Business Tools

Increase Your Profitability with the Seven Wastes Programme

Why should I consider the 7 Wastes Programme?

In your business, any process (what you do) either adds value, or waste to the production of an item or service and, because these activities are under your control, elimination of any waste is one of the most effective ways to increase profitability for your Company.

To do this you first have fully understand exactly what your waste is and where it can be found. The 7 Wastes Programme was originally developed by Toyota, the Japanese automobile manufacturer, who, after years of work to remove waste identified the following seven wastes as the most prominent ones which have since been shown to be equally effective across all types of business.

1. Overproduction is to produce more than needed or to produce it before it is required.
2. Waiting This occurs whenever time is not being used efficiently.
3. Transporting Customers do not want to have to pay for transportation between processes, so this is a clear source of non-valued cost..
4.( Inappropriate) Processing can be easily explained by using the analogy ‘using a sledge hammer to crack a nut’.
5.( Unnecessary) Inventory is Work in Progress (WIP) and is a direct result of overproduction and waiting
6. (Unnecessary) Motions is related to ergonomics and is seen in all instances of bending, stretching and reaching. They are also H&S issues which in today’s litigious society are becoming more of an issue.
7. Defects cost money either now or later and their costs come direct from the bottom line. They can be internal or external defects found before or after sale. As a rule of thumb the cost of a defect increases tenfold for each production or supply chain step.

How to use the Programme Successfully

The key to using 7 Wastes successfully is to identify those areas where there is the greatest potential to make improvement together with the understanding of how easy it is to achieve these savings. This information, once applied to the model Azure uses will show where we should put your efforts first.

It is important to realise that to deliver the benefits this not a one-off ‘flavour of the month’ but rather the start of an ongoing iterative process that will provide the methodology for continuous improvement.

The Facilitated Programme is broken into three parts
Meeting 1: Identifying the areas where the greatest wastes were in each of the 5 areas.
Meeting 2: The Information will be input to the model, the three top wastes agreed and the appropriate personnel tasked to create a plan to address these in the next 8 weeks.
Meeting 3: Review progress and select next three wastes.

After this you can either run this programme by yourself or if you value the independent third party facilitation then adding a quarterly meeting to the regular reviews

Case Study Results

Working with a £5.0million distribution company the process identified nearly £455,000 of wasted and the first three selected accounted for £200,000 of this.

In addition, at the stage three review meeting to discuss progress and decide the next wastes to address, the team was able to drill down further discovering two previously defined wastes were symptoms of more serious problems with higher levels of waste that needed to be addressed.

In reviewing the value of the process the Company’s management team said:
• The sessions were very effective in opening up the issues and getting to the core of the problems.
• The independent external facilitator was crucial in challenging what was being said and driving the discussion forward.
• The imposition of timescales, while not adhered to fully, does ensure they are acted upon and the savings delivered.

A Short Guide to Developing Your Brand

The Value of a brand

Every company has a brand either explicit or implicit which is created by everything the company and its employees do. If this brand is understood and used effectively it can extremely valuable in adding value by increasing image and saliency and differentiating your products and services from your competitors thereby allowing you increased margins. However the effects of not knowing your brand can lead to reduction in added value and margin, perhaps reducing what you supply to the level of commodity.

It is also important to stress that a shiny logo is not a brand. The development or redevelopment of the logo and other materials should only be carried out once the brand is fully understood.

Understanding Your Brand

In essence any brand has three interrelated elements

• Functional Purpose – What the brand is/does/ offers customers
• Pivotal Values – The core values of the brand which make it important to customers
• Psychological Needs-The psychological needs that the brand delivers for customers

To be able to provide this information there is the need to go through the following processes.

1. Develop a comprehensive list of all the products/services/activities that your company provides to clients

2. Thinking about this list, consider where your company adds the greatest value, that is has the greatest competitive advantage.

3. From these first two steps define what business you are in. This is not what you do but is crucial as it defines the biggest space in which you can operate successfully.

4. As part of this exercise there is the need to define which of the three categories of company you fit into:
• Leading edge
• Operational effectiveness
• Customer Intimacy
This is not always obvious and you will need a degree of competence in all three, but since the choice will drive how you both organise and run your company it is essential that you get this right.

5. Having completed these four steps the next stage is to create what we describe as the Brand Positioning Matrix. This is a 9 box matrix that looks at the three elements of the brand described above and how they interrelate with each other. Once completed this single sheet provides you with a comprehensive and practical guide to your brand. The skeleton for this is attached as Appendix 1.

Not only does this provide you with the information that a design agency will require to develop the brand creatively but it will also provides the tool to aide:
• Deciding whether a new product or service idea will fit with the brand.
• Developing the knowledge and adoption of your core ethos and values by:
o Your Clients
o Suppliers
o Staff
o Stakeholders
• Developing your logo and your company collateral that is effective and relevant
• Future decision making and keeping your brand on track, once the initial momentum has taken off.

Selecting a Branding Agency

In looking for agency there are two key criteria:

1. Intellectual Capacity: Does the agency really understand brands, as described above, and what underpins them. To establish this you need to really interrogate the work for other clients and for this you need your team to include a member with skills and experience in this arena.

2. Proven creative spark: As with advertising the right creative treatment can turn a good piece of work into a great one. As with the previous point there is the need to see evidence of this. A particular word of caution; make sure that the ‘creative person’ who produced the work that they show you is still working for the agency and secondly will be on your account! Again experience in this exercise is important to getting the right result.

The world’s most successful businesses rank their brands as their number one asset. Follow what we have proposed and your brand will deliver where it counts – on your bottom line.

PH 06-04-11