MNC Consulting Group Newsletter
April 2015
Just in Time

 

 

We have all experienced the "just in case" syndrome:  Let's purchase a few extra file folders, just in case we need them next month. Let's order an extra toner cartridge, just in case the one we now have runs out of ink too soon. Let's buy an extra steak, just in case George decides to come for dinner.

 

While it is so wrong and so wasteful, many businesses still run on the "just in case" model. Instead, they should be running in the opposite direction - using "just-in-time" (JIT).

 

There are many reasons to use a JIT strategy. These reasons range from reducing inventory stock to reducing waste to boasting higher quality of production of goods and services to enjoying higher customer responsiveness and more. And best of all, the JIT strategy saves money by reducing overall costs of doing business.

 

With JIT, delivery of products and services occur as required. This is in contrast to the just-in-case syndrome where stockpiling of products and services is based on a hunch.

 

Take inventory as a simple example. While an extra cabinet of stationery supplies may be a way to avert waiting for supplies, the cost of the supplies is an expense that eats into the business' cash flow (not to mention the cost of the cabinet and floor space occupied by the cabinet). By not storing this excess inventory, you save space, free up cash resources (that you spent on the inventory), and reduce waste that comes from inventory obsolescence.

 

However, JIT strategies take work. Like most things worth doing, some planning and foresight need to go into implementing a JIT strategy. One of the easiest ways to facilitate JIT is to use a Kanban approach.

 

Kanban is a Japanese approach that uses a visual cue to signal when, for example, inventory requires replenishment. For instance, if your business uses bolts in an assembly line, you might paint a yellow line inside the bolts' storage bin. When bolts inside the bin reach this line, this is the signal to reorder more bolts. This prevents the supply from dropping to a critical level and ensures workers can carry on with their tasks without interruption.

 

While there are many facets to enabling a JIT strategy in your organization, one of the requisites is to build good relationships with your supplier network. It's much easier to call your regular supplier to replenish an order in a timely manner than it is to start over with a new supplier. Building good supplier relationships will help your business operate as a quality organization.

 

Continuing the Improvement

 

Successful companies are quality companies. A JIT strategy is only one part of a company's overall quality management program. To instill a quality culture, the entire organization needs to be involved.

 

According to Philip B. Crosby, there are 14 steps to improving quality in an organization. His absolutes of quality management are (from his book, "Quality is Free: The Art of Making Quality Certain"):

 

  • Quality means conformance, not elegance.
  • There is no such thing as a quality problem.
  • There is no such thing as the economics of quality; it is always cheaper to do the job right the first time.
  • The only performance standard is zero defects.
  • The only performance measurement is the cost of quality (COQ).

 

In brief, the 14 steps to improving quality and continuing improvement in the organization include:

 

  1. Management commitment. Top-level view on quality must be demonstrated to employees by management. Commitment must be clear.
  2. Quality improvement team. To pursue quality regimes throughout the business, form quality improvement teams with representatives from each area of the business (or departments).
  3. Quality measurement. Determine how to measure where current and potential quality problems exist. Look at, for example, late deliveries, budgeted to actual sales, etc. Keep it simple for all to understand.
  4. Cost of quality. Evaluate the cost of quality and explain its use as a management tool. Ensure that everyone understands the need for a quality system, especially the costs of business if there is no quality system in place.
  5. Quality awareness. Raise the quality awareness and personal concern of all employees.
  6. Corrective action. Take formal actions to correct problems identified through previous steps. Simple cause-and-effect analyses may be all that is required to prevent re-occurrence.
  7. Zero defects planning. Establish a committee for the zero defects program.
  8. Supervisor training. Train all employees to actively carry out their part of the quality improvement program. They should be able to apply both quality logic and zero defect appreciation to their business activities.
  9. Zero defects day. Hold a "Zero Defects Day" to let all employees know that change has occurred (in a good way!). Don't forget to serve free coffee and donuts!
  10. Goal setting. Once change is implemented in one area of the business, encourage employees to establish improvement goals for themselves and their groups. Continue with the improvements in other areas of the business.
  11. Error cause removal. Encourage employees to communicate to management the obstacles they face in attaining their improvement. Perhaps goals may need resetting or additional assistance may be required by management to achieve goals.
  12. Recognition. Management must recognize the employees who participate in the quality schemes. Monetary rewards are always welcome.
  13. Quality councils. Use both specialist knowledge and employee experience to bring about a focused approach to business quality improvements. Quality councils should communicate on a regular basis.
  14. Do it over again. Continuous improvement never stops. Once one goal is attained, start the next one.

 

Remember that quality improvement is never a "one off" project. It is, by its nature, a continuous improvement initiative.

 

Crosby's 14 steps will transform the quality culture of your organization. Through the transformation, your organization will not only realize a shift in thinking and doing, but a tangible healthy (and wealthy) profit margin, as well

 

In My Humble Opinion (IMHO)
The more I do and see, the more I learn. One of my learnings is that the bigger you are, the slower you learn. Thankfully, I'm not such a big girl (hold all wisecracks). But, seriously, here's an example of a big slow learner. I was surprised only yesterday to see that the federal government still writes internal memorandums. Flashback to the 1980s or what?! Who does that anymore given e-mail, texting, and shareable databases full of information? Why would John from Finance write a memo to David in IT in 2015? Can't they e-mail or use the phone? Or better yet, meet in person? It's plain as day to me that the federal government has a long (long) way to go to get out of the dark ages (or at least the 20th Century). Stop wasting time typing and formatting memos (and paying someone to sit and type memos all day!). It's high time the feds start developing a quality culture that embraces Lean processes. The side effects will include healthy savings in taxpayer dollars - and that's a direct impact on the entire nation. IMHO.
 

"Quality is free. It's not a gift, but it's free. The 'unqualtiy' things are what cost money."

- Philip B. Crosby

 

About MNC Consulting Group
Our goal is to help you to dramatically increase efficiencies that immediately boost your profit margins.

 

ISSN 1925-8941   

Extreme Profits is a monthly electronic newsletter discussing how leaders can be more efficient and areas where organizations can save more money. 

 

MNC Consulting Group Ltd.� - All Rights Reserved.

mary@mncconsultinggroup.com | MNC Consulting Group |

5536A Hamsterly Road | Victoria, B.C. V8Y 1S5 | 250-658-4873

 

In This Issue
Join Our Mailing List