Judy Dobles, General Management Consulting YOUR TOUGHEST BUSINESS CHALLENGES SOLVED.

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  • How to use a Checklist to significantly improve the outcome of complex processes

    I just finished reading, “Checklist Manifesto: How to get things right”, by Atul Gawande.  Atul is a MacArthur Fellow and a general surgeon at the Brigham and Women’s Hospital in Boston. The book captures medicine in all of its complex and chaotic glory and at the same time shows how simple checklists can greatly improve the outcome of complex processes and procedures.

    http://gawande.com/the-checklist-manifesto

    In today’s high tech world checklists can seem simplistic and mundane.  However, they can be a powerful tool in situations where a process is not codified in an IT system.

    To illustrate the benefit of a checklist in the business world I would like to share an example from my work in finance.  Most of my career has been in finance and one of the key responsibilities is to provide a CFRR (cash flow rate of return) or NPV (net present value) financial analysis for outlays of significant capital.  It was always interesting to me that these analyses had to be re-done multiple times due to forgotten critical elements.  To solve this problem, I created a business case checklist for the entire finance department (500 people), provided a short training seminar and received support from the controller who reviewed all business cases.  As a result, business cases never had to be re-done due to omission of a key element.

    The finance department supported a very large manufacturing plant.  The financial analysts used the checklist to ensure all elements were considered.  That did not mean that every analysis included all items on the checklist.  It meant that the financial analyst did their due diligence to know if it should be included or not.  The use of a checklist meant that there was now a standard approach to every analysis which would be followed by every analyst.

    Here are some of the elements on the checklist.

    • Capital outlay, including the timing of cash-flows
    • Tax impact
    • Direct Labor
    • Indirect Labor
    • Supplies
    • Maintenance
    • Health, Safety and Environment
    • Changes in working capital:  inventory levels, accounts payable and accounts receivable for example
    • Shipping and Transportation
    • Changes in support organizations such as finance, HR, supply chain and IT
    • Impact on machine utilization
    • Impact on product quality
    • Impact on other manufacturing plants around the world
    • Impact on customers
    • Import duties, export fees

    Looking at this list you can see that we ensured the impact, on all financial statements, was considered.   The checklist included an individual to contact for each area since no one can be an expert in everything.  Knowing who to contact in an organization of over 50,000 people is extremely helpful.

    Would a checklist help improve the efficiency and effectiveness of your processes and procedures?

    For a complimentary discussion on how to improve your end-to-end business process or how to increase your profitability, please give me a call.  Judy:  585.329.3754

    Note: By the way, the book was excellent.  I recommend it if you are looking for your next book to read.

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