How Easy is it to improve business and production processes?
On the surface, improving a production or business process appears straight forward. However, many companies struggle to find breakthrough solutions which improve process performance. Why do improvement projects result in lackluster results? What principles should be considered when approaching improvement?
A high-level description of the roadmap often used to identify improvement projects is:
- Waste, inefficiency, and other losses are major concerns to an organization since these impact bottom-line results.
- Critical service, manufacturing, and quality performance KPIs are implemented and must meet or exceed designated hurtles for the business to stay competitive.
- Whenever performance levels fall below the hurdle, action is needed to find the root cause of the problem and the appropriate solutions.
But process improvement is much more than the convergence of individuals with the task of fixing a mission critical problem. A closer look at an organization’s improvement approach may reveal potential shortcomings for addressing waste and inefficiencies. Consider the following scenario:
One Organization’s Struggle
A consumer products company focuses heavily on stakeholder metrics but is less stringent in monitoring the process at the work level. The monthly roll-up report shows all KPIs in the green, signifying everything is above the hurdle level. No issues are flagged even though currently process workers struggle to achieve some KPI hurdles. A few weeks later, complaints begin and there are rumblings of process issues. Soon it becomes a crescendo.
A preliminary review determines unacceptable waste/inefficiency losses, and a team is assembled. Finding a solution becomes “mission critical”. Terms like “all hands-on deck”, “boots on the ground”, “deep dive”, and “move the needle” become the battle cry. The team forms with the expectation of finding a solution that will fix the issue as fast as possible so the business can regain their competitive advantage.
The team meets, discusses, and quickly implements their best judgement based on their experience and interaction with process stakeholders. Finding a solution ASAP provides little time to map the process, identify key process inputs/outputs or collect baseline data. The team identifies a solution, convinced it will solve the problem. The solution is implemented, and the process is thought to improve over the next week although no formal validation is completed. Victory is declared, and the team is disbanded. There is no time to write a postmortem analysis documenting team activity, obstacles, decisions, etc. for future reference.
However, little improvement is seen in the long term and the process continues to struggle. Without an understanding of why the first team did not reach their objective, another team is assembled to begin anew. The cycle starts again
If the above scenario sounds familiar, you are not alone. Organizations that do not have a strategy and culture for continuous process improvement will always struggle in their improvement efforts and may expend resources for months or even years with little to show for the effort.
Formal Process Improvement Strategy
Process Improvement should begin with a formalized strategy and effort. Business objectives, competitive advantage and internal/external customer satisfaction provide insight for identifying areas of focus. From a pool of improvement opportunities, project prioritization is done via a systematic approach. Because of the dynamic state of business, quarterly reviews should be completed for the initiative and project prioritization.
The concept of financial impact is straight forward. How does waste, inefficiency, and other loss impact the bottom line? All financials must be validated by the finance team. (Note: In the beginning financials may be over/under stated. Comparing projected financial impact with actual financial impact improves future financial estimates.) Customer needs can have hard or soft financials. What value can an organization place on Good Will or Quality? (I submit loss of Good Will or Quality results in catastrophic losses to the bottom-line.)
There are many well documented methodologies/roadmaps an organization can use for their improvement strategy. The most effective will have elements of:
- Senior Leadership Commitment: Ensures organizational cultural change, resources to problem solve, environment to build capability and overall commitment (different from support or sponsorship) for the success of the strategic process improvement initiative.
- Focus on Improvement, not Punishment: The process is behaving badly and is unable to run to specified KPI hurdles in which the worker is evaluated. Trust, honesty and partnering is the outcome when retribution is off the table.
- Methodology Roadmap: A map for the strategic initiative that lays out the required improvement activities and tools. The result is consistency of approach, expectations, and capability for the project leader and team.
- Data Based Decisions: Both team-based and process-based data are needed and should go hand in hand in finding alternative solutions. (Hint: In my experience there is never just one root cause, but several small ones that are additive in nature.)
- Confirmation of Improvement: The team is required to demonstrate the improvement either through data or qualitative means such as decreased steps or improved satisfaction.
- Well-Documented Solutions: KPIs and control plans implemented, providing ways to track the health of new process and whether people continue to focus on the important drivers to sustain the improvement gain.
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