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FAQs - Frequently Asked Questions About EV Management & its Associated Measures
Q. If my company has not used Lean or Six Sigma before and I am thinking of installing one or both of them should I do this before or after installing EV Management?
A. Because EV is essentially a top down management method it is better to install this first as once installed EV will indicate whether either or both are important for the company to achieve continuous improvement and also which parts of Lean and Six Sigma are useful
Q. If I am already using Lean and Six Sigma is the installation of EV going to give me additional benefits?
A. Definitely yes as EV is a top-down management method and will enable Lean to be used to maximum benefit in the company. EV will also indicate which parts of Lean are necessary, or need to be modified, or are non-value adding. Some of the latter are activities such as the 5 Ss methodology and Lean Accounting. EV operational measures are much more accurate and more streamlined and direct than the latter accounting method.
Q. If it is necessary to install one of the ISO ratings should this be done before installing EV?
A. If you are in a position where you can delay for 6 to 12 months the obtaining of an ISO rating then it is much better to install EV first as the Standard Procedures part of EV is based on employee ownership of operational standards. Once the latter are in place and you then apply for ISO rating the standard procedures will already be in place and the cost and ease of using standards will be much lower and they will be easier to use and update, also be far less bureaucratic.
Q. I am flat out putting in Lean at the moment and do not have time for installing EV Management, how can I possibly make time for EV?
A. This is a very common question at the moment and has been for the last year or two. At first sight it is not possible to give a definitive answer as in reality the person or persons concerned really are very busy with Lean or it may be Six Sigma or related programs. The first point is that EV is primarily a senior management programme and it is generally a manger at the next level down who is asking the question and is involved with Lean as a bottom-upping program. EV is a "top-downing programme and is therefore in the province and work area of members of the senior management team. In addition continuous improvement in general is often seen as in the day-to-day work area of the second or lower tiers of management. Therefore it is usually these lower level managers who make the case for Lean and other programs and if they regard continuous improvement as being their responsibility naturally they will feel that it would be counterproductive to recommend yet another programme which will overload them. The reality is that EV contains the strategies, tactics and measures to direct continuous improvement and integrate it into all the company's operations. Therefore the work Continuous Improvement managers have to put into such items as justifying time effort and so on spent on C.I. with EV is put into by senior management and much of the CI manager's effort is removed. Also parts of Lean such as standard procedures, employee involvement, Lean accounting and so on are already dealt with by EV at top management level. In other words Lean and related techniques become not only easy to justify but for the first become directly linked to bottom-line performance and are completely integrated into day-to-day management. Thus the time and effort of putting in Lean is reduced and streamlined and items which the C.I. manager is struggling with either disappear or become much less hassle and time consuming and the effort is switched to senior managers. However since EV also makes the senior managers' jobs much easier this is not generally a problem.
Q. It is well known that it is impossible to connect day to day operational measures directly to conventional financial measures such as operating profit, how is this possible with EV Management?
A. Whilst it is true that it is not possible to connect operational measures directly to conventional measures such as profit, ROI etc it is because these measures are what are called "external measures" by accountants and are the measures generally asked for by the Tax Department and by investors. These external measures do not reflect the total value added produced by the operations of a company and it is the total value added produced by both the core investments of capital and people's time which produces the "internal measures" which directly link to operational measures. Once this is realised and the method for producing internal measures is mastered it is then possible to produce the cascade of continuous improvement measures and targets which is one of the major missing elements from 'Current' Management, as currently practised by most Western companies, but is one of the a key additional features of EV Management.
Q. How long does it take a medium size company in the batch manufacturing business to reach the top level of financial and overall business performance for a company using EV Management?
A. If the senior management team are fully dedicated to achieve rapid continuous improvement it takes less than 3 years with EV Management. After reaching this level it is possible to continue rapid further improvements. Without EV it takes much longer to get to the top level for 'Current' Management and you may never get there! It appears virtually impossible for companies to go above this level into the Global Leading Edge range of performance without EV.
Q. What is the attainable level of Operating Profit (or E.B.I.T.) for a medium sized batch manufacturer using EV Management & Measures?
A. Above 25% measured as Operating Profit divided by Net Sales expressed as a percentage. Much higher figures as high as 50% have been seen. 20% to 25% is generally about the top of the range for a conventionally managed company using "Current Management".
"HOW TO BRIDGE FROM OUT-DATED CURRENT MANAGEMENT TO MODERN EV MANAGEMENT"
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