Continuous Improvement -- Process Improvement is the Key

May 13, 2010
In operations, we often talk about inputs and outputs and the classic formula is: Inputs (man, material, machine) + Method = Outcomes (for customers, employees and owners).

In our competitive world, all of your competitors can hire the same people you do, buy the same materials and, unless you build your own equipment (which could be a competitive advantage), buy the same machines. One interesting facet of this equation is that the outcomes are dependent variables. You can vary the inputs and the methods but the outcomes will be the result of these, not something that you can independently manage and control.

It is only the processes, procedures and policies that make up your methods that are unique to your business throughout all your various departments. The key to differentiating your company is that your competitors do not design products, process orders through customer service, manufacture them in your plants or even sell and distribute them exactly like you do, and thats where you can create a uniqueness that could yield a competitive advantage. It also is where your continuous-improvement (CI) projects are concentrated.

The methods that you use in your business create your culture. It's the way everyone does things in your business and its unique to your company. Continually improving these methods with CI is how you create excellence and become globally competitive. Lots of organizations tinker around the edges and try to hire better people or buy materials and machines at lower costs or even chase lower costs by outsourcing or moving to low-cost countries but, at the end of the day, its your methods and culture that create a competitive advantage.

One critical element in this that is missing in many organizations is getting everyone working with the same strategy and toward the same objectives. The best organizations at doing this have a formal policy-deployment (hoshin kanri) process that gets everyone working toward the same goals and objectives. How often have you seen organizations where the top executives develop a strategic plan for the business that is shared with the board and maybe the next level of management, but the folks actually doing the value-adding work where the company's money is made have never been involved with it and are working on totally different goals in their little corner of the world? If you are going to have consistent processes in your business, you must have commonality of purpose everywhere, not local optimization to meet some incentive or financial goal set at a local level that is not in line with the strategic goals of the organization.

By having everyone "rowing in the same direction" and using CI to remove the non-value-adding waste from your methods, you can increase quality, improve delivery performance and reduce costs while developing your people so you can get better every day. Its usually the short little kaizen events done every day in every area that add up to significant gains for your company, not the occasional kaikaku event with its radical change that makes the difference. Improving the methods in every area to reduce the waste and getting everyone involved in these CI efforts is what produces the competitive advantage and can make your company the preferred supplier in your industry. All this is easy to say but very difficult to do, and it takes much longer that most people think. Just remember that continuous improvement is a journey, not a destination, and it takes patience and perseverance to make the improvements in your methods that will yield the desirable outcomes you seek.

Ralph Keller is president of The AME Institute and former president of the Association for Manufacturing Excellence ( ), an organization dedicated to cultivating understanding, analysis and exchange of productivity methods and their successful application in the pursuit of excellence.

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