A Roadmap to Lean: Measure Continuous Improvement

Part 10 of a 10 part series
In order for an organization to transform from its current state of operation to one of a Lean Enterprise Organization, a two phase approach – Planning and Implementation - can be utilized. The fifth step in the Implementation phase is to Measure Continuous Improvement throughout the organization. In this step, we want to:

• Implement Measurements for Key Success Factors and for Each Improvement Event
• Develop Business Performance Metrics that relate to Customer Value
• Develop Metrics to Monitor Lean Learning for Everyone in the Organization
• Establish Baseline Measurements Prior to Improvements
• Communicate Progress and Results to the Entire Organization on Daily Basis
• Initiate a Formal Review Process for Key Functional Leaders

In a traditional business model, cost plus profit was used to determine the price. In the Lean model, price minus cost determines the profit, so the focus needs to be on the elimination of waste. True, the price may be affected by the concentration on customer value because the customer is willing to pay more for what you deliver, but price is not under the organization’s control as much as cost is due to market and competition issues, especially in the world market we exist in today. Measures that focus on the Lean process, the elimination of waste and customer value are those that will drive continuous improvement once the initial Lean effort is complete. Key deliverables of this phase include:

• Business Performance Metrics (a critical few) that are Simple and Straightforward
• Operational Metrics that Relate to Takt Time and Waste Elimination
• Public Scoreboards to Communicate Event Related and Business Performance Metrics
• Lean Learning Metrics that Promote Cross Training, Improvement Activity Involvement, Problem Solving, Team Building , Empowerment, Commitment and Cooperation
• Dynamic Communication to Everyone Regarding All Lean Initiatives
• Rewards that are Aligned with Lean Goals
• Frequent Celebrations of the Successes

This tenth and final step in the Roadmap to Lean is not really a single step – it is an ongoing and ever evolving process: hence the term Continuous Improvement. Those who treat Lean as a project that comes to completion are missing to whole point of taking the trip. The real benefit is the transformation within the organization that allows everyone to contribute to the elimination of waste and the concentration on what brings value to the customer. It is the culture change that occurs that brings the biggest benefit of the Lean journey. Lean performance is focused on the efforts of people to accomplish change and is never complete. Instead, it is an ongoing process that will lift the organization to previously unattainable results. By following these ten steps of this Roadmap to Lean, an organization should be able to change its focus from “Doing Lean” to “Being Lean”. Are you Best-in-Class?

Lean is All About Continuous Improvement

“Lean” is a concept involving the elimination of waste and the concentration on value added activities and is rooted in the idea of continuous improvement. Although it has primarily been associated with and developed by the manufacturing sector, it is becoming apparent to many that the concepts of lean apply to much more than manufacturing. For example, in our practice at Peak Enterprise Solutions, we have applied our lean methodology to help manufacturers improve the processes of the front office and have helped a junior college improve their admissions process of accepting applications. In another example, the healthcare industry has been using the concepts of lean for quite a while.

In my previous note, I spoke about a 5 step cycle for continuous improvement. Although this cycle can be used to address specific problems or opportunities, there is a higher level process that should occur in order for an organization to take the path of “Going Lean”.

For an organization to become lean, we use a two phase approach – Planning and Implementation – each of which has five steps (why five? I don’t know, but it works!). This approach is customizable to a particular situation or client, but if we were to take someone through the entire process, the approach would be as follows:

Planning
Assess Lean Readiness
Develop a Lean Strategy
Analyze Opportunities
Address education and Training
Create a Plan of Implementation

Implementation
Implement Rapid Change
Manage the Culture Change
Transform the Information System
Integrate the Supply Chain
Measure Continuous Improvement

In the next few notes, I will address each of these steps individually as a roadmap to going lean. Even if used only in part, along with the 5 step cycle for continuous improvement, the methodology vastly improves the chances of success from a shotgun approach used by many who attempt the effort. It is also key to the idea of “Being Lean” and not just “Doing Lean”. Please stay tuned or contact us for more information and please feel free to pass this on to others who may be interested.

Are you Best-in-Class?

“5 on 5” The Continuous Improvement Cycle

When playing a game of “5 on 5” in basketball, the key to success is for the team to work well together, utilize the strengths of each of the players and repeatedly work their process as defined by the coach. As the process is repeated over and over again through the course of the season, the really great teams “develop a chemistry” which is something that is unseen and unquantifiable, but which gives the team an edge over its competition and leads to success.

The same is true in the business world for companies that want to improve and succeed. A business team needs to work well together, utilize the strengths of each of the team members and use a process that is repeated over and over. The following continuous improvement cycle used repeatedly will lead to a new “chemistry” within the organization so that the culture begins to change to one of continuous improvement.

“5 on 5” - The 5 Step Continuous Improvement Cycle

Define
1. Identify the target process
2. Organize and improvement team
3. Describe the issues, concerns or opportunity
4. Collect current performance data
5. Create a process map

Identify
1. Identify the process customers and suppliers
2. Define the process inputs and outputs
3. Identify wastes and value added activities
4. Define the process requirements
5. Generate a list of potential improvements

Select
1. Establish desired performance goals
2. Prioritize the potential solutions
3. Establish the selection criteria
4. Select the best solution(s)
5. Define the desired process

Implement
1. Develop an action plan
2. Develop process performance metrics
3. Document the solutions(s)
4. Test the changes
5. Implement per the action plan

Evaluate
1. Measure progress per the action plan
2. Compare results with desired performance goals
3. Establish ongoing feedback
4. Determine corrective actions that need to be taken
5. Repeat the cycle to define new opportunities


The key to really being successful using this process is the very last step – going back to the beginning and looking for new opportunities. Without this, it is one-time change, not continuous improvement. All too often companies declare victory when a change is complete and sit back for the new status quo to set in rather than taking another look at things to find more opportunities. By using this cycle on a formal basis over and over as problems or opportunities are addressed in the organization, inherent use of the cycle will begin to occur since people will become accustomed to it and the culture of the organization will begin to embrace the idea of continuous improvement. This resulting chemistry that begins to develop will be unseen and unquantifiable but will provide an edge for the organization so that it can succeed within itself and against the competition.

Basketball anyone?