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FBP 001: Introducing Hugo Heij – Fluid Business Podcast

 

In this very first episode of the Fluid Business Podcast David and Laura introduce you to Hugo Heij, Fluid Business Coach.

Our team of professional business coaches share their expert knowledge and experience every single week, empowering you, the business owner, to develop and grow your business the right way.

Join us as we cover core subject areas in our unique and relaxed way, including; Rapid Growth, Family Business, Team, Efficiency and so much more.

 

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Business is Buoyant for Essex Entrepreneurs

Business is Buoyant for Essex Entrepreneurs

Essex is a county enjoying a positive outlook this spring as business continues to grow, and jobs and wages are set to increase.

A poll of 60 leading Essex businesses owners by Chelmsford based business coaching firm Fluid has discovered that the next 12 months will be incredibly buoyant for our enterprising county;

  • 50% of those polled would see their businesses grow by over 50% in the next 12 months.
  • 50% of the businesses polled expect to increase their headcount by four, some by as many as 20 people
  • 90% of firms polled will be increasing staff wages across the board

“It seems that Essex is ‘recession proof' said Ray Moore, Managing Coach at Fluid Business Coaching and author of best-selling business growth guide The Levels, “we’ve been working with individuals and businesses (as Team Results) for eight years now and I am delighted that things look so positive. National figures for Start Up Britain listed Chelmsford at # 20 in their most entrepreneurial cities and this research certainly re-enforces this.”

Continuing Ray said, “The challenge now is for Essex businesses to step up to the growth challenge, and to strive to increase the number of 250+ employee firms based in the county. To this end we intend to maintain a focus on ensuring Essex has a clear template for growth, and will continue to work with our clients and colleagues in local government to achieve this.”

Its good news also for apprentices as over 50% of the businesses interviewed will be increasing their head count or creating an apprenticeship scheme during the next 12 months.

Interestingly the businesses that took part will be using the more traditional offline routes for recruitment: recruitment consultants & offline advertising. Only two companies out of 60 will be using social media routes like LinkedIn.

Encouragingly 90% of the businesses will be increasing wages across the board. With 30% increasing wages by as much as 10%.

Fluid also wanted to get the opinions of the Essex based companies on the wider business landscape: when asked where they saw the most potential for growth in the next 12 months many (30%) attributed it to overseas trade with other reasons sited being organic growth via sales team (5%) & the growth of the UK building industry (10%).

We then moved on to the issue of Essex infrastructure unsurprisingly the businesses polled would like to see investment in Essex’ road & rail networks(45%) namely A12 & A13. Other infrastructure issues that need addressing are improved WIFI speeds and more support for start-ups!

The overwhelming response when we asked our business owners if they would like to see the UK remain in the EU after the general election was a resounding Yes (75%).

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Fifth Waste- Doing More than Needed

In any business we should strive to reduce operational expense AND reduce inventories AND increase throughput simultaneously. Lean management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business. There are seven typical types of waste that are found and in this article we explore:

Doing More Than Needed

This is a very common waste that is prevalent in most businesses that I assess. Let me explain a few examples.

When is a Job Finished?

Let’s assume we run a business that builds websites for their clients. We have a meeting at the beginning of the relationship where we obtain the brief of what the client requires in the way of a website. We agree a price for the work and then we get started. Now, when exactly can we say the job is finished? With something such as a website there is always something you can change to make it better. Three people can look at it and have an opinion as to whether the layout should be changed slightly, whether the font should be slightly bigger, changes to the colours etc. This is subjective and can consume a lot of time so be careful to deliver to the customers’ expectations but not go too far in using up our valuable time.

Over Order to Cover all Eventualities

This is a waste that appears again in all areas of the business. If we look at say the marketing department, and assume they have a marketing strategy running where they are going to send out flyers to advertise an event. Now at the beginning they don’t know exactly how many flyers they are going to need so they estimate and add on a few for safety so they don’t run out. They run the campaign and use the flyers they need but invariably there are some left over that weren’t needed, very rarely do we have just the right amount. Now I can understand why we do this, as running out is far worse than having a few too many, however if we go and look through our store cupboards they are often full of old flyers, components, materials, products that have become obsolete and need to be chucked on the nearest skip. All of this has to be paid for in terms of the effort to produce in the first place, the storage costs, the time moving stock and searching in the store for the one thing you do need, and then finally the time and costs in clearing out and scrapping the stuff in the end. By getting the amounts right in the first place we could make huge savings down the road.

Extras to Cover Scrap

Similarly to the example above, let’s say our process doesn’t always deliver 100% every time, we tend to make a few more just in case. The work we must do in terms of waste reduction here is to concentrate on getting our errors to a minimum. We must look at the root cause as to why there are rejects in our production so that we can make one for one each time.

Keeping the Team Busy

How often have we got to a situation where the customer demand has quietened a little and so we have a little extra time on our hands? Now often we love these times because it gives us time to get ahead of the demand. We utilise our team to make stock of all sorts and fill up all the buffers ready for when the big push comes again. This is a natural instinct but can often lead to similar problems as described above. Bulging stores with stock everywhere, no room to swing a cat, and then the big push comes; the customers’ orders come flooding in, the problem generally is that it’s not for the stuff you’ve made but for something completely different. Now with no room to work in, this process becomes very difficult. We should spend more time on getting ourselves geared up to react quickly in these circumstances so we can operate without the huge stock piles.

Productive Avoidance

There is a great temptation when business becomes a little quiet to look at our existing clients and ‘over service’. The main reason for this is that we either don’t know how to do marketing or don’t like doing the marketing to get new customers. At this point our minds own preservation mechanism kicks in and we become guilty of ‘productive avoidance’. To put this in perspective, it’s amazing how busy I can become (convince myself of) when I’m avoiding doing something I know I should be doing and don’t like doing. To make myself busy I generally will look at my existing clients and find extra things that I can do for them. Now I’m an advocate of looking after my customers, however, we need to draw the line somewhere and be aware of this waste of ‘over servicing’. Now as usual, I think if we all look at our own businesses and the people that we employ, there is evidence of this all around. A good ‘Lean’ thinker will become aware of this and be ready to stamp it out.

This is just a few examples again that are visible in many organisations; there are many more. Please be vigilant, take the principles and apply them to your environment to discover the waste going on in your organisation.

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Fourth Waste – Transport (Parts Travelling)

In any business we should strive to reduce operational expense AND reduce inventories AND increase throughput simultaneously. ‘Lean’ management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business. There are seven typical types of waste that are found and in this article we explore:

Transport

This waste is one of those that isn’t often discussed but has a huge impact on costs for a business.

Too Much Stock

In many businesses it is customary to hold a lot of stock to bring down the lead times for delivery to the customer. Let’s assume that the customer requires delivery of the product that they’ve bought in 24 hours however it takes 72 hours to make or bring in the product. The common solution is for us to hold larger quantities of stock so that we can deliver inside the 24 hours required by the customer. Now with this large quantity of stock we require a large store room and not only have we tied up our cash flow we also have products everywhere. A customer order comes in and invariably the products they want are at the bottom of the pile of stock so we have to move everything out of the way to get what is required. All this moving of stock around is waste (parts travelling) which is adding no value to the process. Not only that, it increases the chance of the product being damaged. An efficient solution to this problem is to reduce our internal lead-times so that we can make or buy in to order and not have huge stock around.

Workplace Layout Inefficient

If we could put a tracer on any object in our business and then record exactly where it travels throughout it’s time with us, I wonder how far and how many trips it makes. Consider for example the life of a purchase order once placed. How many places does it visit on its way around the organisation? How many desks does it sit on whilst it’s waiting to be processed through various systems? These days many companies have overcome this problem by installing a computer system that passes the purchase order around electronically reducing the physical distance moved. When any object is transported from one place to another it generally take s a person to transport it, therefore we should consider reducing the distance between the places that it is needed so that they are located in the same vicinity and minimising this waste.

Components Ordered

Assume I run a building company. I receive a customer order from a client to build them a new garage. I order the raw materials from my supplier and then have them delivered to my builder’s yard. These get off loaded from their lorry and get moved around and stored on my site. The next day when I go to start building the garage, I load all the materials on my lorry again and take them to the job where needed. Often this will be back in the same direction from where they came in the first place. Now perhaps I should arrange with my supplier to deliver them direct to site so we all cut down on the costs of transport and fuel which are not exactly cheap. In fact if we consider the multiple journeys that most goods take from the manufacturers to get to where they are needed there are generally many people involved in the chain, each with their costs added on.

Transport Costs

Now taking a look at the bigger picture, a final point for your consideration.

We must accept as with all of these wastes that some can’t be avoided but by doing some careful management we can make a significant impact on the margins involved with it. Imagine a business which is almost entirely based around transport, say a haulage company. Yes, effectively there is a lot that we can do about planning routes and making the most efficient use of the transport and this is a given. However, I’m shocked when I visit these types of companies that the one thing that I would have thought that they would measure as standard is the fuel consumption of their vehicles. Now large lorries don’t do many miles to the gallon and when we recently asked the owner what he thought his lorries would get he stated he expected between 5 and 6 miles per gallon. Just off the top of my head that’s a difference of over 20%, so what haulier would like to save 20% on their fuel bill? When we asked the same business to check what the lorry manufacturer believed should be achieved he stated between 10 to 12 miles per gallon! Just measure on each vehicle and each driver along with suitable training as to how to get the best out of the vehicle totally transformed the fuel costs in a business.

This begs the question, what should you be measuring in your business right now?

Transport forms a large waste in many businesses and we need to think about the examples listed about and apply the concepts to all areas in our business to see where it applies and how we may reduce it.

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Third Waste – Motion (People Travelling)

In any business we should strive to reduce operational expense AND reduce inventories AND increase throughput simultaneously. ‘Lean’ management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business. There are seven typical types of waste that are found and in this article we explore:

Motion

The third waste in this series is where we have our team members travelling unnecessarily. Let’s look at 4 common examples business owners should consider:

The Classic ‘Work meetings’

Although I’m a great advocate of the face to face meeting it still amazes me the amount of time we have groups of people together from far and wide for the team meeting. Sometimes they’ve got up early and travelled 2/3 hours to get to the venue for the early start, or arrived the night before and stayed in a local hotel, or simply travelled the length of the office to get there. Each of these can be considered a waste as it doesn’t add value to the service offered to the client.
Now I’m not saying that we should abolish these immediately, however I do think that we should challenge old views and think how we can reduce the time spent travelling. Firstly, how important are all these meetings? Is it vital to hold them so regularly? Does anything useful come out of them? Secondly, if we do need them, how can we make sure they are located in such a way to reduce the bulk of the travelling? Could we use a better location or try Video Conferencing instead?

Not Having Everything to Hand

I was recently talking to a car repair garage and they pointed out the huge variety in mechanic performance against standard hours. The mechanic that seemed to take his time and be unflustered in his tasks, had an output on average half as much again as the younger more enthusiastic members of the team. After observing him- it transpired that the wise head would get all the tools and parts ready for the job before he got into the cramped space under the dashboard meaning that once he got into the contorted position to do the job he had everything in hand to finish the job. The younger more enthusiastic heads were so keen to get going that they rushed to the job without everything that was needed, then had to get out from under the dashboard half a dozen times to fetch the other things they had forgotten. All this caused unnecessary travelling and slowed the job down. Each time they got back in position they had to get their head in gear as to where they had got to.

How many times have I started a DIY project at home only to find I need some more materials and end up doing 2 or 3 trips a day to the DIY store? It would have been far more efficient for me to spend a few minutes longer planning and getting all i needed in the one trip!

Travelling to Sales Meet

Salesmen often have the opinion that if they’re on the way to a client it must be a good thing. So how often have we got to the client and found that they’ve forgotten the appointment and are not in the office? A simple call to the client just before we leave could save a whole series of unnecessary journeys.
Maybe we are visiting a potential client. We get there and they are in this time, we spend 15 minutes chatting to them and establish that they’re not even interested in our offering at all. Many salesman use a pre-qualification process which ensures we’re not going out on wild goose chases!

Correct Flow

Let’s think about our work area and how we use our space effectively.

I worked with a business recently that was very cramped in terms of space; in fact, they didn’t have room to swing a cat! When we looked at it there was a huge rack against the wall that was in prime working space. When I questioned what the ‘stuff’ was on the rack, I was told it was all old stock that was being kept because it was valued on the company’s Balance Sheet and could come in handy one day. When I asked how long it had been there the answer came back… 14 years! Now, I can hear you saying, ‘that would never happen in my company’. This was exactly the disbelief I heard from the owners of the company I was dealing with. Because this rack was taking up valuable shop floor space, the operators were having to store the next job to go on the machine in the adjoining factory. It took roughly ½ an hour each time the operator finished one job to go and find the next. Is this happening in your business? We often overlook things we see every day.

Now these are obviously only a few examples of the normal things that are happening in many businesses. The challenge for all of us is to take a step back from the ‘coalface’ from time to time and cast a critical eye over what is actually going on, challenge the status quo and make the necessary changes in a timely manner.

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Second Waste: Right First Time

In any business we should strive to reduce operational expense AND reduce inventories AND increase throughput simultaneously. Lean management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business. There are seven typical types of waste that are found and in this article we explore:

Right First Time

Another of the deadly wastes in business is not getting things right first time and this applies equally to all areas of the business. Let’s look at some examples and the effects they may have.

Recruitment

This can be a worrying time for even the best judge of character and ability. We invest a huge amount of time and cost into this process in terms of interviewing hours, advertising, recruitment agencies costs. And that’s just to employ someone! Then when they start there is the induction time / costs.

Often I hear Business Owners say that the employee isn’t really useful to them for a number of weeks until they are trained and get to know our systems. Imagine the shock and horror 3 months in when we finally decide the new recruit isn’t up to scratch! Do we scrap and start again?, Just accept it because we can’t bare having to go through all that again? Cover things they can’t do themselves with someone else? All of this puts a huge strain on the business and the Owner and if measured in terms of cost in hours and money would probably add up to a tidy sum. OK, I understand it’s not that easy. However, we should put systems in place which ensure we have a better chance of getting things right first time.

Misunderstanding of requirements

A client recently relayed a story to me of how they were commissioned to undertake a particular piece of work. Many weeks of effort were invested behind the scenes preparing everything for the big delivery day. Imagine the worry for the two parties on the actual day when the solution didn’t meet the expectation of the client. So where was the problem? There had been a miscommunication at the very start and the project brief had been recorded incorrectly! This happens time and time again in all areas of the business where people are working on the wrong things because there has been a misunderstanding of what is actually required.

I once was asked to take over the lead of a project that had been running for two years and going nowhere fast. My first action was to ask the four team members to bring me up to speed with where they were and what had happened over the previous two years.

After about an hour of sitting to them describing what had happened I have to say I was totally confused as to where they were. I then asked them to go to the four corners of the room and write on a piece of paper what they thought the objective of the project was in less than 20 words. About 10 minutes later I got each of them to read out their statement. At this stage there was a lot of disagreement as they each had written something different down; they were not aligned and were actually each trying to achieve something different, not by much but enough to ensure they made no progress.

Just this simple exercise got them to understand their differences and a quick alignment process ensured they all understood clearly the project brief. The project was completed 6 weeks later!

Lack of system robustness

It’s a fact that all humans are prone to making mistakes. The more human involvement in a process the more chance there is for it to go wrong. I recently visited a business where orders were still received in a manual system. Now, there is nothing inherently wrong with this if it fits with the business requirement. However, in this business the client needed to duplicate the key information into 4 other separate manual systems and this as expected was done by hand by humans. Needless to say there were many occasions when a telephone number had been put down incorrectly, or the address and post code were slightly out. Imagine the cost to the business when product was sent to the wrong place etc. A rule of thumb here is to systemise the routine operations and humanise the exceptions.

Manufacturing

Many business actually make product to sell. Now suppose we have an order for 10 of a certain item and set our manufacturing system up to make them. The product go right through all of the processes and get to the end ready for dispatch. It’s at this point that many businesses will send in the inspector to check that the items all meet the required standard.

What happens if say a couple of the parts are not right! Do we send them back through the system for rework? Start a couple more from scratch? Have to wait to send all 10 parts at the same time so the customer has to wait and experience delays? Or send the 8 good ones and then pay for extra shipping for the last 2 when they’re done? All of these scenarios generally can incur costs, time delays and reputation issues for a business.

Now there hundreds of similar examples that we could discuss here, and I’m sure you could add a few more of your own. The secret is to understand the root cause of the problem and solve it so that it never occurs again. So how do you ensure that mistakes are not repeated in your organisation a second time?

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First Waste: Waiting

In any business we should strive to reduce operational expense AND reduce inventories AND increase throughput simultaneously. Lean management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business. There are seven typical types of waste that are found and in this article we explore:

WAITING

This is a very common form of waste in most businesses. Our team for whatever reason either:

  • Don’t know what to do and have to wait
  • Know what to do and don’t want to do it, so convince themselves they need help before they start
  • You have given what you believe is a clear instruction, they are afraid to tell you they don’t understand what is required so they keep their head down and hope it all goes away
  • Are unwilling to accept the responsibility of making a decision so they wait for help from someone else
  • Are waiting for resources not yet available

All this waiting affects the productivity of the business as a whole. Let’s look at each one of these in turn.

Don’t know what to do

Imagine you were building a house and the plans and design were not written down but all clearly held in your head. Now all your tradesmen, Carpenter, Bricklayer, Electrician, Ground worker, Roofer etc. all turned up on site along with you ready to work. These are all very highly competent and trained people in their field but how well would they be able to begin the job without instruction from you? You are now the centre of all communication and the blockage to allowing the trades to contribute to thinking for themselves.

This is similar to how many Managers / Leaders / Owners run their business. They have the plan in their head and drip feed little bits of it over time to their team. In terms of the plan for the house, every detail should be planned before even the first spade is put in the ground. There should be a blueprint of what we’re building, how it will look etc. Everyone involved in the job can now have a copy of the plan and engage their brain to have meaningful input and self direction. So here are a few questions for you:-

  • Do you have a plan for your business?
  • What will it look like in 5 years time?
  • Is the plan written down clearly?
  • Has the plan been communicated to the whole team?

If the answer is no to any of the above (and probably a few more) then you are potentially a blockage to the growth of your company and making your team waste some their time by being the only one with the plan.

Know what to do and don’t want to do it so convince themselves they need help before they start

Some of our team may have the plan, or have clearly been told what to do and have a fear about completing the task. Maybe it’s just too far out of their comfort zone so what they do is engage in ‘productive avoidance'; that is, make themselves so busy doing other stuff they convince themselves that they need to check with you again on some minor detail before they start. During this time you are blissfully unaware and believe that they’re getting on with it. You go back some time later to check on progress and find that they haven’t even started yet claiming they were waiting to catch you to check the detail.

You have given what you believe is a clear instruction, but your team are afraid to tell you they don’t understand what is required. So, they keep their head down and hope it all goes away

This is similar to the point above and the outcome is exactly the same. The challenge here is that we need to understand that it is a communication issue and until that is sorted nothing will improve and the person will always be waiting. If you feel that this is prevalent in your business, refer to DiSC® Communication Profiling for hints and tips on how to deal with this.

Are unwilling to accept the responsibility of making a decision so they wait for help from someone else

Some of our team simply will not accept responsibility. If this is the case we need to understand why. Have they been chastised before for getting something wrong? Is the job too big for them? Have they been promoted one level above their competence? Do they believe they are no good at making decisions? Each of these scenarios will require a different remedy and the trick for us as business leaders is to work out the root cause of it- so that we can put a fix in place. Left alone, our team member will once again sit there just waiting and nothing will be done.

Are waiting for resources not yet available

We often have a plan and everyone is set to go but not everything is in place. Take a simple example that we’ve set a meeting with our top team to start at 10.00am. At 10.10am we are still waiting for one of the attendees to turn up. Everyone else is at there waiting; does this happen in your business? Maybe we are expecting a delivery of raw materials from a supplier, or an answer from our Accountant etc. Once again, we are sat waiting and can’t get on with the task in hand.

All in all there are many forms of waiting and certainly more than I’ve listed here, so look at your organisation and look at it with a critical eye and see what forms of waste are going on in your business.

 

The second waste of lean – Getting it right the first time.

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Lean Management – The 5 Wastes of Lean

In any business we should strive to reduce operational expense and reduce inventories and increase throughput simultaneously. ‘Lean’ management is a technique by which we can achieve this goal as at its core is the identification and removal of waste within the business.

Typically there are five types of waste and this series of articles will cover each separately:

  1. Waiting
  2. Right First Time
  3. People Travelling
  4. Parts Travelling
  5. Doing More than Needed

 

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Who is Responsible for Lean Management in Your Organisation?

Do you want to reduce waste in your business? So what’s stopped you so far? Generally this is because we don’t know what to do or how to do it. Now contrary to popular belief, Lean Management doesn’t have to be complicated and full of all ‘management jargon’. All that’s needed to start is a commitment from the top and then get the team engaged and enthused about it.

So who should be responsible for the programme in your organisation? Well many large corporate organisations believe in having a formal structure, meetings, reports etc and in my experience this just tends to bog the whole process down in red tape. The simple answer is that every member of the team can have a healthy impact in removing waste from the organisation if they are ‘fired up’ and pointed in the right direction. The best ideas generally come from the coal face, after all these are the people that are doing the job day in, day out.

To implement, we first need to educate the team about what it is we are trying to achieve. The ‘Goal’ of a business is to reduce operational expense AND reduce inventories AND increase throughput simultaneously. Simply put ‘reduce the waste’. In what form do we see waste?

  1. Transport
  2. Waiting
  3. Over production
  4. Defects
  5. Inventory
  6. Motion
  7. Extra processing

Transport

Items are frequently picked up and put down many times throughout their process. If we truly mapped the route and distance travelled by items within the business we would find out just how much double handling is going on. Every time items are moved there is an increased opportunity for damage to occur.

Waiting

This is where people are held up from getting on with the job because either: they aren’t sure what the next step is and are waiting for instruction; maybe the previous process has not been completed or carried out in time either internally or externally; there are shortages of parts; or unbalanced workloads

Over production

A classic situation in many organisations. To save set up costs, whilst I’m doing one I may as well do a few as this will save time later on. This action has many repercussions like increasing the amount of money we have tied up in inventory, the consumption of raw materials, the cost of the labour to produce the extra and extra storage costs.

Defects

If we do work without the ‘right first time’ approach there are increased costs to the business. We have to rework the process a second time or scrap off the work already done. Maybe we would have to go through a concession type process either internally or externally within the business and along with this if the situation goes outside the business we have to deal with the potential harm to our reputation. All these factors will increase costs within the business.

Inventory

This is similar to over production. Money has been tied up in producing. The extra produced is always at risk of damage. Floor space has to be found to store it all and generally means the work area becomes cluttered and now more difficult to work in. Some of the work done could become obsolescent if customers requirements change and of course there’s always the management information system that needs to be kept up to date to track and control all that’s been made for both logistical and accounting purposes.

Motion

Firstly there is unnecessary movement of people doing the work. Have what they need easily to hand to save them leaving their workstation to go and get essential parts/information/equipment that they need. There is the old chestnut of one piece at a time production over batch production. Most people intuitively believe that batch production is much more effective, however unless there is a very large set up cost involved one piece production can be proven to be the most cost effective.

Extra processing

We should always study what is actually going on in our organisation as often there are many processes that are not adding value to anyone. If asked why it’s being done, the response is often, ‘I’m not sure, it’s how I was taught to do it when I joined’. Sound familiar?

Once our team is educated and knows what to look out for we can then get them to go back into their work space and challenge themselves and others around them as to where the waste is and start to eradicate it. As with all of these types of initiatives they are easily started and early results gained, but like so many they quickly fall by the wayside when things get busy, so putting in a system to ensure that the good work is maintained is the key to success.