1. Introduction
What started as the search for five major objectives, consisting of reducing to a minimum the waste and waste related to failures and defects, waiting times, breakdowns, levels and bureaucratic costs, and inventory levels in terms of inputs, products in process and finished, it was expanded over time to incorporate the need to eliminate accidents in the company and occupational diseases, bring contamination levels to zero, generate 100% satisfaction in customers, consumers and staff, which which would lead to significant economic benefits resulting from reducing employee and customer turnover levels.
Finally, it became clear that it was not enough to carry out all the processes well if the organization could be the object of fraud, so this harmful effect was also attacked.
These objectives are not mere utopias, they are objectives that must be pursued in order to achieve maximum profitability, the best positioning of the company, its products and / or services, and consistency in levels of competitiveness.
All the factors or causes that tend to impede the achievement of the aforementioned objectives must be considered as an object of systematic elimination.
World-class manufacturing does not support waste generation. The degree of competition at a global level is such that it is not admissible to let problems pass rather than face them.
2. Zero Defects
Any battle against waste must begin by preventing failures and defects, both in products and services, and in each and every internal process. Both external and internal customers are included in this search for continuous quality improvement. Only when internal customers are fully satisfied can we obtain total consumer satisfaction. On the other hand, the search for quality is not limited to generating products without failures, they must also be generated correctly the first time, since achieving quality after numerous and successive adjustments is a generator of higher costs.
Such achievements in terms of quality lead to a systematic increase in the levels of productivity and consequently to the reduction of costs, which allows achieving a greater market share by increasing profits, as Deming will manifest in what he called the reaction quality chain.
When speaking of quality, it is necessary to underline it again, mention is made of each and every one of the activities, processes, products and services. Quality in information, quality in controls, quality in hiring personnel, quality in machine maintenance, quality in credit management, etc. Only with quality in each phase of the process, will a final product or service be achieved free of failures and errors.
Attacking failure levels implies implementing Total Quality Management (TQM), a system that involves raising awareness and training of staff, Statistical Process Control, Quality Control Circles, Poka Yoke, the use of management tools of quality, the Deployment of the Quality Function, Analysis of Failure Modes and Effects, Design of Experiments, Benchmarking, design of controls and inspections, among many others.
The level in sigma equal to six is today synonymous with zero defects, and the Six Sigma system with its philosophy and methodology make up the actions of the main companies in the search for continuous improvement.
3. Zero Breakdowns
Breakdowns not only cause repair costs, also leading to breakage of other parts of the equipment, but also cause production failures. These production failures are a reason for waste material as well as costs for recycling or product repairs. Breakdowns cause production delays and are one of the reasons for the famous safety inventories.
Improving the maintenance of machines and equipment is a great business as it reduces both the costs generated directly by the repairs, but also increases the useful life of the equipment, generates fewer losses due to failures, increases inventory turnover by reducing deadlines in total production cycles and minimizes the need for finished product inventories, significantly reducing inventories of products in process. This reduction of inventories implies reducing the need for physical spaces, in turn generating lower costs in terms of inventory handling, insurance, financial costs, losses due to obsolescence, among others.
Total Productive Maintenance is the system designed to provide an answer and solution to maintenance problems. Correct maintenance planning not only reduces costs, but also contributes to improving security levels, as well as internal and external satisfaction levels.
4. Zero Wait Times
Eliminate bottlenecks, improve the path of the flow of inputs and products in process, eliminate breakdowns, reduce to a minimum the times of both preparation and change of tools, ensure a timely reception and form of inputs by Suppliers are fundamental questions to avoid unemployment costs (of machines, inventories in process and labor), such as customer and consumer dissatisfaction problems. Furthermore, as in the case of breakdowns, waiting times are reasons that generate safety inventories, with all the costs that this entails.
5. Zero Inventories
Once the above objectives have been achieved, it is feasible to take inventory levels to their minimum expression, whether they are inputs, products in process or finished products. But it is also essential to change the business mentality that seeking the best use of fixed costs does not take due account of both financial costs and all those wastes covered by high levels of inventories.
As if it were a lake where the high level of the water prevents seeing the rocks that are in it, or these rocks do not prevent navigability, high inventories do not allow us to see the large number of defects and unproductivities, allowing compliance with the delivery of orders, but all at a high cost.
6. Zero Stationery
In the current competition, it is no longer admissible to accept the waste caused by excessive bureaucracy and office paperwork. This occurs in all kinds of companies, but they take up more volume in the service industry, such as banks, insurance, social works, among others.
Reengineering comes to the aid of companies in order to increase productivity in administrative activities, eliminating all activities that do not generate added value for the client and bringing those related to internal support tasks for the company to an optimal level.
Extending productivity policies and measures in administrative processes is not only feasible but necessary. It is not enough to eliminate stationery through computer technology (IT), it is necessary to eliminate all those administrative activities that generate unproductive costs, and waiting times.
7. Zero Contamination
Under the current circumstances and given the high level of contamination, companies are, and will be much more so in the future, pressured to generate both products, services and processes with the least degree of environmental pollution. Companies currently tend to implement so-called green processes, processes that not only take into account the recycling of produced goods, but also make the best use of productive resources, avoiding contamination through their different routes.
Companies that do not pay attention to such issues will not only see consumers turn against them, but will be liable to significant economic penalties. Not taking into account the contamination levels of the products can close a company many export possibilities.
8. Zero Occupational Diseases
Occupational diseases generate costs for absenteeism, and higher staff turnover. This higher staff turnover implies the loss of workers with the consequent loss of experience and its effects on the learning curve. It also leads to costs for finding and hiring staff, and losses in the learning stages.
The absence of personnel due to illnesses leads to the need for a greater number of personnel to replace the missing personnel, with the cost that this implies, but also irregularities in the production processes that result in loss of rhythm and levels of productivity and quality., with its effects on higher costs.
For all this, zeroing occupational diseases is essential, even more so considering that a better work environment increases the productivity of the staff and with it the profitability of the company.
9. Zero Accidents
We are emphasizing with this, the elimination of accidents that afflict both staff, customers and users, and members of the community in general. Accidents not only lower the morale of staff, makes their hiring and insurance more expensive, but also destroys the image of the company. In many cases these accidents also end up generating serious ecological or pollution problems.
An accident can be the end of a company. Massive poisonings, large fires with their consequences of death and destruction not only generate risks from the economic-financial aspect, but also criminal.
It is not enough to have the company insured, in the event of a fire the total or partial destruction of the plant destroys the existence of the company in operation as a value-generating entity.
Therefore, considering this aspect is not a minor issue, for which Risk Management takes on a key but crucial importance.
10. Zero Rotation of Employees and Clients
High employee turnover implies greater losses or waste due to:
- Costs of new searches, selections and hiring of personnel. Higher costs motivated by the decrease in the levels of quality and productivity, these caused in the loss of experience and waste of the learning curve. Loss of effective relationships and in some cases affective between staff and customers.
This type of rotation can be reduced through a change in personnel policy that increases the participation of supervisors and workers, both in earnings and in operational decisions, thereby taking advantage of their experiences and knowledge.
Achieving that staff feel full in the performance of their work through a higher quality of working life, achieving both security and self-development is the fundamental question in order to reduce their turnover and consequently the costs and / or losses caused by their rotation levels. Although zero rotation is impossible, it is impossible to decrease such levels.
On the other hand, customer turnover apart from being a sign of dissatisfaction with companies, their products and services, generates the cost of conquering new customers, a cost that always far exceeds the cost of keeping them.
In addition, maintaining clients implies the possibility of knowing their tastes and trends, which means that it is important for them to produce higher levels of satisfaction for them, and to offer them new products and services that are to their liking and satisfaction.
Continuous monitoring of the levels of customer satisfaction, and of their wishes and needs, allows us to keep as many of them as possible.
Never and under no point of view should the entrepreneur and manager forget that two of his main assets are his workforce and his clients. A compliant client will not only continue to regularly generate a flow of funds but will increase it by accepting new offers and proposals from the company, but will also bring in new clients through his recommendation.
While the workforce is the one on the battlefield every day, creating new products, manufacturing, selling, and satisfying customer requirements. Their experiences, skills and attitudes are fundamental to the potential of the company. The synergies generated by the teamwork of the company as a whole will never be feasible as long as a staff commitment to the company is not achieved, a commitment that will only take place to the extent that it is a participant.
11. Zero Dissatisfaction
Increasing satisfaction levels bring with them a continuous increase in profitability levels. Obtaining the objectives described above makes it possible to achieve higher levels of satisfaction or, what is the same, to reduce dissatisfaction levels to a minimum.
Delivering the highest value for money received is the way to keep and keep customers fully satisfied. This involves not only producing goods without defects, but also producing those goods that the customer wants and needs, at a price according to their payment capabilities, making the appropriate variety and quantity available to the customer, at the place and time that the customer I demanded it.
Total satisfaction can only be obtained through the emotional commitment of the company in the delivery of its products and services. It is the time when managers and staff must put emotional intelligence in the pursuit of excellence.
12. Zero Bad Debts
It will be of little use to generate high-quality products and services, promote them and sell them, if they cannot be collected later, or the collection is not adequate to maintain a regular flow of funds. Bad debt constitutes a loss for the company and is the result of the lack of quality in the management of credits and collections. Hence the importance of Total Quality Management reaching all the activities and functions of the company.
A large majority of companies suffer from very bad credit management, thus exposing the company to frequent and significant financial losses. Credit management is not a minor issue and must be properly addressed and considered in conjunction with financial and sales policies.
13. Zero Fraud
Not a few large companies have seen their structures falter as a result of internal and / or external fraud that caused enormous losses to their assets.
Beyond the amount of losses generated, the mere fact that they can be generated and added to the aforementioned losses, are reason for the adequate and systematic survey and evaluation of internal control.
An effective fraud prevention policy will reduce the feasibility of fraud. When it comes to fraud, we are talking about the theft of formulas or designs, as well as the theft of customer databases, the improper use by the company's staff of inputs, the theft of materials and products, among many others.
But one of the most serious and dangerous is constituted by the criminal actions of managers, which can lead to the entire company stumbling as such.
Among the frauds that must be duly considered we have the working time that employees or officials dedicate to particular tasks, despite the fact that the company is paying them to dedicate their time and energy to it.
14. Diagnosis
A first great task is to carry out, preferably by external consultants, a diagnostic task to assess the degrees of loss or waste caused by poor management, as well as the risks to which the company is exposed due to the lack of plans, policies and strategies aimed at achieving zero levels in all the aspects described above.
Diagnosis that, starting from a questionnaire and a thorough analysis of the processes, activities, indicators and policies, allows owners and managers to be made aware of the risks to which they are exposed, as well as the profitability potential that they can obtain when making the relevant adjustments.
15. Command Board
Managers must be continuously informed about inventory levels, waiting times, production cycle development deadlines, average collection deadlines, defect levels, number of failures, number of accidents and their severity, absenteeism, employee turnover, customer turnover level, dissatisfaction levels, bad debt amounts, and contamination levels, among many other indicators and indexes that reflect the good, mediocre or bad management of the company.
To this must be added monthly statistical reports for the purposes of their respective treatment by the Board of Directors, who based on it will determine the adjustments that are necessary to correct the shortcomings and management defects.
All these data must be compared with the budgeted objectives and with the brands of the companies with which it is feasible to compare (benchmarking).
16. Conclusions
Reducing or eliminating losses due to fraud, employee and customer turnover, machinery and equipment breakdowns, production defects, accidents, excess inventories, excess of unproductive activities in the field of offices, high bad debt rates, among others, allows for notable improvements. the last line of the result box.
Achieving the twelve zeros is not merely the pursuit of excellence for the sole importance and significance that this entails, but they are clearly reflected when calculating the profitability of the organization.
To be competitive today is to eliminate waste, and in the search for it
all the members of the company must fully commit themselves, in a systematic pursuit of continuous improvement. Continuous improvement in each and every one of the processes, activities, products and services that make the company as such.
It is no longer enough just to think about achieving the classic Five Zeros, today it is necessary to reduce to a minimum all the possibilities of losses for the company. A company as such is constantly exposed to fortuitous external or internal factors, not only must the possibility of such be reduced, but also its possible incidents must be reduced, but the greatest possible benefits that serve as a mattress (or buffer) must also be obtained at good times. losses generated at other times in the life of the company.
Achieving the Twelve Zeros is much more than a desire, it is an imperative need for companies in today's business world, where faced with any financial setback it is very difficult and complicated to recover. This is why the systematic search for the Twelve Zeros is the best way to prevent financial problems, and if they are already present, their search will allow rehabilitation.
The Twelve Zeros are a form of strategy towards excellence, and therefore to competitive advantage. They reflect a change in management's attitude in relation to the way of managing the various aspects of the company.
It should be borne in mind that traditional accounting does not report the costs and losses caused or generated both in unproductivity and in management failures, and in fraud.
It is necessary and feasible, through a system that, based on a flexible budget, manages to identify the costs and losses generated by management failures, thus allowing the difference between budgeted income to be recognized (depending on the level of sales and / or activities). and the real ones.
As for the losses generated by products with little or no demand, they are part of the default costs, thus following the conception of the TQM by which it is pertinent to a good quality system to previously determine the needs and wishes of customers and consumers.
Only by faithfully recognizing the various types of losses is it possible to act upon them for the purpose of their elimination.
17. Bibliography
- The customer is the key - Lele and Sheth - Díaz de Santos - 1989 Bases of success in business management - William Osgood - Editorial Norma - 1984 Reinventing the factory - Harmon and Peterson (Andersen Consulting) - Editorial Limusa - 1994 Successful production - James Tompkins - McGraw Hill - 1992How to manage the future - Robert Tucker - Editorial Grijalbo - 1991The optimal change - The Price Waterhouse Change Integration Team - Editorial Irwin - 1995How to increase profits - José Orbegozo - CDN Editions - 1990The Toyota Production system - Taiichi Ohno - Management 2000 - 1993 Cost reduction. Costeo Kaizen - Mauricio Lefcovich - www.gestiopolis.com - 2003Kaizen. Waste detection, prevention and elimination - Mauricio Lefcovich - www.gestiopolis.com - 2004 Cost reduction under a systemic approach - Mauricio Lefcovich - www.gestiopolis.com - 2005 Cost Reduction - Mauricio Lefcovich - www.winred.com - 2005 Kaizen Strategy - Mauricio Lefcovich - www.monografias.com - 2003
