The title of a recent book argues: “It’s not the big ones that eat the small ones, it’s the fast ones that eat the slow ones.” Speed ​​is one of your keys to competitive advantage.

The power laws of speed in the book, racing against time (Free Press 1990), the authors present compelling evidence for the power laws of velocity.

The 5% rule: The actual time required to produce or deliver a service is only 5% of the total elapsed time.

The 25-20 Rule: Every 25% reduction in elapsed time will double productivity and reduce costs by 20%.

The 3X2 Rule: Companies that routinely reduce cycle time enjoy growth rates three times the industry average with twice the profit margins

Problem: ad hoc processes

Most processes, whether ordering, billing, manufacturing, or order fulfillment, evolve from ad hoc improvised processes over time. To “cut costs”, specialized people handle the work in ever-larger batches. Every employee is busy working hard, but his inbox remains full and his outbox becomes someone else’s inbox.

The client’s “lazy” request

Every time I work with a team of people to reduce cycle time, they all complain because they don’t see how they can work faster…and they’re right. Speed ​​is not about people working harder or faster; it’s about focusing on the customer’s “lazy” order.

Here’s what I learned: Your people are always busy, but the customer’s order is DOWN 90% of the time. The order does not mean that he is a bum, but the process forces him to behave that way. Sure, you can always squeeze a little more speed out of the workers on the “factory” line, but the big wins always come from squeezing the order, not the people.

Example of computer operations

I worked with an IT operations group that was having trouble getting their nightly “batch” processing done so they could open up their online customer service systems in the morning. It took, on average, 8-10 hours a night. When we examined the process, we found that the actual time required to run the batch programs was one hour, but there were 32 points in the process where they waited for technician validation before moving forward. Turns out the job scheduler on the computer could do most of what the technicians were doing, so they automated 30 checkpoints and jobs are now done in 1-2 hours…an 80% reduction in time of the cycle or a five-fold increase in speed.

Sample Medical Claims
Last year, I worked with a medical claims group. It took, on average, 140 days or more to process each claim. Upon examination, we found that processing the claim only consumed 7 hours (one day) of this time; the rest of the time, the claim sat around waiting for something to happen. In just one two-day session, we found ways to cut nearly 100 days off your cycle time. That’s a 70% reduction in cycle time or a 3x increase in speed.

Breaking the speed barrier
Do you want to make revolutionary improvements in your speed? That is how:

1. Make a flowchart of your process showing all activities (boxes), decisions (diamonds), and arrows connecting each box.

2. Starting at the top of your flowchart, from the moment the customer (internal or external) contacts you to place an order for your product or service, list each box, diamond, and arrow… especially the arrows. Tip: 80% of the cycle time is on the arrows, the delays between activities, not on the activities themselves.

3. For each box, diamond, and arrow, calculate the actual time it takes to do that part of the process. And don’t buy the first response you get. I asked the claims group how long it takes to receive and queue a new claim. They said 25 days. Is not true! It took around 10 minutes to register the form, 24 days before it reached a reviewer, and 45 minutes to validate the form. 55 minutes, not 25 days. For 24 days and 7 hours, the claim was inactive awaiting processing.

4. Now ask yourself, does this box, diamond, or arrow add value to the order? Value-added things change, improve, or improve the order. What is not added value? Delay, downtime, inspection, rework, scrap, etc.

5. Eliminate delays. In the claims example, there really was no reason for the claim to wait 24 days for inspection. I recommended that they set a goal to file and inspect a claim in less than 24 HOURS. We continue to do this with each major delay in the process to eliminate a total of 100 days.

6. Eliminate non-value-added work. If a box, diamond, or arrow doesn’t add value, is there a way to reduce its impact or remove it from the flow? Why, I wondered, do they have to inspect every incoming claim form? Through troubleshooting, the team was able to identify the most common error filling out the form and redesign it to reduce or eliminate common errors. Then it would not need to be inspected or could easily be handled by a less experienced member of staff.

7. Establish an action plan to transition from the old, slow process to the newer, faster process. Start the new process using the incoming orders and let the existing orders disappear from the old process.

8. Find a way to “burn the bridges” to get back to the old process. At one company, they took out the old individual workstations, forcing everyone to participate in learning how to use the newer, faster ones.

9. Establish cycle time measures to sustain improvement, possibly an XmR chart for individual orders.
Templates for flowcharts and value-added analysis are available in the QI Macros SPC software for Excel. For more help, consider the book Lean Simplified.

If you need help getting a team off the ground or getting back on track, consider our consulting services.

Avoid common pitfalls

Trap #1: Don’t buy the first response you get. People often include downtime in their responses.

Solution: Keep prodding to determine how long the value-added work actually takes. The rest of the time is delay that can be reduced.

Pitfall #2: Old clothes are hard to break.

Solution: burn the bridges to the previous process. Implement the new process in such a way that people cannot go back to their old ways of doing things. Do you want to make your customers happy? More loyal? Are you less likely to change providers? In today’s high-speed society, they want you to be faster, always faster. Using the simple tools of a flowchart and value added analysis, I have never failed to find 50-70 and even 90% reductions in cycle time. And you can too! It’s a bit exhausting to separate your process and polish your flow, but you only have to do it once to discover the power of this process.