Going beyond the orthodox approach… for a $ 100 million savings

If you're after big goals, you don't want to settle for the ordinary, extreme success is by definition outside the realm of normal ways of doing things and so I decided to propose something different to accomplish the set goals…I started a dream journey on a $ 100 Million savings for the organization to accomplish the bigger Vision set by the management and solve the problems it encounters during this Mission using tools and frameworks like Lean Six Sigma, TRIZ, CAP, Theory of Constraints etc…

 It’s impossible to get the exact reasons why people fail and others succeed knowing the exact formula to solve problems would have been an awesome state to be in but in vain, we are all human and very unique… so are the problems we encounter are unique in nature…

The organization has hired a set of Black Belts and Master Black Belts and the team is scattered across the organization hunting for small and big projects … a pipeline of ideas from various corners and a DNA building … and so on and so on… not everyone is Jack Welch and not every organization that picks up the journey of Lean Six Sigma has accomplished the monitory results and benefits to the extent they plan for… the challenge for this fiscal year is a big one… savings to a tune of $ 100 Million and will be quite an interesting journey to get this outcome.

While we talk about change and transformation, I did something different…, out of box… and proposed the following model to accomplish the desired benefit compared to the traditional approach where the BB / GB is the only person doing all the things the project requires…

In my approach the phases of a typical projects will be broken such that the team will not be only of MBBs and BBs and they will not be playing the role of a Mentor in getting the GBs do the projects… if at all they do it will be limited to a set of few early and less experienced folks spending time on building the momentum and training GBs and mentoring them on small projects very much in their scope and control… and the rest of the folks will move into a stronger approach to tackle the issue and embrace a factory model…

We will have one team called the IDEATION team who will be responsible to generate and gather ideas from various ends of the organization, this team will be playing a typical presales / marketing kind of role involved in researching industry best practices, building case studies, running champions workshops, conducting trainings, using organization wide tools to generate ideas, talking with people at CxO level and identifying opportunities for improvement.

The second team will predominantly work and focus only on the Define Phase of the project; this team will be assigned ideas from the Ideation team and will connect with the person generating the idea and facilitate the discussion with the people who are the owners of the function… for example if an idea is to reduce energy consumption across the organization this team will facilitate the discussion with the engineering and maintenance team to take it fwd. This Define Team will also be responsible in building the project charter, defining the business case, drawing the problem statement, benchmarking the current levels and  setting the goals in discussion with the champion and key stakeholder, planning, budgeting, initial communications, spending time with the subject matter experts gathering an understanding of the process and draw the as is process maps.

The Third team will be the data analysis team, this team will get the inputs from the Define team and start working on the measures, draw a data collection plan looking at the process and sub processes, perform the Gage R & R studies, get the measurement system right, set the operational definitions in place and perform all the functions of the measure phase, the very important role and function of this team will be to ensure data accuracy and data completeness, prepare the raw data on a spread sheet and draw the initial cuts with some pivots and slice and dice to represent various views of the data as per the data plan.

The inputs form the Team 2 (Define Team) and Team 3 (Measure Team) will flow into the Analysis team, this team will be responsible to come up with inferences post analysing the process and datasets using tools like Minitab and various other analysis tools that the Six Sigma framework offer, this team will liaison with the business leaders, function leaders and all other teams as and when necessary to come up with the inferences based on the analysis.

The final team … or what I call as the real change agents, the momentum builders, the go getters the core execution team will be the one who will use this data, inferences and all the hard work done by the others and play a true consulting role with the function and business leaders in shaping the change and meet the desired outcome. The brainstorming’s, POCs, Pilots, liaising with the internal IT team for rising the change request and building the systems cementing the structures and all other improvement activities. Post implementation this team will also work with the finance to help showcase the savings and benefits to the organization from the improvement project.

EBITDA and SG&A Improvement… the cash flow story (Part 2)

Every penny of revenue leakage fixed and an invalid cost eliminated has a direct impact on EBITDA… after my early journey working on projects which were of the very nature of Quick fix and implementation of best practices and the organization tasted the success to quite a good extent savings few million dollars the next big project I picked up and built a focused team was to Identify every opportunity of Revenue Leakage and fix it.

We identified all areas both in delivery and support functions the potential candidates of revenue leakage and start collecting data around it. It took more than a couple of months to streamline the operational definition for revenue leakage and a series of meetings with various stakeholders and the user community we finally agreed on the common operational definition  and what finance team will sign off (this was very important step) as savings generated by fixing the revenue leakage.

We defined Revenue Leakage as “Money not recovered on time either from the customer or the vendor or employee. Any outward cash flow as a deviation or exception to the set policy or process in place will be considered as Leakage”

Clear instruction on this project was no notional savings will be considered unlike other projects where cycle time savings were multiplied with a volume number and quoted as notional savings.

We picked up the following three areas to fix in this fiscal where an opportunity for leakage occurs…

1.       Days Out Standing / Accounts receivables

2.       Recovering Advance Payments from employees (ForEx and Travel related)

3.       Leave management in T & M assignments 

As a next step we started measuring to baseline where we stand internally and in comparison with industry benchmark. A dedicated team of data analysts were hooked up with the finance team to conduct a data collection exercise and we engaged with a third party consulting firm to benchmark our company with the competition to understand the variation.

While this exercise consumed time there was a definitive number that popped out, of course it was not easy to gather consensus from all and again a series of brainstorming sessions following with what is in scope and out of scope, what should and should not be a part of the data and the further debates took about a few fortnights to finalize. In this entire endeavour while the support from the senior management continued to exist it was a herculean task to gather the support and time from middle management and build the momentum. Mobilizing commitment looked very bleak at the very beginning of the exercise and we had to struggle to get the information from all sources and plug into an excel tracker before coming up with a baseline number … The irony is that the very people you need on the ground hands on are already overburdened with so many activities and tasks that often makes it very challenging to accomplish some simple tasks…. Nonetheless we did it…

The next step that we took based on the inputs from the subject matter experts and the inputs provided by the third party consulting firm who did come up with initial recommendations after the bench marking exercise was to look at the entire set of events and classify them into three broad categories and established role / process clarity to address the situation…

1.      Risk Management : The role of this group was to look at every opportunity and map it with the existing processes and identify possible risks and then address them appropriately as per the risk matrix

2.      Leakage Management: The very role of this team was to constantly look at all opportunities in the existing mechanism the possible leakages and overcome them. Under the umbrella of leakage management we had a couple more sub teams formed to strengthen governance and compliance especially around the SLA Clarity and automation. A separate operations team looked at contracts, warranties, and entitlements. We strengthened our internal interdependencies and raised the need to connect them together… data always exists but is difficult to access… by connecting and overcoming the dependencies and the strengthening the online repository which connects the business operations, sales, compliance, finance, and the delivery with PMO and Governance team working hand in glove was quite a challenging tasks that took sometime to shape up quite well and now we have a strong recommendation in place to have a team of dedicated and focused group of experts who look at wing-to-wing service life cycle

3.      Leakage Prevention: The very challenge we faced in this situation is educating the folks on the difference between customer satisfaction and billable assignments… while it’s important to address the needs of the customer, it’s important to educate the customer the services offered will come at a certain cost especially in a T&M mode where every minute is billed. When brainstormed further we discovered the root cause is the contract document availability and access to the engineers on the field onsite with the customer who are unable to understand if the piece of work they are doing is covered under the terms and conditions or the post maintenance activities or not… there was a huge cry on confidentiality and other such stuff during the arguments which many initially made a noise and finally agreed on the sharing the contract knowledge to ensure things fall in place…. What the very human nature filled with unknown insecurities stops the CRM software’s help the folks onsite with the customer and a very learning we discovered is having access to critical customer data helped cross-selling and upselling thus helps the revenue stream...

Very strong and stringent monitoring of advance payment collections and associated tools which connect the pay-outs and collections were put in place and the IT Team started working on the tool enhancements

Inputs were shared with the HR team on the leave management policies to be revisited which can help the revenue leakage, a set of senior department heads with the HR team coupled together to come up with a policy around the same, addressing employee related sensitive areas need extra time and caution on the roll out of the policy and so measures and steps were put in place to ensure the communication is seamless…

Analytics with dashboards showing Red , Amber, Green (RAG) status are in place, the team will continue to monitor the progress periodically and few months down the line I will again engage with the team to see if the controls put in place are adequate enough or additional things are required to be done…

In a nutshell my learning out of this episode can be summarized as below…

1.       Human nature is the most important one to focus up on; we already know all the solutions but lack action to accomplish it… processes have to flex with the business when ever business and the people running the business demand it

2.       My facilitations skills matured further working with folks from various teams and getting them all together in sync and signing off an agreement on the new process

3.       Digitizing the solutions and cementing the structure using an IT Tool is the only way to strengthen the control… nonetheless we live in an excel based world and exceptions are a part of it, no matter what controls one puts in, someday the exceptions and ad-hoc processes will overcome the discipline and one needs to revisit for continuous improvement that is incremental in nature…

A potential cash flow greater than USD 5 Million year on year is the initial estimate with the recommendations and process changes put in place…

My Pinnacle Quality Award… most memorable…

… I’m getting filmy… just like Shahrukh from the Bollywood movie Om Shanti Om… after receiving the award… I too quote the same dialogue….

Itni shidaat se main tumhe paane ki koshish ki hai,  

 ki har zaare ne mujhe tumse milane ki saazish ki hai.

Kehte hain ki ...... Agar kisi cheez ko dil se chaaho to puri kayanat usey tumse milane ki koshish mein lag jaati hai.

Aaj aap sabh ne mujhe meri chaahat se milaeya, thank you, thank you very much. Main aap sab ka shukar guzaar hoon.

Ki aapne mere kwabon ko yakeen mein badal diya, itna ki I feel like the King of the World.

Aur aaj, is baat ka bhi yakeen ho gaya, ki humari filmon ki tarah humari zindagi mein bhi end mein sab theek ho jaata hai.

Happys Endings. Aur agar, aur agar theek na ho to woh the end nahin hai dosto, picture abhi baaki hai.