Kaizen Your Way to Dramatic Results – John W. Prentice
April 24, 2009
There is a New Paradigm for Profit
There’s a new sheriff in town, and you’ve met him. It is the new paradigm for making a profit. It used to be that you would add a markup to your cost, baking in your profit, and that would be your selling price. “Cost plus profit equals price.” Not any more. Today the market sets the price, you subtract your cost. Your profit is what’s left over, if anything. “Price (market driven) minus cost equals profit.” For funeral products and services today that are highly competitive, the way to profit is to reduce cost. That’s the pressure you’ve been feeling.
Service Processes Can be Full of Waste
Did you know that business processes, especially service processes, can be full of costly waste? It’s true. Here’s what Michael George, another leader in this field, says in his book Lean Six Sigma for Service: “Service processes are usually slow processes, which are expensive. They are slow because there is a lot of “work in process” (WIP). When there’s too much WIP, things can stop and wait up to 90% of the time. But, there is hope. In any slow process, 80% of the delay usually is caused by only 20% of the activities. You may need only to find and improve the speed of 20% of the process steps to effect an 80% reduction in cycle time and achieve 90% on-time delivery.”
Why Processes are Full of Waste
Can you think of some examples of office process waste? (As a funeral director, do any of these sound familiar?) Too many approvals required. Unclear process steps. Unclear job descriptions. Obsolete databases/files/folders. Purchase orders don’t match quotes. Errors/typos. Waiting for information. Too many meetings. Poor office layouts. Unnecessary emails. Your list may be longer.
It is Not About Working Harder
To get these kinds of improvements, you must change the way you do things. You’ll never get there by working harder. Where might you look for waste to remove? The waste is not found when you are moving forward in the process. Look for waste when things are stopped, waiting, or sent back for rework. Then, remove the barriers that cause the waste.
Others Have Made Dramatic Improvements
By employing a process improvement technique called Kaizen, others have made dramatic cost reductions and improvements in service, as well as getting more things done with the same size staff. It’s more than that. Those who have done it will tell you about the renewed pride in their organization and how their results will translate into even better service for their customers.
For example, in three week-long Kaizen events one organization applied the tools and made immediate improvements of 30%-70% vs. previous baseline measures.
Process (Improvement)
Admin. Process (+ 30%)
Payment Process (+ 70%)
New Product Time to Market (+ 30%)
A Personal Postscript
If I could tell you one thing about modern strategies and tools for enhanced business performance, it would be this: THEY WORK.
I believe process improvements are designed and implemented by people, not in spite of them. In my 30 years of business experience, from factory floors to board rooms, I have never seen any concepts so simple work so well for all types of organizations. People are winning 30% to 50% improvements every day.
John Prentice’s 30+ year career has touched financial services, manufacturing and the automotive industry, and includes experience in P&L management, strategy, planning, start-ups, marketing, and continuous improvement (Six Sigma and Kaizen). Most recently he was an Executive Director for Hillenbrand Industries, a global Fortune 1000 company, acting as an internal consultant on merger & acquisitions and other strategic issues, as well as consulting for the company’s European operations. For more information about John Prentice and Prentice Consulting, Inc. visit www.PrenticeConsulting.com
Jake Johnson talks about Keys to a Successful Funeral Operation
September 29, 2008
Recently Jake Johnson, together with Scott Meierhoffer of St. Joseph, MO, was on a conference call with Robin Heppell.
The three of them were talking about how to be successful in the changing and this somewhat difficult time for funeral service. We have two excerpts from the interview. Robin asks Jake to elaborate on the keys of a successful funeral operation and then asks Jake to sum up his thoughts of the conversation.
Jake’s Keys to a Successful Funeral Home Operation
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Jake’s Parting Thoughts
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For more information about our Management Services, see the article: Funeral Home Management Services
Stay tuned for more excerpts from the interview – we will let you know as soon as we have them uploaded.
Return to the September2008 Management Insights Newsletter
Current Economy and its effect on Funeral Service – Tom Johnson
September 29, 2008
We are often asked by our clients, what it is the best strategy to employ in an economic downturn and how has this downturn affected my funeral home’s value? These are tough questions to answer but funeral directors can take some comfort in the fact that funeral service in general is one of the more “recession proof” businesses in the United States. There are many of our constituents in other fields that don’t have it so good right now. Home builders, commercial construction, real estate, trucking, automobile dealerships and restaurants to name a few are in particular feeling the hard times.
Funeral service marches on as families continue to need our services. The best way to handle the downturn is to work harder and smarter than you have in the past. Go the extra mile with families. While your competitor may be crying the blues it can separate you from the pack. Especially from an image standpoint and will pay dividends in years to come.
It is also amazing to me that many funeral homes really do not have an accounting system. They tend to just gather information and send it to their accountant so they can get year end taxes completed. There is no more important time to get your financials affairs in order than now. No matter who you use, get a professional accountant to assist you in not only handling your accounting but also doing some financial planning and budgeting. It is one of the hallmarks of our company now as our accounting division has grown rapidly during the past year.
There may be some families that opt for cremation because of the economy but I do not believe that is wide spread. If this happens it is probably the families that were sitting on the fence with this decision and economics push them over the edge. You may also have some families that do not select as much as they might have in good times, but in my 30 years of funeral service and having gone through this a few times, that really wasn’t much of a factor in the funeral homes I owned. Some funeral directors say that they extend terms on their contracts during these times but I really do not think it is a good idea unless absolutely necessary and then secured.
The funeral homes it affects the most are the ones that were struggling before the economy turned. It’s probably pretty tough for them right now. They may make it or may not. Time will tell. However, for the majority of funeral homes in the United States, it’s a good time to look at all of your expenses and maybe get rid of some of the “fat” in your organization that you have been putting off. As we do our “Performance Evaluations” around the country, we often can assist funeral directors in this effort. In nine times out of ten, the savings or enhancements that are created more than cover our costs. My caution is that the savings should not be in areas that are service connected as I firmly believe it’s time to give the best service you can.
There is a scene in the movie the Godfather that I think back to during situations like this. It was when the gang families were about to go to war to take over each others turf. Michael Corleone asked Clemenza (one of his father’s soldiers) “What happens during a time like this.” Clemenza retorted by saying “These things happen from time to time, don’t worry about it. Things will eventually get back to normal.” It’s true with our business. Things will get back to normal. The question is when?
With regard to the economy’s effect on the value of funeral homes, let me say this; The major way the economy has the affected the value of funeral homes is that the tightening of credit has had a limiting effect on the number of buyers. In our profession, where prices are primarily market driven, this will have an effect on value. The more “willing and able buyers” there are, normally the higher the price. However, this negative is mostly felt by smaller to mid size operators. Premium firms will always command a good price as long as it fits the demographics of the major buyers.
Finally, the best way to maintain or build the value of your funeral home is to continue to offer great service in your community while maintaining your property and grounds in excellent condition. Make sure you are following up with your families. If your call volume and revenues are maintaining or increasing you will be maintaining the value of your firm in the long run.
Hopefully, those who read this article noticed the number of times I referred to the word “service.” It is not an accident. As I have owned or operated over 300 funeral home or cemeteries in the past, the level of service given to the community is the hallmark of any successful firm I have had the pleasure of being associated with. With our many clients it is the same. Some give great “lip service” to the word, but really are just going through the usual motions. It is the funeral directors who are always looking towards “continuous improvement” in their service level that eventually lead the way.
I hope this has given you some insights and ideas that you can bring to your organization. As we know and sometimes say, It’s not rocket science, It’s doing the little things, paying attention to the details and getting back to the basics.
Return to the September2008 Management Insights Newsletter
2008 NFDA Convention: Visit Us at Booth 2303
September 28, 2008
We are excited about all we have to show you at our booth at NFDA this year. It has been a very busy and productive year for our organization. We have earned business from many new clients and have continued to serve our existing clients employing several new enhancements to our products and services.
We are all facing new economic and operational challenges that require methods that we never had to employ in the past. As I mentioned in the article, accounting systems are vital in these times to guide you and help you pinpoint the areas that need attention and strengthening. Our accounting systems are actual management tools designed and tailored to do just that- Web-based and available to you 24/7 with current information.
Owners and lending institutions are relying on our expertise to provide a thorough and in-depth Business Valuation of a funeral home’s total worth. The tightening of Credit has made it more challenging to obtain in all segments of our economy. Funeral Service is no exception. We can help.
Our M&A business is strong and growing. We have earned the market leader position and have all the expertise you may need.
We will be front and center anxious to say hello and show you our new product enhancements and answer any questions that you may have regarding our products and services. We will be featuring services ranging from:
- Management and Operational
- Performance Analysis
- Benefits of a Business Valuation
- Mergers and Acquisitions
- Succession Planning
- 24/7 Web-based Accounting
- Web based Customer Surveys and Sales Analysis
- Management Services
Be sure to stop by our booth and say hello to the Johnson Consulting team. We look forward to seeing you.
We realize the cost of travel these days may influence the attendance at the convention this year. We want to assure you that if you will not be attending, we can very easily bring our convention messages directly to you. How? Just give us a call or reply to this newsletter and request any information you need and we will respond promptly.
If you plan to attend, have a safe trip to Orlando.
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