OpEx Solutions

'There is nothing so useless as doing efficiently
that which should not be done at all'.

—Peter F. Drucker.

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Do your projects align with your strategic needs?

by Ken McClymonds, PE 

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Front-end process of new products is a critical part of the business that often causes rippling effects to operations’ key metrics like quality, delivery, cost and profitability.

Front-end process is the part of your business that determines organizations’ new products, new markets, improvement projects, supplier development and people development. It makes it clear what is important, and what the organization values.

Unfortunately, most often, organizations permit initiation of hundreds of projects that are not aligned with the goals and they never get completed, which dramatically adds cost, extends lead times, and demoralizes employees. We have noticed that most organizations have 70% to 80% of the projects that are either not aligned or weakly aligned with their goals.
 
Companies that have robust front-end processes have increased the bottom line results from new products by up to 600% in 3 years. Financial impact is dramatic, employee morale is greatly improved, and the company has resources to execute other strategic programs. New product lead time also is dramatically reduced by half or two thirds as the organization reduces low-priority projects.
 
We have been fortunate to have several opportunities to analyze and improve the front-end processes. Some of our findings of success factors and pitfalls are listed below.
 
Aligned front-end process framework of successful organizations include:

  • Key data needed to promote this type of focus is clearly defined in numbers not adjectives
  • Clearly defined value-added customer features and benefits
  • Resources are estimated in hours and dollars required for the project
  • Justification for the project with pricing and volumes are solidified up front
  • Sales volumes, prices, or project costs are committed to up front, before they start major projects
  • A leadership governance body is in place to assign/exit projects and check the progress

Non-aligned front-end processes include:

  • Product/marketing projects get started based on hunches, gut feels, or a single lost sale
  • Unfocused general training, such as, Lean, SMED, 6Sigma, and others
  • Poor understanding of constraints to produce more or produce for less cost
  • Lack of a strategy to consolidate the supply base  and negotiate better overall prices

Successes:

  • Reduced 8,394 suppliers to 242 suppliers reducing total purchase part cost by developing a front-end process  and strategy to guide sourcing of parts
  • Stopping two unaligned mega-projects enabled 300% revenue growth in one year
  • Implemented a structured framework for new product development which increased the return per engineer by six times
  • By focusing on the most significant quality issues, we reduced quality cost by 20% per year
  • Identified 20% of revenue locked up in excess inventory and process inefficiencies caused by poor new product and material management processes

As obvious as this seems, very few companies have a structured and focused framework for their front-end new product development. As with most planning, start with the strategy, plan the execution, measure the results and take timely corrective action to assure your organization is getting the maximum results to the bottom line. Once you know your strategy, discipline is needed to stay the course, until you have hard facts that convince you to change. The more predictable your decisions are the faster your organization will move forward and the more the bottom-line will grow. The more predictable your front-end process, the more agile your organization will become in its response to market changes. The more predictable your front-end process becomes the more cash will flow to your bottom line.


 

 Theory of Constraints — Managing Bottlenecks

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"We have a bottleneck that's slowing down operations. Let's fix it with more people and equipment!" 

 

 

 


This is the norm in manufacturing and the service industry today. There are a few problems associated with that type of thinking:

  • Budget limitations
  • Space and asset limitations
  • Is the problem being solved once and for all?

The budget is the most obvious and immediately painful. When the bottom line takes a hit, the effect is noticed in an instant — especially when the expense was not built into the current budget.

Regardless of whether the "solution" is more equipment or people, space will be needed, and in well-managed organizations, excessive space or assets are not the standard.

The most important factor is whether or not the problem has been solved, or, has it just been pushed further down the line, like squeezing a tube of toothpaste?

Any organization that has a process — be it administration, manufacturing, healthcare, or other service, will always run into a constriction in the flow. Managing bottlenecks effectively requires a relentless pursuit to unleash hidden capacity at the bottleneck site. This will result in increased throughput without added capital expenditures — Theory of Constraints!
Rex Draman, PhD, will conduct the July 20 session of the Theory of Constraints seminar in Austin, Texas. Please see the Training Seminars section on the right panel for more information or to register.

 

 
 

OpEx Solutions is an organization that helps identify strategic areas for improvement and provides effective high-value, low-cost solutions, training, and project management to drive significant productivity improvement through the use of operational excellence tools and systems in most manufacturing and service industries.


With a variety of offerings to choose from, we're confident of working with your organization to find and define your own way through:

  • Executive Coaching
  • World-class Training
  • Dedicated Workshops
  • Knowledge Network
  • Project Management

If you have any questions or comments, please feel free to contact us.

Find out more About Us, then look at our Stategy to make your possibilities a reality.

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For free email business advice, send your questions, comments or ideas to mnazareth@opexsolutions.org. For issues that are of particular interest to the the community, we may publish (with your permission) your questions along with our answers on this web site.

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OpEx Solutions' PMI Registered Education Provider ID Number is 3510.

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