SSCX - Aug 12 Event Slides

8/2/2019 SSCX - Aug 12 Event Slides

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Accelerating Cost TransformationIntercontinental Mid Plaza August 12th, 2009


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Menara Rajawali 11th Floor

Mega Kuningan

Jakarta 12950

T +62 21 576 2727F +62 21 576 2736

www.SSCXinternational.com


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Topics Covered Today

Accelerate business growth with Lean Six Sigma

How LSS will benefit your business

Integrating Change Management into LSS

Tranforming Cost with business processimprovement

LSS in Service, Manufacturing, and Mining


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Prolog

The New Normal


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The New Normal

Reduced consumer demand

Higher customer bargaining power

Rising costs but limited pricing power due to

globalization and intense competition

Reduced access to liquidity and expensive financing

Rising unemployment

Threat of global recession

Volatile energy prices

Weak investor confidence


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What Can Should We Do?

Translating Pressure into Competitive Advantage


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Tyranny of the OR


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Need for Improvement

Business

Situation

Business is

great!

Facing Margin

Pressure

Turnaround

TimeCrisis! Crisis!

UrgencyLow High Very High Extreme

Too Risky Let's Do It Act Now Do It! Do It!

Primary Cost

Lever

'Risk-free'process

improvement

SG&A

COGS

SG&A

COGS

Infrastructure

SG&A

COGS

Infrastructure

Financial

Restructuring

Time

ExpectancyLong term Medium to long Short to medium Short term

Choice No Choice


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Typical Reaction

Big Squeeze

Collecting A/R aggressively

Suppressing A/P to suppliers

ruthlessly

Cutting inventory all over

DEBT COLLECTOR


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Cost Transformation vs Future Growth

Organizations tend to cut cost all over for short

term without considering longer term growth

Impact:

You survive, for now.

But, to bounce back?


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Mega Kuningan

Jakarta 12950

T +62 21 576 2727F +62 21 576 2736



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Recommended Steps

Align business objectives and priorities

Develop and maintain a healthy financial forecast

Identify forecast risk and take appropriate actions

Improve efficiency in working capital

Aggressively manage costs

Exercise discipline in capital investments


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Our Perspective on COST

Cost is everywhere Costtends to increase along with business

complexity

Good news is you can manage the complexity

Area with cost reduction opportunity is not

always obvious!

Cost-cutting measures will not only keep a business

running efficiently in a downturn, but also position

the company to take advantage of the market when it

eventually snaps back.


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Aggresively Manage Cost

Obvious Cost You are certain

eg: Defects and Errors

Suspected Cost

Doubtful

Can we eliminate it?

eg: transportation, discount?

Hidden Cost You do not aware

Biggestportion of managing cost.

Hidden

Suspect-ed

Obvious


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Approach to Cost Transformation

LOW

HANGING

FRUIT

STRUC-

TURAL

Complexity

Length of Time

High

Low

HighLow

PROCESSCHANGE


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Instead,..

How can ZARA not only staycompetitive, but also leading in retail?

What are their competitive

advantages?

What are the lessons that we can takeand use for our business?

LEAD TIME: Shorter lead time from

concept to stores

SCARCITY: Smaller quantity per style

VARIETY: Many more styles per year


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Which one will you choose?


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What about this? JWhat about this? J


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Mega Kuningan

Jakarta 12950

T +62 21 576 2727F +62 21 576 2736



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Lean Six Sigma

THE Methodology to Improve Business ProcessPerformance, hence Cost Structure


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Many ways to get the apple.


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Cut down the tree


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Outsource


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Hire professors


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Practice ZEN, do the opposite,see what happens


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Use technology


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Okay, Lets Agree on What We Need

Strategic Alignment and Integration between processimprovement, cost transformation, and strategy

Selected and prioritized portfolio of initiatives (projects)

Calibrated vision and business objectives, top down

Proven Change Infrastructure (change management,

people, monitoring process)

Skilled change agents with technical know how and people skills

Power of Mass

Diciplined Execution of initiatives/projects with

comprehensive skill set and methodology Robust factual-approach methodology

Wave by wave by wave


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Okay, Lets Agree on What We Need

Strategic alignment and integration between processimprovement, cost transformation, and strategy

Selected and prioritized portfolio of initiatives (projects)

Calibrated vision and business objectives, top down

Proven Change Infrastructure (change management,

people, monitoring process)

Skilled change agents with technical know how and people skills

Power of Mass

Diciplined Execution of initiatives/projects

Robust factual-approach methodology Wave by wave by wave

LEAN SIX SIGMAA rose by any other name would smell as sweet!


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What Is Six Sigma?

Benchmark, Measurement: 3.4 defects permillion opportunities (dpmo)

Problem Solving Methodology : D-M-A-I-C

(define-measure-analyze-improve-control)

Six Sigma has been

OVERSIMPLIFIED


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So, What Is Six Sigma?

Change Managementeffort, deployedconsistently, aggresively throughout organization

Business Strategy to accelerate growth by

creating value for stakeholders and reducing

non-value-added cost.

Six Sigma is now

REDEFINED


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DD

MM

AA

II

CC

SS


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More on Change Management

Clear andShared Vision

AlignedInfrastructure

EnduringCapability

Quick Winsand Stories

Change isnot a Priority

Clear and

Shared Vision

Compelling

Reason

Enduring

Capability

Quick Wins

and Stories

Slow , Bumpy

Change


CompellingReason



Frustration

Clear and

Shared Vision

Compelling

Reason

Aligned

Infrastructure

Enduring

Capability

Losing

Enthusiasm


CompellingReason


EnduringCapability


Succesful

CHANGE

Compelling

Reason

Aligned

Infrastructure

Enduring

Capability

Quick Wins

and Stories

Confusion,

Unmotivated


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Hernan Cortez. 1551.


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Trying to conquer Aztec.


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McKinsey Survey Result (1)


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McKinsey Survey Result (2)


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Take Aways

Cost is everywhere and can be in any form We need to balance short term and long term benefit for

the organization, by looking at the big picture

We need an initiative with:

Strategic Alignment and Integration Proven Change Infrastructure Lean Six Sigma

Diciplined Execution

Lean Six Sigma is the way to improve business process

performance, hence cost structure

Change Management is critical to ensure success!


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Mega Kuningan

Jakarta 12950

T +62 21 576 2727

F +62 21 576 2736



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Sources

Internal research report and study from Premysis Consulting, SSCX. SSCXs Executive Briefing modules.

Publicly accessible report and research reports from Bain, Booz Allen,

BCG, PWC, McKinsey & Co, Deloitte LLP.

Built to Last, Jim Collins. Cut Cost and Grow Stronger, S. Banerji, P. Leinwand, C. Mainardi, 2009.

Images : strategy2c and other free-to use licensed images.

SSCX - Aug 12 Event Slides

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