9. Order to Cash Flow – Value Stream Sales/ Marketing Order Quotation Order Manage- ment Fulfillment/ Manufac- turing Warehousing/ Distribution Finance Returns, Corrections, Etc.
10. A “Value-Stream” Diagram of A Process Overall Process Input Desired Result 94% 98% 98% Entire System = 90% ! Impact? 100% 100%
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Hello, this is Howard Coleman. Thank you very much for taking the time to learn more about MCA Associates and how our organization, potentially, can add value to your organization..
So, in the next few minutes I’d like to introduce you to MCA Associates…… … ..Who we are… … ..What we do…. … ..and what the potential value added benefits are to partnering with us.
MCA Associates is a team of four (4) senior management consultants……. We provide idea leadership to wholesale-distribution companies who are willing to commit themselves to operational excellence….. And we have been doing just that, for over 23 years Although we also have manufacturing clients, we focus most heavily on working with wholesale-distribution companies, just like your own…… And we believe that we are the first to apply lean thinking philosophy and methods in wholesale-distribution companies, just like your own.
The first question that you should be asking, in developing a relationship with any consulting firm, is.…whether they can provide any real “value-added”………. Honestly, this is a question that we can not often answer fully, at the very beginning of a conversation with a potential client. We do believe, though, that our value-added begins……. with our Industry Expertise………. We’ve worked with a broad range of W-D companies in HVAC, Plumbing & Heating Supply, Electrical Supplies, Fasteners, and many other types of industrial supplies, as well as with W-D who sell primarily thru catalog distribution. We understand the “key business drivers” that lead to success in W-D We have, I believe, been very successful, with our client companies, in uncovering the underlying issues that impact competitive advantage – by assessing their key business processes…….. We do that with an objective view - and a “fresh set of eyes”. - because we know where to look – and we know how to look!................. And we personally value the measurable and continuous improvement that we have helped our clients obtain
In any potential relationship, to realize our value proposition….we first need to determine what your “needs” are …..and what your goals and aspirations are for your company as well as yourself, as an owner or senior manager. One thing I am very sure of…..every company, owner or senior manager, no matter how successful or profitable they have been in the past, experiences some current “pain”, what we call “the afflictions”……., in reaching their goals and aspirations. These “pains” have impacts……. and there are consequences, particularly the consequences of inaction! I must mention though that it also requires a willingness, on your part, to be “honest and open” with us in discussing your company and your own strengths and weaknesses. One we begin to fully understand those goals and aspirations, and those pains, then we can intelligently discuss with you, whether we possess the offerings of “solutions”, that can fill the “value gap’ between those “pains”……. and your goals and aspirations - for your company and for yourself. In other words: Will you be able to obtain “specific and measurable value”, from us, which leads to a “new or a different reality”.
Most often, the way we go about our business of needs assessment is thru our “Competitive Advantage Assessment”……. Our own business analysis model. It is a process which has been honed over many years……and really involves, us, looking at your company from different perspectives…… Understanding Your Business Processes Understanding Your People, Your Culture & Organization Understanding The Technology you possess and how well you utilize that technology…… … .and lastly, understanding your company from a financial perspective Now, we do all this thru our prism of experience in W-D….. and thru our understanding of “Lean Thinking concepts and how they impact “operational excellence” goals. These Lean Thinking concepts are a critical and key component of our approach…. and is really something, I believe, you should know more about.
As we progress thru this Competitive Advantage Assessment, which by the way, also includes a confidential survey of your employees, we begin to develop what we call in our business, “our findings”, in other words….your opportunities and action plan for improvement. Every one of our major findings and your opportunities for improvement, brought to light by our business analysis model, is described in writing – the evidence, the symptoms, the constraints and their significance. We discuss the impacts and the consequences of inaction. Our detailed action plan describes the “how-to”, organizing for action, and the expected results…….. your “new reality” Now, none of this is done in a vacuum. We keep you in the loop because our on-site activities include daily discussions and ‘de-briefings” with you. There are no surprises at the end of the “CAA”. Our objective, through-out the process, is an alignment of your goals and aspirations and the necessary actions that need to be taken that impact the bottom line and customer satisfaction. You will not find us sugar-coating any issues……….and There is no obligation to retain us beyond the CAA process.
Now, another thing I know for sure from our experience, is that: “upwards of 60% of the activities performed at a W-D, typically add no value to the customer”……. That being the case, eliminating those activities should represent the greatest potential source of performance improvement in your organization. We identify these non-value-added activities by employing, what we call, our “Seven Wastes Model”
If we look at the typical functionalities within a W-D, that is from sales order to cash flow, each one has processes contained within them. Each one providing value to the customer and to the next step in the flow.
As an example, let’s describe a simple process that could exist within the order to cash flow model.. I like to call it a “value stream” because its all the things you do, from beginning to end, in your company’s functionalities, that ultimately provides value to your customers. As you see, I’ve illustrated here a process which required some “inputs”, some resources, etc., with the expectation of a “desired result”. You see though that we can have some “restrictions”, some “constraints” in the steps in our process that causes a less than desirable result….a “system”, in this example that is only functioning at a 90% effectiveness level. The ramification here, the consequence: … .is that these constraints increase your capacity needs, the resources that are necessary, and the transaction costs, of those resources! What’s the real impact of this particular example?
Well, let’s say that each day you have to “produce”, or in others words, get out the door - 600 line items or skus. We’ve discovered that thru constraints in some of the steps, in your value-stream, that your system is only effective 90% of the time. Thru some simple arithmetic, I can say that the capacity you must plan for requires the resources for 667 line items, to get out 600. Further, in our example, assuming that 80% of your activities is value-added, in others words, 20% of your activities are not, there are errors, redundancies, and the like. Remember, earlier we said that in our experience, upwards of 60% of the activities can be “non-value-added”. Again, thru some simple arithmetic, we can state the your capacity need, your resource need, requires that you plan for 834 line items, to get out 600. So, there are impacts and consequences.
Now, Let’s look at it from a “lean thinking perspective”: Here, we will simply describe “lean thinking” as a way to reduce “waste” within your processes and eliminating all the non-value-added steps which provide no value to your customers. They won’t pay for inefficiencies. Because Lean Thinking is an enterprise-wide strategy across your your “value-streams”…. the benefits are not just from transaction cost reduction, but ultimately being able to grow the business. It is important to understand that this is not about “headcount reduction”! If a lean initiative in your organization gets perceived this way, I can guarantee you that your efforts will “take on water”. So, A 10% improvement, thru lean initiatives, comes from being able to thru-put 10% more with no increase in transaction costs, ………..of particular value to you during an economic recovery, …… ……… ..but it also gives you the opportunity to be more competitive by bringing the 10% improvement in flow down to the bottom line.
So, what better time than now, during this economic environment, to really understand your “value-stream”? What better time than now to better understand the “opportunities” that exist, their impacts, and the consequences of inaction? If you would like to discuss what your next step might be, for your organization, I invite you to contact me personally and/or click on the Competitive Advantage Assessment page on our website.
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