Busy season is underway and for many firms; progress is similar to last year. However, for some firms we’ve talked to this year is better than ever before. A managing partner from a large regional firm in the northwest said, “This is the best tax season we have had in two decades.” A managing partner at a another large regional firm said, “We are two weeks ahead of last year.” An admin at a midsize firm in the northwest said that when they called clients to let them know their returns were ready, the most common response was "Already?!"
How did these firms achieve such positive results? They prepared for the busy season by using Lean Six Sigma methodology to identify and purposely eliminate wasteful activities in their processes and optimize value from the client point of view.
An advantage is found when you incorporate the principles of Lean to increase velocity and efficiency. This leads to increased capacity while using Six Sigma to increase quality and consistency. This combination helps firms create efficient and high quality processes and additional capacity to offer more value-added services to their clients.
In order to maximize the effectiveness of their process improvement, these firms followed the Lean Six Sigma five step model:
Define - Define the problem that we are trying to solve. This includes identifying the specific process that we want to improve (i.e., business tax, individual tax, client accounting services, audit, billing, etc.) and setting expectations and timelines for the project.
Measure – Map out the current process step by step. We document what is REALLY happening instead of what SHOULD be happening. This helps identify the areas of opportunity in the process.
Analyze – Put the current process under a microscope to identify the wasteful activities in the process, work loops and quality issues. Ultimately, identify the areas of opportunity.
Improve – Develop ideas and solutions into the areas of opportunity discovered during the Analyze phase and develop the new and improved process.
Control – Develop a plan to train, rollout and implement the new process, sustain buy-in and encourage continuous improvement!
During this five step process, we use the 9 Categories of Waste to help identify activities that do not add value from the client’s point of view. These wasteful activities result in decreased profitability, lost capacity and longer cycle times.
- Defects include mistakes like transposing numbers, entering incorrect information and not following procedures and quality guidelines.
- Overproduction happens when you do more work than necessary. Examples include significant time spent on returns that will be going on extension anyway or prioritizing the wrong projects.
- Waiting is defined as any non-value add time for which value-added productive output is not being performed. Most commonly, this is caused by time spent in between touches during a process.
- Not utilizing people’s talents is a common issue in the profession. Resources are wasted when higher skilled people perform lower skilled work. Other examples are not maximizing staff strengths and failing to cultivate staff ideas for improvement.
- Transporting is a waste that occurs from passing paper files and information from person to person instead of utilizing technology to automate workflows and other firm processes.
- Inventory sounds like retail terminology, but this applies to your engagements as well. It is best to keep your inventory from getting stale. WIP and backlogs in email inboxes create bottlenecks and decreased throughput.
- Motion is the result of scavenger hunts for information. Efforts are wasted by searching through poorly named digital files or digging through poorly organized, overfilled physical files.
- Excess Processing is doing more work that the client values or is willing to pay for. Examples include over-auditing or correcting client bookkeeping prior to gaining permission.
- ATTITUDE is the final and most significant category of waste. Negative attitudes, poor morale and refusal to follow guidelines and procedures impede firm processes and progress.
Identifying and minimizing the wasteful activities in your firm will help you to create processes that provide value from the client’s point of view and also provide the following benefits:
- Less variation in process cycle times to clients
- Less time spent waiting for client data to filter in
- Increased consistency in processes between employees
- Increased capacity (throughput)
- Better quality from the start
- More time for high level activities and identifying value-add solutions for clients
- Increased profitability
- Increased client service & satisfaction
If your firm is interested in utilizing Lean Six Sigma to improve firm processes, we recommend the following two options. The first is to schedule a time to have a Lean Six Sigma certified facilitator lead your firm through the process. This option gives access to the facilitator’s expertise from working with other firms and an outside perspective for finding the best solutions. Another option is to identify an internal process improvement specialist(s) to attend a Lean Six Sigma Green Belt certification program where they will get the tools and training needed to effectively lead the change initiatives in your firm. You can click here to learn more. Either of these options will help position your firm to take advantage of the benefits of Lean Six Sigma process improvement.