The Brightest and Best Organizations do this, but Why? Lessons in Lean Six Sigma

Have you ever been in a management or executive meeting and someone raises the idea that efficiencies can be gained or administrative/overhead costs can be reduced by merging or consolidating X, Y, and Z?  So do you think bringing groups together will solve all the efficiency problems?  Unfortunately, it won’t. If you put two inefficient and ineffective processes together, you’d end up with one big problem as opposed to two.  This blog discusses some basic Lean Six Sigma concepts to consider when a merger or consolidation is certain. 

Here are certain concepts or questions you may want to consider when undertaking a merger/ consolidation exercise.

 

1) Will the consolidation promote the flow of work or slow it down?

Typically, the groups that you plan to bring together should have complimentary processes, so that the consolidation will result in better performance than when they were separately.  In many instances, it makes the most sense when merging the two groups that must collaborate closely on a regular basis.  As such, it will allow the two groups to work completely in sync maximizing the flow of activities.  So it is important to consolidate the right groups. 

 

2) Are there repetitive/duplicative activities between the two groups?

This question may seem obvious; however, it is a question that is often overlooked even by the brightest and most experienced executives.  When two groups are consolidated planning activities, some activities, e.g. management frameworks and training processes, often remain to be carried out exactly the same way as before the merger.  Often there are opportunities to examine, for instance, a planning or training process within the merger in order to reduce any unnecessary duplication. 

There are probably duplications exist between other processing areas and the two consolidated groups; however, this duplication is often identified by management and its employees. 

 

3) Will the merger/consolidation be a perfect opportunity to redesign the process?

Despite how logical it may sound that a merger/consolidation is a perfect time to re-examine your processes, many organizations often overlook this step. 

Once consolidation occurs, it will be the perfect time to re-design and optimize the processes, procedures, tools, systems, and organizational structure. Some of these activities may be conducted during the re-design are:

1. Value Stream Mapping of the As-Is – A value stream map will be an ideal tool to visually a) layout how and which activities are conducted, b) how work, material, and information flow throughout the process, and c) show key process measures, such as the amount of work units demanded,  processing time, cycle time, queue time, inventory and inventory churn, production, re-work, defect rates, activity costs. 
2. Collect Data and Measure the process – Whether you collect data using our “No Data, No Problem” technique or other techniques, you must collect some baseline data to understand the opportunities that exists within the processes of the areas you are consolidating.
3. Value Added Assessment and Simulation –You are likely to want to assess the costs and degree to which certain activities are adding value and those that aren’t (i.e. value and non value added assessment).  In addition, you may choose to use a process simulation tool to analyze the bottlenecks in the process, capacity constraints, throughput issues, resource utilization issues and waste that is occurring in the process.
4. Conduct an assesment of various end state processes – Once you have identified the opportunities in the existing processes, I would recommend creating various end state processes (i.e. the final process to be used under the merger) free of all process waste and other inefficiencies.  The process simulation will allow you to analyze the performance of various to-be processes. 
5. Pilot – Once a to-be process has been established, a short pilot project should be conducted.    The pilot project (i.e. a test run of the new process) will allow you to test out the new process and make any required changes to ensure the process is completely optimized.
6. Operationalize the process – Once a pilot has been conducted/evaluated and the new processes, systems, and tools are ready, people will be trained on the new process.  In addition, procedures and process designs will be documented and control frameworks will be put in place.  After this point, the new process will go live and the project team will hand over the control of the process to the process owner.

Concluding Thoughts

A merger or consolidation is an opportune time to optimize your business processes.  Yet, many organizations simply stop short and are happy to create one big inefficient process for some cost reductions in overhead and administration.  If you are in the midst of thinking of a merger/consolidation of multiple areas, consider what I have put forth and optimize the new business processes.

 

By Kyle Toppazzini

 

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More Valuable Resources

 

The following URLs provide great additional information on Lean 6 Sigma

 

Toppazzini and Lee Consulting Lean 6 Sigma Consulting  at -Lean Six Sigma Consulting

 

Linkedin Six Sigma Group at http://www.linkedin.com/groups?home=&gid=37987&trk=anet_ug_hm

 

ISixSigma web site at www.isixsigma.com

 

ASQ web site at www.asq.org