Continuously Lubricating Processes

man doing yogaAs I push through my later 50s I’m finding that I value flexibility and balance far more than strength and endurance.  This is augmented in my case as I’ve always had very high calcium levels, and even after removing dairy and other sources I still deal with calcification of various tendons leading to one shoulder surgery already, and the early onset of some arthritis.  Thankfully no buildup in the arteries, and as a positive I’ve had no cavities.

To stay limber and mitigate more calcific tendonitis I’ve been adding more yoga into my daily fitness routine.  Our company healthcare plan recently added free access to the Peloton app, and I’ve found many live and canned classes at all hours.  I combine that with a couple hours of pickleball in the late afternoon, which adds a lot of quick movement and hand-eye coordination.

I’ve become very aware that I must practice yoga or some form of stretching every single day, otherwise after even one off day I can feel the stiffness creeping in.  To practice every day I have to make it a habit, schedule it, and be more efficient at other activities to create the time.

Last week, as I was working on the year-end financial close for our company, it struck me that a similar situation exists for our work processes.

Exercise Processes Continuously

Over the past few years the monthly financial close process has become a continuous process, with “month-end” really being simply an arbitrary division where we’ve chosen to measure progress.  All financial processes, including reconciliation and reporting, are dynamic and effectively happen every day.  A few hours after the end of each month we lock the previous month and save the reports of that period.  Even the review is effectively continuous.

Year-end close is a bit different.  It has been a year since we last performed an annual financial close, and even with detailed standard work and checklists there are still questions on how certain processes need to work and what the prerequisites are.  There are different CPA, tax, and regulatory submissions that need to be made, 1099s and W-2s to issue to employees and contractors, and so forth.  Standard work is not as clear as we thought it was when we wrote it, and some processes require revision due to legal, tax, or systems changes.

As part of the next step from the “continuous monthly close” we’ve been able to also improve the annual close process and reduce the key components to under a week.  Our goal this year is to make every day a “year end” so that on January 2nd, 2023 we are simply emailing required documents to our CPA, vendors, and employees.

Understanding Value and Surfacing Problems

Why close a month in an hour and a year in a day when external requirements allow much longer?  Why try to run processes continuously instead of just when they are needed?  The value is in what you uncover when you undertake such an effort.

When I stretch and exercise every day I quickly see where progress is being made, where problems are developing, and I can take immediate action.  I can see trends, understand correlation to other activities, and adjust accordingly.  My morning yoga practice has added a physical component to my daily reflection, which has then let me understand how physical wellbeing impacts emotional health and progress toward personal and professional goals.

As we were working on making the monthly and annual financial processes more continuous we uncovered analogous problems.  Bank data was originally delayed a couple days until we found ways to use and automate real-time information.  Missing or delayed receipts were an issue until we developed improved processes.  These changes addressed problems immediately instead of during a frantic few days at the turn of the month.

Lean daily management systems, including a daily standup meeting at the gemba, have a similar function.  It’s not just another meeting, but a way to ensure processes are running effectively all the time and to surface and address issues quickly.

Examine Process Elasticity

Exercising every day also helps me understand the stability, robustness, and elasticity of those habits.  What happens on weekends and holidays?  Do I maintain or modify the activities?  What happens when I’m not feeling well or when an external factor impacts the habit (maybe I shouldn’t have had that extra glass of wine last night…)?  I can see the relationship between processes, and how they impact my journey to a desired future state.  This reinforces the value of other habits.

Running processes in a continuous fashion similarly shows how the process tolerates even small changes to inputs, which might have been otherwise overlooked.  How those changes impact a desired consistent output informs you of the characteristics of the process.

A couple decades ago I was responsible for a large 24/7/365 injection molding operation, yet the support staff (including myself) worked traditional business hours.  Mondays were a nightmare for us, catching up on and trying to fix issues that happened overnight or on the weekends.  As much as they were a nightmare for the support staff, they were even more of a nightmare for the operators responsible for the processes during the times when there was no support staff.  We made changes, first with on-call support and later with dedicated in-house support at all hours, and I even had “midnight staff meetings” every month to ensure everyone understood the needs and demonstrated respect for the night and weekend operations.

Simplify to Avoid Overburden

When processes run continuously, it’s easy to become overburdened.  Instead of setting aside several hours to reconcile several thousand transactions every month, we needed to do a fraction of that every day, and eventually even fewer but every hour.  Although the true time per transaction is the same, the time cost of launching and executing systems and processes can become much greater.

We deliberately applied SMED quick changeover thinking to our financial operations which created the ability to quickly shift between processes multiple times every day.  But we’ve also looked at the inherent value in data versus our value of time. Do we need to know how much we spend at Chevron, or just on gas in general?  Generalizing some data can create value by simplifying and reducing effort.

Similarly, we pay all of our bills when they come in, which has almost completely eliminated the need for the complex accounts payable processes typical to most companies.  Sure we give up a few pennies of interest float, but we engender good will at our vendors that has paid dividends in terms of service and quality that has offset that by orders of magnitude.  Contrast that to companies that play the net nonsense game.

Memorized transactions and other automations can help, but it’s important to realize that, just as in manufacturing, automating office activities can easily simply cover waste – or even make waste happen faster.  First take the time to understand value and optimize the underlying process, then apply technology and automation.

What processes do you have that need to be lubricated?  What would you learn, and improve, if they ran continuously instead of every few months, weeks, or days?

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