Every company is made up of interconnected processes that can be improved to perform better
When you have a continuous improvement mindset, you believe that any process can be improved once you study it and observe the interactions between people, technology, information, and materials. It’s important that improvements are not made in isolation but are guided by set of principles. Lean improvement process methods change processes within the context of a fully integrated system and help you maximize results.
The danger of isolated process improvement
Many times, well-intentioned individuals volunteer to take ownership of a particular problem or improvement idea. They enthusiastically march into battle and collect data, make observations, and analyze the savings they will deliver when the problem is solved or the idea is implemented. Sometimes, their results will blow your mind as they declare a $6-figure reduction in labor or materials. The problem is the savings never show up in the company financials. They appear to have won the battle, but lost the war.
I was on the phone with a client recently who was asking about this very phenomenon. They have had hundreds of kaizen events, each driving enormous process change and operational improvement, yet the financials don’t reflect the same order of magnitude for savings. I’ve had other clients share that they proudly have 6-sigma black belts who similarly saved $millions in their improvement projects, yet the company financial statements would not agree.
Kaizen events are team-based approaches for rapid improvement. 6-sigma projects dive deep using statistical tools to study and improve process. Other continuous improvement approaches can dive huge results too, just like kaizen or 6-sigma. The problem is that the method you select to improve your results needs to be tied together into a bigger, more comprehensive improvement strategy.
Integrated Production System Design
Lean thinking starts with an end-to-end look across the full operation to then understand from the highest view point the opportunity for improvement in safety, quality, delivery, and cost.
The phrase “Production System” comes from how things are made in a production environment, but has expanded in recent years to reflect the “Operating System”, or how the operations get work done in non-production environments. I’ve been involved in teaching and implementing these principles in banks, hospitals, insurance, grocery, retail and food service to name a few different types of operations. The principles are the same, whether or not you’re in a manufacturing environment.
With an end-to-end review you can draw conclusions about the integrated system’s capability to deliver the results you want. As you then study and analyze the material and information flows in your business you can identify constraints and problem areas. If you have lean expertise with experience in production system design, then you can redesign your material and information flows and dive into details to understand what changes are possible and required to create that lean system.
By first conducting the above analysis to create a vision of your future state business operation, you will then get a sense of the significant changes that need to occur.
These changes may have a ton of detail that you will have to implement and may even take a few years to fully complete, but at least you now have a vision and rough plan.
A note about value stream mapping and lean expertise
When I was at McKinsey and Company, I was in the operation practice and worked beside some of the best lean experts I’ve encountered – people who gained their expertise at Toyota, Nissan, Wiremold, and other companies where they gained full lean transformation experience. During client engagements, I learned that the right way to use the principles of value stream mapping.
- First, you deeply analyze material and information flows to understand the real capability of your current state in your business.
- The next step is to inject lean thinking into the design exercise and redraw the map as if you’ve already implemented the concepts.
- As you compare the current state and future state you just created, describe the operational metrics and the level of results you expect to see.
- With the improved operational performance as a reference, predict the financial impact you would expect to see after implementation is complete.
- Finally, a critical step is to draft the set of specific projects that you will plan and execute to make your future state a reality. Within these projects, you will have a series of events and exercises that you will conduct. This is where the kaizen events, 6-sigma projects, decisions and just-do-its, or larger cross-functional teams fit together.
As you can see, lean thinking leads the way and dictates the detailed projects rather than the other way around.
For those of you have been part of a value stream mapping kaizen events, you might notice that the team’s process to create a future state was based on their experience and paradigms only without the benefit of new thinking. The risk is that without a lean expert with production system design experience guiding your future state, your answer will be suboptimal. As W. Edwards Deming used to say about continuous improvement, “New thinking must come from the outside.” If you want to maximize your results, get the right type of help.
Your Continuous Improvement Program, Guided By Lean Principles
Continuous improvement is an important philosophy for you and your company. Unless you are actively making changes with the intent to move your business forward, you risk having other companies pass you by.
When guided by bona-fide lean thinking across the whole end-to-end business, you will maximize your continuous improvement program’s impact.