Hidden Profits Blog

Finding the Gold in Your Business

Hidden Profits Author:

Lynda J. Roth

As the president and founding partner of Woodland Hills-based LJR Consulting Services, Lynda advises clients on ways to improve profitability and productivity through both technology and business processes. She also works with companies and private equity firms on the role of information technology in mergers and acquisitions.



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Getting Started On Your Lean Project

Filed under: business process,Information Technology,lean accounting,Uncategorized — Lynda Roth at 3:25 am on Monday, February 1, 2010

In the last couple of posts I talked about the importance of looking at the organization differently, expanding thinking beyond our day to day limited view to find ways to change processes and technology to improve the business, successfully navigate the current economic situation and become more profitable.  This post is a continuation to discuss how to get started. The idea of creating a lean organization is a concept that today many executives are talking about.  You could almost say it is the new fad!  I am a very strong proponent of lean thinking and do believe it is the next level for business to improve productivity.  Most companies have the core business systems needed to function and so the benefits of just implementing technology have already been integrated into the organization.  So using Lean principles to get the next level of productivity is important especially with the current economy.  However, like many new ideas or concepts, it is easier said than done.

So what are some of the challenges that companies face when they want to take on lean projects.

  •  Resistance to Change and Skepticism
  •  Lack of Expertise in Lean Process
  •  Lack of Exposure to other Technologies and Processs
  •  Lack  of Time – Too Busy Chopping Wood To Sharpen the Ax Syndrome
  •  Lack of a Decision Process on Policy Changes, Project Priorities etc.

These are all very real challenges and not unlike the challenges faced when new technology is implemented. The first thing for organizations planning to apply lean processes is to realize these challenges exist and plan how they will be addressed.  I will discuss each challenge individually in future posts.

The next step in getting started is to pick a pilot target area. This should be an area in which the lean process has strong support at all levels of management. It should also be an area where there is significant pain in the processes.  For example, a process in which the competition has an advantage over your company.  Or an area where employees are working significant overtime, have high error rates and/or can’t keep up with the volume of work.

Once the pilot area has been identified, you need to determine the team members that will be involved.  It is very important to have team members from different areas of the company, not just from the selected business area.  If the team consists of just personnel that work in the area to be addressed there is a very strong tendency to make very limited changes.  You should include employees from departments that are touched by the area to be made lean.  The goal is for the team to understand the entire business process from the beginning to the end, not just the area that seems to be the problem.  It is also very beneficial to include on the team personnel that have experience at other companies.

Finally, bring in outside support.  You do not want an outside consultant to do all the work, however, you Do want an outside consultant to provide input in the following areas:

  • Project Management 
  • Envisioning possible new processes
  • Mentoring team members 
  • Change Management

 The consultant should be a firm  who has experience with lean techniques, the business processes, technology solutions and change management.  By doing this it enables you to overcome some of the change resistence, keep the project moving forward and provide insight into new process options and supporting technology.

Get started with your project. Keep moving forward and Be Successful!!

How to Profit in Current Economy

Filed under: business process,Information Technology,lean accounting — Lynda Roth at 7:11 am on Wednesday, November 18, 2009

Well we are reading lately that the recession is over and the economy is starting to grow again.  At the same time we hear how unemployment and under employment is still at extremely high levels.  With all those people out of work it will be hard for them to pump much into the economy.  So while the worst may be over, the economy is still pretty weak kneed and your sales are probably not where they were a few years ago. 

Also, in order to survive you have probably laid off a few employees and you are struggling to meet the demands of the work load.  As your own company recovers, and you get busier the next big question is ‘How are you going to get all the work done with a reduced staff?’  Of course some people will be hired back, but do you really want to return to the levels you had before?  Plus with new regulations, Obamacare and potentially cap and trade, you are unsure of what your cost structure will look like.  Those employees will be more expensive to hire back.  And don’t forget the cost of momey – and the availability of money.  The credit markets are still pretty tight and it may be hard to get debt or equity for growth. 

So what can you do?   As I mentioned in my post about the ‘Profitability Vice’ the answer is to become a more efficient and streamlined business – often called a lean business.  A lean business is one that modifies their business process to eliminate ‘muda’ waste, increase the use of information technology solutions and empower employees throughout the organization. 

In the majority of businesses today, there is significant duplication of effort where managers in operations do work using offline systems only to be duplicated in back office operations using the official corporate computer systems.  For example, customer invoices are created on spreadsheets or Word documents, mailed to customers and then sent to the AR department to be entered into the AR system.  Another example, operations personnel go through an informal process to approve and purchase needed supplies.  Then someone in the department maintains a record of what was purchased on paper or spreadsheets.  Vendor invoices are mailed to the AP department who then goes about investigating who purchased the items and getting approval to pay the invoice.  Enormous amounts of time are wasted in this process and frequently vendor discounts are missed or late fees charged because vendor payments are delayed.  Issues like these can be resolved by new thinking and providing information technology solutions to enter the information in the systems in the operations departments.

To learn more about how to implement lean business processes and technology contact LJR Consulting Services for a free consulation.  Call us at 818-227-5025 or visit our website at www.ljrconsultingservices.com

On Becoming Lean..

Filed under: business process,Information Technology,lean accounting — Lynda Roth at 10:31 pm on Monday, September 14, 2009

 

In the early 1800’s Henry David Thoreau said
 
 ‘Our Life is frittered away with detail…. Simplify simplify.’  
 
Most of us believe that life during Henry David Thoreau’s lifetime was much simplier than today. We are mired in much more detail today. The essence of a lean organization is one that simplifies processes in order to improve productivity and have greater clarity and timeliness of information and ultimately improve profitability.
 
Fifty or so years later the great Supreme Court Justice, Oliver Wendell Holmes Jr. said the following :
 
‘Most of the things we do, we do for no better reason than that our fathers have done them or our neighbors do them, and the same is true of a larger part than what we suspect of what we think.’ – Oliver Wendell Holmes, Jr.
 
Man’s mind, stretched by a new idea, never goes back to its original dimensions.   – Oliver Wendell Holmes Jr.
 
These quotes also apply to reviewing current business processes with the goal of becoming a more lean,efficient and profitable organization.
 
First, what is being done in the company at the current time is not necessarily bad or good, the business processes have often come about because that is the way others did it or they are generally accepted business practices. The challenge with that way of creating business process is that it does not take into consideration unique issues in every company and rarely takes into account new technological advances.
 
Second, in order to really redesign process and become lean, we must completely rethink the entire organization, why processes are the way they are, and what are new ways of doing the task to eliminate the waste, inefficiencies and bottlenecks that have become commonplace. This requires that we stretch our minds to new ideas and when we do that we wonder how we could ever go back. In fact we can’t. So when the new ideas are introduced and tried, they seem very strange, unusual and against the order of the universe. While some ideas may not fit, many will over time. 
 
Becoming a lean organization takes courage, and dedication.  The rewards for the management team that becomes truly committed to lean is a more profitable organization positioned to take advantage of the recovering economy. 
 
Contact LJR Consulting Services for a free 1 hour lean consultation.  818-227-5025
 
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