Consulting Services
Why Chase Lost Opportunity?
There are several answers to this question:- You have an existing inventory of hidden opportunities and "free" growth capacity, potentially worth millions of dollars. These dollars are hidden because monthly reports contain stats and dollars on actual performance, not process potential.
- The Value of Lost Opportunity is always greater than you think.
- Expansion capital can be avoided or postponed by tapping into hidden capacity that you have already paid for.
- Your management team and workforce can capture millions in losses if they:
- Stop accepting problems as "part of the process.
- Change their definition of opportunity.
- Recognize that paradigms and behaviors (not equipment) are the ultimate barriers to improvement
- Believe that paradigms can be changed and barriers can be removed within the scope of improvement work.
- Understand that the execution of management processes is a critical factor in sustaining improvement.
- Have the courage to honestly discuss the politically incorrect issues only talked about behind closed office doors.
Each year, millions of dollars in profit that could have been reported to shareholders never make it to the bottom line. These dollars equal lost margins for products that could have been produced with existing capacity (but weren't) and dollars spent that could have been saved (but weren't) for a variety of reasons.
How can millions of dollars be missing from the bottom line without anyone's knowledge (even the CFO)? The answer is simple: the general ledger does not report what did not happen and hides excess dollars that could have been saved.
Potential Profit - Losses From Recurring Problems = Actual (Reported) Profit
How many millions of dollars in profit are missing from your annual reports?
Truths About Opportunity and Improvement - Are You Ready for a Revelation?
Improving performance depends on people, not equipment. It's that simple and that complicated. One reason that many improvement initiatives fail to deliver expected results is that they focus mostly on equipment performance (making equipment run faster and longer), rather than on the people's role in improving equipment performance, regardless of the sophistication and cost of any improvement initiative (Six Sigma, Lean, etc.)
You can't capture what you can't see and you won't fix what you believe is not fixable.
Paradigms define opportunity and determine which problems end up on your list of improvement projects. That's why an emphasis on the "people side of improvement" is critical for successful projects and sustainable improvement. If people fail to recognize or acknowledge a problem as an opportunity for improvement, then the dollars associated with that problem remain unknown and uncaptured...forever. Reasons that recurring problems are overlooked or under-valued include:
- An organization's definition of opportunity,
- The level of awareness about the value of losses,
- The acceptance of problems as "part of the process",
- The freedom to speak honestly about what needs to be fixed,
- How well departments work with each other, and
- How the management system is executed.
Example of an overlooked problem:
This example illustrates the power of paradigms on the recognition of high-dollar problems and how millions of dollars can be missing from the bottom line without anyone's knowledge.
The 10-Minute Million Dollar Problem
At one of the operations that we worked with, the start of shift change was delayed by 10 minutes every shift (it was a 3-shift operation). Managers and employees got so accustomed to the delayed start time that they accepted it as "part of the process" and even budgeted for the delay. They said "it was only a 10-minute problem that seemed irrelevant compared to a 2-day breakdown of a major piece of equipment." Let's see what a 10-minute problem could be worth...
- 10 minutes lost per shift = 30 minutes lost per day = 180 hours lost per year.
- For a high-margin product, ten minutes of run time was conservatively worth $25,000, and 180 hours of run time was worth $27,000,000 in lost margin.
- This operation did not know they were missing this huge opportunity for improvement until we measured and valued it. They had been losing 10 minutes per shift for several years and did not recognize that millions of dollars of profit were missing from income and cash flow.
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“This chute plugs twice every shift, but it only takes 5 minutes to clear. There are so many other things that seem more important to fix. We have a man assigned to clear it ASAP.”
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“For the past 3 months, haul truck fueling has been taking 10 minutes longer because the pump on Station One broke and I have to drive to Station Two. I heard a rumor that we may not fix Station One to save money.”
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"When this bin gets full, the entire system shuts down for about 3 minutes several times per shift. This is a short delay and is part of the system design, so it has very low priority.”
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“We used to get water delivered to the drills faster until other things took priority. Now the drills sit for at least 30 minutes longer before the water truck comes.”
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“Third shift hand-off does not go well here. It takes at least 30 minutes every night to understand where 2nd shift left off and confirm our priorities. It’s always been that way here.”
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"Everyone knows that scoops are last priority here. We never know where they are when we start our shift. We probably lose 3 hours per week looking for them. It’s just the way it is."
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“Our shovel operators drive our buses at shift change. Since they arrive at their equipment last, we lose 10-15 minutes of loading time every shift. We budget for this loss, so it’s really not an issue.”
- “Getting PMs started on time has always been a problem here because the right parts are almost always missing. We plan for this delay and schedule the equipment to be down 30 minutes longer, knowing that we will almost always have to go to the warehouse to correct the problem. That way operations is not expecting the equipment sooner than we can deliver it.”