business avionix sbdc presentation

1

SBDC

If You Are Not Happy With The Way Your Business Is Running,

Change The Design ?

Larry Girouard

The Business Avionix Company

June, 2012

Focus

List CustomerNeeds/Wants/Complaints

2 minutes

2

9 out of 10 of these Companies Fail to Implement Their Business Strategies?

Only 25% of managers

have incentives linked to strategy

Only 5% of theworkforce understand

the strategy and their role in it

60% of companiesdo not link

budgets to strategy

85% of executive teams spend lessthan 1 hour/month discussing strategy

9 out of 10 companies fail to execute strategy

The People Barrier The Management Barrier

The Vision Barrier

The Resource Barrier

Balance Scorecard Collaborative

Of the 20% - 25% of companies that HAVE a strategic plan >>>75% - 80% of all companies do not have a strategic plan >>>

Lean Methodologies, sales tacticsValue Stream Mapping, stress of change

Linking Functions to Vision and Customer Experience, GAP

Product Definition“Customer Experience”, needs/wants

WIN/WIN/WIN

Competitive Analysis, SWOT, salesForecast Review, ABC Pareto, Financial Overview

Case Study, Business Modeling, Data Mining, Culture, Differentiation, Customer Experience Concept,

Vision

Stay at 30,000 feet for Awhile

Level 1

Level 2

Level 3

Level 4

Level 5

Company

Let Data Slowly pull you back into the Company

Data & Detail Centric

Conceptual Centric

Tactical

Strategic

How do you work as a team?

Competition for Market Share

TotalServed Available Market

100% ($=?)

Your Company

Competitor

Competitor

Competitor

Competitor

Competitor

Your Market Share

Capture Share

3

As is >>>> To be

Your CompanyCompany

CustomersOutput

Output = Your Product = Customer Experience

Current OUTPUT Performance Level

The “AS IS”

Future OUTPUTPerformance Level

The “TO BE”

GAP

Business Modeling at 30,000 Feet

Product or Serviceyou are in businessto deliver (Yellow Page Heading)

The Blue Stuff

Culture Company Target Accounts

Very Few Companies can differentiate themselves on the “Yellow Page Heading” alone!!

Red Stuff

Your Company is in the Customer Experience Business

Differentiation“The Heart Of The Marketing Message”

� Hard Product Differentiators

� Microsoft

� Xerox

� Electric Car Hybrid

� Cabbage Patch Dolls

� Pet Rock

� Harry Potter

� Netflix

� Others

� Softer Differentiators

� On time delivery

� Tech Service

� Quality

� Customer Attentiveness

The Blue StuffThe Red Stuff

4

Think Out Of The Box

Your Company YourCurrentCustomers

Output

CompetitionOutput

CompetitionOutput

CompetitionOutput

CompetitionOutput

CompetitionOutput

Competition’s

Customers

>97%

<3%

<3%

Your “Blue Stuff”

Question

How many of you are NOT Satisfiedwith the way your business is

currently running and feel that there is a lot of room for improvement?

Your business is running exactly the way management has designed it to

run. **

If you are not happy with the way your business is running, change the

design. **

If you change the design, behavior will follow.

Max Carey

5

Design and Communication

1966

� No Cell Phones

� No Personal Computers

� No Hand Electronic Calculators

� No Digital Watches

� No CAD/CAM programs .. Hand drawings

� Slide Rules

� No E-Mail

� Carbon Paper to Make Copies

� Three Stations on TV .. ABC, NBC, CBS

Circleville Line 5 ModelScale Model

Building Design

Plant Engineering

Other

Equipment Design

Safety

HVAC

Electrical

Power of modeling

Process

Company

Mark. Seg.#1

Mark. Seg.#2

Mark. Seg.#3

Mark. Seg.#4

Customers

Customers

Customers

Customers

Money,Credit

Products

Products

Products

Products

Pareto

Competition

Business Modeling (Strategic Plan Foundation)

Market Share

Market Share

Market Share

Market Share

Information

Goodsor Services

GM%

GM%

GM%

GM%

Inventory

6

Communication“The Entabulator”

The Win Culture

� Win for the Customer

� Win for the Employee

� Win for Business Owner

� Win for the Suppliers

In That Order

Can youidentify and measure

what makes Customers,Employees,

Business Owners, and suppliers

WIN?

These measurements become the first steps of your business “Redesign”

Organization Chart

The Customer

MiddleManagement

Employee

MiddleManagement

MiddleManagement

EmployeeEmployee Employee Employee Employee

President

Employee

Senior Management

MiddleManagement

MiddleManagement

Senior Management

Senior Management

Value Added for the Customer Experience and Satisfaction“Employee Empowerment”

Most

Least

7

Drive Influence Steadiness Compliance

Sales

R & D

Q. C.

Finance

HR

Eng.

Entrepreneur

Process

Cust. Serv.

Working“ON”

your business“E-Myth”

Job Descriptions & Job Personalities

0 0

+

-

Life Cycle Units

Quality, Process & Measurement

� To make a quality product in the manufacturing world you have a QC Lab that inspects and measures the key elements of that product during different phases of the manufacturing process

� A quality company similarly must embrace measurements throughout the “corporate process” to monitor the key characteristics of it’s business, if a high quality value proposition, (The Output), is to be realized.

8

Data Mining, Modeling&

Pareto’s Law … 80/20 Rule

• 80% of sales from 20% of accounts

• 80% of profits from 20% of products

• 80% of problems from 20% of activities

Company

Mark. Seg.#1

Mark. Seg.#2

Mark. Seg.#3

Mark. Seg.#4

Customers

Customers

Customers

Customers

Money,Credit

Products

Products

Products

Products

Pareto

Competition


Market Share

Market Share

Market Share

Market Share

Information

Goodsor Services

GM%

GM%

GM%

GM%

Inventory

2007 Corporate Data(667 in Alphabetical Order)

9

Pareto-1

Customers 1-85(85)

80%

Customers86-277(192)

16%

Customers 279-667(390)

4%

Ordered by Sales Largest to smallest

Summary .. ABC

80% of Sales

16% of Sales

4% of Sales

It takes way more than 4% of corporate “energy”

to service these “C” accounts

Not all Customers are Good Customers

667

MARKET SEGMENTATION

87 = 13%

10

As is >>>> To be

YourCompany

Your

CustomersOutput

Output = Your Product = Customer Experience

Current OUTPUT Performance Level

The “AS IS”

Future OUTPUTPerformance Level

The “TO BE”

GAP

Think Out Of The Box

Product or Serviceyou are in business for.

The Blue Stuff

Changing Culture

Question

Do you practice plays?

How many of you feel you have a reasonably good team at

work?What is a Play?

Any activity that takes 2, or more, employees to complete a task for either a customer,

or your company.

Follow the order, or the request, from the customer

Copyright: Exceeda Consulting, Inc. 30

Eliminating waste and continually

improving the process to increase

productivity and lower costs!

The “Lean” Way

11

More, Better, Faster — But How?


Compiled by Andrew Shafer, Inc.

Magazine – January 25, 2012

Top 3 contributors to

recent productivity gains,

according to companies:

1. Improvements to

Business Processes

2. Technology

Improvements

3. More Hours Worked

by Employees

Source: Sageworks; Deloitte

62%

Copyright: Exceeda Consulting, Inc.

Customer FirstRespect

for

People

Elimination

of

Waste

For the CUSTOMER

Highest Quality

Lowest Cost

Shortest Lead-Time

For the EMPLOYEES

Work Satisfaction

Job Security

Consistent Income

For the COMPANY

Operational Excellence

Market Flexibility

Profit

Desired

Outcomes

Goals

Lean Tools

&

Techniques

Pillars of

Lean

Foundation

of Lean

Roof of

Lean

Continuous Improvement

Rule 1 – How

people work

Rule 2 – How people connect

“Suppliers” and “Customers”

Rule 3 – How the flow

paths are constructed

Rule 4 –

How to

improve

Rules In Use


Expose Waste – RIU 1, 2, & 3

Eliminate Waste – RIU 4

12

What is Cost, Price and Value?


COST

Overhead Profit

+ + + =Price

$

ProcessingMaterial


Cost + Profit = Price

Can we still

think in

this way?

Price – Cost = Profit

We need to be

competitive!!!

Cost Principle vs. Market Principle

95% of what we do is considered non-value added

by the customer!

Did You Know . . .

The Two Forms of Non-Value Added (Waste):

� Avoidable – Eliminate

� Unavoidable – streamline to perform in the fastest, most efficient and least

costly manner possible.

36Copyright: Exceeda Consulting, Inc.

13

� Most current business processes are the products of work methods designed, added on to, tweaked, and reconfigured over numerous years.


Removing Waste & Cost from the Process

Beginning End

Value Added vs. Non-Value Added

� The non-value added is defined as waste.

� “Waste” – is any human activity that absorbs resources, but creates no real value


Waste =

The Seven Wastes Transportation

Inventory

Motion

Waiting

Over-Processing

Over-Production

DefectsComplete elimination is the target . . .

reduction and/or elimination is the approach!


The “8th” Waste

Underutilized

People

14

People Drive the System


Directive

Leadership

Top directed

projects

Middle

Management

Floor

If I make problems visible . . . does anyone care about solving

them when I have them?

Typical Business

Supportive

Leadership

Middle

Management

Respond and

solve problems

where they occur

Floor

Lean Business

The VIBCO Culture

Total Employee Empowerment

5S (at VIBCO)

SortStraightenShine

StandardizeSustain

Gem Mission Statement .. 2002

Through our world class customer service, dedication to excellence, and random acts of kindness we

will exceed our customers expectations everyday!!!!

15

Case Study .. Gem Plumbing .. 1999 - 20071999 .. Not Profitable

Tot Sales > $8M

Serv. Sales > $2M

80 Emp

2 Computers

“Out of Control”

30 Vehicles

Plumbing/HVAC

60% OTD(service)

2007 .. Profitable

Tot Sales > $40M15% CGR

Serv. Sales > $25M30% CGR

325 Emp

Fully ComputerIntegrated

Malcolm BaldrigeCandidate

167 Vehicles

Plumbing, HVACElect., Handy Man

92%-95% OTD

What Changed?

FamilyBusiness

FamilyBusiness

What StayedThe Same?

5 buildings 1 Building

Passion For PerformanceCustomer Needs …

List, Measure, Performance Improvement Goal

Efficient and Effective Telephone Communication

On Time Delivery

Clean

Value Pricing

Security

Quality

60%

1999

Gem Plumbing’s analytical approach to solving their

“On Time Delivery”

Issue

One of their customers greatest needs

16

Passion For PerformanceCustomer Needs …

List, Measure, Performance Improvement Goal

Efficient and Effective Telephone Communication

On Time Delivery Traffic

Truck Breakdown

Out of Stock

Lost

Caffeine

Clean

Value Pricing

Security

Quality

Over Schedule

Flat Tire

Battery

Transmission

Electrical

Driver Abuse

5%

13%

9%

6%

2%

5%

60%

40%1999

2007

90%-95%

Here is how they did it?

Gem Call Center

Traffic Patterns

17

Implemented Fleet Maintenance Program

� December 31, 2002

� 84 Vehicles

� 12 Electric Lifts

� 3 Trailers

� 3 All Terrain Lifts

� 2 Bobcats

� Total Cost of Fleet Maintenance:

$25,890.32/MoInformation taken from December 2002 Fleet Report

� Average cost per vehicle $308.00/mo

Work Performed Breakdown

PM

14%

Routine

35%Breakdown

32%

Driver Abuse

19%

Implemented Fleet Maintenance Program� March 31, 2007

� 167 Vehicles (MA, NH, & RI)

� 6 All Terrain Lifts

� 24 Electric Lifts

� 4 Trailers

� 1 Backhoe

� 3 Bobcats

� Total Cost of Fleet Maintenance:

$19, 123.46/mo Information taken from

March 2007 Fleet Report

� Average cost per vehicle $114.00/mo

Work Performed Breakdown

PM Services

47%

Breakdown

12%

Driver Abuse

8%

License Cost

3%

Routine Work

26%

Accident

Damage

4%

Before: 167 X 308 X 12 = 617,232After: 167 X 114 X 12 = 228,456

Savings = $388, 776/year(fund in-house service)

Lateness to jobscaused by

truck breakdown

< 1%vs.13%

Company

Mark. Seg.#1

Mark. Seg.#2

Mark. Seg.#3

Mark. Seg.#4

Customers

Customers

Customers

Customers

Money,Credit

Products

Products

Products

Products

Pareto

Competition


Market Share

Market Share

Market Share

Market Share

Information

Goodsor Services

Your

CustomersOutputYour

Company

Suppliers

1) Determine your “True North” .. Great Service, Short Lead Times, Low Price, etc

2) Align your OUTPUT with your Internal Culture, Suppliers, and Customers

Culture & Alignment

Red Stuff

Blue Stuff

DifferentiationLean

18

5 Key Axioms for Designing the “Customer Experience”

The President/CEO must have 100% Buy-In

if change is to be both achievable and sustainable

On TimeDelivery

Self EsteemEmpowerment

Sales/Profitper

Employee

Customer Needs/WantsPerformance

Cluster

EmployeeNeeds

PerformanceCluster

Customer ResponseTime

ManagementNeeds

PerformanceCluster

Sales EBITDA

WIN WIN WIN

Red Stuff Blue Stuff

SupplierNeeds

PerformanceCluster

WIN

What is a Value Stream?

� In order to deliver a product or service we need to perform actions

� These can be value added or non-value added (waste)

$ $ $ $ $ $ $ $ = sum of $time time time time time time time time = sum of time

What are the

benefits when

we eliminate

waste?

“As-Is” Process

“To-Be” ProcessCopyright: Exceeda Consulting, Inc. 54

19

The Rework Loop (i.e. Death Spiral)

Make a

Product or

Service

No Problem Solving, Cause

Unclear

Incur a Problem

Restore Flow using

Counter-measures

Only

55Copyright: Exceeda Consulting, Inc.

“It isn't the mountain ahead

that wears you out . . . it's the

grain of sand in your shoe”

- - Japanese Proverb


Road to Profitability


Improved

Flow

Decreased

Cost

Decreased

Cost

New Business

Sustainable Profits

Elimination

of Waste

Improved

Flow

20

Searching for Nirvana

Orienting your workplace and adjusting your work tasks so that the product/service is always in a state

of constant value adding.


It is impossible to solve problems

at root cause and improve our

cost, quality and time without

changing how we do work!

$1 Million Dollar Question

Why should I buy a Product or Service from

your company??

21

The Customer Experience

Johnny the BaggerJohnny the BaggerJohnny the BaggerJohnny the Bagger

Questions&

Questionnaire

SBDC

If You Are Not Happy With The Way Your Business Is Running,

Change The Design ?

Larry Girouard

The Business Avionix Company

June, 2012