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Lean Transformation: The Diagnostic Phase

by Mike on Wednesday, January 16, 2013 10:00 PM
In the Diagnostic Phase of the transformation, a very intense analysis is used to gain a detailed understanding of the “current state” of the business. The elements evaluated are: Business Processes, Organizational Infrastructure, and Organizational Culture, as well as how effectively these elements support the customer’s requirements and needs.







In this phase the team will need to answer the following questions:







1. What are the current customer requirements and needs? How are they likely to change in the future?







2. What are the current KPI’s (Key Performance Indicators)? What are the behaviors that they drive? How are the KPIs calculated? Who uses them? How are they being used? What has the rate of improvement been?







3. How are the Business Processes configured (upstream and downstream)? How are these processes currently performing? Answering these questions requires a detailed value stream map for all of the activities in the value stream.







4. What is the current Organizational Infrastructure? What, if any, gaps in this infrastructure affect the ability of the organization to support the business processes?







5. What are the mind-sets and Organizational Culture of all personnel in the business? Is this an organization that runs on fear and intimidation or is it open to engaging and empowering the workforce to drive continuous improvement?







6. What is the current financial state of the business and the value stream you are addressing? Revenue, Gross Margins, Inventory turns…







Keep in mind that since the key stakeholders will want to understand the size of the opportunity for improvement at the end of the diagnostic phase, it is essential that we understand the current financial situation as well as the current operating performance.







A completed Diagnostic Phase means that we have collected, extracted, calculated, and analyzed the current situation in the business to create a potential savings from the Lean Transformation.







If the Diagnostic Phase document does not show a significant ROI you should question the quality of the diagnosis or consider a different Supply Chain for improvement.







A Diagnosis Phase document is created to detail the activities mentioned above. This document is used both as reference material for the project team as they present their findings to the leadership and as reference for the start of the Design Phase. Success in the Design Phase is dependent on the quality of the Diagnosis Phase.







Don’t start the Design Phase unless the leadership of the business agrees and signs off on with the Diagnostic Phase document. At minimum this sign off includes agreement as to the findings, authorization for the resources and a commitment to getting the expected savings. 



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Mike

(“The Professional Provoker”) is the Founder and President of Empowered Performance, LLC a worldwide management education and consulting firm. Michael has extensive international experience working with companies of varied sizes and industries helping them implement strategies to attain World-Class levels of performance. Michael has developed expertise in “Enterprise Excellence”, Enterprise Resource Planning and Supply Chain Management (ERP/SCM), Lean (Toyota Production System), Team Building and Problem Solving, Six Sigma and Reengineering Business Processes. He is considered an expert in helping companies develop and implement Strategic Business Units and fast response customer service production units.

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