The Customer Value Bill of Rights and the Lean Manufacturing Justice System

Customer Value Bill of Rights - calvinlwilliams.com

You’ve probably heard the expression that you succeed by helping others to be successful. Well that’s also true for a manufacturing business. Truly putting the customer first and your role as helping them to succeed changes the way you see value and waste, which are the ying and yang of Continuous Improvement. In 1950, it took Toyota a year to make the same amount of cars that Ford and GM made in 3 days. Toyota was on a glide path to failure and needed to make drastic changes for the sake of their own survival. Out of this immense pressure emerged the diamond that we now call Lean Manufacturing and the Toyota Production System, which has become the global benchmark of operational excellence. At the core of this set of management processes were 2 principles:

  1. Value is defined by the customer
  2. Waste is eliminated or controlled by a method we call one-piece-flow

This article stresses the importance of the first principle. The Toyota Production System was born out of an understanding that the customer is at the center of the company’s universe and everything the company does is intended to bring greater value to the customer. With this clear perspective on what it means to “win”, it also becomes clear what “losses” are – which are any activity that does not bring value to the customer. On the same note, Toyota has famously proclaimed that as much as 93% of all of it’s end-to-end supply chain activity is waste. So if you look around and see some opportunities for improvement, you’re certainly not alone.

Each customer defines value differently. Likewise, customer preferences are constantly changing. This is great; it means there’s always opportunity for you to grow and lay claim to whatever your slower moving competitors are leaving on the table. However, there are 6 rights that bring increasingly greater value to every customer. The company that does the best job satisfying those 6 rights every time has a huge competitive advantage over the other guys.

Here is the Customer Value Bill of Rights:

The Right Product

When you think of product, think of a solution that has a certain form, fit, and function. Customers will buy the product that most closely fits their need (or desire). Also, keep in mind that customer needs are always evolving as being driven by new technology, fashion trends, and competitive activity. You win this category by picking up the signals of consumer taste and being first to re-tool and launch products that seize emerging market opportunities. In this category, your weapon of choice is production agility and flexibility.

The Right Place

One simple but powerful Lean tenant is that supplies should be staged near the point of use. Your customers also appreciate the convenience of getting what they need from you without needing to look far and wide for it. Nearly all supply chain operations fall short of the ideal of zero distance from the point of use but Amazon.com is getting us fairly close. Most supply chain models are designed to get the product from the factory to the shelf at the supermarket. We then rely on the customer to come into the store to find and purchase the product. Amazon and a few other close followers have taken this a step further by delivering products directly to the customers doorstep – albeit at least a couple of days later. There is still opportunity here for us all.

The Right Time

Can you imagine everything you need just materializing right in your hand the moment you need it? We don’t live in that world today but I’m sure people would be delighted to fork over a little extra cash if you could figure this one out for them. This sounds a lot like the Lean Manufacturing principle of Just in Time delivery (JIT). As a consumer, the closest thing we have to this is in digital products like movies, music, and other content that can be accessed on demand. The next wave is products on demand in real-time. Imagine a new bottle of dish washing liquid showing up at your door the moment your current bottle reaches the 10% mark with no action needed on your part. Its coming – and if you get there before the other guys do, the spoils are all yours to enjoy.

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The Right Quantity

I would venture to say that most manufacturers that have been in business for a while do a pretty good job at shipping the right quantities to the customer. Of course some still struggle in this department from time to time but with the help of ERP and Order Management technology, you shouldn’t have much trouble getting production orders filled as needed. The key here is to continue to increase production reliability so that your system delivers the quantities needed with less time and inventory required.

The Right Quality

Quality can be a tricky one because it has a double-meaning; one being to produce with high consistency and low deviation from one unit to the next of the same product; the other referring to the perceived value of materials and methods used in production (consider luxury products as being regarded as high quality). For all intensive purposes, let’s consider quality to mean consistency and reliability of the product itself. Manufacturers win in this space by continuously engineering a more perfect production process where defects are made impossible in the best case and contained prior to shipping in the least so that product defects never reach the customer.

The Right Price

Finally, all of this must be done at the right price to the customer. This implies that conversion and material costs are low enough to leave you with a healthy profit as well. The manufacturer with the lowest direct, indirect, and overhead cost structure has a significant advantage over the competition given all other things equal. To win in this category, continue to drive out the eight wastes while delivering excellence across the Customer Value Bill of Rights.

The days of brand loyalty are quickly becoming a thing of the past. Companies that win in the markets of tomorrow understand the Customer Value Bill of Rights and leverage end-to-end Continuous Improvement to deliver on them more effectively than the competition. Jeff Bezos and the good folks at Amazon.com have made a killing by exploiting the fact that manufacturers do poorly at providing the right product at the right place. However, Amazon is terrified of that manufacturer who figures out how to deliver the right product to the individual customer’s doorstep on demand in the right quantity, quality, and price.

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The Ultimate Lean Metric: Are You Really Improving?

The Ultimate Lean Metric - calvinlwilliams.com

So, I have good news – and I got bad news. Which one do you want to hear first? Ok the bad news…you might want to sit down for this. Well the results have come back from the lab and…it turns out that your manufacturing business is only 50% as productive as it could be (maybe this comes to you as good news. If so, we should talk because you need some new friends). The good news is that you can get to 60% just by tracking and reporting the right information. You can get even more productive than that by engaging your workforce in overcoming issues that are hurting your company’s productivity. But let’s tackle first things first. What Lean Metric are you using to show your opportunities for improvement? And how are you measuring productivity?

What is a Lean Metric?

Okay, I have a confession to make. I used the term Lean Metric with an unfair assumption. In my defense, its an assumption that almost everyone makes when they think about Lean or Continuous Improvement. Its the assumption that your company is focused on increasing productivity, reducing cost, freeing up working capital, optimizing throughput, improving quality, and so forth. Before investing another minute of your time or kilo-joule of your energy in Lean or Continuous Improvement, you should know what’s most important for your company to improve. If the answer is none of the items listed above, you might not be looking for the intel I’m about to share with you.

Your Lean Metric is the one that lets you know 2 things:

  1. How much better can you get – notice I didn’t say “how good you already are”. Hey, we all like to look good – but when you’re looking bad, you want to find out before everyone does
  2. Where do you place your improvement effort – hopefully you’ve accepted by now that improvement does require effort and you’ve planned for that, come on people. The next step is sizing up where that effort is most economically placed to produce the greatest return on investment. Not all changes are actually improvements – only changes that actually help are improvements.

Now if I walk into your plant and you tell me that you’re achieving over 100% efficiency, we need to have a serious talk. When you tell me that your performance metrics are no longer green but have reached gold status, let me know in advance so I can bring a good therapist along with me. The global standard for measuring productivity is a metric called Overall Equipment Effectiveness (OEE). I like this metric because it measures your equipment output against perfection, which means you can never achieve 100%. And that’s okay. The first step to recovery is acceptance.

However, even OEE as it’s taught in the textbooks is limited because it lacks the human element. The one that says that a person, or group of people, are responsible for the results. It draws focus to fixing machines but not developing people. A better metric would look overall personal effectiveness, which is similar to OEE (availability x throughput x yield) but at a person level as well. This way you can see who has better processes and capability and can help develop capability in those who need it most. This works well if leader behave more as coaches and adopt a CI mindset instead of seeking to place blame or take punitive action.

Why Your Lean Metric Matters

You may be thinking, wait a minute here. If I show a low efficiency number, its going to hurt morale and demotivate the team. The flipside is that if you show a high number that isn’t deserved, you’ll spoil the troops, which is also demotivating. To foster a Continuous Improvement culture, you need to reward the behaviors that you want to see repeated. The key is to reward behaviors that produce consistently improving results, not the results themselves. Even better if you can catch the behavior in the act and reward, encourage, inspire, etc. Rewarding results is dangerous because you probably don’t know what behaviors were used to produce those results.

Lean Metrics should help drive the right behaviors; those that lead to better and more sustainable results, as indicated (but not proven) by the metrics. Reward steady and gradual improvement, which is achieved by learning and increased engagement in the right behaviors. As a leader, the Lean metric more than likely represents how much you are investing in building the right capability in your people. The capability to overcome challenges, solve problems, and continuously improve processes in their area of ownership.

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How to Improve Your Lean Metric results?

We all know managers who think they’re “coaching” when they’re actually just “telling and punishing” their employees. They say things like “I told them what to do and they didn’t do it” or “they didn’t listen” or my favorite “they were coached”. This mindset comes from the old command and control management style that just doesn’t work for operational excellence. The reason is because you can command a short-term change in behavior, but if you haven’t built the capability and learning to sustain that behavior, it falls apart under the weight of real life. The key to getting better results in your Lean Metric is by truly coaching people. John Wooden would say that “great coaches can guide the behavior of others without causing resentment”. That’s a powerful skill that every leader should work to master.

Here’s a great way to coach people. You issue them a challenge that excites them or find out what they’re trying passionately to improve. Then engage them in overcoming the challenges between the current and target conditions. Whatever you do, don’t give them the answers – that’s not coaching, that’s commanding. Certainly don’t force them to use certain Lean Tools that you like and expect them to fall in love with the tool like you did; it’s not gonna happen. Let them come to understand that they can’t achieve their goal unless they get the tools or help they need. Once they ask for help, then you provide advice (but not commanding). They must achieve and retain ownership of the process and the improvement. One of my favorite expressions is “the beauty is in the struggle”. Let them struggle, then overcome, and finally be victorious. The Lean Metric will show improvement, then you reward them for all their hard work in overcoming such impossible challenges.

The Brilliance Behind the 5 Why’s: The Leanest of All Lean Tools

The Brilliance Behind the 5 Why's - calvinlwilliams.com

I have some terrible news. I hate to have the one to inform you of this. But…if you or your people are no good at solving problems, you can’t do Lean. Don’t waste your valuable time running out to the production floor to do 5S, kanbans, or even OEE. You’ll get your hopes up high just to watch them come crashing down after a couple of weeks when you start to see all the great work you did just isn’t sustaining. It will break your heart after investing so much political and emotional capital and getting everyone else so excited about Lean, just to end up feeling like Lean doesn’t work for us – just another flavor of the month.

But don’t give up hope. What I’m about to say in this blog post will change the trajectory of your Lean journey and put your initiative on the path to lifelong growth and sustainability (just pretend with me like that statement is not an oxymoron).

What is the 5 Why’s?

I assume you’ve probably heard of the 5 Why’s but I’ll give you the quick and dirty. It’s essentially a little technique that helps you identify the root cause of an issue simply by asking Why 5 times. The 5th Why (sometimes more or less) should get you pretty close to the root cause.

For example, a 5 Why’s Analysis might look something like this:

Problem: The conveyor system keeps failing

1st Why: The motor is running high amperage and shutting down

2nd Why: The motor is failing

3rd Why: The motor and gearbox have been lubricated very infrequently since they were installed

4th Why: No one is checking the lubrication record to see when the next lubrication is needed and lubricating

5th Why: There is no scheduled preventative maintenance in place for this motor

Logically, one would conclude to implement a PM, or even better, an Operator PM or self-lubrication system to lubricate the motor on a regular basis to avoid future failures.

How Are You Supposed to Do The 5 Why’s?

Although many people just complete the 5 Why’s as a conference room activity, which is a huge step forward from doing no root cause analysis at all. Ideally, the 5 Why’s would be done along with validating the “truth” in each of the assumptions made during analysis. The fact is that each of the Why’s listed above is a hypothesis that needs to be validated by testing the process to see if it actually changes the outcome, or even better, produces the desired outcome. If the 5 Why theory holds true, once you get to the 5th Why, then you have found the root cause.

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Why the 5 Why’s is so Powerful

There is no typo there. The 5 Why’s is immensely powerful. I’ll list 2 damn good reasons why but I’m sure you can come up with a half dozen more if you put your mind to it.

Reason #1: In identifying the root cause of one issue and fixing it permanently, you have also solved a whole boatload of other problems. So there’s a multiplier effect of getting this right. Take the example above regarding the PM for the conveyor motor. You can probably imagine that this conveyor failing is causing other reliability issues up and down the line due to the erk and jerk of frequent stopping and restarting. Also, I’d be willing to bet my allowance money that there are a bunch of other motors / gearboxes in your plant that also need to be set on a lubrication schedule.

Reason #2: Probably 99% of humans older than age 6 could effectively handle asking Why 5 times to get to the Root Cause. Okay maybe 99% is an overstatement but I’ll venture to say that all of your employees, managers, and colleagues can handle it just fine.

That’s another reason why I love Lean and Continuous Improvement. After spending too much of my life in undergrad for Industrial Engineering, half-killing myself pulling all-nighters to pass tests designed to demonstrate my inferiority and make me pay twice to retake each class, I get to the real world and learn that the best Industrial Engineering tools out there can be successfully executed by a six year-old.

Root cause analysis is at the heart of Dr Deming’s PDCA (Plan – Do – Check – Act) model of Continuous Improvement. The 5 Why’s is undoubtedly one of the most powerful Root Cause Analysis tools as it applies the logic behind what’s driving the problems we see everyday, regardless of complexity. So go forth and apply this wisdom to your stickiest of problems and at least (but not last) start to build the ever-so-needed problem solving capability. Couple this behavior with a good management system to get everyone using it regularly and you’ve got a recipe to build an unstoppable growth machine.

Kazien Events Don’t Work without this Powerful Activator

Sustaining Kaizen - Impruver.com

Okay so you spent the last 2 months planning this Kaizen event and the big day has come. You had to give up a kidney to get some line time freed up for this. You had to sign over your first born child to get a few operators, a mechanic, a quality person, and a safety resource booked for this event. The Plant Manager has given you an ultimatum that says if this kaizen event doesn’t result in a complete transformation of performance and culture, there’s no chance you’ll be successful with the company. Better yet, the expectation is that you get 100% buy-in from the entire workforce and all of the shop floor operators need to start taking the initiative to apply lean tools in order for you to claim any degree of success from this event. But hey…no pressure – it’s all good. Let’s do this.

You execute the event to perfection. The training is engaging and eye-opening; the observations and ideas for improvement are insightful; and the execution of action items was impeccable. After the event, the team does the report out to leadership about all the amazing learnings and changes and benefits to the business, right before breaking out into celebrating like you all just hit the lottery.

The Reckoning

The next Monday, everyone gets back to work. Back to the firefighting, the daily struggle to hit schedule, and avoiding risks of any type. However the results from the Kaizen event are showing promise, at first any way. After about a month or two, somehow the line performance is right back where it was before anything was done. How could this be? Should you have done more to recognize the good work that was done? Does the team not care about the beautiful standard work documents that were created and everyone swore on a stack of bibles that they would follow? What went wrong?

Why Your Kaizen Event Gains Aren’t Sustaining

So now it’s time for the post-mortem on your kaizen event and possibly any resemblance of your career with the company. The first stage is denial. You say things like: wait it did work. Look, this area still looks really good. And what about those potential safety accidents we avoided?

The second stage is blaming. You say things like, well it would have gone much better if this operator or that supervisor would have just done their job. You say, “the problem wasn’t the kaizen event, it’s a lack of accountability!”

Finally, you reach a stage a acceptance – and the healing can begin. You start saying, you know what, maybe I could have done some things differently. Perhaps I should have engaged more people or gotten more buy-in from leadership from the beginning.

Chances are that if this sounds familiar, you’re probably more a victim of circumstance more than anything else. Maybe you’ve been given the responsibility to lead a Lean Implementation that is expected to deliver rapid and sustaining results. However, this entire mindset is flawed from the onset. The truth is that you, or anyone for that matter, cannot will rapid and sustained results over the will and capability of the people doing the work everyday, or the people managing the business. Beware anyone claiming that this is possible because they end up doing more damage than good in the long run.

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Maximizing the Results of Your Kaizen Efforts

Here’s the reality of the matter. You can make changes or engage teams in kaizen to improve processes until you’re blue in the face. However, the business performance is truly limited to one thing: the improvement capability that exists within your workforce. So it’s not one-off kaizens that produce sustainable results, it’s gradual and disciplined mastery of the skill of improvement that gets you anywhere. This means the people who own processes in your factory need as many opportunities to sharpen their blade as practically possible.

 

Where the Real Improvement Happens First

It takes time and maybe some therapy to help people to cope with change – and some need more than others. Expecting rapid results is the same as denying people the time to grieve the loss of a loved one. The only thing that helps people overcome the fear and grief that comes with change is time, support and consistency, or risk causing psychological damage to your workforce. It also takes time for them to build the skills of making improvements. This is done through the practice of Improvement KATA’s. The only way to get good at golf is to play a lot of golf – there is no alternative. Watching videos and reading articles help but if you never pick up the club, you’ll never play well. One-off Kaizens are like golfing once or twice a year…good luck with that because you’re gonna need it.

Just as in golf, you need a good coach or coaches to help you with your CI game. You need someone to give you a few tricks of the trade and hold you accountable to your commitments. If you’re a Lean expert or support resource, it’s not you who will improve processes, its the people who execute them everyday. They are the golfer in the analogy and you’re (maybe) the coach. Even better if they are being coached by their immediate manager or supervisor. But the line operators are the ones who have to step up to the tee and drive the ball into the proverbial CI hole.

Making the Kaizen Results Stick

Once the right skill sets are developed, then you can expect greater results and sustainment from your kaizen efforts. Just like all other things in the universe, entropy destroys processes over time. A kaizen event might provide you with quick burst in productivity and a new process but given time and other factors, it will start to break down. If your workforce is under-developed and not capable of dealing with problems as they arise instead waiting for you or management to fix them, your kaizen gains will be short lived.

So, with all that said, the success or failure of your Continuous Improvement efforts is based on the strength of the problem-solving or CI skills within the workforce. Gains don’t sustain themselves, the people who own the process sustain and continuously increase gains. They need to be empowered to do so by building their skills through daily practice of the scientific method and problem-solving. All you can do is provide them with the means and motivation to improve.

The New World Class: Beyond TPM in Continuous Improvement

The New World Class: Beyond TPM - calvinlwilliams.com

Okay so you’ve achieved and are sustaining base condition across your entire plant, now what? Does Continuous Improvement end there? Machines are running in peak condition and unplanned failures are at an all time low. Meanwhile you’re getting higher OEE results than you’ve ever seen. Even changeover times, safety, and quality incidents have come down dramatically. You’re thinking – this is fantastic! It feels like the plant has turned the corner and we’re finally winning. But then you get the news. Your products aren’t doing well and the market and the business is failing. The plant may be shut down if drastic action isn’t taken. “But how can this be?”, you ask. The plant has executed AM to perfection. What could possibly be beyond Autonomous Maintenance or is there something we’ve missed along the way?

Okay let’s just go through the checklist:

AM Step 1) You’ve eliminated abnormalities (defects) and installed centerlines – check

AM Step 2) Sources of contamination have been identified and rooted out – check

AM Step 3) You’ve implemented a Cleaning, Inspection, and Lubrication plan that operators are executing to perfection- check

AM Step 4) Operators are completing general and component-level inspections to identify and repair defects there as well – check

On top of that, operators are now capable of doing over 75% of the work that mechanics use to spend their time doing a year ago. Some could quite possibly be qualified as mechanics fairly soon here. Even the plant’s Preventative Maintenance program has reached a state of maturity. How is is possible that we’ve become a World-Class Manufacturing organization and are facing shut-down?

This scenario, as dire as it may seem, is becoming more common, especially in fast-moving markets. Autonomous Maintenance is a powerful method of helping operations to achieve and maintain base condition, or peak machine performance, by developing operators to become more autonomous from the maintenance function. But does that guarantee long-term success and viability of the business? This article covers how Continuous Improvement goes beyond helping operations achieve more autonomy from maintenance and why it needs to.

What’s Beyond Autonomous Maintenance?

In the scenario above, the plant successfully progressed through AM Step 4. Although this is excellent progress and produces incredible benefits in itself, there are still 2 inherent vulnerabilities that need to be addressed. Let’s cover each:

AM Steps 5, 6, and 7 (Autonomous Management)

Beyond AM Step 4 is where operators, or the people working directly to create value for the customer, start to become more autonomous from the Management function. Up to this point, management has probably been engaged in some form of Leader Standard Work in order to drive AM progression. Management has been performing routine reviews, coaching, and perhaps some degree of intervention to keep the good work from backsliding. What happens when those highly competent managers move on or there’s a reduction in salaried staff? Many times plants do begin to regress in their AM progression over time. This is why AM Steps 5, 6, and 7 exist, to put the mechanisms in place to perpetuate operational excellence at the value stream level despite what is happening at the administrative level. This includes building capability into the workforce to make key decisions, solve problems, and sustain base condition with limited or no management input. Information technology and artificial intelligence has aided dramatically in making autonomous management easier to reach.

Market Mis-Alignment

Even when all is well inside the business, there could be complete turmoil on the outside. There are 6 rights that keeps the customer happy. Those are: right product, right price, right place, right quality, right quantity, and at the right time. AM (and TPM in general) only enables four of these rights: quantity, quality, time, and price (indirectly). Failing to address the others means failing in the market; and the others (product and place) are where many established companies are being killed by upstarts. These two items are the reason why Jeff Bazos is now the richest man in the world – because he closed this gap that many companies have left wide open. Lean Manufacturing is intended to bring value to the customer, not only by achieving internal operational excellence, but by keeping the internal operations in perfect synchronization with the needs of the ever-changing market.

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How to Achieve Autonomous Management?

When operators struggle to meet the demands of daily operations autonomously, managers spend too much of their time fighting fires. This requires managers to “take their eye off the ball”,  meaning to lose touch with which way the market is moving. This also makes them incapable of developing and / or deploying winning strategiesbecause they don’t have the knowledge or time needed to do so effectively. Autonomous Management allows leaders the space to lead the company to a better station in the world. To achieve this, leaders need to consider what they spend their time doing and how they can pass this capability into those working the value stream in a practical way, especially when it comes to the execution of “normal operations”. The ideal state is to have progressively more decisions made and problems solved at the value stream level. To achieve this, leaders can start by doing these 3 things:

  1. Standardize decision-making processes
  2. Create a knowledge management system where market and administrative knowledge flows into people at all levels, especially the value stream
  3. Engage value-stream-level people as partners in key decisions as if they will ultimately be making similar future decisions autonomously

This will start to connect the people on the value stream more directly with the customer / consumer so that layers of “noise” can be removed from the process of delivering an excellent service and winning in the market. This concept is similar to the inverted pyramid where the customer is on top, who are being served immediately by the people working the value stream. In this model the role of management / leadership is to enable and support success but not necessarily to command-and-control people.

Coaching and Improvement KATA – How to Do It and Why You Should

Coaching and Improvement KATA - calvinlwilliams.com
There’s a damn good chance that coaching and improvement KATA are the missing ingredients in your Lean or Continuous Improvement recipe. KATA comes from the martial arts world as an approach to building skills through practice and repetition. Over time, this practice leads to the rapidly development of process improvement capability and has produced incredible results across industries.

I have personally used this process to drive a 25% increase in productivity in 6 months, including a 40% reduction in quality defects at a leading global CPG company.

Lean’s AHA Moment – How Lean Met Improvement KATA

Lean thought leaders, Mike Rother and others, have identified that the leading reason that over 70% of Lean and Continuous Improvement initiatives fail is due to a lack of development of improvement skills and understanding within the workforce. Coaching and Improvement KATA addresses this shortcoming by transforming every employee into an agent of improvement and every leader into a coach, whose role is to develop CI capability into their teams. This multi-layered approach engages employees from the shop floor up, where the true culture work is done.

In the Improvement KATA framework, each process owner (the person executing the process every day) is issued a challenge, for which they need to develop the target condition. The challenge should be aligned with the broader business strategy and target condition should be the next performance goal the learner, or process owner, is trying to achieve. The learner and coach should also agree on a target due date for either the result to be achieved or for the next experiment to be completed.

Learners run a set of controlled experiments (PDCA) to drive progress against their target condition and 1st level leaders provide coaching on established intervals. 2nd level leaders provide coaching to 1st level coaches. This helps build coaching capability into the organization as well and engages multiple levels in driving improvements.

In this model coaches don’t provide learners with the “just go do this” answer, but help the learner find the answer for themselves; which in a sense, teaches the learner how to learn on their own. Over time, learners begin to take initiative to resolve issues that exist in their work areas instead of waiting for management, who also have limited time and resources available to work on issues. They key for management is to ensure that all employees understand and keep their improvement work aligned with the company strategy.

At the end of it all, the workforce builds the skills and capabilities to drive Continuous Improvement in their work area, resulting in more rapid progress against the company’s goals. This method, in combination with an effective strategy deployment process, enables greater speed of improvement in the direction that can help the company excel in the market.

So, here’s the Coaching and Improvement KATA process:

  1. Deploy Strategy
  2. Assign a challenge to each employee in alignment with the strategy
  3. Each employee should develop a target condition
  4. Collect data and make observations to understand the current condition
  5. Experiment with changes to see what difference they make to performance (here’s where many other Lean tools fit into the puzzle)
  6. Collect data to measure the impact made
  7. Review the findings with 1st level coaches to determine what should be done next
  8. 2nd-level coaches work with 1st level coaches to improve coaching capability

This is very much like the PDCA process with a slight twist, placing more focus on the skill-building than on actual results, which are a product of developing the right skills.

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For coaches, there are 5 Kata Questions that help the learner progress to their desired future state:

  1. What is the target condition?
  2. What is the current condition?
  3. What obstacles are preventing your from reaching your target condition?
  4. What is the next step (or experiment)?
  5. When can we go and see what we have learned?

This cycle is repeated on some frequency agreed upon by the coach and learner until the desired result is achieved and sustained. In this model coaches are most likely to be the learner’s (or executor of the process) direct supervisor, who’s 2nd level coach is their direct manager. This model supports deployment of continuous improvement through the direct chain of command instead of being owned and driven by a support function.

We are now learning that this is the secret sauce in Toyota’s CI success. Toyota has generously opened their doors on the tools and methods they used to rise to sustained market dominance. However, many have copied and pasted these tools verbatim without putting in the work to develop the workforce. As a result, leadership ends up pushing changes that the workforces are not capable of sustaining, leading companies to be further behind than where they started.

Improvement KATA turns the focus of CI from tools and methods to coaching and experimenting to solve problems through the application of the scientific method. Coaching and Improvement KATA are not viewed as a tool or process to be implemented but more of a behavior to be practiced so that the skills to solve problems of ever-increasing complexity can be solved. Over time, a true culture of continuous improvement develops as people become conditioned and skilled at overcoming the challenges they see all around them. This approach can be combined with cross-functional engagement in the application of Lean tools such as Root Cause Analysis can produce powerful effects.

WHAT IS MARKET-DRIVEN CONTINUOUS IMPROVEMENT?

Market-driven continuous improvement - calvinlwilliams.com

Continuous improvement can be tricky. There are examples abound of companies applying all the tools and methodologies to perfection and still failing in the market. But how can this be? you ask. Isn’t Continuous Improvement supposed to give a company a significant competitive edge in the market?

Well the fact is that CI can be used to do whatever you want it to do. It can be used to increase profitability, reduce operating cost, or improve quality, morale, or safety. But winning in the market is a little bit different. To do this, Continuous Improvement must be coupled with strategy. Toyota called this Hoshin Kanri, where strategy is used to focus any improvement effort on making gains in the market.

This is a stark difference from the way many companies approach Lean and Continuous Improvement. Many tend to consider Lean an approach to eliminate waste and drive cost savings. Often, they never stop to consider if these areas of focus will actually help make gains in the market.

Market-driven Continuous Improvement might look at the few strategic imperatives needed to increase sales, market share, or even customer retention. For example, company XYZ might be getting a signal from the market that customers want suppliers to provide products in much shorter lead times. In this case, the company realizes that it could increase sales, market share, profitability, or some other key area of performance by being the supplier with the shortest lead time. The company can then deploy its limited Continuous Improvement resources against cutting lead time down as low as possible in order to win in the market.

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In the absence of a clear strategy, improvement efforts are more random, which can be wasteful in itself. Even when using prescribed Lean tools as flawlessly as can be done. This is what can create a dynamic of succeeding at Lean and failing at business, which can be counterproductive.

In today’s CPG business landscape where retail is gradually moving online and brand loyalty is waning, companies are competing in three key areas:
1) Product fit – this means the more flexible or agile factory wins
2) Quality – the factory with the most consistent and reliable processes wins
3) Price – the factory with the lowest operating cost (and ultimately best value for the price) wins.

The market is changing toward more of a direct-to-consumer model where big box retailers have less influence over which manufacturers get more exposure to the customer. Smaller companies are growing at 6% year over year and larger ones are at less than 1% growth in CPG. The game is changing – so make sure you’re in position to win.