Q 57. While Operational Excellence professionals seem to work well and deliver good results, why is it that cost-cutting initiatives target this function commonly and results in a reduction in certified full-time LSS resources?   

 

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An organization ideally can be split into three major groups with respective responsibilities

 

A STRATEGIC (senior Leadership) head for driving the goals, mission and culture.

A TACTICAL (excellence) team for analysis, change and sustenance

An OPERATIONAL (Production, Technical and Quality) team for meeting the volume of work, handle  deviations and learning.

 

Misplaced Values and corresponding propositions are the reasons for neglected VOB and VOC.

So, when the Strategists are content with the ROI, status quo and have pride being risk averse, along with the Operations with no time for change management, adaptations and controlling penalties – Tacticians turn out be a cost.

 

As a Tactician; in order to create a value in the process, through the service, to the product, for the customer and on self – he/she has to

• Make the organization realize who the customer is and why is he important
• Develop systems thinking
• Map Value stream processes
• Drive triple loop learning
• Promote stronger communications
• Encourage transparency
• Awareness of the industry best practices

 

 

First of all, it is difficult to generalize that LSS certi'fied professionals are commonly targeted during a 'cost cutting' exercise. 

 

In the very first place, if an organization is creating positions for LSS professionals, it has be based on the belief that these professionals can bring cost savings to the organization through efficiency improvements. 

1. There could be occasions where an organization could overdo and create too many such positions and then all these LSS professionals may not find it easy to drive projects.
2. It has to be well remembered that the real source of the drive in any LSS initiative has to come from the leadership. Only so long as they provide the intent of the initiative across the organization, could the LSS professions be successful in getting the projects identified and executed.
3. Another possibility is that these LSS professionals, when they operate offline, they will have to collaborate with the online members, be it Operations, Quality, Technology or any other function, who hold the direct responsibility of running the improvements in their respective areas. The leadership may sometimes tend to think 'Why not the LSS professionals themselves take up one of those online positions' and drive the initiative with direct responsibility than trying to get it through others? This could lead to reduction or elimination of such exclusive positions
4. Other reasons could be that the project(s) that were taken up became irrelevant due to some changes in the business priorities.
5. Lastly, there could be a genuine problem due to lack of knowledge, expertise or aptitude in the LSS professionals due to which they could not get across the teams and provide the necessary traction to get the projects done.

Operational Excellence Professionals

In General , these professionals work as part of supporting team to the management's needs and do not belong to any functional department in an organisation. Management uses them where improvements needs to be done on cost , quality, scope  etc.,... This will ensure that customer gets maximum profit.

 

What happens when cost-cutting happens

1. Normally these professionals are Master BB/BB who are rich in experience and who might be in higher grade/designation in an organisation and hence would cost more to the organisation.

 

2. Unlike other employees, these professionals will not be part of any team but are themselves part of a team whic would support management needs. During recession period, therefore , management might reduce the team size.

 

3. As these professionals are not part of any project team, they may not be able to generate any revenue directly from the customer, though they are the primary ones who will ensure that a project saves money due to improvements shown in its team. This can happen quite frequently in software industries.

 

4. As these professionals focus too much on operational excellence, they may loose the focus on their Technical or functional knowledge over a period of time and may not be able to help teams more effectively addressing their issues. Such professionals may be identified.

 

5. Management might look into SeniorJunior ratio and act upon or might like to have only limited amount of persons in each grade.

 

Conclusion:

This is why we see as why there is reduction in full time LSS resources when there is cost cutting

Let’s see the job description of the LSS resources and try to evaluate as to why cost-cutting initiatives target this function..

 

Six Sigma professionals work in all types of companies, in nearly every industry. They are often employed by government agencies and contractors, telecommunications firms, manufacturing companies, healthcare companies and financial services providers, to name a few. Six Sigma professionals are typically responsible for providing expertise in deploying Lean and Six Sigma programs and initiatives, and directing teams to achieve desired results using Six Sigma methodologies.

 

Six Sigma professionals support the analysis, planning, design, implementation and evaluation of key projects to help companies achieve their goals. Using Six Sigma methodology and analytics, they accomplish measurable business process improvements.

 

Specific Six Sigma job duties might include instructing cross-functional teams in adapting to and understanding improvement processes, facilitating Kaizen and Rapid Improvement Events (RIEs), and overseeing process improvement projects. These professionals may also be required to interpret customer needs and requirements, translate concepts into practice, identify process improvement opportunities, and quantify results and trends.

 

Professionals who are leading Six Sigma projects are also often required to make recommendations, and develop and present formal presentations to senior management. Six Sigma Black Belts will typically share best practices methods and ideas, as well as coach and mentor others, particularly Six Sigma Green Belts.  (Excerpts from sixsigmadaily.com)

 

Though such elaborate functions are planned, carried out, documented and implemented, the “results” may not be in sync with the Management’s expectation.  

 

Quoting a personal experience: A six sigma approach was implemented in one our department.  The attrition rate before Six Sigma was quite low.  All the evaluation parameters, the KRA’s, that were defined were not accepted by the subordinates and the attrition rate increased.  This in turn was another set of challenges for the management, which is now focusing on frequent hiring, training, hand holding, deploying etc., There was a large gap between the theoretical discussion and the actual implementation and the results.  

 

Once the companies grey areas are identified and the solutions implemented, the LSS resources seems to be a Liability to the company.  Not trying to sound harsh – but it’s more often that it’s a onetime use and throw approach. 

 Or

The expectations from the management is very high in a short span of time for which they think that LSS is not yielding results are expected and in turn have to face the heat.

As per my opinion the cost cutting process starts in an organisation when the overall business is deteriorating. In the first phase all those units are targeted which are the cost center and not generating any revenue, though these units are the backbone of the growth of any organisation. Majority of the services industry is focusing towards product based organisation where individual business units are taking the responsibility to generate profit. In the current scenario process excellence professionals are attached to different business units and they are mentoring and training operators for improvement in any function. Once these people get trained and well verged with the implication of lean and six sigma they themselves can train and start working on gap analysis and process improvement projects. In this way the role of a operation excellence person might become mundane at certain point. let's also revisit the three main phases of cost reduction:

Phases in creating value for money and cost reduction

1. Cost Identification
2. Cost Elimination through Process Improvement
3. Cost Reduction through Procurement Strategies

Among these, many organisations today focus only cost identification method and due to that all major expenses are driven from the profit and loss account. Since process excellence folks do not contribute directly to the revenue of the organisation they become victim of the cost cutting. This could be avoided if every process focused organisation could set up a Center of Excellence with lean and six sigma professionals and this CoE should start directly engage with the internal and external clients as an independent unit rather as a supporting function