Denise and Jason find out more about grasping current condition.
“Why don’t we grab a coffee and then go over to my office”, Denise said when she and Jason had finished their lunch. “I’d like to take a look at a list of steps my mentor Maggie sent me for grasping the current condition. They might help us in your case as well.”
“Yes, I need a coffee now. Let’s do that”, Jason said already a bit kinder, “and by the way, who is Maggie?”
“She’s the owner of the gym I go to, and she has been using Kata to improve the gym. She is an avid student of Toyota Kata and helps me to get better at coaching my team”.
Jason raises an eyebrow and looks confused, “She runs a gym?”
Denise said, “I know, it sounds weird. Actually, before that, she was a great lean consultant. It’s a long story. I’ll tell you another time. Come on, let’s go.”
They dropped their trays and grabbed themselves a coffee from the huge Italian coffee machine at the front of the canteen. Then they made their way to Denise’s office.
Denise grabbed her notebook and flipped through it until she found the page with the list of steps for gasping current condition she had gotten from Maggie.
“Ah, here it is”, she said, as she placed the book on the table between them.”
Denise continued, “that list is originally from Mike Rother. I saw it in the Toyota Kata Practice Guide. I think Maggie just adapted it slightly for better understanding and to apply to a service process. Originally, it was more manufacturing oriented.”
Jason scans the page. Then he said, “well, in general, I get it. But it still seems a bit production oriented, for a sequential, repetitive process. Ours is not like that.
“I’m not so sure if all these steps are applicable for our administrative processes. Maybe we could go through my example following that list?”
Denise replies, “sure, let’s do that. OK, graph process outcome. How is the process performing over time?
Jason said, “we’ll that includes another question we might need to answer first. What process will we focus on? Or maybe even, what is the process? For my team, that would already be difficult to answer. They don’t think about their work as a set of processes.
“So, that might be something I have to work on first. But for now, let’s stick to our example. My analysis showed some first ideas for what our main processes could be, and I’ve selected ‘producing quotations for the project business’ as my first process to focus on.
“Now for that process the outcome performance is lead time. Because that’s the lagging measure, want to improve on. I’ve also measured the lead time for several recent quotes. All I need to do is put that data into a run chart. So, I guess step one of your list is fairly easy.”
Denise moved on, “so what about customer demand? Who are the customers and what do they really want?”
Jason thought for a second, “ok, let me think… you are bringing me back to my Total Quality Management training. There are the customers we produce the quotes for.”
He pauses again. “ But actually, it is the sales team who comes to us requesting the quote. They vet the quote first and then also the customers will ask them about the quotation. So, they need to understand our thinking behind it before we send it out. I guess sales are our internal customers. And then, of course, there are the end customers, the ones we deliver the pumps to as part of a project.
“So, what do they want? Of course, they want quality quotes that are done right. I think we are pretty good at that, or at least I have not heard complaints about that. What I get hit in the head with is that we are too slow and sales are even losing orders because of that. That’s why I want to work on reducing the lead time.
“But you do ask a good question. What do our customers really want? What do they need for fitting into their project schedule? That I don’t know.” Jason admits.
“I guess I should go and find out. We might get some additional insight as well. What information do our different customers want? Maybe it’s not only about lead time after all. What information do we provide compared to that? Imagine if we find out that we’re spending a lot of time on creating certain pieces of information in our quote that they don’t need.” Jason seems more energized by this thought, something he can sink his teeth into.
“I like where you are going”, Denise replied excitedly. “That is what scientific thinking is about. We call it finding your “threshold of knowledge.” What do we know, and at one point are we starting to guess? That is when we must investigate. So, understanding our customers’ needs goes on the to-do list.”
Jason put his finger on the next two lines on the list. “Customer demand and required performance. That’s definitely production. It sounds like it applies to a repeating cycle, which is not us.”
“I can see why it sounds that way, Denise said. "Customer demand, which we also call takt time in production, is calculated in time per unit of something. It acts like the metronome for an orchestra and paces all processes.
"In production, it is pretty straightforward, it might be a pump every 15 minutes. What we are really talking about is to somehow quantify customer demand and how that translates into your planning for schedules and number of people assigned. So, it is important. Let’s see how to better translate that. How frequently does the quotation process need to do what it does?”
Jason pondered, “ahm, I guess we get two or three requests for quote every day. But of course, that varies a lot.”
Denise said, “OK; here’s another perspective. What’s the target revenue for the project business this year?”
Jason gives her the number.
Denise continued her thought process, “now if you take the average value of one customer's order, how many orders does that make per year?”
Jason got out his mobile and started calculating. Then he said, “yes, that ends up at two or three per day. So that matches.”
“Let’s start with 3 per day. The takt is simply the available time over the number needed in that unit of time.” Denise goes to her white board:
TAKT = Available Work Time/ Quantity Needed = 8 hours x 60/3 = 160 minutes
“If we take as available work time 8 hours, and you need 3 per day, that would give you a quote every 160 minutes. Now that number is pure. It assumes you have 8 hours of real work and that you get the quotes right the first time and that all your quotes are accepted by your customer.
“Of course, that is not the real world. That is why we calculate the required performance which is our plan to reach the takt time given all the losses in the process. In production, we call it the planned cycle time.”
Denise stares at the board, thinking: “Hmmm. Now what percent of the quotes lead to accepted jobs, your conversion rate?”
Jason frowned, “well, I don’t know for sure. But maybe 75 percent?”
She said, “there you go, another item on your grasp current condition to-do list. Now, let’s imagine it really was at 75%. How many quotes would we need to send out then to meet your revenue target?”
Jason said, “that means we would need to produce 4 quotations per day. I guess we are a bit in trouble then.
“But still, I don’t understand why this matters. Let’s suppose we have to get 4 quotations done per day, based on your calculations. But it’s not like in production. Each quote can take a different amount of time. And we do more than just writing quotes. So, what does calculating these rates do for me?”
Denise took a deep breath, “okay, Maggie once explained it to me in the following way. Takt time helps us to understand what speed of work progress we need to achieve to create a just-in-time flow of work.”
“But that’s only for production”, Jason interrupted her.
“Strictly speaking, it can be more precisely calculated for a standard product and a repeating cycle of work. So, we do have to be creative, and a bit more crude, in the case of an administrative process”, Denise replied.
“I also learned from Maggie that, creating just-in-time and thus 1×1 flow of work is the most efficient way of doing work. We can never reach the ideal, but it is something to strive for, and striving for it in return will make us more and more efficient.
"It’s probably also the most effective way of doing work because just-in-time creates immediate feedback from the customer, so we learn if and how our work meets the customers' requirements.
“The idea behind takt time is to give you and your team an indication of what it would mean to match the speed of your work to customer demand, just-in-time. And the gap provides a feedback loop, so you can understand if your work is progressing at the right speed and make appropriate adjustments.”
Jason looked thoughtful, “mmm, interesting, this is starting to make sense. I used to manage our software group. Actually, that’s becoming a more common approach in software development. They strive to have ever shorter release cycles. It used to be years from one software version until the next. Now it’s more like every month or even down to weeks.
“They break the big project into smaller pieces and figure out how often a piece of code needs to be written to meet the customer requirement. Isn’t that’s moving from batch production to one piece flow?”
Denis loved the analogy, “yes, exactly, break the work into pieces and at least roughly estimate how often in our case a bid needs to get done, so they can match production to customer demand. The gap with what actually happens gives us feedback that closes the loop.”
Jason then asked, “but back to takt and what I think you called planned cycle time. What is the difference?”
Denise got back on track, "So we started by calculating takt based on your estimated demand of 3 quotes a day and based on that we came up with a takt time of 160 minutes per quote. But we said that is only if everything goes perfectly, which it never does. That is where planned cycle time comes in.
"For example, if you were working to pure customer demand, you would ship 3 quotes a day. But we said that the quotes are only 75 percent effective in producing sales. So, there is a loss of 25 percent. You have to make up for that process loss.
"So right away you really need to produce 4 quotes a day, and your planned cycle time speeds up to a quote every 120 minutes, or two hours. Or at least we should on average. In other words, to achieve the results of three accepted bids a day, which would be 160 minutes per bid, you have to produce four bids a day, so you need to produce a bid every 120 minutes.
“The planned cycle time considers process losses and if there are losses it will always need to be faster than the takt time.”
Jason ponders, “I am getting concerned that this will be too complicated for my team. Can we simplify this planned cycle time?”
Denise had to think about this, “I suppose you could use a rule of thumb from your experience. From what we have discussed, what is your guesstimate of process losses?”
Jason thought about it and said, “let’s say 50 percent.” He then calculated on his mobile, “Wow, we now have only 80 minutes per quote. We need to be cooking. I can see why our customers are so unhappy.
“Now I can better understand what step three is about. Draw a block diagram, time process cycles, I guess that’s measuring several quotations to see how long we currently need compared to the 80 minutes and record any observations while doing so.”
Denise moved on, “also identify constraints. In production, capacity could be limited by equipment downtime. In your case, that could mean waiting for information from other teams.”
Jason nodded, “I’ll say that happens pretty regularly.”
Denise was happy Jason was progressing.
Jason said, “Here is one more thing I wonder about. Doesn’t all that measurement put pressure on people, which in turn kills creativity? That could really backfire!”
Denise replied, “I also had that concern. We would rather not create a pressure cooker environment. I remember Maggie talking about exactly that. She said that’s another big misconception, or at least something we can avoid. Many think that it’s about measuring the current performance and then telling people to speed up. It’s not.
“There are good reasons why the current process runs the way it does. If we understand where and when we fall behind, that it serves as a starting point for improvement. Now we can start developing ideas on how we could do things differently, experiment with them, learn and improve.
“And you can engage the people doing the quotes in helping to improve their work processes, which will make their lives easier and free up time for creative thinking.”
Jason nodded more confidently. “That sounds plausible. Now I think I can start coaching my team.”
Denise shook her head, "I doubt that’s a good idea. We would rather not put the cart before the horse. Maggie pointed out how important it is to first practice Improvement Kata with a coach yourself before we start coaching others.
“So, I suggest you start by building your first storyboard, and then I’ll coach you while you work your way through the list with the steps of process analysis?”
Jason replied, “well”, he paused, “I guess a storyboard might be a good idea. Maybe you can show me one of yours and then I can take it from there.
“And, I’ll think about the coaching. I’m not sure if I need that. I think I could start with my team. Who knows what mind-boggling tricks you would play on me when you coach me.” He started laughing, “just kidding.”
Denise thought, I guess I have to leave that for now. I don’t like him starting to coach his team, though. I’ll discuss that with Maggie. They left Denise's glass cubical and went to Joe’s storyboard, where Denise explained to Jason what it contained and how to set it up. She promised to send him the forms, so he could print them out. They agreed to meet the next day.