Why Companies Need Continuous Improvement Programs
Continuous Improvement Methodologies
Continuous improvement is needed for the firm to perform similar activities better that will enable the firm to provide higher level of quality and service at a much faster rate compared to the competition. However, as companies deploy continuous improvement programs, they need to be aware of the fact that operational effectiveness cannot supplant strategy.
Let us take a closer look at the Plan-Do-Check-Act Cycle and Hoshin Kanri, two commonly adopted continuous improvement methodologies.
Plan-Do-Check-Act cycle, more commonly known as PDCA cycle, was developed by Walter Shewhart as a continuous improvement process that can supplement the Statistical Quality Control methodology. As the name suggests, PDCA is a four step process:
Plan: Establish what you want to accomplish and also establish the metrics and measurement system that can help you verify whether you have been able to accomplish what you set out for.
Do: Carry out or “do” what you have planned. This is the step where the actual work happens.
Check: Compare using the measurement system that you have put in place, how you are progressing towards meeting your accomplishment and analyze any deviations.
Act: Deviations are analyzed and solutions implemented to ensure they do not happen again in the future and the gains are standardized. This is also the phase where a debrief or lessons learned exercise is carried out.
Even though Hoshin Kanri, or “Policy Deployment” as it is sometimes called, is considered a PDCA, Lean, or TQM tool, it is actually quite similar to the common concept of Management By Objective (MBO).
Since Hoshin Kanri follows a very structured approach of tracking the progress of the initiative and owners are made responsible for each critical initiative it ultimately helps a company drive successful results.
Hoshin Plan Elements (adapted from Hoshin Handbook by Pete Babich)
• Business Fundamentals Plan – documents daily work and describes what the business is, for an organization based on its mission.
• Long Range Plan – documents how the organization expects to operate in the future. This plan describes what the business should be based on the organization’s long term vision.
• Annual Plan – documents the key objectives that need to be accomplished in a given year to ensure the organization is moving on the right track towards achieving the long range plan and vision. This plan documents what the business will be.
• Review Tables – are used to compare actual results versus expected results and document any changes to the plan. Review tables make the plan a living document.
• Abnormality Tables – document any occurrence that is outside the normal range of variation and facilitates root cause identification and implementation of corrective actions.
In order for any company to reach the ultimate frontier of efficiency and effectiveness, and in order to deliver according to customer expectations in the best possible manner (lower costs, high quality, high speed) it needs to have a continuous improvement program that will ultimately make processes highly optimized.
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