The Principals of Six Sigma Methodology and how it can help your Business- Defining 5S

          Before I dive into this methodology I want to remove the thought that this only applies to industrial industries. When this was first developed, it was developed with the thought of manufacturing companies in mind. So many of the terms will seem this way, but the overall methodology can be applied to ANY industry. I will give examples of this to help with understanding. Much of this is common sense, the problem is that most companies do not do apply the 5S idea. What is 5S? It stands for sort, straighten, scrub, standardize, sustain. The basic philosophy of this is to keep a clean and organized workplace. Companies do not realize the importance and actual impact that a non-cleaned workplace is. 

          So why is it important to be cleaned and organized? There are the quick answers that I always get; to be safe, or so you don’t lose things. Yes, these are acceptable answers. A dirty place can cause accidents. For example if you leave something on the floor someone can trip and fall. If you do not put something back it could get thrown away on accident. Now outside of the general ideas we need to better understand the concept of lean six sigma. This is a methodology that makes a company more efficient. This can be any process implemented into a company to save time in creating a product. This is where breaking down the five S’ are so important.

Sort: This is basic organization of an area in a workplace. This is where you can remove unneeded items in the area and make sure everything is useful. This includes replacing or removing broken equipment that can no longer be used. This will also give you the chance to find out what may be missing to replace what you need that isn’t even there.

Straighten: For me this is the most important stage as far as getting things where they need to be. The last stage made sure everything in the area was needed. This stage puts things where they need to go and creates a system for organizing it all. Imagine a tool bench. You have screwdrivers, wrenches, and hammers laying everywhere. Last stage you threw away the broken tools. Now that you have the good tools left you need to put them in the right area. Maybe you make a drawer for each type of tools. Another good way is color coding each tool. Put a blue sticker on all hammers and green on the screwdrivers. Then mark a designated area for each color. You can trace a spot for each tool. That gives you a visual spot to place it when done. Not only will this step help you quickly find items, but it also ensures everything gets put back.

Scrub: This step is not really set up to clean the items. This should be done in the sort step. Scrub is the step in which management and employees will set up a schedule to continuously review and clean items going forward. By setting a cleaning routine, this will reduce the chance of breaking equipment as well as save time during actual production (since this step is done outside of normal production hours).

Standardize: This step is more for management. This is to design and set up a quality review of all work stations to ensure the previous steps are continued to be followed. By setting up quality and a general review of making sure this is done, it will help ensure employees understand the importance of it all. This is also the step where management will make charts and reports to track condition of machines or equipment overtime. This is also where you set into place monitoring systems that tracks the results f the changes to see how much of an impact it is making.

Sustain: This is the step where the company as a whole adopts the 5S methodology. It is important to not only maintain the first four steps, but to also improve and expand them. Maybe your company tests this with only one section of its company. After a month or two you find it to be successful and you then move to another section to apply it. This is a good example of expanding and improving on 5S.

Example with computer file management:

So as I said, I want to be able to show you that this can be applied in any field so I am going to pick in my mind an industry far away from a manufacturing line and go with file management. There is a law firm in Miami Florida who did not organize any of their electronic files.

Before 5S: They saved all their files in one folder and when they needed something they manually searched for the file or they would use a search function. The problem was that they named files different things and there was no uniform process behind it. One account would use first name, another account would be last name. They also handled several types of lawsuits which was all saved in the same folder.

Applying 5S: After going in and reviewing their organization we determined that the best approach would be to organize work by applying different folders for each type of service they provide. There was one for divorce, one for bankruptcy and so on. If you click in any of those they will then have the year the claim was started. This help keep general organization. A uniform file name was also designed using last name and date of birth. This allowed a very quick search to find files. On top of this each account folder had a different icon and a different color to help visually differentiate them. 

Results from applying 5S: By designing this level of detail we were able to create a file management system that saved over two minutes per search to find files. This may not seem like a large amount but that is two minutes less that a client had to wait to get helped. On average this company pulled around 30 files per day per employee. That is 60 minutes saved (one hour) per day that the employee now gets to do other things. This also reduced the chance of losing files altogether. It was determined that on average 1 out of every forty files saved was titled something that was not searchable and was considered lost where they had to redo paperwork. 

          As stating in the beginning most of this seems like common sense, but the fact is that some industries are harder to organize and maintain than others. It is key to make sure that when this method is started that it is not a one time thing. It is pointless to spend the time or money on if six months down the line it is not followed. To fully roll something like this out a company should spend 3-6 months to implement and get it all set up. To be the most effective it needs to not be a quick “spring cleaning” but an initiative to get a more efficient process for all levels of the company. On average companies run between 40-60% efficiency. By implementing these simple tools, it can increase efficiency 15-20% on average for process cycle time! If you are not sure how to implement this in your company, it is a good idea to bring in a consulting firm that specializes in this. It is important to make a healthy and accepting workplace environment to it before even attempting to make changes. This sometimes can be the hardest part.

More information about six sigma methodology coming in the future. Please read and review them to see how they can help your business grow.

Social Media and Marketing- When to use it and when will it be successful

                One of the questions I get the most is “which social media should I use to promote my company?” I generally give a generic answer because once I start going into detail I see the glazed look go over people’s eyes. Social media is a GREAT way to sell and promote a company. You can generate a lot of leads and sales by having a Facebook, Twitter, or Youtube account for your business. That being said, do you as a business owner know how much time your spending on these sites building and promoting, and how much business you are actually getting from it? 

                When I do marketing analysis for a company the first thing I do is look at the product and determine a target demographic. This is a group of people who I think would be interested in the product or service they are trying to sell. After that I create a detailed marketing plan that may or may not involve social media. This is based off demographics for all the different social media sites. I not only put in the plan which sites to use, but how much time, energy, and most importantly money is put into the site. I base this all of ROI (return on investment). I want to ensure where I am putting the money is where I will get the most leads. If I put $10,000 towards social media I want to see the company get that much business back or more within a certain time frame. It is not good business to put $10,000 in advertisement into a media that may only give you $5,000 back.

                The next thing I usually get back is the money being put towards traditional media and advertisement. Again, this is part of market strategy and analysis. The internet is a great way of advertisement but as long as people who give potential business are still leaving their house, you should be putting money to advertise in the “real world”.  It is true that social media is much cheaper to do. Most of my techniques in social media advertisement is free! The thing with traditional advertisement is that it will get people who do not use the internet or social media to notice you. There are many ways of doing this as well that can be done with a small budget.

Here are a couple scenarios to help explain:

                Scenario 1- A company in San Francisco is launching a new handheld gaming device. It is a product that does not link with any current gaming systems (ps3, xbox). It has its own selection of games, many similar to what is offered on other systems. They want to create a marketing advertisement but after development and production they have a small budget for the first 6 months of launch. After reviewing the product we determine we want a 70/30 split on media. 70% of funding will be put towards social and online media. A site was developed, Facebook was set up to target males 16-24 (determined initial demographic), and a twitter account was set up to help give updates of the product.  A linkdin account was also set up to market and network with other companies to help with distribution and sales. We then put 30% of the budget towards traditional advertisement. We designed and printed posters and fliers to put in malls, video game stores, and used money to help launch promos with movies that came out with a related video game.

                In this scenario it made sense to direct a lot of money towards social media. Not only is our demographic very large on social media sites (16-24 male gamers) but since the product was an electronic gaming device, it was a safe assumption that many “gamers” also had an online presence. We did want to do other marketing to ensure we were seen around competition in the stores and create a presence outside of social media as well.

                Scenario 2- A candle making company based out of Salt Lake City needs a marketing campaign to launch their new scented candles. They have no market presence currently. After review of the product we determined that we wanted to sell these with a more traditional approach. Instead of selling directly to customers, the company wanted to sell to other companies to distribute. We determined to still create a website where they could sell directly and a Linkdin, Facebook, and blog was set up. These were set up primarily to set up a fan base and create brand presence. We only spent about 20% of their budget on creating this. The rest went towards contacting and creating networks with other businesses and creating banners, flyers, posters, and displays for the products in the stores that carry them. This will help make their product stand out from the competition.

                In this scenario we determined it was important to develop a web presence as well as a way to sell directly to the loyal customers who do not want to go to the store each time. We did find it more logical to do more traditional advertisement and media within the stores where they will be sold from. 

                It is important to realize that market strategies should be reviewed continuously. It is important to review to see what is working and what isn’t. If you thought using one media was good, but after 3 months of putting money into it and getting no new business it is a good idea to possibly adjust or abandon that media. I also always suggest trying every media and gauging the results from it. Also watch for new technology and media that may work well for your business. Marketing is simple in getting the word out, but is very complex when it comes to ROI and being effective and efficient.  If you are not sure what to do it may be a good idea to hire or at least talk to a marketing or media expert.

The Principals of Six Sigma Methodology and how it can help your Business- Defining DMAIC

Six Sigma has really evolved into being a tool that can be used in all industries. The tools are universal for each business. Over the last 25 years Six Sigma has evolved into one of the leading management methodologies and has been adopted by most Fortune 500 companies. Six sigma specializes in removing wasteful process steps and setting up quality methods to ensure everything is running as efficiently as possible and to also help catch processes that can be improved on.

The primary methodology that is taught in Six Sigma is called DMAIC. This stands for Define, Measure, Analyze, Improve, and Control.  This is the method in which most six sigma projects are run. In the define stage the six sigma team will determine what the issue they are wanting to address actually is. Measure is the stage where the team gathers the details and data to better review the problem. Analyze is the stage when the team reviews the data they collected from the measure stage. After they analyze the data they move into the next stage, improve, where they design and implement process changes to help solve for the issue. Control is the final phase where quality processes are added to ensure that the changes made are helping to solve for the problem. If in the control stage they are finding that the issue is still there they may decide to go back to one of the previous steps and go back through to find another solution.

It is easy to understand the ideas behind the steps, but harder to actually understand how to actually implement them. Here is one simple example of DMAIC:

Using DMAIC in the hotel industry:

·         Define- Say you want to improve customer service but you are not sure how. In the define stage you will review your current processes to see what all impacts customer service. So for example you can look at your room service processes, your front desk processes to sign people in and out, or your housekeeping services. You then find out which area needs the most help. There are many tools in six sigma to determine this; these will be discussed in a later blog. 

·         Measure- So we have narrowed our list down and found that we want to work on our room service. You will want to analyze all the different aspects of customer service and use different resources. Some things you may want to look at is quality of service (how the employee interacted with your customer), the speed of the service, or the presentation of the service. 

·          Analyze- In the analyze stage you will look at the data you gathered and determine where the issues may be. So form the last stage we may have timed the speed of the service and determined that it was taking longer than 30 minutes to bring them their requests. We also did surveys in the last stage to gauge the overall customer satisfaction of the customers and determined they wanted the service done within 20 minutes. This gives us one thing that we will want to look into to change since we can see we are failing our customer expectation.

·         Improve- Now that we have our issue, let’s fix it. In analyze we not only realized that our turnaround time was not fast enough to meet the customer’s needs, we also found out that there was a time lapse from when the customer dialed the number to room service, until the request was given to the employees who prepared and delivered the request. This lapse on average was nearly 15 minutes. So to fix this, in the improve stage we implement new processes where the customer service call is typed into a database by the receptionist who answers the call. This database feeds directly to the back where the requests are handled removing the call to them which was originally how it was done. This eliminates the step that took wasteful time.

·         Control- So now we have eliminated steps that were not only taking up extra time from the employees, but also improved the speed of customer service which resulted in higher customer satisfaction. The hotel has decided to make sure this new change will continue, they built in a reporting database to track the calls and time it takes to answer. They also decided to give survey cards on all room service calls to get an idea of how they are doing and how they may be able to continue to improve

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As you can see from the example we were able to identify the issue, use data to see why it is an issue and how we can correct it, implement the changes effectively, and set in place control methods to be able to ensure that it is maintained going forward. Although there are many tools involved in each step, just knowing this basic layout is a great foundation to any project.  Being a Six Sigma Black Belt, I use this methodology on a constant basis.

 I will be going over more tools used in Six Sigma in this blog. If you have questions on this methodology, six sigma in general, or consulting service you can email me directly at thutchinson@fullcirclebusinessconsulting.com or on my website www.Fullcirclebusinessconsulting.com.

The importance of creating a positive environment in the workplace

                To many employers they see an employee as a disposable asset to them. Someone who if they quit can easily be replaced by any other person off the street. Some industries require special skills or education, but honestly most people can learn and be trained just about anything these days. I find that employees in many cases take advantage of their employees and do not treat them as fairly as they should. Base pay simply is not enough to keep an employee happy these days. Employees have higher expectations today then 20 years ago in how a company needs to treat you and I completely agree.

                When you look at some of the top places to work for many have the same things in common: good benefits, vacation time, and most importantly a feeling of importance with a company. The workplaces are not boring offices with cubicles where they are required to dress up even though they do not see actual customers all day. Take Facebook for example. Their offices do not even have real desks. The employees can set up their workplace however they want. On one documentary I watched it had employees going around the office on a skateboard. I am not saying to let your employees run wild, but give them an environment that they want to come to each day. If there is no real need for them to dress up, then let them dress casual. If they want to decorate their workplace then let them. As long as it does not go against any corporate policies then it should not be a problem allowing this.

Some keys to creating a positive environment in the workplace:

·         Treat employees how they should be treated. Do not treat them as a disposable object. They are not a pen that can be easily replaced.

·         Do not put yourself or management above them. All employees should be treated fair regardless of seniority or pay grade.

·         Give employees some little extras. There are many ways to increase a positive workplace without spending money. Do potlucks, contests, and games to keep a high moral.

·         Give credit when credit is due. I am not saying to give out compliments, but if one is deserved then let give it. It is amazing how far a good word can go in the workplace.

                What does it really cost to hire a new employee? Most employers do not realize how much money actually goes into hiring and training a new employee. First, there is posting ads to get the word out that you are even hiring. You also need to pull time from other employees (and sometimes your own time) to interview and review applicants. Once you spend the time to hire you then need to take time to fully train the new employee. This requires pulling someone from their normal work to do this which can cost money in finding people to cover that time, or even overtime. There is also a time gap that comes into play before the new employee can work as efficient as the old employee which can mean a drop in production or quality (which is a form or profit loss).

                So employers, think about the cost involved in hiring and how such a little effort in raising a positive environment in the workplace is. Much of it is little or no extra cost to the company and turnover rate can account for a lot of potential profit loss in a company. Figure out how many people you have had to re-hire in the last 12 months and how much time and money it cost you to replace them. Now think of two-three things you could have done that would have prevented it from happening!