Lean Machine: The Secret to Make Money, Grow Business
Fortunately, there is no shortage of consulting specialists eager to implement their brand of lean techniques. Many focus on manufacturing, others on service and some solely on software improvements. Whichever direction a company chooses, there are a few universal points every business needs to address along the lean journey. Here a few words of advice from Canadian lean consultants to optimize enterprise and better bottom lines.
Peter Rice, Rice Consulting Associates
Rice has more than 43 years of industry experience including 18 years in various management roles and 17 years in consulting/management advisory roles. He is the founder of Rice Consulting Associates and has assisted clients across Canada and the US.
“The term I use with my clients is ‘see what better looks like.’ Managers have to know what better is before implementing change. Once mangers know, they have to bring team members onboard. It’s key to include those who roll up their sleeves and the financing people, sales, accounting. Lean is a companywide initiative.”
“I do one-day workshops at companies and bring in managers. I take them through the lean toolbox and give them some sobering information. I always start out with slides of companies that were once dominant in their field. I then turn the slide over and reveal that the company no longer exists. That gets mangers’ attention real quick.”
“We start with the basics, the low hanging fruit—5S, value stream, waste reduction. We do a walk around, both around the office environment and the engineering/operation environment. During the walk around, I ask the managers to apply what they just learned from the lean toolbox.”
Steve Jackson, Synchronix Inc.
In 1988, Jackson was one of the first independent consultants in the world to be invited to receive “Jonah” training by Dr. Eli Goldratt, author of The Goal and originator of the Theory of Constraints (TOC) technology. Jackson is now one of the most experienced TOC educators and consultants in North America.
“Once the goal of the system is known, the theory of constraints is the most direct manner for improvement. The first step is to discover the most direct constraints to improving performance. Once the constraints are known, the second step asks how to squeeze the most out of the system—exploiting the constraint.”
“Question number one is whether the company faces a market constraint, meaning there are no more sales to be made. If that’s the reality, plant performance improvement is irrelevant. Conversely, is the plant’s constraint the ability to ship product out the door. We call that internal constraint or production constraint. Theory of constraints aims to make money through growth. Lean tends to focus on eliminating waste.”
“We start with huge, quick improvements and then add continuous improvement. My partner and I, we work with companies with $2 million to $70 and $80 million in sales. We have colleagues working with $100+ million companies. Our colleagues worked with Letourneau Technologies in Texas. The company grew from $250 million to $1.2 billion in four years using the theory of constraints.”
Bill Cloke, P. ENG, Certified Management Consultant, Grant Thornton
Cloke is responsible for helping manufacturing and distribution clients improve processes and ensure profitable growth. He has more than 25 years of industry exposure in consulting and line management and holds a B. Sc. from Queen’s University, Kingston and M. Eng. from McMaster University, Hamilton.
“Some mangers have all of the lingo down—the lean speak and a bunch of Japanese words. The managers with big egos are showing how much they know instead of really communicating.”
“One of my first Kaizen blitzes was trying to reduce an order entry cycle—how long it took from order received to production. We mapped out the process the first day and outlined the objective of cutting the process in half. The next day we taught them the tools to cut cycle time. We then turned the task over to the employees, and they accomplished a more than 50 per cent reduction in cycle time—from 12 days to 4 days.”
“The team knew the objective was to cut the cycle time in half. They knew what they could change and couldn’t change. If a leader has a big ego and can’t step out of the way and let people solve the problem after it is defined, results are impossible. And if a leader doesn’t give credit, but instead takes credit, the leader won’t see future participation.”
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.