In effect, focusing on lead time will ensure that we are able to serve our customers at a speedier pace whilst reducing the effort we put into it – without even optimising the actual value-adding activities. We know, as a rule of thumb, that a 50 % lead time reduction is not an overly ambitious target in most organisations. From our 20 years of process improvement work, we have also seen that by reducing lead time by 50 %, the E2E process will result in a 20 % increase in throughput due to the disappearance of wasteful activities. All of this is done without changing the actual value-adding activities. Thus, a lead time reduction is a main lever for raising productivity.
Article
Avoiding the dead end
– of end-to-end optimisations
Authors
A relentless focus on customer value and lead time reduction will drive transparency, efficiency and clarity - ultimately providing better services with less effort. The approach prioritises simplification and sustainability in improvement efforts. Quick wins are only an added benefit, not the goal.
Fighting complexity
Most organisations today face an ever growing amount of complexity. Complexity emerged from changing customer needs and market conditions, rapid technological advances and regulatory amendments.
The symptoms are noticed as complexity accumulated in the organisations’ key processes.
The usual response? Disintegrated processes and introduction of performance metrics to monitor the chopped up processes. Thereby, we abandon an end-to-end (E2E) process mindset that should benefit both customers and the organisation.
E2E is a matter of building and improving processes across the value chain and embedding flow into company structures, collaborative processes and daily routines.
The approach takes a holistic view on processes and prioritises simplification and sustainability in improvement efforts. Quick wins are only an added benefit, not the goal. The purpose is clear: Release potential by dissolving silo thinking, zooming out on total lead time and reducing total process costs. This means directing improvement efforts to opportunities across departments and functions.
Focus on flow
When chopping up process flows, organisations tend to focus the improvements on individual activities and reduce the related resource consumption: Can we make the individual employee work more efficiently?
Though filled with good intentions of reducing costs, this will lead to suboptimal decisions. The organisation will be left with little chance to identify the actual cause of the cost or value creation of serving the customers.
We know from two decades of process improvement that there is a huge potential in looking at our processes with another mindset:
Improve the total flow between each process step and you improve on multiple dimensions: speed and accuracy for customers, efficiency and motivation for employees.
Focusing on creating flow from E2E will drive increased efficiency compared to how organisations end up spending their resources when optimising individual activities. The effects come through transparency to make the fundamentally best decisions early on in the process, thereby removing extra work caused by having to manage the non-value adding tasks that always follow from a process that is not designed for flow.
Understand the business system
When designing for E2E flow, we will be able to identify which actions in our process are driving the decisions affecting cost or value.
Important decisions on how the customer is being served or how a product is to be produced often take place early on in the process. In order to identify the consequences of these decisions, we need to ensure transparency of the result of decisions later in the process. Only then are we able to target our E2E improvement efforts.
One metric to rule them all
When measuring the efficiency of E2E, lead time is the key. Reducing lead time will inevitably drive efficiency as you will start seeing the “in-between” waste-related tasks of moving material, gathering information, recapping lost files etc. disappear.
Typical symptoms, where we have not focused on lead time yet, are backflows, a lot of handovers or long and complex processes.
Five principles for successful E2E improvements
Optimising E2E is not easy, and numerous organisations have tried, but stumbled when things get rough. The reasons are often found in the counter-intuitive of not focusing on resource efficiency, but rather on the flow. Otherwise, the difficulties are caused by the division into local “cost-focused kingdoms”, which is how a silo-divided organisation often is structured.
In order to overcome this, we advise you to focus on five simple principles to avoid the dead-end traps when embarking on E2E.
1. Improve delivery on the basis of customer needs
Make sure that you truly understand your customer requirements before designing E2E processes. Without this focus, your improvement efforts might very well end up efficiently providing what the customer does not want. We advise you to analyse, understand and map the customer journey as the starting point of any E2E initiative. This will focus your improvement efforts as well as increase your revenue through improved delivery to the customers.
2. Drive improvements through lead time reductions
With lead time as the driver, the improvement efforts will be focused on removing the wasteful activities in between the value-adding activities and, as such, you will see lower costs and shorter delivery times through strengthened processes and synchronisation in the flow.
3. Optimise processes based on one common E2E overview
This ensures that the right decisions can be made and that the consequences of these decisions do not cause inadvertent disadvantages elsewhere in the process flow. Additionally, the E2E process overview also lays the foundation for a firm governance system, which is required to ensure that the E2E processes remain strong and coherent.
4. Change behaviour to improve results and sustain change
At the end of the day, changing process performance is a matter of the behaviour of the employees and leaders. In doing so, it is pivotal to have effective systems for training, establishing and sustaining new habits for leaders and employees. Another important lever for changing behaviour is changing performance management and incentive systems. Imagine the power of changing the metrics, so a leader has e.g. 40% of his yearly target linked to lead time metrics.
5. Anchor knowledge and competences to secure ongoing E2E thinking
E2E is not a one-off, and it is therefore crucial to embed the E2E thinking in the daily routines of employees and leaders. Competences to run E2E improvement circles need to be acquired and anchored in the organisation. An owner needs to be appointed and empowered. Leadership routines and employees’ habits concerning the way in which they work on improvements must be practiced and reinforced.
The dna of af world-class E2E process organisation
Is E2E relevant to you?
Ask yourself a few simple questions to learn if E2E would benefit your organisation:
- Is our organisation providing for the customers in everything we do?
- Are our value and cost-driving elements clear? And is it obvious what effect one decision will have on activities elsewhere in the process?
- Are we certain how to prioritise our improvement efforts for maximum impact?
If you are in doubt about or your answer to one or more of the above questions is “no”, you will most likely benefit from E2E.
