Accelerating Continuous Improvement For A "Flat World"

Business pressures are accelerating as the competitive landscape expands from a local geography to worldwide. On the plus side, the "Flat World" allows your company to have a presence in distant places. At the same time, it allows distant competitors to enter your area. This rapidly increasing pressure increases the demand for high business performance. Marketplace pressures from this fierce global competition are driving manufacturers to Continuous Improvement (CI) programs to extract greater operational performance. Each improvement program provides a consistent methodology for manufacturers to make incremental improvements in their processes. Over time, the incremental changes accumulate and compound to provide a competitive advantage.

Comparison Of Continuous Improvement Programs

Lean includes a set of proven methods and practices whose focus is to engage the people who do the work to identify and eliminate waste. Six Sigma uses statistical analysis to reduce variation. By reducing variation, the probability of producing a defect is less. The most commonly used Six Sigma methodology is DMAIC (Define, Measure, Analyze, Improve and Control.)

While both ideas are productive, the key to unlocking true value and performance improvement is in merging the two approaches. Maximize your "go and see" efforts by focusing resources on the true constraint; the result is a seamless flow of production that generates the highest possible return. This simple idea in theory was a nearly impossible task in reality, until now.

Many blogs and news groups demonstrate that awareness of CI programs is pervasive on a global basis, both in developed and developing countries. Press releases for audited quarterly financial reports by public companies show that awareness reaches most senior executives.It is now common to see skills in continuous improvement programs included in job descriptions for employment at all levels of a manufacturing company.

Industryweek Com Media News Items 13680 Comparison

Unfortunately, the success of these programs has been inconsistent. Achieving an overall positive financial benefit has eluded many companies. A small program office with strong, proven change management leaders is critical. They must be able to listen to and instill confidence among the people who actually do the work so they are comfortable participating and aiding change. Another key is to have executive influence to break though barriers among organizational "silos." To retain continued executive interest, they must translate the accumulated benefits of many teams' activities into metrics the executive team can appreciate, i.e., the P&L and balance sheet. Senior executives are human; they respond to their metrics (which are in these financial reports) just like you watch your metrics.

Some traditional lean advocates deride the use of technology and software systems. Their arguments go back to the original teachings and techniques of Taiichi Ohno (credited for developing TPS) when he wrote his book Toyota Production System: Beyond Large-Scale Production. However, this book was written in 1978 when highly automated processes meant excessive stoppages and long set-up times. IT was difficult to use, unreliable and used batch runs that created voluminous printed reports. Considering the state of automation and IT in 1978, Ohno-san was right when he advised against technology.

To hear more about this topic attend the IW Best Plants Conference, April 24-25, 2007 at the Indiana Convention Center & RCA Dome, Indianapolis, Indiana. The session Taking Constinuous Improvement Beyond the Plant Floor will be held on Tuesday, April 24, 2007 at 3:50 p.m. To register for the conference and view the entire list of speakers visit www.iwbestplants.com.

It is an understatement to say that a lot has changed since 1978. Advances in reliability and ease-of-use of automation and IT systems offer the opportunity to take a continuous improvement program to a much higher level. Today, software and networks provide visibility that allows a broader set of employees to gather data about processes at both the plant floor and business levels. Employees can analyze information and identify improvement opportunities. Rather than frustrating improvement, today's technologies enhance the basic premises of Ohno-san's approach. When designed appropriately, technology is a tool for reducing waste and variability.

Manual systems are subject to variation, inconsistent adherence and human error, all of which encourage people to slip back into their old ways of doing things. Technology enhances a program by reducing variation and sustaining improvements. Business processes are usually embedded in the business systems (ERP, MES, controls and others) ensuring that business rules are consistently respected and applied. Making a change permanent, therefore, includes modifications to these systems.

A simple example is in set-up reduction. An ERP or MES system usually has a function that calculates lot size using an Economic Order Quantity (EOQ) calculation that includes a factor for set-up time. Shorter set-up reduces the lot size, providing improved flow and inventory reduction. However, if the reduced set-up time is not changed in the ERP or MES systems, lot size will revert back to one based upon the EOQ calculation with the previous set-up time. Changing set-up time in these systems embeds the change and sets the stage for further improvements. Changes accumulate and compound to provide substantial, sustained business benefit.

Software applications specifically designed for an improvement program are available. Some CI applications are already well accepted, particularly in areas like Advanced Planning & Scheduling (APS), Statistical Process Control (SPC) and Total Quality Management (TQM). Newer applications have "crossed the chasm" in areas like Electronic Kanban (eKanban), Overall Equipment Effectiveness (OEE) and Value Stream Mapping (VSM). The worldwide market for each of these six segments has reached a sustainable "critical mass." ARC's "Continuous Improvement Systems Worldwide Outlook Study" forecasts the market for these software applications to double in the next five years.