditional organisations have a

    vertical focus - with managers focussing their activities in their own

    function, as a result optimising their own area of focus often at the

    expense of or cost to other functions of the organisation.

    The customer, however, is buying a product or service that flows through,

    or is influenced by all of the functions and departments of an

    organisation.

    The same applies to all of the organisations in the end-to-end .

    The objective of the Project Initialisation is to enable everyone to see

    and understand the current state and how the selected supply creates

    and delivers its proposition to their customers. This then provides an understanding of how much waste and non-

    activity and costs exist and therefore the opportunity for improvement.

    The stakeholders can then develop a future state based on what they have

    seen and learned from applying the Lean principles, with a view of what

    needs to be changed and what needs to be put into place to improve

    performance.

It is worth reflecting on the quote from Jeffrey Pfeffer and Robert I.

    Sutton in Harvard Business Review in their article “Evidence Based

    Management” - Evidence-based management is practiced best not by

    know-it-alls, but by managers who profoundly appreciate how much they do

    not know.

    Learning by Doing

    Whether it’s Toyota, Tesco or Cogent Steel, world’s best practice is

    dependent on stakeholder engagement. Good organisations will say that

    they do engage with employees and suppliers and that they have good

    relationships and on the whole they are right.

    But there is a difference between good engagement and engaged employees.

    Engaged employees are actively involved in delivering the organisation’s

    strategy. They know what the strategy is and they know how they are

    contributing to it.

    They know the targets and measures to ensure performance success and they

    are empowered to improve their workplace.

    Excellent organisations engage their key suppliers in the same way. So

    the next step in the stream performance improvement is to engage

    the stakeholders in identifying the improvement opportunities and

    determining and quantifying the solutions, then presenting

    recommendations to management.

    If management have played their role correctly by providing direction,

    internal and external support and coaching and active review support, the

    solutions presented will be acceptable and do-able, and aligned to the

    strategy and objectives of the organisation.

    A key element of the success of this approach is for management to provide

    the training of internal leaders and coaches in “learning by doing”.

    Sustainable continuous improvement will only come from being engaged in

    training in the workplace or where is created or delivered.

    This therefore, requires cross-organisation team engagement when

    end-to-end program performance improvement is the objective.

    John Shook was the first American manager at Toyota Japan and he thinks

    that the leader’s job is, firstly, to get everyone to take the initiative

    to solve problems and secondly, to ensure that everyone’s job is aligned

    to the company’s goals.

It is the leader’s job to develop people by mentoring, coaching and

    example.

    Mike Morrison, Dean of Toyota University, said in an interview with

    Gabriel Gonzalez-Molina (Gallup Management Journal, 8 August 2003): Lean

    Thinking is best defined as creating organisation wealth (capability).

    Lean Thinking:

    Adds by focussing on customers

    Creates flow by focussing on people and processes and by developing

    engaged employees who collaborate to engage customers by understating and

    anticipating their needs

    Achieves mastery by focussing on personal and group leaning.

    This is the final element of Lean Thinking. It encompasses one of the most

    basic human needs: the drive for meaningful growth and progress.

    Objectives & Outcomes

    The primary objective is to improve the capacity and productivity of the

    selected by applying Lean Thinking innovation - that of engaging all supply stakeholders in aligning the capacity and productive capability to the demand.

    This approach is unique in Australia, in that this is more than just

    improving the processes and reducing cost. It is also about developing

    innovative solutions by engaging the collective skill and knowledge of

    the stakeholders in thinking differently about the individual and

    collective contribution to the creation of .

    Unfortunately, productivity improvement is often confused with working

    harder and cost reduction (head-count reduction or cutting discretionary

    spending).

    The productivity potential lies in the understanding of the work that is

    done to create . Through this seeing and understanding the elimination of the non- activity productivity improvement is achieved - the balance of the efficiency and the effectiveness of

    processes to deliver the desired outcome.

    The objective of activity is to improve the use of available resources (labour, materials, land, capital, materials, and consumables,

    R&D etc) to achieve more from less and to improve the proposition

    through innovation in terms of quality, positioning, service and

    alignment to perceived needs.

    What’s the typical outcome? Business growth with little or no increase in staff. There are Australian examples of this, with over 20 per cent business growth in twelve months).

    It is well proven that business excellence comes from collaborative engagement of stakeholders. As Professor Joachim Milberg stated: "Those that work alone can only accumulate, those that collaborate intelligently can multiply".

    Andrew Stewart is the Managing Director of Intelog Business & Healthcare Performance Group. He is passionate about the improvement in productivity of Australian business as a means of becoming globally competitive. He believes innovation comes from the engagement of the people who create the that delivers profitable performance. It is this innovation that

    will deliver Business Excellence. Andrew is happy for further discussion on this and related subjects.

    (Source: Logistics Magazine)

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