Friday, July 31, 2020

In Lean Six Sigma a Charter is Critical







In Lean Six Sigma a Charter is Critical

A written commitment between a Six Sigma team and the organization, the charter includes the business case, problem and goal statements, constraints and assumptions, roles, preliminary plans, scope, and the roles of participants in the project. This doc­ument states the scope of authority for an improvement project or team, and is approved by management. Periodic reviews with the sponsor ensure alignment with business strategies. Charters should be reviewed, revised, and refined periodically throughout the DMAIC process, based on data.

Tips:

  • 1.     Make sure the charter identifies the defect or the problem clearly.

  • 2.     Make sure there are plenty of metrics to measure when you have achieved your goals.

  • 3.     Investigate if there is valid data available now.

  • 4.     Get the project champion to endorse the charter and participate in the DMAIC process.

  • 5.     If you cannot measure something, don’t.




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Thursday, July 30, 2020

There’s No Glamor In An Information-Based Negotiations Approach









There’s No Glamor In An Information-Based Negotiations Approach

The information-based approach requires immense research about the industry, the supplier’s financial condition, and competitive forces. Some suppliers may be very reluctant to provide financial information and their margins. The supply chain professional must work to overcome this reluctance and build trust with the supplier. Understanding their culture and their organization is critical. You are, in essence, trying your best to put yourself in their shoes and mimic, as well as possible, their anxieties and fears about the whole process. The infor­mation-based approach is not for the fainthearted or for those who do not want to persevere. It should only be exercised for critical materials or services. These are those that have a major impact on your bottom line or can give you a critical competi­tive advantage. One key guide would be if your customers value the aspect that the supplier brings to the table. Since it requires ongoing market research, and it works better when executives are exchanged (stay in person at the site and become part of the team) however, the resources necessary to pull off such an information-based approach should not be underestimated. 
Link to my book Common Sense Supply Management

 




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Wednesday, July 29, 2020

Pilots Are For Doubters, Naysayers, and Obstruc­tionists












Pilots Are For Doubters, Naysayers, and Obstruc­tionists
New process or new initiative pilots are good for certain supply management ventures but don’t procrastinate or extend them out ad infinitum. It’s a good way for the resistance to kill you off. The burden of proof is 51 percent or reasonable. It’s not beyond a reasonable doubt or a 12-0 unani­mous jury vote. If you use the later criteria you will never have a successful pilot. Make sure one person is accountable for the pilot beach­head and can understand the total picture. Folks love experiments, but remember that the first rule of experiments is to have controls!
If you get consensus in a kaizen, change the process, change it right away! Do not lose momentum.



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Tuesday, July 28, 2020

Preparation Before the Kaizen Is Crucial













Preparation Before the Kaizen Is Crucial
Two to four weeks of hard preparation work by the Green Belt or Black Belt and team or kaizen leader is required for a kaizen. The kaizen leader should be a Green Belt or Black Belt. Essentially the first six kaizen tools (there are eleven) are com­pleted or very nearly roughed out before the kaizen event.  The champion (the sponsor who wants the kaizen done) and kaizen leader must identify necessary subject-matter experts (team members) required for the kaizen. The champion and kaizen leader should author a draft kaizen charter. Hold initial planning meetings with affected stakeholders to communicate the kaizen’s schedule, metrics, targets, and Lean tools to be applied. Most kaizen teams hold three-to-five working meetings before the actual kaizen event.



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Monday, July 27, 2020

Jayson and the Corporate Argonauts - the Quest for the Golden Fleece of Transformation




 Jayson and the Corporate Argonauts - the Quest for the Golden Fleece of Transformation


  In his guide to organizational transformation, author Tom DePaoli simplifies the strategies learned from his diverse career in many organizations. The book does an analogy of the Greek tale of Jason and the Argonauts Quest for the Golden Fleece.  In this new tale, Jayson and the Corporate Argonauts - the Quest for the Golden Fleece of Transformation DePaoli suggests strategies for transforming an organization.  The book follows the adventures of the Greek hero Jason and his Argonauts and draws on the lessons learned from the crew and the perils that they overcome. These adventures are used to recommend strategies for modern Corporate Argonauts trying to transform their organization. The quest for organizational transformation is a more perilous journey than the Greek quest for the Golden Fleece.  The book remains true to the myth of Jason’s journey and the need for organizations to constantly transform.  DePaoli provides practical lessons learned from his real-life cases of transformation and tested in harsh competitive reality. The emphasis is on the key tips that can make transformation successful. Since every organization is different the author concentrates on the important strategic principles not the tactical methodology. The reader does not have to be familiar with the Greek tale, but the author does recommend at least becoming acquainted with a summary of the adventures. The author makes the adventures relevant to dealing with change and organizational transformation. DePaoli kept the methods simple and to the point. The fun is in the quest or the journey.  He reveals the right methods that can help avoid the missteps of change and transformation. The author admits that there were many failures in his career especially when attempting to have people not only accept change but proselytize change. Organizations need both compassion and integrity to succeed. Corporate Argonauts should be given the chance to join the crew of the Argo and begin transformation.






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Saturday, July 25, 2020

Have Supply Management People attend Production Meetings It Works!










Have Supply Management People attend Production Meetings It Works!

One of the first things that I had my supply management people do was to attend production meetings that took place every day in the plant. I required them to attend the meeting’s which were often conducted early and before many staff personnel normally arrived in the plant. I myself, when I worked in production, had heard various staff functions being criticized by production personnel and basically bad-mouthed.  My logic to my people was that if they are going to bad-mouth you, you should be present to hear it, or defend yourself, or take action to correct what they were complaining about.  What shortly happened is that the production people soon realized that informing supply management people of potential problems gave us a much better chance of helping them with spare parts or maintenance orders.  It also eliminated any of the normal message hand-off noise that accompanied many of their requests and demonstrated that we had a sense of urgency to help solve their problems. We also brought in supplier experts to help with technical problems and issues that arose. Soon my people were accepted as contributing members of the production team.




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Thursday, July 23, 2020

Strong Supplier Expectations Work Use Them











Strong Supplier Expectations Work Use Them
Here is a good example of a supplier expectation: We seek suppliers that can help us continuously improve. In order to encourage this behavior, we are willing to split hard improvement savings with you 50-50 for the first year of these savings. We need your help in educating end-users, designing manuals, working with cross-functional teams, and introducing new products. We want to take advantage of your technical expertise. We value suppli­ers with good technical services and those who can keep us informed of leading edge technologies that we can employ.




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Wednesday, July 22, 2020

How can a Purchasing Professional get “Street Cred” in their company?






How can a Purchasing Professional get “Street Cred” in their company?

By Tom DePaoli

Most purchasing professionals have skills in purchasing, negotiations, and the materials or services that they buy. Many have certifications. They have dutifully enhanced their skills in all these areas and pursue continuing education. Unfortunately what many organizations value are operations skills, or what they know about the core business and the customers.

Some purchasing professionals have come up from the ranks or gained operational experience in other internal jobs in the company and they are fine, but most often this is not the case. The challenge for the purchasing professional is how to gain this respected credibility when they are often swamped with other priorities and crises.

One of the best sources may be a supplier or distributer who is willing to take the time and discuss your competition. You will be surprised about how much knowledge they have. They are especially valuable discussing the Voice of the Customer (VOC) and your customers concerns. Often they supply your customers.

Since many purchasing professionals have a material or service specialty, my advice is to get out on the shop floor or area where your folks actually use the material that you source. For example, when I was in charge or purchasing wires for a papermaking machine, I went out to the paper machines and actually observed the crew tear off a new wire and put on the new one. Yes it was wet and hot but I soon got a sound understanding of their issues and concerns. Another way is to actually go on service calls with your service technicians and observe and listen. This is usually unfiltered and sometimes you receive unflattering feedback from the customer.

One of the best ways is to conduct internal training with the purchasing department. Have engineering or customer service give you training on your products and how they work. Have them gear the training to the purchasing department. We asked them to design a training manual targeted to us and they gladly did this by just modifying the existing one. The best instructors know how to make the complicated simple and present the customers point of view. One of the best courses I attended was Papermaking for the Non-papermaker which avoided all the confusing technical argot. Another way is to have department meetings where fellow purchasing professionals share what new knowledge they have gained about your products and services. This is an especially good approach because it is relatively non-threatening.

Nothing flatters operational or shop floor personnel more than going right where they work, and asking them to train you about their job and duties. Showing a genuine interest goes a long way in establishing your credibility and getting their cooperation in the future on purchasing projects such as sourcing.

Finally getting “street cred” is not an instantaneous process. Respect does not occur overnight. You will have to take the time and effort to build up your reputation as a purchasing professional who can be trusted more, because they truly understand the core business.

.




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Tuesday, July 21, 2020

Some Non-traditional Supply Chain Metrics 1











Some Non-traditional Supply Chain Metrics 1
·      The number of preferred suppliers under long-term con­tract.
·      The number of supplier-alliance relationships.
·      The number of single-source parts, commodities, ser­vices.
·      The number of suppliers providing onsite service.
·      The number of new products or design reviews that sup­pliers participated in on a team.

The one that probably has the most value is having suppliers who participate in design for six sigma for a new product or service. They provide an invaluable outside perspective.




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Monday, July 20, 2020

Ramming the Supplier Savings Iceberg










Ramming the Supplier Savings Iceberg

The Iceberg of Supplier Opportunity theory holds that only five to ten percent of efficiency is gained via price, and it’s the area of least resistance and work. The ninety to ninety-five percent (hidden costs) of the so-called new frontier of supplier explora­tion is bottom-line, total-cost-of-ownership savings of using a pre­ferred supplier. This is the one area of the greatest resistance and opportunity. This is the realm of relationship building that requires increasing communication and the building of trust. Flexibility in supplier relationship building is a must.

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Sunday, July 19, 2020

Procurement Needs to Lead Process Improvement Transformation












Procurement Needs to Lead Process Improvement Transformation

By Tom DePaoli

Often companies make the grievous mistake of not letting procurement select or source the consultant or consulting group to lead process improvement. Lean Six Sigma and Lean are too important to leave in the hands of other departments not familiar with the comprehensive evaluation of a bid or a proposal. In fact, procurement or supply management not only should lead the selection, but lead the entire process improvement transformation. Nothing can have more financial gain for a company than improvements in the supply chain! Here are some hard learned selection lessons.
Experience trumps everything in selecting a Lean Six Sigma or Lean consultant. It’s critical that the consultant you hire has multiple experiences with multiple projects. Verification by checking with former clients is essential. Beware of consultants who want to charge exorbitant fees for all the process improvement training belt classes. You can quickly master this training internally for employees to become at least an entry level Green Belt by using the train-the-trainer concept. Belt certifications differ from company to company. Insist on training effectiveness data from the consultant and examples of successful projects and tools used in their methodology. There are hundreds of improvement tools that could possibly be used in the process improvement. There are however only about 30-40 that are used most frequently and are the most effective.
Strongly consider a fixed hourly rate especially for training, but remember that you get what you pay for. Make sure you can retain all the training materials developed during the process. Many of the available training materials are generic, and you will want to retain any customized ones for your company. Make sure the consultant understands that you will demand process improvement self-sufficiency in two years or sooner.
The consultant’s people skills must be superb. Initially many members of a process improvement team are hostile to the process and transformation until they understand it. Strive to make the contract performance-based on the savings of the projects rather than amount of training delivered or other parameters that they suggest. Consider jointly developing online training courses that can be used with much greater flexibility. Process improvement meeting organization and facilitation skills are indispensable. Insist on sitting in on a live meeting that the consultant conducts like a kaizen. Observing a consultant in action is one of the best ways to judge their skills. Make sure the consultant can fit into your organization's culture and adapt to your organization's standards and norms. Nothing destroys process improvement initiatives faster than cultural mismatches.
Finally prepare your organization for the process improvement transformation. The most successful proven way to make process improvement initiatives work is to make employees accountable for it. In other words tie their cooperation, progress and training in process improvement directly to their pay or raises. You must financially incentivize it for them. Other so-called persuasive or cooperative approaches have a much higher failure rate.

Tom DePaoli






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Saturday, July 18, 2020

Use Gamification Principles to Improve Supplier Relationships and Collaboration







 
Use Gamification Principles to Improve Supplier Relationships and Collaboration
Dr. Tom DePaoli

Many organizations rely on close relationships with key suppliers to insure competitive success. Gamification tools offer an opportunity to not only improve the relationship but to have fun in the improvement process. By gamification, I am referring to the application of the typical elements of game playing (e.g., point scoring, competition with others, rules of play) to other areas of activity, such as an online marketing technique to encourage engagement with a product or service. Initially, gamification should only be attempted with preferred suppliers with whom you already have a good relationship.
Gamification does have a high potential for payoff, but trying to quantify it or justify it on a cost basis is difficult. Strong engagement with suppliers can lead to better collaboration and possible “leapfrog” technology breakthroughs. Creativity improves when people have fun and are more committed. Understanding what motivates people, especially within the supplier relationship arena, is a good starting point. I recommend the assessment book What Motivates Me Put Your Passions to Work by Adam Gostick and Chester Elton as a good source of inspiration. This provides a solid base line for identifying the motivators for each individual on the supplier relationship teams.
Typical gamification goals include more engagement, increased motivation and fun. Some of the gamification tools that are utilized are badges, virtual points, virtual goods, rewards, prizes competitions, leaderboards, milestone rewards, and gifts, for example.  The tools are only limited by the imagination of the gamemaster.

How gamification works
Since purchasing and supply chain professionals are already pressed to the limit on work load; many may question the value of gamification for improving relationships. From my own experience, we went into the gamification process very skeptical and wary of any extra work. Surprisingly we had a good core group of people who were excited about the gamification approach and wanted to engage in a controlled pilot. We started with a basic game website.  We strictly controlled who could access the game and the game content. We were fortunate because both the supplier and our organization had internal digital dashboards that we could integrate into the game website.
We awarded badges and points for professional certifications achieved, training CEUs and joint attendance at seminars. We posted a leaderboard and the initial prizes were personal time off, lapel pins and company logo jewelry. During quarterly supplier-customer meetings the leaderboard individuals were recognized publicly and awarded prizes. We also issued surprise awards to individuals who performed outstanding actions to improve the relationship.

During the next stage, we tracked our jointly agreed upon metrics and asked participants to “predict” the metrics for each quarter. The best prognosticators received more points and prizes. We awarded instant leaderboard status to anyone who generated a significant savings to our processes, developed an outstanding solution to a crisis, or who achieved a major upgrade in metrics performance.
We also formed “game” teams. Each team focused on three areas of potential improvement and were awarded virtual points for their successes. We created a portfolio of prizes, and these included golf outings, company products, and gift cards.  This tactic generated a surprisingly high level of healthy competitiveness and camaraderie.
The enthusiasm created helped to generate numerous business improvements. One result was a complete revision of our parts packaging approach. Our packaging sustainability was enhanced when a supplier was able to observe some of our reusable packaging. That spurred an idea that lead to the joint redesigning of our parts packaging so that the supplier would have an easier time reusing it. The supplier picked up the empty packaging with their truck, on their return/outbound trip from our facility. They then reused the packaging for the next set of parts.

Our joint team of gamers are looking forward to even more creative missions. Purchasing and supply chain professionals should seriously consider gamification tools to improve relationships not only with suppliers, but other internal departments and customers


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Friday, July 17, 2020

A New Way to Look at Paying Procurement









A New Way to Look at Paying Procurement
By Tom DePaoli 
Most supply chain professionals are familiar with the best practices of a supply chain organization and how to transform purchasing into a lead strategic partner in a company. These usually include a thorough spend analysis to focus on the major areas of materials and services. Another aspect includes the rationalization of suppliers and the formation of a few key partnerships with important suppliers. The institutionalization of a comprehensive sourcing methodology is also crucial. The area that is often overlooked or neglected is the investment in people! 
Many purchasing professionals have been rewarded for bureaucratic and tactical behaviors for many years. The culture of risk aversion is prevalent and roles are particularly well-defined and limited. They focus on a particular material or service and become “experts” on these items. Often they work in silos and have no real connection with operations. It is usually not their choice but the expectations of the culture or of their organization.
The retraining of supply chain professionals begins with developing the capability to lead cross-functional teams not only in sourcing, but in process improvement activities such as Lean and Lean Six Sigma. Most need to reach the level of at least a green belt in a process improvement approach, and to reinvent themselves to be total product experts not just a particular material expert. You have to be a product expert to understand the Voice of the Customer (VOC) or what is really important to them. This requires striving to become an expert in an entire industry not just a narrow material. It also requires a dedication to understanding and working with operations. Performance reviews need to be tied into how well they do in predicting the market trends of their particular industry and meeting or exceeding the VOC.
All too often this training is piecemeal, unorganized and uncoordinated. Fortunately there is a comprehensive approach that has been around for 40 years that works in many industries particularly ones where employee knowledge is highly valued like the chemical, oil and process industries. The approach has been called pay-for-skill or pay-for-knowledge. Employees are paid more for each skill or knowledge area that they develop, and demonstrate their proficiency in by job performance. It does require a significant monetary investment by the organization in training employees and the organization evolves to a continuous learning campus. The word campus is critical because many organizations partner with local technical schools or universities to jointly provide the comprehensive training and courses. 
Unfortunately many organizations have dis-invested in training employees and would rather outsource for many skills or functions. This is deadly to the supply chain concept and process improvement, which must strive to constantly improve the entire supply chain from start to finish without breaks which may or may not be performed better by an outsourced entity.
The major objection to the pay-for-skill approach is the cost and the length of time for payback from the employees' improved knowledge. Once in place, however; the power of this employee intellectual capital, and the momentum of continuous improvement, establishes a supply chain-centric organization that is nearly impossible to beat competitively. 
People transform supply chains and organizations not technology or best practices. 







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Thursday, July 16, 2020

Strategy Always Trumps Technology




Strategy Always Trumps Technology

The Institute for Supply Management notes that 95 percent of supply chain departments do not have a procurement strategy or long-term supply management plan. Of the 5 percent that do in fact have a strategy, only half have successfully aligned the strategy with overall business strategy. Don’t be afraid to put non-traditional metrics in your plan. Remember, people behave according to the way that they are rewarded. After you have a strategy, you must educate other employees on its tenets and the reason behind it. Get a plan and be better that the other 95%

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Wednesday, July 15, 2020

Aim High with People’s Standards and Expectations






Aim High with People’s Standards and Expectations
Set the standards of performance for yourself and your peo­ple high. Expectation-setting is critical to success. Reward out­standing performance, not average performance. Encourage supply management professionals to become experts in a market, industry, or supplier group. Most of all encourage them to know your busi­ness, the cost drivers, and the end-customer’s needs, and strive to exceed them. This is the only way to get company-wide credibility and respect.


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Tuesday, July 14, 2020

Benchmarking Via the Shopping-Cart





Benchmarking Via the Shopping-Cart
Many organizations brag about their benchmarking efforts and how good they are at it. I once worked for a large paper company, and a lot of our spending in supply management was for pack­aging materials involved in the making of toilet tissue and paper towels. I was involved in materials management, plant scheduling, and packaging engineering at the time. Fortunately, all the people involved in these operations reported to me. We were also very fortunate that the plant manager had a materials background and was open to suggestions from us. At first, we went out and tried to get information from various paper institutes, but we found this data to be unwieldy, expensive, and not up-to-date.
Then we just decided to use the shopping cart. We went out to various supermarkets and stores and purchased as many of our competitor’s products as we could. We basically dissected them and the materials that they used, looking to see what they had done differently than we had. They were using cheaper mate­rials but had suffered no disconcerting quality drops. Over the years, we had not kept up with the advances in materials. In addi­tion, the process to get new materials approved was unwieldy and required corporate approval. This discouraged almost all the plants from taking risks in the materials area.
We basically changed all our materials specifications to meet or exceed our competitors. In the first year, we saved over $20 million.



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Monday, July 13, 2020

How to Get Employees to Trust You









How to Get Employees to Trust You
            There is no easy way to get employees to trust you. One of things that I've always done is to make sure that I do what I told them I was going to do. Nothing impresses employees more than keeping your word. Another good tactic to use is to always admit your mistakes and do not try to cover them up. Employees appreciate when you invest the time and effort to train them. Make sure you have a training plan for all of your employees. Try to behave ethically, employees expect you to lead by example and to live by your word. Communicate to them daily if possible in use as many different channels of communication as you can. Remember some people have preferred channels for communication. Take the time to understand what they do and respect what they do.

          One of the things that I always did was sitting down with my employees and not only watching how they do their jobs but actually have them teach me how to do their job, then go out and actually do some of it. This really grounds you as a boss. You get a good understanding of the aspects of their job and what they go through every day. If I work for a company that had well documented work practices, I would read these before I sat down with the employee. This gave me a good background to learn more rapidly. It also showed the employee that I was very interested in what they do.




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Sunday, July 12, 2020

There’s No Glamor In An Information-Based Negotiations Approach








There’s No Glamor In An Information-Based Negotiations Approach
The information-based approach requires immense research about the industry, the supplier’s financial condition, and competitive forces. Some suppliers may be very reluctant to provide financial information and their margins. The supply chain professional must work to overcome this reluctance and build trust with the supplier. Understanding their culture and their organization is critical. You are, in essence, trying your best to put yourself in their shoes and mimic, as well as possible, their anxieties and fears about the whole process. The infor­mation-based approach is not for the fainthearted or for those who do not want to persevere. It should only be exercised for critical materials or services. These are those that have a major impact on your bottom line or can give you a critical competi­tive advantage. One key guide would be if your customers value the aspect that the supplier brings to the table. Since it requires ongoing market research, and it works better when executives are exchanged (stay in person at the site and become part of the team) however, the resources necessary to pull off such an information-based approach should not be underestimated. 


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Information-based Negotiations is a Superior Approach








Information-based Negotiations is a Superior Approach

Information-based negotiations are an approach to nego­tiations that emphasizes deep knowledge of the supplier and its industry. It varies greatly from some traditional approaches to negotiations. It’s not the adversarial Win-Lose negotiation style with the emphasis on game playing, exposing untruths, and taking full advantage of the supplier’s weaknesses. This old approach is a competitive winner-takes-all system that rarely builds longstand­ing, deep relationships with suppliers. Information-based negotia­tions are not based upon the Win-Win model, either. Information or knowledge is definitely power, but in information-based nego­tiations, the supply chain professional gains a deep knowledge of the supplier’s industry, their margins, and their culture. In essence, this is a deep immersion or empathy with the supplier and their competitive landscape.


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Selecting a Lean Six Sigma Consultant









Selecting a Lean Six Sigma Consultant
Experience trumps everything in selecting a Lean Six Sigma consultant. It’s critical that the consultant you hire has multiple experiences with multiple projects. Beware of consultants who want to charge exorbitant fees for all the belt classes. You can quickly train your internal folks to become Green Belts, and using the train-the-trainer concept, train future Green Belts.
Certifications are varied and differ from company to com­pany. Insist on references from the consultant and examples of successful projects and tools used in the methodology. There are hundreds of tools that could be used in the lean six sigma process. There are about thirty to forty that are used most frequently. Ask which tool your tools your perspective consultant uses. Ask if they have previous experience in your industry. Let them talk about their project failures.   Ask what they learned from them.


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Transforming Courses Story- Use Boiler Plates




Transforming Courses Story- Use Boiler Plates

          A very bureaucratic purchasing department wanted to transform themselves into the latest supply management concept. There were over two hundred purchasing professionals throughout the company that needed to be trained in the new strategy and concepts.

          Since training was basically non-existent an As Is process map was not a Kaizen tool option. A team of purchasing department heads decided to meet and try to design a To Be course curriculum for the new strategy and concepts. After many long hours of meeting a consensus could not be reached on many of the courses to offer. Disagreement of certain aspects was strong.

          Luckily I discovered a roadmap of courses that were recommended by the Institute of Supply Management and broke the impasse. We basically boiler plated their courses into our To Be process map.  This is a good tactic to use especially when consensus cannot be reached.

 


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