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2011

Last week’s blog, ‘2 Challenges with Best Practices’ generated a lot of very thoughtful and interesting feedback and interest so I thought I would take the opportunity to continue this discussion.  This seems to be a topic that many people have thought about and I am very happy to continue down this path.  I thought I would start with a statement that I think clearly, and simply, defines what many have agreed to be the challenge with ‘Best Practices’ and highlights the necessity to view this as a ‘Best Guidelines Business Process Improvement Program’! When everyone in the industry is doing it, then something new and better has already come along!

 

These Business Process Improvement initiatives are usually started as a result of some type of impact to the business.  These business impacts can come in many shapes and sizes; from a desire to reduce cost to a merger / acquisition.  No matter what the initiating factor, it provides a great opportunity for strategy, process and objectives alignment from the executive leadership with all levels of the operation.   The Business Process Improvement program is a critical piece of a successful continuous improvement program.  The Business Process Improvement program provides the mechanism to institutionalize a continuous improvement process and methodology.  It is important to understand that there can be no ‘industry standard best practices’ that can be implemented ‘as is’ in any organization.  Many people in the discussion agree that the ‘best practices’ are simply guidelines, or a starting point, to use in developing the business process improvements that are a best fit for the individual organization.

 

In addition, the continuous improvement process itself also provides the mechanism to measure strategic decisions and assumptions in order to revise as necessary to promote a continuous improvement culture.  Joris Claeys provided a link to a McKinsey study  on behavioral strategy with some surprising statistics.   The article stated that a survey of over 2,200 executives found that 60% of the respondents felt that bad decisions were about as frequent as good decisions!  I think that this statement provides the most compelling reason for an organization to initiate a business process improvement program based on a measurable continuous improvement initiative.  Without a continuous improvement program to identify and correct the bad strategic decisions there is a very high probability that the strategy will be ineffective or detrimental to the enterprise!

 

I think there are some critical factors to consider and include in a successful improvement initiative.

  • Culture is a critical ingredient to a successful continuous improvement initiative (I am focused here on successful continuous improvement initiatives and it goes without saying that culture is a critical ingredient to the success of any initiative.)  It is critical to recognize market, enterprise and departmental cultural mores in order to develop an effective process improvement mechanism.  In fact, a successful initiative very often involves cultural changes as a requirement for success.
  • Clear, concise and measurable Service Levels (SLAs) must be defined as a method to measure the impact of the modifications.  In addition you must define the Key Performance Indicators and their metrics as the means to measure the SLAs.
  • Clear and measurable strategic objectives must be defined and agreed starting with the leadership to ensure alignment across the organization.  These objectives should have success factors defined so that the organization can determine when they have achieved the objectives.  In addition the strategic objectives should be regularly reviewed to ensure that they are appropriate and achievable.
  • A change management procedure is critical to ensure that the improvements take into account organizational and procedural requirements for validation, training and scheduling.

 

In addition to providing a mechanism to align the organization, objectives, measurements and culture, this program provides a mechanism to document the business processes that will act as a tool to support operations process training and new employee on-boarding in addition to the improvement definition.  This documentation provides a means to overcome the challenges involved with ‘tribal knowledge’ sharing and utilization.  This is a key benefit so that the organization is not dependent on the memory and participation of specific resources that retain the ‘tribal knowledge’ for how a process or operation works.

 

Now for the audience participation portion of this program……

 

What is your experience with the benefits, risks and costs of continuous improvement programs?

 

Do you view ‘tribal knowledge’ as a hurdle in your organization? 

 

Do you have strategic objectives defined and metrics to identify when you’ve achieved the objectives? 

 

How do you currently align your organization? 

 

How do you account for your cultural requirements?

 

The phrase ‘Best Practices’ is a great phrase for organizations and especially consultants because it implies high quality, industry expertise and the phrase cannot be nailed down!   However, when you think about the implications of Best Practices, along with the current highly visible focus on defining and implementing best practices, I have identified two key challenges to the operation;

 

  1. If everyone utilized the same best practices and everyone implemented the same best practices, then it goes to follow that they would no long be best practices.  After all how can they be ‘best practices’ if everyone is doing them? In this case that would become minimum operating practices!
  2. Every operation and Supply Chain must be specialized and configured to meet the individual organizations and partners involved in their Supply Chain.  In a way each organization builds and implements a Supply Chain with different features and requirements, very few supply chains are identical.  So, you must think of best practices and more like optimum guidelines that will be configured or customized to fit the specific Supply Chain requirements.

 

You should never look at this exercise as a ‘once and done’ initiative.  Everyone wants to be following ‘Best Practices’ and based on the challenges I’ve identified above I suggest a more appropriate, realistic and value added approach to these challenges is to view this initiative as a continuous improvement program to utilize ‘Best Guidelines’ as a means to identify and deliver the most valuable improvements in your Supply Chain.  This continuous improvement program would follow a DMAIC process (Define, Measure, Analyze, Improve, Control) to continuously measure the results of the improvements and revise and drive new improvements into the program.  This program must take into account the culture and the individual challenges and objectives for each supply chain.

 

Just as these improvements must take into account the culture and the individual challenges and objectives of each supply chain, the measurements must take into account not only the individual processes and procedures, they must include the impacts and results on the entire supply chain.  You must remember that the changes and improvements you implement in one process can have a positive or negative impact on the upstream and downstream processes in the Supply Chain!

 

In addition to planning for the measurements you must also clearly define the service levels and key performance indicators you will utilize in your measurements.  In order to effectively measure the improvements your measurements must be consistent!  Your improvements should be defined and delivered in such a manner as to allow effective measurement, contain the improvement delivery in a controlled manner, and contain the size and extent of the improvement in a way that will control the problems in a worst case scenario.

 

This ‘Best Guidelines’ continuous improvement program can bring an added value to the Supply Chain through the definition and documentation requirements of the business processes and the definition of the service levels and the key performance indicators.  This baseline of information will be extremely valuable to the Supply Chain in providing a means to clearly communicate and measure performance of all the partners.  In addition, this provides a comprehensive base for developing training and new partner on-boarding procedures and programs. 

 

I recently completed an internal operational business process mapping exercise for a major direct-to-consumer retailer.  The exercise provided a ‘journey of discovery and understanding’ for the organization and expanded into some additional areas.  This was an iterative exercise that involved the front-line associates to the senior level management team.  The result of this exercise provides a continuous valuable tool in operational discussions, improvement programs and new associate on-boarding and cross training.  The value of this tool, and the exercise to develop the tool provided an order of magnitude level of added value in addition to the base objective of providing a baseline for improvement definition!

 

Now for the audience participation portion of this program……

 

What is your experience with the benefits, risks and costs of ‘Best Practice’ implementations?

 

Have you seen a progression or maturity growth in your procedures? 

 

Have you recently completed an evaluation and validation of your service levels and key performance indicators? 

 

What hurdles and challenges have you encountered in implementing a continuous improvement program?