How do you balance the short-term and long-term benefits of your value stream initiatives?

I encourage clients to begin by working with their CFO's to create simple COST/TIME profiles of their products and/or processes using their Income Statements and Balance Sheets. By considering the area under the curve for each product or process, they should be able to identify a particular TARGET and set a specific financial GOAL by reducing either the COST or TIME or BOTH as they consider the Current State Map. I would also suggest that the GOAL be aggressive. In setting an aggressive goal they need to assure their LEAN Team that LEAN is not a PASS or FAIL exercise but a process focused on Continuous Improvement.

1. Lean Principles: Address immediate waste reduction with Kaizen, while long-term gains come from continuous process improvement and flow optimization. 2. Benchmarking: Compare with industry best practices to ensure both short-term efficiency and long-term innovation. 3. Lessons Learned: Use insights from past projects to secure quick wins and avoid repeating mistakes, ensuring rapid short-term results while building for the long term. 4. Risk Analysis: Tools like Bowtie XP help manage both immediate and long-term risks, guiding resource allocation effectively. 5. VSM + Spaghetti Analysis: Value Stream Mapping targets long-term goals, while Spaghetti Diagrams eliminate short-term inefficiencies, enhancing operational agility.

With a specific financial goal in mind, the LEAN Team will be more likely to suggest "out-of-the-box" solutions to eliminate excess process steps and hand offs. It is also important to have previously established and communicated a personnel policy that insists on 10% OT and 10% Contract Employees versus 100% FTE's. Having such a policy will assure the LEAN Team and that if a person's job is sacrificed in LEAN'ing out the the process, the person impacted will still have a job, even if it requires re-training in a new position. The excessed employee will replace a contract employee and demonstrate the goodwill of the client.

When a client's employees understand their job security is assured, they are much more likely to make significant changes. Since they work within the process every day, they already know what the problems are and where they exist. They only need to be given assurance of continued employment and some kind of recognition for their accomplishments.

The COST/TIME profile for the NEW process should be an easy way to determine if you have made an improvement and by what percentage, even if you didn't make the original goal.

Once the new process is up and running smoothly, the new "deliverables" should be built into the SMART Goals of those individuals who are responsible for the process. This needs to include the operators as well as all of the support operations such as Maintenance, Materials, etc.

Leverage lessons learned, benchmarking, and Kaizen methodologies to drive continuous incremental progress while ensuring alignment with broader strategic objectives. By systematically analyzing past performance and industry standards, you can identify key areas for improvement and implement targeted changes. This iterative process enables organizations to make adjustments that capture immediate, impactful quick wins, while simultaneously laying the groundwork for long-term operational efficiency. These short-term gains contribute to sustained improvements over time, fostering a culture of ongoing enhancement and adaptability in a competitive environment.

Once the new process is up and running, I encourage clients to allow it to settle into a routine before revisiting it with a new LEAN Team effort. While I would suggest three months before the next exercise, I am certain there are lots of additional products and processes identified in the initial COST/TIME Profile in need of similar changes.

If the initial COST/TIME profiles identify a real DOG, eliminate that problem ASAP before launching any improvement projects with LEAN. My reasoning is that we want the employees to feel secure as we ask them to FIX the business. If they feel their jobs are at risk, suggestions will be minimal, at best. Secondly, while it might be thrilling for Upper Management to keep all of their LEAN financial profits, I recommend sharing 25% of the profits with customers through price reductions to increase sales and even greater profits. And consider giving 5% bump to employees in recognition of their contributions. According to Taiichi Ono, those who convert raw material and raw data into finished goods are the only ones who really ADD VALUE.