How to Double Cost Savings Through Process Excellence

A non-linear journey Process improvement has been identified with many names: Lean, Six Sigma, Lean Six Sigma, Continuous Improvement, etc. However you brand it though, three things are certain: without cultural change, genuine support from the top and effective communication, success will remain elusive. Scott Kuklinski, Director of Business Transformation at ACCO, recently shared some learnings from the process excellence initiative of one of the largest suppliers of branded school and office products in the world. What started in 2010 has exceeded expectations having reaped at least $20 million in productivity savings last year. While the nature of process improvement is convoluted and complex, Scott shares some pointers on how to succeed while having to navigate challenges inherent in a non-traditional process improvement story. The first stage – deployment – is as important as any stage because this is where expectations and framework are established. Some key points usually associated with a successful deployment include: senior management buy-in; participation by the entire organization; full-time, dedicated project leaders; projects tied to the strategic goals of the organization; and a focus on project sustainability. High-minded, yes, but how realistic are these steps? Not surprisingly, change leaders can find themselves faced with a suspicious or skeptical audience, preferring to wait and see before fully committing themselves. In ACCO’s case, the team took a couple of steps to counter initial resistance. First of all, they recognized it was important to capture the imagination of the organization through visioning content; they trained part-time change leaders; emphasized the connection to the company’s’ strategic objectives; and highlighted the fact that, by changing how staff thought and acted about process, and by providing the tools and skills that would help employees drive improvement themselves, they would be able to drive unprecedented improvement for the organization. Culture, Scott emphasized, is the single most influential determinant of program success or failure. When the program officially kicked off, a series of brainstorming sessions, senior management discussions and focus groups led to 300+ processes/projects identified as potential target areas. Two were chosen; one dealing with the sales returns process, and the other relating to financial reporting that would help the North American region drive better and timelier decisions. In other words, both impacted the business vividly and significantly. At the same time a Lean manufacturing pilot was held at one of the manufacturing locations to help transform the facility into one of operational excellence. What was crucial moving forward, Scott explains, was to ensure projects chosen were designed to meet the customer’s needs, and based on statistical data, so the link to business objectives was clear and transparent. From the beginning to track progress, identified projects were highlighted on the intranet, and, importantly, savings independently validated by the finance function. In other words, it needed to be clear that the savings were real and tangible. Once the infrastructure foundation had been established, senior management set a $5 million target as the deliverable for 2011. The team achieved this by focusing on projects deemed low hanging fruit with high return. They also took into consideration how difficult it would be to implement a project, and its level of complexity – in other words, if it took nine months to implement, the savings were too distant. They also made efforts throughout the year to create an ongoing buzz via informational articles, an "open house" event and awards. The results, 80 projects were generated and the target was met. For the next year (2012), the target savings doubled to $10 million. Tactically the team focused on larger strategic projects that would leverage a significant return. They also increased the scope from across North America to Europe, and thereby, through 99 projects, achieved their goal for the year. This included incremental training of additional change leaders and leveraged the learnings from the 2011 Lean effort in the U.S. to Europe. During 2012 the company also merged with a similar sized company creating the need to harmonize the two process improvement efforts into one larger, unified initiative. Some of the challenges that became apparent included: the need to continue to drive cultural change; the improvement methodology chosen (Lean Six Sigma) was seen by some as bureaucratic, rigid, and time-consuming; inconsistent participation throughout functions; and the message of process improvement was not consistently understood throughout the organization. In 2013 the target was doubled to between $15-20 million. To achieve the goal in a newly merged company the team elected to broaden the definition of process improvement and rebrand it to the company at large. ASPIRE was born: ACCO, Strategic, Productivity, Improvement and Re-Engineering and incorporated an emphasis on global productivity improvement. This lent itself well to finding a common platform tied into the strategic objectives of the new organization. An additional method of creating harmonization and accountability was to have leaders plan for improvement contributions in their annual budgets. So what are key learnings? Communication and culture, Scott says, are still two core determinants of success. When it comes to communication it is vital that from day 1 an emphasis is placed on the tone of the message coming from the top, messages are tailored to the various audiences to be meaningful to the listeners, and communication is backed up by action. Organizational culture is important because it affects how people interact with each other. Some of the questions to ponder regarding culture include: is accountability baked into expectations around productivity improvement? Is change in process encouraged or frowned upon? Are time and resources allocated to projects? Are new ideas welcome? Scott believes’ culture change usually requires a long term perspective while keeping the efforts’ core vision at the center. The good news is that it can be done with the right support, resources and tools. Key Lessons: Always focus on meeting the needs of the customer be they internal or external The CEO is your greatest ally To avoid resistance participation must be communicated from the top of the organization Don't interpret setbacks as failure–only as learnings Build process improvement accountability into performance reviews to help encourage participation Make sure you independently validate the results of your project preferably by finance to establish credibility Introduce some kind of reward system to incent participation when there is reluctance within the culture Initially focus on low hanging fruit that yield high returns Maintain an ongoing buzz through the organization (e.g. "open house" events, awards, articles, tips for success, etc.) Rochelle Hood, SSON Global Head of Communities and Process, and host for 'Process Transformation: The ACCO ASPIRE story' (listen to the recorded webinar) shared, "The ACCO journey is impressive and inspiring for all productivity and process excellence change leaders. ACCO built a program from grass roots to tangible, defendable results in only 3 years. Results were transparently shared in their annual report and the continuous improvement focus has been integrated with their employee onboarding process." Rochelle added, "To accomplish a process improvement focus and organizational culture change during a time of significant merger and acquisition activity is a truly commendable. The ACCO ASPIRE team and unwavering support at the executive level sets a shining example and clearly defines the keys to success." [eventpdf]

How to Double Cost Savings Through Process Excellence

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