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Laws of Speed and Lean Six Sigma
A recent book says: “It’s not the big that eats the small, it’s the fast that eats slowly.” Speed is one of your keys to competitive advantage.
The Power Law of Speed In the book, The Race Against Time (Free Press 1990), the authors present evidence for the power law of speed.
The 5% Rule: The actual time needed to create or deliver a service is only 5% of the total time spent.
The 25-20 Rule: Every 25% decrease in the previous period will double the production and decrease the cost by 20%.
The 3X2 Rule: Companies that consistently reduce cycle time enjoy triple the growth of the average business with double the revenue
Problem: Ad Hoc Procedures
Most processes, whether it’s ordering, billing, manufacturing, or order fulfillment, evolve from ad-hoc processes cobbled together over time. To “reduce costs,” work is done in increasingly large batches by specialized people. Everyone is busy working hard, but their inbox stays empty and their outbox becomes someone else’s inbox.
Customer “Lazy” Order
Whenever I work with a team about reducing cycle time, they all cry because they don’t see how they can work faster… and they are. Speed isn’t about people working harder or faster; it’s about targeting “lazy” customers.
Here’s what I’ve learned: your people are always busy, but customer orders are IDLE 90% of the time. The decision is not meant to be a bum, but the process forces him to behave this way. Sure, you can click a little faster on the workers on the “factory” line, but the big profits always come from clicking on the action, not the people.
Computer work for example
I was working with a group of computer engineers who were having trouble completing their “batch” overnight so they could bring clients online in the morning. He was eating, on average, 8-10 hours a night. When we review the process, we see that the actual time required to run the batch service is one hour, but there are 32 points in the process where they are waiting for the technical experts Confirm before they can move forward. Turn off the computer’s working time can do most of the technology has been done, so they used 30 checkpoints, and the work is now completed in 1-2 hours. .. 80% reduction in cycle time, or five times increase in speed. .
Medical Practice Examples
Last year, I worked with a group of medical applicants. It took, on average, 140 days or more to process each request. Upon inspection, we found that the requested operation only takes 7 hours (per day) at this time; rest of the time the application sits around waiting for something to happen. In just two days of discussion we found a way to shave almost 100 days off their cycle time. That’s a 70% reduction in cycle time or a 3-fold increase in speed.
Break the Fast Track
Do you want to make an improvement in your speed? Here’s how:
1. Flowchart your process showing all activities (boxes), decisions (diamonds), and arrows connecting each box.
2. Starting from the top of your flow chart, from the moment a customer (internal or external) contacts you to place an order for your product or service, make a list of all the boxes, diamonds, and arrows…especially the arrows. Tip: 80% of the cycle time is in the arrows, the delay of activities, not in the activities themselves.
3. For each box, diamond, and arrow, estimate the actual time it will take to perform that process. And don’t buy the first answer you get. I asked the application team how long it would take to receive and get a new application in line. They said 25 days. Not true! It takes about 10 minutes to fill out the form, 24 days before it gets to the auditor, and 45 minutes to confirm the form. 55 minutes, not 25 days. For 24 days and 7 hours, the application is idle waiting to be processed.
4. Now ask yourself, does this box, diamond, or arrow add value to the order? Value added factors change, improve, or improve the order. What is not worth more? Delay, no time, review, repeat, scrap, etc.
5. Remove the delay. In the request for example, there is no reason for the request to wait 24 days for verification. I recommend that they set a goal to list and review the request in less than 24 HOURS. We have done this with all major delays in the process to remove 100 days altogether.
6. Eliminate non-value-added tasks. If the box, diamond, or arrow doesn’t add value, is there a way to reduce its impact or remove it from the flow? Why, I wonder, do they have to review every application that comes in? The use of problem solving teams can identify the most common errors in paper processing and redesign to reduce or eliminate errors. Then it may not need to be inspected or it can be easily done by a less efficient person.
7. Create an action plan to change from the old, slow process to the new, faster process. Start a new process using the delivery system and allow existing orders to be released from the old process.
8. Find a way to “burn bridges” back to the old system. In one company, they got rid of the old office, which forced everyone involved in the study to use the new, higher.
9. Create a cycle time measurement to support improvement, maybe a XmR form for a judge.
Templates for graphs and value added analysis are available in QI Macros SPC Software for Excel. For more information, consider the book Lean Simplified.
If you need help getting a team off the ground or back on track with our consulting services.
Pitfall #1: Don’t buy the first answer you get. Most people include downtime in their answers.
Solution: Keep pushing to determine how long the additional costs actually work. Rest time is a delay that can be reduced.
Pitfall #2: Old habits are hard to break.
Solution: Move the bridges to the old system. Following the new system people cannot go back to their old ways. Want to make your customers happier? More loyal? Less likely to change suppliers? In today’s high-speed life, they want you to be fast, always fast. Using the simple tools of flow chart and value added analysis, I have not failed to find 50-70 and even 90% reduction in cycle time. And you can do it! It’s a bit grueling, downloading your process and nit-picking its flow, but you only have to do it once to see the power in this process.
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