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Thursday, September 30, 2010

Predictive Measures with Throughput Accounting

Dr. Charlene Spoede Budd was my guest on the Busienss901 Podcast and as you would expect our discussion was about the Theory of Constraints Through-put Accounting methods and the application of the knowledge that we gain from this information. We discussed the use of accounting throughout the organization for developing predictive measures versus reactive. This is not your regular accounting discussion.  C.Budd web

Dr. Budd was a contributor to the recent Theory of Constraints Handbook on two separate subjects:

  1. Traditional Measures in Finance and Accounting, Problems, Literature Review, and TOC Measures (Chapter 13 of Theory of Constraints Handbook)
  2. A Critical Chain Project Management Primer (Chapter 3 of Theory of Constraints Handbook)


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Charlene Spoede Budd is a Professor Emeritus from Baylor University, where she taught management accounting and project management classes for a number of years. She is certified in all areas of the Theory of Constraints and is the Chair of the Finance and Metrics Committee of the Theory of Constraints International Certification Organization. Her research has been published primarily in practitioner journals and she has been awarded three Certificates of Merit for articles published in Strategic Finance. Dr. Budd has co-authored two accounting textbooks with her most recent book, A Practical Guide to Earned Value Project Management.

The subject matter may seem a tad dry but give this podcast a chance, I do not think you will be disappointed!

Related Posts:
Six Sigma a great companion to marketing
Use Intuition or Six Sigma for your Marketing Data?
Theory of Constraints Roundup

Wednesday, September 29, 2010

Value Stream Map your Customers buy Process

Below is the outline I use for a guideline to create a Value Stream Map and to mimic a customer’s buying process. I have written many times and have an eBook (Mirror Marketing) on the subject that you should Mirror your customers buying process in developing your marketing strategy and tactics. I choose this flow diagram for several reasons. The Six Sigma tools involved in the DMAIC process complements the steps of the buying process. The Involve, Influence, Interaction, Intimacy and Commit stages are central to the patterns you must create during the customers buying process.

DMAIC

Most businesses are very consistent when they are making a purchase decision and practically any purchase is taken through a process. Below is the process most customers will go through and you can see how it correlates to my standard outline above.

Buying Process

Many people might not consider the Awareness stage but I believe that is critical in today’s marketing. Seldom does a purchase occur today simply starting when a buyer realizes or recognizes they have a need for the product. Most business decisions are still purchased from someone they already are aware of or there is a direct connection to them even if it is only a Google Search.

Your Value Steam Map should mimic your customers buying patterns and provide/supply the information that enables them to make a decision. That decision typically supports or creates the action to move to the next stage, not necessarily to buy. You may find out interacting with one value stream that they need only to attend a webinar to support the transition from evaluation to purchase. While in another channel it may require that the webinar is attended during the research phase and a free trial is needed before a purchase is made.

Buyers will buy different through different channels and it your tactics may have be different or in different order depending on the value stream. For example, a value stream may be created for a dealer network, direct sales, internet sales, parts, etc.

The Customer’s decision making process also will vary in length and the number of decision makers. Typically, it is safe to say the higher the cost of the product the longer the time it takes, the more material reviewed and the greater number of people involved in the process. Price will also affect what purchase method is used (P.O., Online, In-person, etc.). These all our critical factors in determining your value stream and ultimately in how you manage your value stream.

The key to successful implementation of Value Stream Marketing is getting this right. You typically understand your your marketing/sales channels but the level or how deep you go into the process is the difficulty. There is no right answer. Drew Locher of Change Management Associates in his podcast and also in the eBooks created from them gave a great definition on this particular subject.

Related Information:
Value Stream Mapping
Six Sigma Marketing
Lean eBooks

Wednesday, September 22, 2010

Is your Lean Supply Chain practicing ASR?

This a transcription of the Business901 podcast that featured Carol Ptak. She is first and foremost a thought leader. You will find in the transcription that Carol has an extensive background in Supply Chain and Management. It was one of my most informative podcasts full of fresh ideas, examples and usable material. Even though it centered around Supply Chain most of the principles can easily be applied in other areas such as operations and even marketing.   


Introduction to ASR - Actively Synchronized Replenishment

Related Podcast: In a Supply Chain, Where is more important than How Much!

She co-authored a chapter with Chad Smith in the Theory of Constraints Handbook and has authored and co-authored books such as Necessary but Not Sufficient: A Theory of Constraints Business Novel, The Quantum Leap: Next Generation and several others. She has been asked by McGraw-Hill and presently updating Orlicky’s Material Requirements Planning.

You can also purchase just this chapter: Integrated Supply Chain (Chapter 12 of Theory of Constraints Handbook).

ASR Website: http://beyondMRP.com

Related Posts:
Logistics Matter, even in Marketing
Implementing the TOC Supply Chain Solution
Transforming your Supply Chain to a Lean Fulfillment Stream eBook
Lean Six Sigma applied to Supply Chain
Application of Lean Six Sigma to the Supply Chain

Tuesday, September 21, 2010

Competing in a Value Driven World

This is a Guest blog Post by Dr. Eric Reidenbach, the Director of the Six Sigma Marketing Institute. I think Dr. Reidenbach’s thoughts are right on target. We keep basing Continuous Improvement efforts in areas that are making little difference to the bottom line. Most manufacturers constraints are in the marketplace and till we address and solve the issue of demand, improvement in operations mean very little.   

Dr. Reidenbach’s Message:

Production is driven by consumption. Manufacturers will not add new shifts or open new plants unless there is consumption - demand. It really is that simple. No amount of targeted tax breaks, free trade zones, industrial policy, lean initiatives will create the demand necessary to drive production and employment. These are factors that operate on the production side of the equation, not the consumption side.

Eric picture web What will drive production is giving buyers a compelling reason to buy. That compelling reason to buy is value – superior value. Value is the interaction of quality and price. High quality products and services offered at a competitive and fair price are the drivers of value. Every undergraduate econ student that is paying attention in class knows that value is the lubricant that facilitates exchanges. The buyer seeks high quality at a fair price (value) while the producer seeks payment (value).

Recessions are often referred to as conditions of excess inventory that requiring an adjustment. The buyer is telling manufacturers that the value offered in the proposed exchange is not sufficient to complete the exchange. Until the producer understands value and its catalyzing effect, exchanges will be stultified.

There is a growing emphasis on retraining our manufacturing sector. Until this retraining includes education regarding the identification, creation and delivery of value, we will be doing the same thing over and over but expecting different results. NAM (National Association of Manufacturing), state manufacturing associations, AME (Association of manufacturing Excellence) all have a role to play here.

Most manufacturers tend to be product focused. They believe that quality and value are a function of the product and product features. They ignore all of the other elements of the value delivery system such as product support, parts availability, technical support, and distribution – all of the elements that make it “easy to do business with”. This is what I call “value myopia” and it severely limits and restricts a manufacturer’s capacity to penetrate markets, domestic and global. They need to refocus on value – become value focused.

Manufacturers are also consumers. They purchase goods and services in their daily lives as well as their business lives. Do they buy automobiles solely on the basis of product features (blue tooth, gps, xm radio) or do they factor into their decision elements such as dealer service, repairs (timeliness of repairs, quality of repairs), availability to get the right parts, the ability to talk with someone at the dealership who knows, someone who tells them the truth, someone who does not talk down to a woman, warranty, cleanliness of the dealership, etc.

My bet is that they do. If they don’t they have to deal with their wives who are often saddled with the job of taking the car to the dealership for service and repairs. Why is it that while they recognize these elements as part of the value package, they don’t take this lesson back to their own operations? Is it because they are so focused on their definitions of quality and value? These are too often words that are abstractions that, in reality, have no meaning when they are divorced from the markets they serve. Quality and value, absent their linkage to the market become nothing more that “conformance” to specs that if the manufacturer is lucky correspond to actual buyer demands.

Many manufacturers are products of engineering programs. I did a search of a number of prominent engineering programs and found no mention of customers, value or markets. I did find a lot about typical engineering subjects such as calculus, trig, aerodynamics, etc. – things you would expect to see in engineering programs. However, the world has changed significantly since many engineering curricula were developed. Buyers are smarter and competition is greater and stronger. The question is – Will U.S. manufacturers have what it takes to compete in this new world? Will they become the superior value providers that dominate global markets? They won’t unless something changes.

Related Information:
Best in Market eBook
Six Sigma Marketing Institute has just released (for a limited time at no cost) a Customer Value Assessment Program which can obtained at http://DrivingMarketShare.com. The program enables an organization to evaluate their organization based on Customer Identification, Customer Value, Customer Acquisition, Customer Retention and Customer Monitoring. This assessment will expose your weaknesses and strengths in each of the 5 Cs of Driving Market Share.

Related Posts:
Six Sigma Discipline is Good for a Creative Process
Six Sigma a great companion to marketing
The Eagles always understood!

Monday, September 20, 2010

Decision Making enhanced thru Lean Accounting

Lean Accounting provides the strategic tools for lean management by focusing on visual shop floor measures for Rapid Decision Making; coupled with management accounting tools for longer term planning. Lean accounting is an integral part of the lean management system, as well as a vital tool for strategic decision making.

My guest on the Business901 Podcast this week was Ross Maynard, is a Senior Consultant with BMA Europe Ltd., and a Fellow of the Chartered Institute of Management Accountants. He has worked as a coach and consultant with a wide range of British and European organizations for over 20 years. He is the author of many articles on lean accounting and business improvement, and specializes in lean accounting, lean service, and process simulation and improvement.

In the podcast we discussed how accountants need to become an integral part  of the other departments. No longer can accountants only relay past financial data. They need to participate in the Value Streams with real time numbers which will enable other departments to make quicker and more accurate decisions. Lean Accountants are spending more of their time on the shop floor these days.   

BMA Europe is the leading consulting firm for practical Lean Accounting and the management systems supporting the Lean enterprise. The foundations of Lean thinking are very different from those of traditional companies. Lean organizations need different approaches to accounting, control, measurement and management systems. BMA Europe Ltd. and sister firm BMA inc. have nearly 20 years experience in assisting organizations making the transition to becoming a Lean enterprise.

P.S. These Lean Accountants must not be all that stuffy. The Lean Accounting Summit is this week in Las Vegas, NV.

Related Website: Lean Accounting SuperGroup (The Meeting Place for Lean Management)

Related Posts:
Leading with Lean thru Accounting
Unclear Customer Value leads to Failure
Making your numbers meaningful with Throughput Accounting

Sunday, September 19, 2010

Be part of the first Webinar Series on the 5Cs of Driving Market Share

Since the publication of Listening to the Voice of the Market, Dr. Reidenbach has published Six Sigma Marketing: From Cutting Costs to Growing Market Share and created the Six Sigma Marketing Institute.  This month we have launched the initial product The 5Cs of Driving Market Share. I know that you want to stay on top of the latest developments and innovations that affect your business.   Such an innovative breakthrough has been made with Six Sigma Marketing – a fact based disciplined approach for growing market share in targeted product/markets by providing superior value.  The power of Six Sigma Marketing is illustrated and embodied at www.drivingmarketshare.com where you can be introduced on using Value to Drive Market Share.  C PPT

Six Sigma Marketing has been called the “next generation of Six Sigma” – one focused on value creation, innovation and market performance.  I could not agree more.  With the economy beginning to pick up, many organizations are starting to shift their focus from one of cutting costs to one of growing the business.  I am excited about the power of Six Sigma Marketing and the unique tools that it employs to grow market share.  I invite you to take a few minutes and review the website  - It is an efficient and effective way to transform your company into a value driven business.

The 5 Cs of Driving Market Share Program is being offered at an introductory price of $299 for the rest of the month. In addition to this, we are conducting a 5-part webinar series as added content to the 5Cs which will be included in the $1,299 addition. However, we would like to offer you the opportunity to be part of this webinar series at no additional cost.

Anyone signing up in the next 7-days will be offered a ‘seat” at these webinars. This is an exciting offer as it will never be offered at this price again. This is the same methodology that has achieved these types of results:

  1. Equipment Management Company

    1. Increased revenue from $150M to $1.6B over 12 years
    2. Increased market share by 4 – 6X in targeted markets
    3. Achieved record profitability in last 4 years

  2. Telecommunications firm

    1. Reduced customer churn by 50%
    2. Reduced service response time by 20X

  3. Heavy Equipment Manufacturer

    1. Increased ROE from 6% to 15% in 6 years

  4. Plastics equipment supplier

    1. Doubled market share within 1 year
    2. Increased profitability by 5X

  5. Packaged goods

    1. Identified key value adding opportunities in multiple product lines

    Value is the best leading indicator for future market growth. Organizations need to change from a customer satisfaction focus to a customer value focus. The Five Cs of Driving Market Share serves as the template for this transaction. I hope you will consider joining on the pathway to Value.

Wednesday, September 15, 2010

Tuesday, September 14, 2010

Using Theory of constraints to handle Uncertainy in Decision Making

This is a transcription of a podcast I had with noted Theory of Constraints author and expert Eli Schragenheim . Eli as been part of the Theory of Constraints movement practically from the beginning. He started working with Dr. Goldratt as a programmer to program a game for adults that would teach them how to think over 25 years ago. During the podcast we dove into the subject of Uncertainy! A great discussion, that affects our everyday life and how it relates to forecasting and even our intuition.


Uncertainy in Decision Making

He is the author of Management Dilemmas: The Theory of Constraints Approach to Problem Identification and Solutions.  He recently collaborated with William Detmer and Wayne Patterson on the book Supply Chain Management at Warp Speed: Integrating the System from End to End. The new book contains much of the new development of TOC and operations.

You can contact Eli Schrangenheim through his e-mail @ elyakim@netvision.net.il

Related Podcast: Removing Uncertainy in your Decision Making

Business901 Related Information:
Theory of Constraints Roundup
Holistic approach to the Theory of Constraints.
Theory of Constraints Handbook

Monday, September 6, 2010

Insight on Performance

This lively RSA Animate, adapted from Dan Pink's talk at the RSA, illustrates the hidden truths behind what really motivates us at home and in the workplace.
www.theRSA.org.

Great insight on motivation and well worth the 10 minutes.

Dan Pink’s book: Drive: The Surprising Truth About What Motivates Us

Related Posts:
Can you be talented enough on your own?
How effective does your Sales and Marketing team work together?
Does your customer know why you do it?

Friday, September 3, 2010

Can you be talented enough on your own?

Can you be talented enough on your own? One of the tremendous powers of continuous improvement and whether you want to call it Lean, Six Sigma, Agile or even Scrum is the power of the team and collaboration. Cross-functional teams create high-bandwidth communication. It is not about individual talent, though it can help, it is more about effective collaboration.

See what John Hagel, co-author of The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion says about Talent.

Individual Talent certainly helps but when the Yankees lost all the role players in the early 2000’s it took a long time for them to re-build a team…starting with star power doesn’t hurt, but does it get you there?

Thursday, September 2, 2010

Lean Thinking in the Office

Drew Locher was my guest on the Business901 podcast and our conversation centered on applying Lean to the Office and Service sectors. Drew has been working to implement business strategies since 1986 and I am amazed at his ability to distinguish between novel ideas and ones that are just a horse of a different color. His recent workshop, Optimizing Flow in Office and Service Processes in Indianapolis hosted by the Lean Enterprise was filled to capacity and registration was closed weeks before the event.Drew Locher

Drew is currently Managing Director for Change Management Associates, Shingo Prize winning author and the first Business901 Podcast returning guest.  CMA is a consortium of individuals who share a similar business management and improvement vision. They are committed to seeing innovative strategies implemented in all business environments. The CMA approach is practical and application oriented - a 'learn as you're doing and succeeding' approach.

Related Books:
The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes
Value Stream Mapping for Lean Development: A How-To Guide for Streamlining Time to Market
Extending Lean Thinking to Office and Services

Related Posts:
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Using Value Stream Mapping eBook
Using Value Stream Mapping in Lean