Lean Goes Thrift Shopping

Lean Goes Thrift Shopping
Leanovations Works with Ansonia Thrift Shop
to Create Flow and Better Serve the Customer

Business is booming for thrifts stores. A few years ago, it was stylish and trendy to wear vintage clothing, but in today’s economy, it is becoming a necessity. At a time when most retailers have seen a decline in shoppers, second-hand stores are thriving as those who have been laid-off or are worried they are next, turn to less expensive clothing, furniture and household items. Figures for national second hand stores have recently reported that revenues are up over 8%.

As thrift stores are attracting new customers, the need to spruce up the operations, have the ability to turn over inventory quicker, and be able to sort through and process all donations faster to ensure the current trend/seasonal merchandise is available at the right time, at the right quality, and at a valued price. All this adds up to needing a Lean operational excellence approach to meet customer demand.

Leanovations has formed a “Lean Partnership” to teach and coach an Ansonia CT thrift shop, “My Sister’s Place & My Sister’s Attic” which offers quality new or "gently used" clothing, furniture, and household items to the public at discount prices. All proceeds from “My Sister's Place & My Sister's Attic” support Birmingham Group Health Services Inc. The Umbrella program serving women and children affected by domestic violence. Birmingham Group Health Services Inc. (BGHS) The Umbrella program has spearheaded the fight against this epidemic and worked tirelessly to help women and children affected by domestic violence become survivors.

My Sister’s Place realized that they needed to develop a better process for sorting through donations. The goal was to create flow where possible and establishing pull for the product, where flow is not possible. By taking the donations at the receiving door in the back of the facility through their quality control system, into pricing and onto the store floor, there was a lot of waste. The team came up with a goal to establish a “Door to Store” flow concept.

During the Kaizen week, there was the traditional 5-S actions to make sure everything had a place and everything was in its place, and the need to create visual controls to not only engage the staff and volunteers, but also the donors and customers alike. The next process was for the team to establish cells to flow the product through the quality/sorting process. The Kaizen Team studied the value stream for the Clothing Product Line, Household Products, Toys, Books and Seasonal Products. The team implemented assembly cells, which sorted, cleaned, and prepared appropriate product for the store. They created a pull process for pricing the product, reducing rework, delivering through a FIFO lane to the store as customers consumed/purchased the products. Product that used to average 1-2 weeks of lead-time to go from the receiving door to store floor, due to unmanageable piles of inventory and rework loops, has been reduced to 1-2 days. Allowing the thrift shop team of staff and volunteers to ensure the right product, with the right quality, at a valued price is available to the customers at the right time.

To learn more about “My Sister’s Place” and how you may be able to support the Birmingham Group Health Services Inc. (BGHS) and The Umbrella program either through donations, volunteer work or patronizing the store and becoming a regular customer, please go to their website at: www.bghealth.org/my_sister's_place.htm

CT DEP Nationally Recognized for Their Lean Results Commissioner Gets Nominated to Federal Position in EPA

CT DEP Nationally Recognized for Their Lean Results Commissioner Gets Nominated to Federal Position in EPA

Being eco-aware does not just mean doing your bit to save the planet; it also means being able to convert Lean activities into results and real business benefits, which is exactly what the Connecticut Department of Environmental Protections (CT DEP) is doing.

Leanovations enjoys a “Lean Partnership” with the Connecticut Department of Environmental Protection (DEP), assisting, teaching and coaching Lean Enterprise Strategies and Tools via Kaizen Workshops to the CT DEP organization on a regular basis. CT DEP organization is enthusiastically embracing Lean to improve their own business processes, to improve environmental performance for the state by collaborating with other state agencies, professional organizations and businesses. The April 2009 Ecos Green Report entitled "Lean Case Studies: Continuous Improvement in State Agencies”, .By Lee D. Garrigan, Senior Project Manager Environmental Council of the States, highlighted three outstanding Kaizen Team accomplishments by Connecticut’s DEP Lean transformation:

- Evaluation of the Air Planning and Standards Division Permit Modeling Program
- Office of Long Island Sound Structures, Dredging, and Fill Permit Application
- Evaluation of the Water Permitting and Enforcement Division’s Enforcement Program

To learn more about the three CT DEP Lean Kaizen Success stories in the April 2009
ECOS Green Report you can contact Karen Caliendo, DEP Agency Lean Coordinator through e-mail at: karen.caliendo@ct.gov or go to : http://www.ecos.org and click on the April 2009 featured report or you could read about the CT DEP results on Leanovations website at: www.leanovations.com

Connecticut State Department of Environmental Protection Commissioner Gina McCarthy, known for her accessible, pragmatic and plainspoken leadership style in her four years heading the agency was a key ingredient to a successful Lean transformation. Commissioner McCarthy visited with and encouraged every Kaizen Team at the CT DEP. Due to her success and leadership approach to environmental management in her career, President Barack Obama nominated Commissioner McCarthy for a key post at the Federal Environmental Protection Agency, for Assistant Administrator for Air and Radiation.

For those who are not aware, the U.S. Environmental Protection Agency (EPA) has made available a Lean and Environment Toolkit, which is available on the website at: www.epa.gov/lean. The EPA’s intent in developing this toolkit is to enable Lean practitioners to improve both their business performance and their environmental performance by identifying and eliminating environmental wastes at their organizations. The toolkit offers practical strategies and tools for integrating environmental considerations into Lean initiatives in ways that support Lean’s focus on the elimination of waste and non-value added activity.

Leanovations teaches and coaches the elimination of environmental wastes in addition to the traditional Toyota Production Systems 7 wastes, which is inherent in all processes. What is environmental waste? Environmental waste is an unnecessary or excess use of resources or a substance released to the air, water, or land that could harm human health or the environment. Environmental wastes can occur when companies use resources to provide products or services to customers, and/or when customers use and dispose of products.

Fred Shamburg, President of Leanovations will be a guest speaker at the Northeast Department of Environmental Protection - State Park Directors Conference, on May 6th, 2009 presenting “Lean and What it Means”.

A Global Recession Creates Opportunities for

A Global Recession Creates Opportunities for
Lean Thinking Companies

Last week the government estimated that the gross domestic product fell at an annual rate of 6.1% in the first quarter, and many economists believe the first quarter of 2009 will mark the end of the recession. Given the recovery will be slow, many companies are reporting focusing on wringing additional efficiencies out of their businesses through Lean efforts and kaizen team events, rather than quickly expanding and hiring people.

At Leanovations, we believe a global recession creates winners and losers just like a global market boom. Certainly, some companies are using these times to layoff and reduce staff to make their organizations "leaner," which of course is not what Lean is.

With the steep economical challenges of today's global recession Leanovations continues to teach and coach companies to be forward-thinking and see Lean as a key to reducing waste, improving cash flow and improving operational flexibility, thus enabling them to adjust more quickly to the new realities of today's economic climate. As the world exits the recession, Lean companies become well positioned to leverage their productivity gains as volume returns, outpacing their competitors by achieving higher inventory turns, greater operational flexibility, and lower operating costs.

No one is denying that cutting costs is essential for surviving 2009, but companies who are truly embracing Lean, practice a different philosophical approach than just getting most of the costs reductions through layoffs. They look for ways to eliminate waste and improve productivity throughout the entire enterprise, staying focused as they move toward building a better Lean operational excellence and culture to take advantage of future global opportunities. This is continuous improvement with a long-term view.

Before any company makes painfully aggressive reductions, it should keep in mind and fully understand the potentially serious repercussions. For example, companies risk damaging employee morale, losing experienced and talented employees, seeing valuable employees leave on their own as they become worried they may be next to be let go, and hurting the firm's reputation as an employer of choice. During these tough economic times, many companies also lose sight of the importance of training and conducting employee-development programs, which engages the employees in the Lean-execution strategy.

Many of the companies Leanovations is working with understand the power of Lean, and the importance of keeping their people to compete globally. They are trying everything to avoid or limit layoffs by filling their open capacity by bringing back previously outsourced work, implementing flexible work schedules, such as four-day workweeks, 6 hour days, wage freezes, unpaid vacations, and voluntary furloughs. One Leanovations Lean Partner has gone to 6 Hour days, with 2 hours each day dedicated to Lean projects via mini Kaizen Teams. Another is allowing the employees to volunteer time in valuable community projects, creating a win-win environment, with a positive image for the company and providing needed services to the community. These steps help control costs but, more importantly, companies are retaining the value of their human resources.

Many companies today who understand the global impact of Lean are using this slow down period as an opportunity to redesign their skills matrix and align jobs to engage employees while protecting and emphasizing training and development programs. Adding responsibility and autonomy promote employee satisfaction, and providing the company with flexibility and the skills necessary for performing redesigned jobs, which will increase long-term productivity.

Create a Lean Office for a Competitive Advantage

Create a Lean Office For a Competitive Advantage

Manufacturing and service-related businesses are heavily dependent on office and administrative processes, which can add up to 40-70% of all costs associated with meeting customer demand. Leaning out office environments starts by engaging the employees to see the waste in the office environment and to empower them through kaizen teams to eliminate them to create a competitive advantage.

One of the most common misconceptions about doing Lean in the office is that there is a different set of Lean tools for the office. Many times organizations will say "What are the unique definitions of value and waste in knowledge work?" or "How can we do kaizen in the office when everything we do is non-standard?"

Organizations should start on its Lean Office journey by creating a Value Stream Map or Swim Lane Process Map of an entire process – whether it be a manufacturers office, service providers, government agencies, health care, etc. You will need to observe and measure, map and analyze the office’s processes like, sales quote and order handling, design/engineering processes, approvals, financial accounting and material procurement. Each of these processes can be done in a few days or up to a week.

Most organizations are shocked by the day-to-day inefficiencies that are discovered just in information flow. These inefficiencies significantly affect the total product or service lead-time and the company’s ability to create and deliver its “value-added” product or service to the customer on time, at a lower cost and with high quality.

Value Stream Mapping (VSM) or Swim Lane Process Mapping (SLPM) helps everyone to see the flow and take a hard, objective look at what it is they do every day that impacts the value stream – both negatively and positively. It also forces people to look at how they manage their gaps and handoff information.

A value stream map (AKA end-to-end system map) takes into account not only the activity of the product or service, but the management and information systems that support the basic process. This is especially helpful when working to reduce cycle time, because you gain insight into the decision making flow in addition to the process flow. It is actually a Lean tool. The basic idea is to first map your process, then above it map the information flow that enables the process to occur. Value Stream Mapping is designed to help Lean teams identify opportunities to remove waste and non-value-adding activities from processes so that organizations can produce and deliver the products and services to customers more rapidly and at lower cost.

Example of a Swim Lane Process Map with 3-M PostedSwim lane Process maps very explicitly show the organization structure, and the map arranged on a table where the rows indicate the “who” does the process step (the “who” could be an individual, a department, or an organization). The advantage of this mapping approach is when the process flows change “lanes” it indicates a hand-off. This is where lack of coordination and communication can cause process problems. It also shows who sees each part of the process. Clear distinctions can be made between the back-office, and those process steps where customer interactions occur.

Both mapping processes (VSM and SLPM) are used to identify waste and non-value added activities, which can then be attacked to create a more competitive process.
At Leanovations, we recommend starting with a 3-M post it notes on large brown paper, or use a white-board that can print a copy of the VSM or WLPM, and then moving to eVSM software program to dynamically digitize, perform calculations and track progress and results through eVSM.

Once the current and future state maps are drawn, the next steps are to create a Project Plan to prioritize implementation, a value stream storyboard and a key performance metrics tracking methodology. From there Leanovations will assist an organization to begin the continuous improvement process, teaching and showing people how to make improvements on an on-going, sustainable basis.

eVSM Provides an International Language for Lean

eVSM Provides an International Language for “Learning to See” the Lean Opportunities for the total Value Stream Map

Leanovations is proud to announce a partnership with GumshoeKI, headquartered in Cincinnati, Ohio, a visual communications company that developed eVSM (electronic value stream mapping) software, the easiest way to visualize the value stream. eVSM utilizes common standardized templates, which provide an international language all Lean practitioners understand. This leading "drag & drop" value stream mapping, analysis and management capability is used today around the world by 8500+ Lean practitioners for Lean manufacturing, Lean office, Lean government, Lean service and Lean healthcare implementations.

The software designed to complement the Lean implementation methodologies in the Shingo award-winning, best-selling publication "Learning To See" by Mike Rother and John Shook, provides comprehensive support for the mapping, calculations, box scores and charts. The combined capability allows Lean practitioners to draw, analyze and communicate globally Value Stream Maps using standardized templates that any Lean practitioner understands regardless of the language they speak. For this reason, over 20% of the Fortune 500 companies use eVSM, with extensive international use.

The benefit to Lean practitioners is a “Visual Net” that helps practitioners develop, think through, connect, and effectively communicate any aspect of a value stream. Visual gadgets that are "in-place" on the map and update with map data is a new innovation that really helps to "see" and make decisions about value stream characteristics. Lean calculation relating to lead time, inventory cost and capacity can be analyzed using the map data in Excel or can be created by picking data directly on the map.

Current state maps, can be easily copied and modified, to create future state maps. The maps can be combined and presented as a storyboard (or value stream board), for Lean management, complete with data on team members, targets, progress and milestones. It is easy to create and deploy standardized templates for maps, metrics, units, tables and storyboards for consistent and productive usage by Lean practitioners and be able to present them to their peers around the world making eVSM a dynamic tool for management in making strategic plans and decisions.

Leanovations helps organizations not only map their organizational Value Stream, but also map which includes the customer and supply chain linkage, creating a flow of information while establishing a pull of products. To learn more about eVSM go to www.leanovations.com .

Business Succession Planning a Must

“Business Succession Planning” A Must For 2009

Business succession planning seems to have lost its way in recent years. Maybe it is due to the stress of the economy, maybe it is because the current and next generation views business differently, or maybe it is due to the new technology that continues to create new challenges and complexity for businesses. At Leanovations, we encourage businesses to include “Succession Planning”, during their annual “Business Strategic Planning Session” utilizing Plan-Do-Check-Act Process (PDCA).

Leanovations works with a number of small businesses (including many family businesses) to develop Succession Plans. Business succession planning must include a plan for transferring the trust, respect and goodwill that built up over the years. Generally, setting up a successful business succession plan involves the following 5 stages:

1. Selecting and developing a Team of Qualified Advisors – Developing an Advisory Business Council (at Leanovations we call this an ABC Team) to provide insight into Business opportunities, decisions, planning and general counseling with qualified advisors is recommended. This may include an accountant, attorney, financial planner and some industry leaders who can help assure that your plan legally, profitably, and affordably considers the business needs and objectives.

2. Investing in People and Recruiting Talent - Investing time in developing people in key management positions, and allowing them to exercise authority and control, is vital to a successful transition. It is important when the business is closely held, such as in a family, to separate the family dynamic from the business dynamic as much as possible. For those experiences and leadership skills needed to have the business prosper, that are not evident in the current members, it is required to recruit outside individuals to these key management positions. Hiring good people and being able to retain them, always pays dividends and is an important part in succession planning. For family businesses, this often involves a tough analysis of whether family members have the skill set to run the business or whether your key succession candidates are non-family members.

3. Commitment to a Transition Plan—Once a transition plan is developed and successors identified, the owners must be committed to the concept that the business must continue to create opportunities for generations to come. Once a succession plan is in place, the owners need to communicate that plan clearly.

4. Communication -- Communication of a succession Plan gives key management and/or family successors, if a family business, a clear understanding of the path to the future, as well as any role they may play. It also allows them to begin setting future goals and objectives for themselves that support the business. Ensure key employees remain with the business during any succession transfer by sharing the plan with them, keeping everyone involved with the plan and on the same page.

5. Implementation – Having the business continue into the future, without compromising current business owners needs is the most important step (and most difficult) in implementing the succession plan. The owners must be ready to step aside and allow the successors to take over. The owners must be prepared to take on new challenges away from the business, knowing the financial future is secure. As in any other Planning process, always be prepared to adjust and modify as needed. Using the Plan-Do-Check-Act/Adjust process (PDCA) is a perfect fit for creating and developing a robust “Business Succession Plan”.

Lean Manufacturing May Qualify for Federal Investment Tax Credit - Section 41 of IRC

Lean Manufacturing May Qualify for Federal Investment Tax Credit - Section 41 of IRC

“To keep our nation leading the world in technology and innovation, we’re extending and modernizing the research and development tax credit. By allowing businesses to deduct part of their R&D investments from their taxes, this bill will continue to encourage American companies to pursue innovative products, medicines, and technologies.”

George W. Bush
While signing the Tax Relief Act of 2006 The White House December 20, 2006

President Bush’s concern for the men and women who work in manufacturing and the critical contribution they make to the U.S. economy is the driving force behind this tax relief and health care act of 2006. Manufacturers are full partners in the effort to build the future of the country in the marketplace for new products and ideas. Simply put, a healthy manufacturing sector is key to better jobs, fostering innovation, raising productivity, and higher standards of living in the United States.

Section 41 of the Internal Revenue Code (IRC), defines “Qualified Research” more broadly than some may think. Section 41 rewards manufacturers for keeping manufacturing and engineering jobs in the United States and Lean manufacturing activities may qualify!

The words ‘Research & Development” creates an image of scientists in white lab coats in sterile laboratories doing advanced research using expensive equipment and instruments. The IRS definition of eligibility under the R&D Tax Credit program is much different. Under the IRS guidelines, if you are developing, designing, testing new processes or products, or improving existing processes or products, which many Lean/Kaizen projects accomplish, your company may qualify. If your Lean/Kaizen projects have devoted resources to evaluating a new technology, investigating new materials, improving machinery or tools, developing and implementing lean manufacturing techniques, or improving the environmental impact of your processes, your company may be eligible for the R&D Tax Credit.

Both large and small companies are potential candidates for the credit. If you are doing things in your business to remain competitive in the global marketplace and designing or developing new or improved processes or products, you may be eligible for the credit. The R&D Tax Credit program is in place to reward and encourage Lean-Innovation amongst all U.S. businesses and it is particularly beneficial to the smaller companies who take a proportionally greater risk in staying competitive.

An overview of IRC Section 41

- Provides a credit against federal tax due equal to 20% of qualified research expenditures over a certain base amount plus 20% of certain qualified basic research payments.
- Net yield of credit on federal level is approximately 6.5% of qualified expenditures. (State credits may provide additional funding.)
- Companies may go back and amend returns up to three years

For additional information on IRC Section 41, please contact your tax adviser.