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.
Let us now take a look at some of the most 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. The PDCA cycle was, however, popularized by Deming who introduced it to Japan after World War II and is commonly referred to as the Deming cycle. As the name suggests, PDCA is a four step process:
In the plan stage you 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.
In the do stage you carry out or “do” what you have planned. This is the step where the actual work happens.
In the check phase you compare using the measurement system that you have put in place, how you are progressing towards meeting your accomplishment and analyze any deviations.
In the act phase 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.
PDCA cycle is one of the oldest forms of continuous improvement methodology and almost all of today’s improvement methodologies, most prominently Six Sigma and Lean, are based on the PDCA approach. However, even after all these years, many companies are still struggling to fully understand and successfully deploy this basic methodology primarily when it comes to having a formal “check” and “act” process in place.
Lean Methodology focuses on empowering team members to simplify processes and identify non-value added process steps. These steps are then either eliminated or automated to reduce human involvement and improve cycle time. The focus with Lean is to reduce defects and eliminate waste from the process. The Lean thought process has been covered in the book The Machine that Changed the World by Womack and Jones. Primarily there are four basic notions of Lean that have been identified:
Lean as a fixed state or goal (Being Lean) – This is similar to the concept of being a Six Sigma company where companies set the ideal of being recognized and embraced as a Lean corporation as the ultimate goal.
Lean as a continuous change process (Becoming Lean) – This is where an organization identifies and applies Lean methodology relentlessly as a continuous change or improvement approach with the goal of identifying and eliminating all wastes from the process and delivering as per customer demand a defect free product or service.
Lean as a set of tools or methods (Doing Lean / Toolbox Lean) – Here Lean is more of a tool rather than a company’s culture or way of doing continuous improvement. A typical example would be where a team is working on improving a process and would apply some elements of Lean, like Value Stream Mapping, to identify steps that can be eliminated from the process.
Lean as a philosophy (Lean Thinking) – This is probably the most difficult to achieve for an organization. The whole culture of the organization needs to change so that Lean becomes the way the employees do their work and Lean gets embedded as a philosophy within the company.
The book Lean Transformation by Bruce Henderson and Jorge Larco lays out the Lean Fundamentals towards transforming a process or organization into a Lean process. The first step of Lean starts with mapping the process for the area that needs to be transformed into Lean. Once this is completed, the area is cleaned, organized, and all items that are not needed for the production process, or service, are removed from the area. Next, continuous flow of material or information is installed and then a Kanban pull scheduling system is implemented to link production to customer order cadence. Setup times and batch sizes are then reduced and any defects in the manufacturing process are removed through root-cause identification and problem solving. Thereby the end goal of defect free parts flowing from the suppliers to the customers in accordance with customers demand is achieved.
- Kaizen / Gemba Kaizen:
Kaizen is a term that was coined by Masaki Imai who founded the Kaizen Institute. The Kaizen Institute still holds the copyright to the term “Kaizen” and “Gemba Kaizen.” The Kaizen Institute defines Kaizen as “a Japanese term meaning change for the better.” When applied to business organizations it implies continual improvement “involving everyone that does not cost much, if any, money”. In practical terms, Kaizen is a continuous improvement methodology that focuses on one particular business area that needs improvement. These are usually three to five day events where team members come together and use Lean tools like value stream mapping, Lean opportunity mapping, FMEA, and so forth to identify waste and improvement opportunities. At the end of the event, the team presents solutions to the project sponsor and gets a go/no go decision to implement the solutions. Usually the Kaizen leader sets up a thirty, sixty, and ninety day follow up to keep leadership informed on progress and the project closes within ninety days.
Gemba Kaizen is pretty similar to Kaizen events. The major difference between the two is that Gemba Kaizen focuses on the shop floor where the work is actually being performed. Gemba literally means “the real place” in Japanese. In that sense there can be an IT help desk kaizen, a warehouse kaizen, an engineering design kaizen, and so on.
- Hoshin Kanri:
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). However, it is important to note that Hoshin is not same as the MBO approach. The Japanese adopted the Management By Objectives concept plus Deming’s Plan-Do-Check-Act cycle and modified them into what is now popularized as Hoshin Kanri. What Hoshin Kanri does is to help an organization identify and focus on the critical few initiatives that need to be undertaken in support of the strategic objective. As per the book Hoshin Kanri: Policy Deployment for Successful TQM it is defined as follows: “[Hoshin Kanri] provides a step-by-step planning, implementation, and review process for managed change. Specifically, it is a systems approach to management of change in critical business process [sic].” The book further states, “What hoshin [sic] provides is a planning structure that will bring selected critical business processes up to the desired level of performance.” 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. Note that Hoshin Kanri can be a powerful approach to identifying the most impactful Six Sigma or Lean projects that directly affect a company’s strategic goals and making sure that progress is reviewed at the right level and with the right cadence. This also helps those projects get the right level of corporate sponsorship and in turn ensures success of the continuous improvement program.
- 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.
- Six Sigma:
In the book The Six Sigma Way, Six Sigma is defined as “a comprehensive and flexible system for achieving, sustaining, and maximizing business success.” In essence Six Sigma is an approach to improve processes and reduce variation, so that customers get near perfect products or services with as little variation as possible. There are two approaches to Six Sigma application, namely DMAIC and DMADV.
DMAIC – is an acronym for Define, Measure, Analyze, Improve, and Control. Each of these are stages in the process improvement methodology. Readers might notice how closely the five steps fit with the PDCA cycle. This is because the DMAIC methodology was based on the PDCA cycle. This methodology is applied to existing processes, or in other words processes that are in place but not operating at an optimal level or the process is producing defects. In the define phase the voice of customer is collected, the project charter is put together, scope is finalized, the process performance goal or target is established, and the project team is formed. In the measure phase, the team brainstorms the potential root causes and comes up with the plan to collect the data that would be needed to track the project performance goal and establishes the baseline and the root causes data. Once the data is collected, the team moves to the analyze phase to identify the vital few root causes through extensive statistical analysis, if needed. The team then identifies creative solutions to validate the potential root causes and implements them in the improve phase. Once the improvements are validated and the project performance goals are met, a control plan is drafted and controls put in place to ensure the improved process is stabilized.
DMADV – is an acronym for Define, Measure, Analyze, Design, and Validate. This methodology is applied where processes do not exist. A perfect example would be when a company is planning to launch a new product which they have never done before. DMADV is also called DFSS or Design For Six Sigma, since the goal of this methodology is to design a process that will be able to deliver products or services at a six sigma level, less than four defects per million products produced. It is important to note that in many cases the six sigma goal is a hypothetical target, in that companies might not want to design a process at such a high defect free level.
Designing and maintaining processes to sustain outputs at such high yield levels might not always make business sense. DMADV follows a more rigorous approach compared to DMAIC, and it usually takes longer to complete DMADV projects.
The following table gives a quick comparison between Lean and Six Sigma, note that the last element is common to both Lean and Six Sigma. They both require a change in leadership and employee mindset in order to become a successful and sustainable program.