Mark DeLuzio will be presenting a mini-keynote at the next Lean Accounting & Management Summit on September 21, 2018. As a precursor to his upcoming book, he will share why organizations are Flatlining after doing lean for more than a decade and what to do about it.
Organizational Announcement – Clem Confessore
It is with great pleasure that I announce the promotion of Clem Confessore to Managing Director. Clem has a distinguished career in Lean management and has been a Senior Consultant for Lean Horizons over the past several years.
Clem is one of the longest running practitioners of Lean Transformation in the USA. He has embraced the Toyota Production System (TPS) roots of Lean throughout his career. His 20 years as a Lean consultant was preceded by years of leadership positions where he employed Lean methods including 11 years as VP Operations, 12 years as President, 7 years of which were as CEO.
His career has featured a balance of results orientation with process orientation and a dedication to continual improvement relentlessly pursuing the elimination of waste throughout the enterprise utilizing Lean. This has resulted in stunning improvements in quality, delivery, cost and growth.
Clem served in the Corporate Danaher Business System Office (DBSO) working under my leadership. He was instrumental in introducing Value Stream Mapping to Danaher and played a key role in the development of Danaher’s approach to Transactional Process Improvement as well as their Lean Certification program. He gained significant and meaningful experience through the tutelage of Taiichi Ohno’s Autonomous Study Group, the originators of the Toyota Production System. Having led Lean transformations on a global basis, Clem has experience in various types of industries including an array of manufacturing, administrative, service, higher education, insurance and financial.
Clem possesses a BS in Mechanical Engineering and an MBA and is certified in 15 key Lean tools, including Strategy Deployment.
Please join me in congratulating Clem on his new role. Clem can be reached at: clem.confessore@leanhorizons.com or on his mobile at: +1.845.988.7710.
Financial Close to Disclose: Impact of Delays and Poor Quality
Monthly, quarterly and annual Closes and Discloses are an integral part of the business cycle. When you have a great month, quarter or year you want to share the great news, describe the success and give credit to your team for a job well done. When things don’t go well you need to explain why and, more importantly, detail the preventative actions being taken to return to success.
In many organizations the close to disclose cycle can be up to 25 business days. Why? What causes delays? Delays have many sources – interminable hours of Variance Analysis, changing management assumptions, waiting for data, endless reviews and approvals, etc.
As a result of these delays critical information is not available when needed and the quality of that information is suspect. A scramble ensues to interpret results and disclose uncertain guidance. Credibility could be compromised.
Process quality is “multiplicative.” Said differently, the true measure of your close to disclose process quality is to multiply the quality of each successive step in the overall process. This is called “Rolled Throughput Yield” or RTY. In our experience we have seen RTY for Finance processes frequently less than 40%! The impact of poor close to disclose process quality can be:
- Delays in providing crucial information to leadership and investors
- Terrible quality of life for your finance team due to frequent 80 hour weeks and constant scrutiny from auditors, leading to poor morale and greater than 50% turnover in many companies
- Uncertain guidance can have a negative impact on shareholder returns
There is a light at the end of the tunnel. Operational excellence processes are available for us to implement that can eliminate delays and dramatically improve the Financial Close to Disclose process quality, often improving current RTY by 50%.
By focusing on standardizing processes and eliminating waste, Financial professionals can enhance greatly enhance the business value of the Close to Disclose cycle and significantly improve credibility in the marketplace.
Look for our next blog, Financial Close to Disclose: The “One Day Close” and more information about optimizing your financial processes and our webinars at www.leanhorizons.com.
Finance Department: Historians or Navigators?
Is your finance team under enormous stress that leads to burnout? Is there low morale and high turnover? Lately this seems to be the rule rather than the exception. Increasing regulations, poor data integrity, demanding Boards of Directors, and outdated accounting systems and processes all contribute to long lead-times to close and disclose financial data. This is a major cause of the extreme pressure felt by financial departments.
Let’s say, for example, that the close occurs on day 15 and disclosure to “The Street” on Day 21 of the next month. In this case, the finance team becomes “historians” of old financial data by explaining variances, correcting errors, etc. The opportunity to be navigators toward success by quickly making competitive decisions and enacting countermeasures is missed.
Our experiences show that long accounting close cycles are the key factor contributing to this unfortunate state of affairs. Frequently, there is a large variance when comparing lead-time (total duration) to the actual effort time to close the books each month. Some companies have spent over 900 person-hours on their close with departments of roughly 50 people. This means each person contributed only about 2.25 total days of effort… but the closing process took as long as 17 days!
Not all is lost. We can deploy operational excellence optimization processes that can reduce the accounting close to less than a week… and in some cases to one or two days. In addition to accounting close, we can use optimization methodologies that can dramatically reduce the forecasting process lead-time for the FP&A (Financial Planning & Analysis) team.
Compressing lead-time from close to disclose enables financial professionals to transform their roles from “historians” to value-added “navigators” – management team members who successfully navigate toward future success for the business.
Look for our next blog, Financial Close to Disclose: Impact of Delays and Poor Quality, and more information about optimizing your financial processes and our webinars at www.leanhorizons.com.
Kaizen Award Earned by Lean Horizons Client Tempel Steel
Lean Horizons client Tempel Steel earned an award on January 4, 2014 for Best Kaizen Project at the Quality Circle Forum of India.
The Kaizen award Tempel received was for an innovative tool used to reduce set-up time on a 300 ton progressive press. The Kaizen event, led by Lean Horizons’ Ashok Puri, identified the chute set-up time as the largest contributor to overall set-up time on the press. Through the Kaizen event, the team identified the root cause to this problem and brainstormed a solution that would reduce set-up time, without adding significant costs.
Kaizen Award to Tempel
Ultimately the solution provided Tempel with measurable benefits, including:
- 70.4% reduction in chute set-up time (142 minutes to 42 minutes)
- Increased productive time per month by 26 hours
- Eliminated the possibility of jams, leading to an increase in quality
- Faster response to customer requirements due to reduced set-up time
- Able to respond to diverse product mix with additional set-ups due to increased machine availability
- Improved employee morale by lowering effort of set-up, increased ergonomics, and pride in providing a solution that can be adopted through the company’s world-wide facilities
About Tempel
Tempel is a global manufacturer of precision steel products for the automotive, motor, generator, transformer and lighting industries. Tempel’s five manufacturing facilities, located in China, India, Mexico, Canada, and the United States, house 155 active presses and produce 350,000+ tons of electrical steel each year.
About Quality Circle Forum of India
Quality Circle Forum of India (QCFI) is recognized as the organization representing the Quality Circle Movement in India, representing the country in several international forums. QCFI’s mission is to impart training, knowledge and practice of Quality concepts and philosophy with special attention to Quality Circles in the organizations and enable the people of India to face challenges and achieve success in this fierce competitive world.
Six Sigma Versus Lean Tools
Lean and Six Sigma have now matured as the premier continuous improvement tools in today’s business environment. But there is still much confusion over which is the best tool to use and when. Some companies declare themselves staunch six sigma advocates and some are just as passionate about the lean tools. This mindset can often cause us to use the wrong tool set in our continuous improvement endeavors; the proverbial square peg in a round hole. [Read more…] about Six Sigma Versus Lean Tools