Hoshin Kanri business improvements - Team Business
Our unique 'reality check' uncovers what you are missing out on, how much the problems are costing you and helps you identify the necessary countermeasures.
reality check,operational feedback,SWOT analysis,
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Hoshin Kanri business improvements

What if you could double your production capacity in 6 weeks?

 

A home counties concrete batching plant manufacturer provided a great example of the potential for Hoshin Kanri business improvements. This manufacturer had a base turnover of £2.4 million. However, it was struggling to make a profit. In fact, the most recent P & L figures showed a loss of £97,000. Unfortunately, the second generation management in this family firm had let inefficiencies to creep in over the years. The resultant decline had reached a point where the capacity of the plant had dropped to just below breakeven point.

 

The company used Hoshin Kanri to carry out a wide range of improvement projects. But just as important, the team instigated these improvements simultaneously across the whole company. The result was a doubling of production capacity in a matter of six weeks. Just as importantly, the improvement team achieved this goal without investing any extra cash on capital equipment. That is apart from a few hand tools. What is more, the company only hired one extra part time person. This extra hand was needed to overcome a particularly damaging bottleneck in the design department.

 

In typical Hoshin Kanri fashion, the team generated expanded capacity without blowing a lot of money. Instead they deployed their collective brains in group problem-solving. In addition, various Kaisen events removed a lot of waste and improved systems. A particular benefit that helped save time and money was improved interdepartmental interaction. All in all the improvement cost benefit analysis estimated £352,000 in savings and other benefits.

 

The net result was a return to profit for the following financial year of £50,000.

 

 

What if you could generate 11% extra fee earning capacity

 

A Dorset based accountancy firm with a base turnover of £2.8 million used Hoshin Kanri to improve the business and also remove end of year bottlenecks. As a major benefit from the process they developed an extra £310,000 of potential fee earning capacity. A large part of this extra capacity came from software upgrades and improved hardware. However improved work processes, better interdepartmental teamwork and more customer focused professional work also made a significant contribution.

 

 

What if you could turn an 8% loss into a 7% profit in eighteen months?

 

A newly established micro business manufacturing and installing domestic windows was losing £41,600 per year. With a negative net worth of £51,000, the firm was effectively insolvent. In order to stay in business the owner instigated a rapid Hoshin Kanri programme. Following the arrival of the coach, the employees immediately began drawing up feedback about the business situation. This led to the planning team developing 36 improvement projects. All in all, these projects collectively covered every aspect of the company’s functioning in all four profit quadrants.

 

The planning team focused particularly on the sales order processing and production process. During a single rapid improvement event the team generated seventeen further recommended actions to remove errors, bottlenecks and waste. These action plans realized estimated savings of £95,000 for the year and helped to increase the gross profit margin from 20% to 28.8%.

 

Results: Turnover for the first full year rose 7.2% to £567,384. Importantly the planning team converted a loss of £41,655 to an OPBIT of £37,307. Consequently, the firm was able to continue trading.

 

 

Get in touch

 

If you’d like to know more about how Hoshin Kanri can help you multiply your profits call Jeremy Old on 0845 0945 819.

 

Or email [email protected] Remember we guarantee that our Reality Checks are self-funding. With Hoshin Kanri you will reap benefits well above the cost of your investment our typical client ROI is over 33 : 1.

 

You are in safe hands

 

Jeremy is author of ‘Reinventing Management Thinking; using science to liberate the human spirit’. This groundbreaking management manual draws on the latest neuroscience and psychology to help managers stimulate fierce engagement and motivation. By learning how to work with the twelve ’emotional needs’ Jeremy shows how any leader with a degree of emotional intelligence can quickly transform productivity by 30% or more.

 

Jeremy has twenty-five years experience as an independent management coach to small and mid-sized enterprises and non-profit organisations. His experience includes facilitating 54, strategic change or business improvement assignments across a wide range of industry sectors. On average his assignments yield an estimated 33 : 1 ROI for clients. In addition, Jeremy is qualified to MBA level, with a post-graduate diploma in psychotherapy.

Production capacity at a concrete batching plant factory had slumped to below breakeven point.

What if you could get back into profit in one year?

 

A diamond cutting tool manufacturer with a £2 million turnover had lost £162,000 the previous year. Further to this problem sluggish sales and weak administration had distorted the balance sheet starving the business of ready cash.

 

An urgent programme of Hoshin Kanri led to a restoration of profit of £92,000 the following year. Improvements that contributed to this turnaround in the bottom line included a 25% increase in workshop productivity, a long overdue achievement of ISO accreditation, a £123,000 improvement in sales in targeted product lines (chosen for their high margins), and a 23% improvement in administrative capacity despite a cut of £19,000 in costs.

 

On the balance sheet, the firm greatly enhanced their solvency by creating a £200,000 drop in stock levels and £151,000 drop in the debtors due ledger.

What if you could make all round efficiency savings?

 

The government’s increases in the statutory minimum wage gave this £1.25 million turnover domestic laundry an existential challenge. As the industry is very labour intensive it is highly sensitive to changes in the general wage level. There was a real risk that the enforced wage rise could put the firm out of business. Consequently, the long term challenge was to improve employee efficiency and ‘do more with less’.

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Continuous improvement initiatives combined with three rounds of Hoshin Kanri planning have resulted in a 46.7% increase in sales. This steady growth is in direct contrast to the modest 14% increase in staff levels. Far from going under, the company’s focus on an integrated approach to continuous improvement has pushed net profits up 80% along with a 7.58% reduction in the wages-to-sales ratio. This ratio was achieved despite a 19% increase in the statutory wage level over the period. Wage savings are estimated at approximately £64,000 p.a.