7 Wastes – Seven Wastes – 7 Wastes of Lean – This lean six sigma methodology (also known as 8 wastes) helps identify waste and other types of issues in the workplace. The 7 wastes framework includes defects, transportation, inventory, overprocessing, movement, overproduction and waiting.
Defects are wasted products completed not right the first time around. Inventory and overproduction are excessive quantities of raw materials or finished products. Transportation and movement are unnecessary movement of things or people. Overprocessing is making the product beyond customer expectations and waiting is simply waiting for materials, preventing timely completion of products. 7 Wastes Analysis – 7 Wastes Framework
BCG Matrix – BCG Matrix Analysis – Bcg Matrix Framework – Bcg Matrix Business Methodology – Bcg Matrix model categorizes companies and products by the type of market they are in. Matrix has four quadrants divided by the market growth and market share on each of the axis.
Each of the quadrants in the bcg matrix represents a certain market position and is depicted by a symbol a star, which stands for high growth, high market share; the cow (also known as a cash cow) stands for high market share and low growth, a dog for low market share and low growth and a questin mark, which represents high growth but low market share. BCG Matrix developed by the BCG consulting company is one of the top business frameworks. Below sample images are examples of bcg matrix used in business management.
Swot Analysis Swot Analysis – Swot Analysis Framework – Swot Analysis Business Methodology – Swot Analysis model is an approach to solving business problems that identifies Strengths, Weaknesses, Opportunities and Threats facing a company.
While strengths and weaknesses are internal factors, opportunities and threats are external. Understanding of the SWOT variables helps formulate company’s business strategy. Below sample images are examples of swot analysis used in business management.
Value Stream Map – Value stream map is a lean tool used to depict end-to-end process that a product or a service goes through from initial placement of the order to completion in the hands of the customer. This is often used to analyze the current state processes and design the future state process. Value stream mapping is used in manufacturing, service industries such as financial industry, logistics, healthcare, software and product development, etc. Value stream maps usually have standard symbols to depict activities.
The proper value stream map should separate value-adding processes from the non-value add activities. Another way to separate is by the type of activities, e.g. information flow vs. materials flow. Lead time is usually represented at the bottom of the value stream map to represent the total elapsed time for the order to get to the customer. Note, lead times are viewed from customer perspective and are usually longer than cycle times or internal processing times (e.g. lead time would include time in transit). Value stream maps show value adding times and non value adding times. Time spent on non-value add activities is waste (also known as muda in Lean methodology).
Just in time – JIT – The just-in-time concept is one of the Lean tools and is essentially an inventory strategy that prescribes receiving goods only when they are needed thus reducing waste, inventory costs and decreasing capital needed to run the business. In addition, having low inventory can be viewed as more flexible, i.e. if a product does not sell well, you can always switch to something else (both in terms of finished goods and raw materials).
One obvious disadvantage of JIT, it is hard to predict demand and hence sometimes customers will demand products that you have no inventory off, thus decreasing your revenues and creating a client irritant. Nevertheless, adopting the just-in-time strategy can potentially create a cost and efficiency advantage for a business. The just in time diagram below identifies some of the key areas where just in time strategy may be applied.
Change Management – Change management is a step-by-step process that enables an organization to go through changes, achieve transformation, while ensuring the changes are properly managed. Change management analysis involves understanding of the impact of the proposed transformation, identifying relevant stakeholders and understanding their needs, designing communication strategy, updating processes, procedures and delivering training. Change management framework below will help organization through transition.
Change is painful for the organization, its employees and culture. While in transition, many employees are unhappy, and communication and motivation become key in making sure everyone is aligned with the change and its impact (e.g. technological or process change). Below is an examples of a change management process.
What is agile? Agile is an iterative approach to deliver a product (often software) incrementally instead of trying to deliver it all at once. It breaks projects into manageable bits of user functionality called user stories, prioritizes them, and then deliver them in short cycles called sprints (or iteration, usually running 1-4 weeks). The list of the outstanding user stories to be developed is called a backlog. Agile is different from the regular lengthy waterfall approach projects that try to get all the requirements upfront and complete the project at once.
Agile values the following concepts:
Customer collaboration over negotiations
Individuals and interactions over tools and processes
Functioning software over detailed documentation
Responding to change over adhering to a plan
Agile principles include:
Develop small, incremental releases and iterate
The team empowered to make decisions
Active user involvement and collaborative approach between stakeholders
Requirements evolve while the time is fixed
Apply the 80/20 rule and capture requirements at a high level (use visuals)
Focus on frequent delivery of products and complete each feature before moving to the next
Testing is done throughout the project – test often and early
Critical Path – The below diagram depicts the critical path for a given project. Critical path analysis is a widely-used project management tool for scheduling projects and allows to see which actions impact the overall schedule.
In project management, a critical path is the sequence of project activities which show the longest overall duration of the project and thus the shortest time possible to finish it. Critical path activities have 0 slack (or float), i.e. one cannot be late on any of these activities without delaying the whole project.
A simple example of the critical path: imagine you need to take your car to a mechanic and the repair takes 2 hours. In those 2 hours, you need to walk to the nearby store and purchase some gifts, which should take you no more than an hour. Afterwards you are going to a party and you don’t want to be late to. Mechanic’s work is on the critical path, i.e. if it takes more than 2 hours, you are going to be late to the party. Gift shopping is not on the critical path, even though it is still required. There is slack of about 1 hour because you are waiting for the mechanic.
The example below also shows a critical path with black arrows and non-critical path with light blue arrows. Duration of each activity and individual paths is also shown on the diagram.
Control chart is a chart used to show how a process changes over time with data plotted in time order and relevant measure value on the y-axis. It is one of the 7 basic tools of quality, originally developed by Walter Shewhart. It is often used to determine whether a process needs to go through a formal review and whether everything is within the norm. If there were changes to the process, it will show how the new outputs compare to the historic norms. So let’s explain how control charts work.
Data measurements are plotted against time. A control chart has a central line for the average, a lower line for the lower control limit and an upper line for the upper control limit. These are established from historical data. One can track process outputs and variations by checking current indicators against historical limits. If variation is normal (i.e. within limits) than the process is in control, otherwise the process is out of control and may be affected by the so-called special causes.
DMAIC is a Lean Six Sigma methodology that is used in reviewing and analyzing processes to come up with various process improvement tactics. DMAIC is an acronym that stands for the five phases of the approach: Define, Measure, Analyze, Improve and Control.
In the Define stage of dmaic, the project would be officially launched, the main business problem identified, project team established and project activities planned (e.g. project charter and project plan developed). In the Measure stage, the team would document the process, collect data (e.g measuring cycle time) and narrow project focus. In the Analysis stage of the DMAIC, project team is to analyze data, identify root causes (e.g. using Ishikawa diagram) and waste (see 8 wastes). In the Improve phase, one would develop recommendations for process improvement, evaluate and prioritize solutions (e.g. develop an implementation roadmap), and conduct a pilot. In the final stage of the DMAIC method, one would implement, control the process and validate project benefits.
Bullwhip effect (or Whiplash Effect) is a recurring phenomenon in inventory management and order demand forecasting. The orders to upstream members of the supply chain (e.g. producers of raw materials) exhibit greater variance than actual orders demanded by the end consumers.
The below graphic demonstrates the variance between retails sales and orders shipped by manufacturers to distributors due to seasonality.
The variance grows with each additional member of the supply chain.
Business Case Methodology: business cases are prepared to help a company decide whether to proceed with a given project. To start off, the preparation of the business case requires understanding of the key metrics or key drivers that help company either generate or spend money. The money can be generated by increasing revenues or sales and/or decreasing costs. The key revenue driver is increased sales, for example due to an increased number of sales agents. Decreased costs may be as a result of increased capacity in the back office, because some of the processes that used to be manual are now automated. The more data used for the assumptions the better. Another way to validate assumptions is to obtain the key stakeholder opinion or buy-in.
Usually, any project also carries investment costs that are subtracted from the benefits. A good business case also has a multi-year view, e.g. creates 5 year projections. This future cashflow is discounted by the interest rates. The sum of these discounted cash flows is added to come up with a net present value – NPV for the project. Other business case metrics include the internal rate of return – IRR and average annual benefit.
Job satisfaction can be tricky to find. Many people feel that while they are generally happy with their employment, their job is missing certain aspects that would contribute to a more rewarding work experience.
Seven steps to complete job satisfaction have been identified and arranged in a hierarchy. Starting from the most basic job satisfaction attribute, each step in this hierarchy is a higher-order feature that, once achieved, contributes to greater employment satisfaction and happiness.
1. Having a job: A lot of people draw satisfaction, a sense of pride and security from having a job in the first place. The feeling is an important contributor to overall job satisfaction.
2. Being well-paid: The importance of the monetary compensation for one’s work is two-fold. First, in a very direct practical sense it influences the kind of life-style a person can afford to have. Second, it often acts as a measure of success.
3. Having job security: This is another quite basic aspect that means LACK of constant threat of being fired. If someone is working in a role, where better candidates are always available or the person lacks skills for, they would be under constant threat of being fired. Working under such stress could seriously affect job satisfaction. Having job security would mean that the person has most of the necessary skills and attributes for the position and his or her superiors are not looking for replacement.
4. Enjoying the work/people/process: This is a transition step from basic to more higher-order attributes of job satisfaction. Once Step 1,2 and 3 have been fulfilled, the job content becomes important. What one does on the daily basis, as well as the kind people and processes one works with can greatly affect one’s job satisfaction.
5. Utilizing your potential/feeling needed/delivering value: Even higher-order job satisfaction components come from within the person. These aspects are highly subjective and stem from the interaction between the worker’s talents, life experiences and ambitions with the nature of his or her job. For instance, if a person feels that they are highly capable in a certain area, but work in another, they might feel that their abilities are being underutilized. In the same way, if the person does not feel that their work is needed or that they are delivering value, he or she will not be completely satisfied with their job.
6. Experiencing growth/self-improvement: Personal growth and self-improvement can be a nice bonus in any life experience. However, it is especially valuable in the workplace where a person typically spends a lot of time on the daily basis. If a person feels he or she is learning and improving in their field, as opposed to doing monotonous work, they will likely feel more satisfied about their job.
7. Finding ultimate meaning: This final step is probably the most difficult to achieve. The sense of ultimate meaning at work comes as a result of a match between one’s values, life experiences and goals with aspects of one’s job. This match can happen via different scenarios. For instance, a person who believes in saving the environment works for an environmental protection association and feels that his or her everyday contribution furthers the goal of the association. In another example, a heart surgeon or a fire fighter would derive meaning by saving peoples’ lives.
Whatever the scenario, finding ultimate meaning in one’s job would greatly contribute to workplace satisfaction. At the same time, it is important to recognize that other steps are also crucial and no step by itself can replace the satisfaction missing if some of the steps are unfulfilled.
Many wonder how to build trust with a client. It is important to realize that trust is a function of credibility, reliability and intimacy, the three essential components to any long term business relationship.
To become a trusted advisor for a client involves moving through the key stages of relationship building. The first stage is a commodity stage where your advice is interchangeable with another person. Transactional stage is where the value is added to resolve a certain business problem. The partner stage is a strategic relationship. Trusted advisor stage is the stage when one is assisting with key and often intimate business challenges.
Accounting Ratios are used to evaluate company’s performance and relevant standing against its competitors. The list of the key accounting ratios includes profit margin, gross margin, asset turnover ratio, current ratio, quick ratio and other ratios.
Financial accounting ratios help analyze how a company is performing in any given year and through out the years. Balance sheet shows the financial position of a company at a given point in time. Income statement shows financial performance through a given time period, e.g. a year. Cashflow statement depicts the flow of cash through a given time period. Accounting ratios help connect the statements together and make sense of what is happening with the business.
Stakeholder Management Analysis (or a Stakeholder Map) is a framework for identifying stakeholders and understanding their needs. This is key to change management, project management and day-to-day activities of the business.
The stakeholder management includes identification the stakeholders, stakeholder analysis, stakeholder engagement, stakeholder information flow, abiding by agreements, stakeholder debriefing. Stakeholder mapping is the process of mapping stakeholders in terms of their power (influence) and interest. Another related framework is The Pig a metaphor that shows that everyone sees the pig differently, the butcher, the piglet, the farmer, the environmentalist and the store owner, etc.
Net Present Value (NPV): so how do you calculate net present value? NPV is calculated as a sum of cash flow through project life cycle adjusted to the discount interest rate. It is calculated to estimate the net benefit of a project and other types of multi-year engagements. The NPV diagram below visually depicts the overall calculation methodology.
NPV is a key finance tool. Usually, the initial cashflow is negative due to the investment required (e.g. purchase of new equipment). As time progresses, the company starts to generate positive cash flow. The further away is the cashflow, the more discounted it becomes (i.e. cash today is worth more than the same amount of cash in the future). Therefore some projects that seem to generate excessive returns in the future may actually have a negative NPV as their future cashflows do not offset current costs.
Supply and demand graphs is one of the most used tools in Economics. It depict the equilibrium between suppliers and consumers. The graph is an intersection of two curves mapped against quantity and price.
Demand curve has a negative slope as consumers are willing to pay a higher price for a low quantity of goods. As the price declines, the quantity demanded increases. Suppliers, on the other hand, are willing to supply a large quantity at a higher price and a low quantity at a lower price.
Business Model – Business Model Development – Business Model Analysis – Business Model of a company involves a number of characteristics. The business model development consists of the following stages and answers the following fundamental business questions: how will I make money, how will I sell products, how will I manufacture the product or how will I deliver the service, where in the supply chain will I be, is my business disruptive to the existing players, am I creating a new way of conducting business, how do I plan to engage the market?
Answering these basic business questions will help you develop your company’s business model.
Five Factor Model Of Personality – Five Factor Model – Personality Model – Different Personalities Model – The 5 factor model of personality is a business psychology framework that helps analyze a stakeholder through openness to experience, emotional stability (neuroticism), extroversion, agreeableness and dependability (contentiousness).
Each stakeholder and/or individual is scored against these 5 factors. The score is then analyzed and depending on the result, one would adjust their actions or behavior to address the personality and the needs of the stakeholder. The analysis can be also completed on one self.
Gantt Chart – Gantt Diagram – Gantt Analysis – Gantt charts (also sometimes spelled as a gant chart) is a project management method of displaying multiple project activities in a single view. This includes the duration of activities, dependencies and milestones against calendar timelines.
Gantt charts are useful project management tools because they conveniently display project tasks against one another. Below, we include a sample gantt chart.
Process Management – Business Process Management – BPM – Process Management Diagram – Business Process Management model is a stream within business management that focuses on the management of company’s processes. Essentially, BPM views a business through the eyes of the process, i.e. all activities are processes in one way or another.
Process Management is about active control of the business activities and involves process mapping, KPI and metrics identification, end-to-end view and oversight. The key process management steps include process design, process implementation, process enactment and diagnosis (analysis)