On the Success Stories podcast with Marshall Atkinson, Ali Banholzer of Wear Your Spirit Warehouse discussed how Lean Six Sigma was utilized to increase profit margins for her company as she worked towards achieving a Six Sigma Black Belt.
When a small business goes through a period of growth, it can become painfully clear that improvements to processes are necessary. Some of the things you can get away with when your business is a small one, just do not fly once you have grown.
If you have a company that is going through a period of growth, it is time to ensure that your processes are in order and can manage the expansion.
Plenty of resources are needed to make sure that the growth of the company is healthy, and that means that profit margins need to be sound. If there are issues with the processes in a growing business, the company is not as efficient as it could be, and there is less of a profit margin that can be put towards growth.
Ali Banholzer realized this when she took her Wear Your Spirit clothing and apparel screenprinting company from being a home business to a larger brick-and-mortar location.
Wear Your Spirit Needed To Ensure Their Profit Margins Met Their Goals
Wear Your Spirit had a humble beginning on Ali Banholzer’s kitchen table in 2004 with the intent of making better-looking t-shirts for events in which both of her daughters participated. By 2017, the business had grown to the point that having a brick-and-mortar location made sense. It was the right move, as Banholzer’s business jumped 62 percent. Now, Wear Your Spirit has accounts with nearly a hundred organizations that are listed on their website.
Of course, as Banholzer mentions in a podcast interview, company growth and a high number of sales do not amount to much if your processes are out of whack. Not having your processes stable eats into your profit margins and can prevent your company from being as strong as it can be.
While studying to become a Lean Sigma Black Belt, Banholzer decided to take the principles and methodology that she was learning and apply them to how she ran Wear Your Spirit. What she found were several areas that could be improved, ways to save her company money while improving quality, increase her profits, and improve the working experiences of her staff.
One major goal in the quest for improvement was that Banholzer wanted to ensure that the company’s rolled throughput from blank screen through press ensured that the profit margins were where the company wanted them to be.
Banholzer Decided To Use the Six Sigma DMAIC Process
The first step in the DMAIC process is to define. Banholzer approached this by launching a brainstorming session for her staff, in order to hear what they thought the biggest problems were within the company. She took a round-robin approach, having each employee name one issue and then share it with the group. After hearing all of the issues, Balholzer calculated what was the most realistic to tackle based on cost as well as impact. The team then voted on the issues, and the first project was determined.
The issue that received the most votes from the brainstorming sessions, was addressing the staff’s frustration about the screen failures that were delaying production and eating into profit margins. They had already implemented a few simple fixes, such as checking the newtons (a measurement used for screen tension). These prior simple fixes had limited success, so it was chosen as their first Sigma project towards improving the company’s efficiency.
Once the problem to be addressed was determined, it was time to measure. In order to make this part of the process as easy as possible for her staff, Banholzer made sure to make measurement-taking simple and efficient, keeping the tools for data collection always within reach and easy to tabulate. In her case, this meant a hanging clipboard with a hanging pen and sheets of paper that just had a couple of columns. She also provided a time-stamped eight-sided die to keep track of the time efficiency for each step of the process. With a couple of tick boxes the employees marked and the results of the die, she was able to then analyze the data given for the day, put it into a control chart, see if the failures were trending up or down, make the necessary improvements, and then control the process so that the same issues would not come up.
Increased Efficiency and a Less Frustrated Staff
The end result of utilizing DMAIC in this project was fewer screen failures (which meant an increase in profits for the company) as well as a less-frustrated staff. The system was controlled. Today, the company still tracks its errors and utilizes the tools from Lean and Six Sigma to continually improve.
4 Best Practices When Implementing DMAIC at a Small Business
1. Look at the whole picture
Banholzer talks in the interview about how a lot of similar companies to hers might look at blank screen to on press failure, counting the number of screens that fail on press. She argues that this is not the whole picture and does not give you your whole profit margin. Instead, her company looked at how many screens were not clean enough to put emulsion on them, the number of screens that were not coated correctly and could not expose, how many did not wash out correctly upon exposure, and if it failed on press.
This is an example of looking at the whole picture for all of the failures that occur throughout your processes to determine what your true profit margins are as well as where you can improve.
2. Your sales are not your profit
During the interview, Banholzer talks about how important it is to keep on top of and improve your processes for the best possible profit margins. She makes it clear that it does not matter if you are a million-dollar company if your processes are so out of whack that you only have ten thousand dollars in the bank.
3. Doing multiple improvement projects at once
Banholzer talks about the benefit of being a smaller business is that you can be more nimble than a large corporation in your Sigma projects. For large corporations, a Sigma project can take up to six months. A small business, however, can typically complete a project in thirty days. In fact, smaller businesses can feasibly run more than one project at a time, provided the projects are independent of one another and do not influence each other.
4. Be transparent and make the employees part of the successes
One project that Banholzer talked about working on was the company’s error rates. She took the dollar amount and posted it on the wall so that all the employees could know. To get the employees invested in the improvement, she told them to think about how big of a party they could throw with the money saved from fewer errors.
It is also important for employees to understand that continuous improvement means that with improved processes come bigger profit margins and larger financial incentives for them (such as more money to pay them).
This kind of strategy creates a sense of responsibility among your employees as well as unity. It also makes the employees feel invested in the success when the goal is reached.
Lessons Learned From the Example of Wear Your Spirit
When your company grows, it is absolutely imperative to have your processes in line with the goals of your organization. During the implementation of Lean and Six Sigma methodologies to how business was run, Ali Banholzer and her staff found multiple areas within her company where waste could be eliminated and processes could be improved. In using the DMAIC process, Balholzer was able to cut down on the company’s screen failures, achieve buy-in from the staff about the changes being made, and improve the company’s profit margins.
These kinds of results can happen at your organization as well. Balhozer stresses that the full implementation of the principles requires fifteen tollgates for completing the various phases of a project. Nevertheless, just starting and using some of the concepts can improve your business dramatically and likely lead you to want to eventually go at it fully. The important thing is to want to improve and to start.
Even with all the success that has come to Ali Banholzer due to her embrace of the Lean and Six Sigma methodologies, she still operates from the perspective of always working towards continuous improvement. The reason for this is that, at the crux of the philosophy behind these concepts, is the knowledge that there is always room for improvement. By making that a key component of the culture of your organization, whether you are a small business or a large corporation, further successes are just around the corner.
