A structured, team based problem solving approach with defined the Activities, End products, Time table, Roles and Responsibilities & Accountabilities.
Focused on delivering a giant step change in operating performance against cost, quality and performance and thus building a platform for sustainable and continuous improvement through excellence of process and people.
It is a “bottom up” managements effort where the entire workforce participates in providing ideas for the improvement of their work areas or cost reduction opportunities for the operating unit as a whole.
Preparation towards Enterprise Improvement
Communications
Before commencing the program on site, there is an extensive communication process. Because in this cost reduction program, all cost are examined and if its to succeed, the active participation and commitment of majority of the employees is essential.
And the plan consist of:
Communication announcements tailored to the operating unit
Face to face briefing
Distribution of communication material
Walking the talk
Coaches
A key element to the success of the program is the use of Coaches. These are resource people “ outside “ the operating unit where the program is to be implemented, but who are knowledgeable about some aspects of the overall business and fully trained in the execution of the EIP structured program.
Criteria of Coaches selection are:
Open minded, willing to challenge
Ideally & is hungry for change
Hardworking
Good interpersonal & leadership skills
Good analytical skills
Appropriate mix experience
Units & Leaders
Unit for the process was identified base on functional basis comprise of direct functional basis comprise of direct functional and supporting units. Units can be divided as follows;
Unit 1 – Production
Unit 2 – Engineering and Maintenance
Unit 3 – Purchasing and Progress Control
Unit 4 – Management Support
These unit leaders ideally should be the person responsible for the area of the area of the Company/business. Careful selection of strong Unit Leader is important to the success of the EIP process, and they should posses some of the following qualities:
Knowledgeable
Energetic
Open Minded
Fairly comfortable with carrying out detail analysis
Strong character, able to deal with significant pressure & multiple demands
Resources person in operation, organization and technology.
Data Gathering & Target Setting
This initial stage of the process is to determine the improvement target and assess from where the improvements could come from. The data gathering aims to collect all relevant costs and performance data of the operating unit for a particular base year. It will be detailed exercise to determine the various cost drivers and the individual cost components as a through understanding needs to be made as to “where every cent was spend”.
A comprehensive data base that includes all costs and drivers of quality, service and uptime is created. The data is combined and structured in new ways to Identify inter-relationships- e.g using activity –based costs to analyze the budget. There might be a possibility that, at this stage not all the necessary data is available, and where necessary the EIP team will estimate through sampling or through the judgment of shop floor operators or Manager or Supervisors etc.
The data gathering & target setting normally comprise of the following:
The current organization chart and total number of permanent unit equivalent ( PUE)
Process flow chart
Mission, activity and End Products (MAE) analysis
Current Quality & Performance data with theoretic/capability limit
KPI tree
Current cost drivers of the unit with analysis of controllable, non-controllable & partially controllable cost base
Idea Generation, Consolidation & Evaluation
The aim here is to generate the best set off specific, actionable ideas to improve the unit’s performance by at least the targeted amounts. The process of generating and evaluating ideas in iterative, and relies on brainstorming as key techniques for idea generation. Idea generation session should rely on harvesting existing ideas and/or brainstorming new ones. The external coaches act as facilitators to make sure that everyone is involved and that ideas re not rejected out of hand. They have a responsibility to create a positive environment, and to involve as many knowledgeable people as possible. The focus is always on the performance improvement and cost reduction.
It also involves the input of specialist or technical advisors, who can be internal or external sources, who collect and present to the operating unit all the technical recommendations made in the past so that the effort is not wasted in “reinventing the wheel”. They also participate at later stage to review the ideas which get through the plant or operating unit’s screening process to ensure that these ideas are technically feasible and that any interaction between the ideas are fully understood by everyone.
The evaluation and agreement of which ideas to forward is the next step of the process These involve more than just picking on those actions that give the greatest cost savings. It is an opportunity to build commitment for executing the idea, and also by involving more people, its improves the idea.
Step that need to be taken to ensure that this happen included careful consideration of all parties that need to sign of an idea in the particular operating unit – and those who will be impacted by the idea must support the idea, or can offer an important perspective on the idea in question. There should be a face to face discussion with all parties signing off and suggestion from signatories to modify and improve ideas should be included where ever appropriate.
Some idea particularly those that involve headcount reductions, are obviously controversial, so these idea needs to be discussed over several meeting to gain acceptance.
As the idea generation, consolidation and evaluation cycle evolves, the Unit Leaders should assess the progress of the unit towards achieving the set target. Progress should be assessed by cost category, especially for the unit’s largest cost driver, by mission, activities & end products as well as by idea type. Once again , this process is iterative and assessments should be conducted every few days in order to determine progress and highlight remaining opportunities to pursue. There may be instances that repeated brainstorming session may be required to be executed to ensure that idea bank is not exhausted in trying to achieve the set targets in the EIP program.
Idea Sign-off:
When all the ideas from the operating unit have been evaluated , the prioritization process will reduce the number of ideas from the original list. At this stage it is important to start considering of the resources available in terms of capital and the people necessary to implement the idea. Given that the aim of the program is to deliver the benefits within 2 years timescale, there is no point in committing to implement all project/ideas at the same time when there is clearly inadequate resources available to execute them.
Having developed the final plan, there is a presentation to the Senior Managers of the operating unit who will provide the final sign-offs. Experiences have shown that approximately one Dollar of capital expenditure is needed for a saving of one Dollar, which demonstrates that overall, the process generates projects with a very high rate of return.
Implementation Plan
Having generated the prioritized list of projects, they now have to be put into an implementation plan. This plan has to include a timeline, an identified project manager, financial and technical resources requirements. As the intent is to generate rapid reductions in cost over a maximum two year period, success will only be assured if the projects are executed according to plan.
At the end of this 3rd Phase, the second and last presentation will be made to the Steering Committee members. This crucial presentation will include, firstly, the details of all projects/ideas that will be undertaken by the operating unit in ensuring that the set target will be met, and secondly, the implementation of the planning process for the execution. With all needed resources.
Also during presentation, The Steering Committee will approve, disapprove or designate a particular idea as “Further Study “ idea, if additional factors are needed to be considered in the analysis. The operating unit will then proceed to implement only those “GO” ideas and eliminate the “NO GO” ideas.
Implementation Phase
As it is critical that the anticipated results are achieved on schedule, a sophisticated project and result s tracking system will be put in place. Any slippage can be and will be quickly identified and the necessary resources targeted to get the project back on track will be deployed. It also provides a management reporting tools, so that the Senior Management can be assured that the process will deliver the stated profit improvement.
The Benefits
Profit enhancement
Cost reduction
Savings from Strategic Procurement
Personal skill development
Clear responsibilities and accountabilities
Transparent tracking and reporting
Transfer of best practice and benchmarking
Global language of enterprise performance improvement
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