Profit Improvement Workshop - Advise

1. 1. Read these instructions before use and then delete this slide.
2. Adapt the timings and slides within this presentation to suit your needs. These are a
guide.
3. Ensure where applicable these slides are transferred over onto your own PowerPoint
master slides.
4. Review the Mindshop tools covered within the toolbox for further explanation of their
use.
5. Ensure you have all your training aids available being whiteboard, flip-chart, projector,
handouts and delegates loaded onto Mindshop Online where applicable.
6. Adapt all timings to suit size of group and focus.
7. Update the title and closing slide where fields are in red.
Instructions for use – 4hr workshop

2. Profit
Improvement
Workshop
Russell Cummings
DD MM YYYY

3. Who are we?

4. 1. Understanding the Business
Improvement Stages
2. Waste Audit process
3. Profit Formula
4. Driving Implementation
5. Summary and key actions
Agenda for today

5. Measuring
Waste

6. Waste elimination can be one of the
most effective ways to increase
profitability.
Studies show as much as 30% of the
operating costs of a business can be
waste!
How much waste is
in a business?

7. Business Improvement Stages
STRUCTURE
WASTE
BELIEFS
Stage 1
Stage 2
Stage 3
Visible
Invisible
Stage 1 = 1- 2 years
Stage 2 = 1- 2 years
Stage 3 = 2- 5 years

8. Exercise
Where are you NOW in your
business and WHERE do you
want to be in regard to
waste?
Now Where How
1. No continuous improvement
2. -4% profit
3. Poor processes
1. Culture of continuous
improvement
2. 15% profit (700k of waste
removed)
3. Great processes, clearly
defined

9. Waste
Reduction
Process

10. 5 Step waste reduction process
1. Audit
3. Team
4. Measure the Outcome
5. Repeat
2. Prioritise

11. Taichi Ohno was a production engineer
at Toyota whose formative years were
spent in the textiles division of the
Toyota Corporation, and who moved to
the automotive business in 1943. Ohno
is usually referred to as the Father of
the Toyota Production System (TPS),
which is itself the basis for what is
considered in the West as Lean
manufacturing.
Ohno identified seven wastes to be
addressed by the Toyota system, and
they have become known as the 7Ws (7
wastes).
Toyota Production Systems
Taichi Ohno

12. Seven
Wastes

13. Seven Wastes
1. Overproduction
- Producing more than is needed or before it is required
4. Inappropriate Processing
- Right tool/process or person is being used for the job
5. Inventory
- Unnecessary Inventory. Work in progress
3. Transporting
- Transport between stages in a process
6. Motions
- Unnecessary motions. Poor ergonomics in a workplace
2. Waiting
- Where waiting occurs between steps in a process
7. Defects
- Re-work or delays with a product / service or processes

14. Step 1: Waste Audit Process
Overproduction
Duplication 34,000 |--X--|--|--|--0--|--|--|--|--|
Producing without guarantee of sales 18,000 |--|--X--|--|--0--|--|--|--|--|
Errors 15,000 |--|--|--|--X--0--|--|--|--|--|
Waiting
Waiting time – work in progress 28,000 |--X--|--|--|--0--|--|--|--|--|
Freight 14,000 |--|--|--|--X--0--|--|--|--|--|
Storage 9,000 |--|--|--|--|--X--|--|--|--|--|
Transport
Stock Layout 10,000 |--|--|--|--|--X--|--|--|--|--|
Sub Contracting 45,000 X--|--|--|--|--0--|--|--|--|--|
Travel 5,000 |--|--|--|--|--0--X--|--|--|--|
Inappropriate Processing
Senior partners doing work juniors could do 17,000 |--|--|--X--|--0--|--|--|--|--|
Wrong equipment 8,000 |--|--|--|--|--X--|--|--|--|--|
Laser prints for draft copies 9,000 |--|--|--|--|--X--|--|--|--|--|
Inventory
Raw material 17,000 |--|--|--X--|--0--|--|--|--|--|
Old Stock 12,000 |--|--|--|--X--0--|--|--|--|--|
Product range 55,000 X--|--|--|--|--0--|--|--|--|--|
Motion
Factory Layout 16,000 |--|--|--X--|--0--|--|--|--|--|
Desk Layout 6,000 |--|--|--|--|--0--X--|--|--|--|
Hand movements 13,000 |--|--|--|--X--0--|--|--|--|--|
Defects
Re work 12,000 |--|--|--|--X--0--|--|--|--|--|
Production faults 16,000 |--|--|--X--|--0--|--|--|--|--|
Errors 22,000 |--X--|--|--|--0--|--|--|--|--|
Total 381,000
Area Cost
EASE OF REMOVAL
Lo Av Hi
-5 0 +5

15. 1. Now spend 25 minutes completing a waste audit on your business
2. Where is the largest areas of waste?
Exercise: Waste Audit Process

16. Another option: Profit Formula
Profit = Sales -
(Increase Sales)
Overheads -
(Decrease Overhead
Expenses)
Variable Expense –
(Decrease Variable
Expenses)
Too many sales people 120,000 Reduce Salaries 5,000 Over Printing 4,000
Reduce Conversion time on
sales
20,000 Reduce warehouse
size to save rent
50,000 Fuel costs 10,000
Use Web for more sales calls 10,000 Vehicle Expenses 5,000 Delivery Expenses 2,000
Poor conversions due to
poor staff
20,000 Training staff 10,000 IT Services 2,000
Reduce sale material, more
web based
10,000 Reduce warehouse
size to save rent
As above Over printing As above
Clustering 20,000 Better systems 10,000 Casual labour 40,000
Losing existing customers 30,000 Defect in production
down 1%
20,000 Lessen event cancellations 2,000
Total 230,000 100,000 60,000

17. 1. Invest 10 minutes further brainstorming areas of waste or profit
improvement using this tool.
2. Are there other profit ideas (wastes) that can be added to your key
areas of focus? What was their value over 12 months?
Exercise: Profit Formula

18. It is essential that the waste issue prioritisation be repeated at
regular times, as frequent as every six months
Step 2: Prioritise the Waste
SAVINGS
Low 0 5 High 10
5
High 10
EASEOFREMOVAL
X
X
X
X
X
X
X
X
X
X

19. 1. Now spend 6-7 minutes plotting your areas of waste on the matrix
2. Where is your three largest high priority wastes?
Exercise: Prioritise the waste

20. To implement your profit improvement strategies you will
need to allocate them to specific teams (or individuals in
smaller organisations) to drive their removal
Exercise:
• Discuss what teams or individuals could be allocated the role
of implementing each strategy?
• What time frame would they be provided?
• What accountability, training / coaching will be required to
drive the changes?
Step 3: Teams

21. Lunch Break

22. Key Performance Indicators (KPI) are quantifiable
measurements, agreed to beforehand, that reflect the
critical success factors of an organisation. They need to
be specific and measurable.
Exercise:
1. Brainstorm some potential KPI’s to measure the
change during and after the waste audit process
2. What were the top 3 KPI’s identified and note where
you are NOW and WHERE you would like to be
against each of them.
Step 4: Measure the Outcome –
KPI’s

23. Every 6-12 months ensure you repeat the audit process on
your organisation to continuous look for ways to remove
waste
Step 5: Repeat every 6-12
months

24. Time to Implement: One Page Plan
Now Where
• Considerable waste
• -4% profit
• Poor processes
• No continuous
improvement
Waste Reduction plan
XYZ Company
12 month plan
• Reduced waste
• 15% profit
• Great processes, well defined
• Continuous Improvement
culture
Strategies Actions Who When
Travel time for sales people
to boost sales calls numbers
• Review and adapt sales process
• Implement initial gotomeeting chat
• Group calls for sales people to specific
days
• TR
• SA
• LK
• 14th Nov
• 28th Nov
• 24th Jan
Reduce production error rate
by 50%
• Purchase new equipment
• Implement daily run chart to adapt
processes quickly when errors occur
• Train team in lean principles
• FD
• SW
• GF
• 1st Dec
• 5th Feb
• 12th Jan
Do a 5% cost review across all
expense lines.
• Get up to date accounts from CFO
• Workshop with senior team ideas using
mindmapping
• New dashboard monitoring weekly by
team leaders against KPI’s
• CG
• LK
• CM
• 1st Nov
• 1st Dec
• 10th Feb

25. Collect your work from various tools throughout this workshop
and enter them into your one page plan
Exercise: One page plan

26. If you have access to the Mindshop Online
platform ensure you add your actions where
relevant into the platform so you can be held
accountable.
Add actions to Mindshop
Online

27. • Don’t attempt to put more business through an
incapable system.
• When using internally clearly define what each of
the seven wastes mean for the business
• Follow the five step waste removal process each
time
• Prioritise the waste to focus your attention on the
top 3 noting it’s not always the highest value items
• Have clear KPI’s to measure the change
• Use One Page Plans for implementation of actions
What is your key insight from today?
Summary

28. Thank you for attending
Any questions at all please let me know. Good luck with
the implementation phase.
THANK YOU
Russell Cummings
Business Consultant
M: 0414 929 585
W: www.shifft.com.au
E: russell@shifft.com.au