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Lean principles: How to enhance sustainability and eliminate waste

In part one of this two-part series, Tessa Hebditch uses lean principles to explore how finance teams can reduce the waste of ‘waiting’, with a focus on efficiency and consistency.

13th May 2020
Owner Chickp
Columnist
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Tech Target defines waiting the best as “processes are ineffective and time is wasted when one process waits to begin while another finishes. Instead, the flow of operations should be smooth and continuous”.

The classic scenario we see all the time is waiting for information from other teams to use as inputs for month-end reports. Sound familiar? This is the particular process I have used in many of my examples below, as I believe it is one that we can all relate to.

In part one of this article series, I will look at two key areas to explore and understand within your team to help eliminate this waste.  

  1. Efficiency
  2. Consistency

Efficiency

To be efficient and to avoid waste, map the month-end process as it is currently using a tool such as Visio or Lucid Chart ensuring the inputs in the definition above can be easily identified at each step. Examples we see regularly with our clients include:

  • Materials – printing reports, writing notes down on paper
  • Energy – last-minute critical information that needs to be rapidly input into the month-end reports to ensure they are produced by the deadline
  • Efforts – misallocation of tasks based on employee strengths, or a misallocation based on visibility/awareness of certain information throughout the month
  • Money – ineffective paid-for systems/software that continue to be used because “they always have been”
  • Time – we run the management reports in the system, then we export them to Excel to manipulate them and make them look fancy, we change a few numbers so the bottom-line is £1.50 different and send out a full report to senior management with every single nominal code shown in detail

Consistency

Consistency is “the quality of achieving a level of performance which does not vary greatly in quality over time”.

Employee turnover is the biggest destroyer of consistency. We can look at this in two ways:

  1. Reduce employee turnover
  2. Reduce the destruction of employee turnover

Those of you that follow me on social media will know that I am all for the people and believe every individual’s potential needs to be nurtured.

Your team needs to grow to feel that they are adding true value but also getting something back. Too often a rising star will be promoted, only to suddenly make a U-turn on their reputation by not living up to the standard expected. It is unlikely that this was a misjudgement on the managers’ part. Steps just need to be taken to realise that potential.

We like to run whole team sessions tuning individuals’ growth mindset, aligning the vision, mission and values of the company to the finance team, as well as exploring the strategy of both the company as a whole and the finance team using the Business Model Canvas.

Giving people a purpose is a great retention strategy and can even help to increase the company’s reputation in attracting top talent.

Flow is another lean principle that can be explored in the reduction of waiting, but you cannot understand flow unless you know purpose and capability.

The other point of view is to look at reducing the destructive nature of employee turnover. This is where training is key. If the inevitable happens at some point and you have to rehire, you need a succinct process from start to finish, including the hiring itself.

Time to get those mapping tools out again. Sit down with HR and look at your complete 'hire-to-retire' strategy to establish where there may be gaps.

What does your job advert say about your company and who would be suitable for the role? What metrics do you use to understand which candidates would be better suited to the position? What onboarding is available for new employees? What training occurs in the early days and what guides are available for easy reference?

One onboarding step we particularly enjoy implementing is tasking someone on their first day to come up with as many improvement points as possible in their new role. The more points the bigger the prize. Nothing like throwing someone in at the deep end, but it is a truly great way to test understanding of the systems and processes required in the role. It also allows the recruit to ask questions that will enable them to make the list as long as possible – thinking outside just which buttons to press and when. Maybe present the month-end process tasks and ask them what improvements they recommend.

The outcome is either that more explanation is required as to why their improvement suggestions will not work or you have a great wish list of what improvements to work on next.

Variation is probably the second destroyer of consistency. It is imperative that this is reduced by formalising the inputs into the month-end process. The data you receive from other departments each month should be consistently formatted in an agreed fashion. This even opens up the possibility to explore tools such as Macros for analysing and further formatting the data provided.

In part two, I will look at the key areas of compliance and confidence and offer tips on how your finance team can eliminate this waste.

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