When it comes to optimizing workflows, the automotive industry was early to the starting gate. Henry Ford’s pioneering practices in mass production not only made cars affordable and accessible to millions of people; they also set standards for efficiency and profit throughout the modern enterprise.
In that spirit, last week’s column about quantifying operational variables got me thinking about my own experience developing a global business plan at Ford Motor Co. back in the ‘90s. Specifically, it called to mind the metric Things-Gone-Wrong (TGW), a term that started in the auto industry to interpret and quantify negative results in customer satisfaction surveys.
TGW is a Lean Six Sigma methodology for eliminating inefficiencies, speeding operations, and maximizing profits throughout an operation. It’s expressed as the number of complaints per 100, 1,000, or even 1,000,000 survey responses, units sold, or other quantitative measures of performance.
As I noted in my recent column about operational “black holes,” Lean Six Sigma evaluates processes against different types of waste in an effort to eliminate them. You can remember eight types of waste with the acronym DOWNTIME:
- Defects: This form of waste consists of process activities or outputs that do not conform to the customer’s requirements.
- Overproduction: Not truly understanding the demand for your product and overstocking as a result is another form of operational waste.
- Waiting: When you’re dealing with a work in progress, waiting for something before taking the next action, it results in waste.
- Non-Utilized Talent: Not utilizing the knowledge, skills, and abilities of individuals on your team is one of the most unfortunate examples of waste.
- Transportation: Avoiding transportation waste is a logistics game. Consider where your various resources are located and whether their paths can be streamlined.
- Inventory: Excess inventory can result in product defects or damage, longer production lead times, and inefficient allocation of capital.
- Motion: If you’re adding movement without value, you are adding waste.
- Excess Processing: This type of waste occurs when your business is performing more work than is required, or duplicating work.
Lean Six Sigma practitioners have recently added a ninth type of waste:
- Accident/Risk Waste: This waste category covers workplace security — both physical and digital — and includes employee illness and injury.
TGWs contribute to waste across the board, and your efficiency and profits depend on identifying them and eliminating them.
Finding the TGWs in your organization
- Are you truly in command of your TGWs? Are you successfully managing them, with confidence, to a level that’s inconsequential to your profitability?
- Do you know what your TGWs cost you in lost profit every month, quarter, or year?
- Do you have an effective way to monitor and manage these variables proactively as you scale your business?
Did you find that you’ve identified and eliminated all these profit-draining sources of waste? If so, congratulations!
For everyone else, here’s your opportunity to become the benchmark instead of chasing it.
Decision-makers have several technology options to consider. These include building their own custom software and finding commercial applications that deliver the configurability, highly flexible business rules, and automation to achieve complete command of their quote-to-cash operations.
At a minimum, your selection criteria should include consideration of:
- Fit to requirements (business and technical)
- Time to value
- Return on investment
- Long-term flexibility
Work with a trusted technology partner to assess your options. If you want guidance on choosing the right tech partner or would like to discuss your journey with one of Cavallo’s experts, we’re happy to help in any way that we can.
And if you want to learn more about Lean Six Sigma, check out Cavallo’s white paper Applying Six Sigma Principles to Distribution. It’s full of insights about how a methodology created for manufacturing translates into success for distribution. Please tell me how you like it!
Want to see more? Take a look at the previous two blogs in this series: