CI 101

What are the key elements for continuous improvement success?

key elements

The answer to the question of what the keys to a successful lean implementation are depends on who you ask. Most people will say that discipline and determination are key.  Others will include skills, passion, know your goals, and luck.  If you are convinced that lean is the strategy you will use to frame your business decisions, you must know the keys to a successful lean implementation.

The key ingredient for a successful lean implementation is creating a continuous improvement culture.  The objective is to change from traditional thinking to a lean thinking approach.  Changing behaviors and beliefs that have been part of the company’s soul since birth is not an easy task, it is a big challenge.  A fundamental part of the culture change is to care more about people’s motivations, viewpoints, and how to develop their skills.

The culture change is not possible unless leadership buy-in and support the transformation.  Leadership defines the organization culture if they don’t change their attitudes and behaviors, success is a dream.  If you are the owner of a small business, you are the person who needs to drive the change and align purpose, process, and people.

Communication at every stage is crucial.  People need to know what, why, how, when, and who.  If the current culture is not good with communication, this will be the start.  The team is now your ally, you work to facilitate their work and develop their skills.  The more they know, the more engagement and willingness to help will be.  They need to know what the problem is and what you want to accomplish with a continuous improvement strategy.  Set the tone by including them in the decision-making process.  For example, ask for help to establish the baseline and stretch goals for the implementation.

You would think that there is no need to clarify the frequency of continuous improvement activities.  Unfortunately, it does need an explanation.  A common mistake is to believe that it is ok to base the implementation of CI events only. CI events are good, but you need to promote CI thinking every day.  Lead by example every day by looking for waste and ways to eliminate it.  Why are we doing this?  How can we improve it?   Use the culture change to promote daily improvement activities and events as training opportunities.

For effective improvements, your team will need to have the right tools.  An early step is to identify which tools make sense for your operation and train the team.  You can find a responsible person who works with you to design the roadmap to growing the CI culture and identify the tools to support it.  A good start is to review how the current leadership culture has shaped the work environment.  Define the gap between that and where you want to be.  Knowing the current environment, you can create a motivating climate for the lean journey.  You will design a toolbox with the basic tools you will need to support the lean implementation journey.

Consistency is very important; you cannot change the framework to make decisions every time something is not working.  Regardless of how challenging the problems are, keep using lean thinking.  Remember, leadership is responsible for creating and modeling culture.  Your employees will be watching, they will do what you do, not what you say.  If you go back to your old ways, they will too.  When problems arise, go where the action happens, go, and see.  Observe and ask why, ask your team for ideas, try something new, and measure the effect.  Make from every situation an opportunity to learn, and always celebrate the wins!

In summary, the following are the five key elements for a successful continuous improvement or lean implementation:

  1. Leadership buy-in and support
  2. Culture change to lean thinking & people’s development
  3. Effective Communication every step of the way
  4. Use the right CI tools, create your own toolbox
  5. Continuous improvement everywhere, every day, by everybody
CI 101

Is visual display and visual control the same thing?

A visual display share information at the point of need

Do you know the difference between visual control and visual display? A display tells information, and control prompts some action.

A visual display shares information or standards. It provides the right information, in the right format, at the point of need. Some examples are bin labels to identify different parts or materials, floor markings, safety signs, and defects displays. Work instructions and other types of job aids are also examples of visual display. Bulletin boards to share information like the safety record for the year, open job postings, and changes in policy are a very common visual display.

A visual control calls for action when something happens. The standards are part of the workplace, and a warning makes you notice that something abnormal happened. Sometimes, visual controls not only warn that something happened but also organizes behavior. When an operator pulls an Andon cord, the line stops sending a powerful signal warning of problems in the line. Everybody knows the warning means that the line stopped, and help is needed to fix a problem. The ultimate goal of a workplace is to have visual controls that prevent defects. Mistake proof controls use techniques that make it impossible to make mistakes.

Warning and call for action, organize behavior, and defect prevention are different levels of visual control. A visual display is the first step before you start building visual controls into the workplace. Many companies never moved from this stage, and wrongfully think that they have visual controls. To avoid that same mistake, keep improving one step at a time to reach the ultimate goal, to have mistake-proof controls.

CI 101

Do you believe in these lean misconceptions?

Do not makes these mistakes, learn about lean misconceptions

Like many other things in life, continuous improvement is often misunderstood. During my lean journey, the following are the most common ones that I have encountered.

CI is not a department store, you don’t get to pick and choose what you think you need. CI is a system, the only way to achieve big and consistent results is by using all its parts. CI is a business management system designed to provide customer value with fewer resources. It is made up of a group of principles, best practices, and tools. 

The heart of the system is the people, and you show respect by developing them. These motivated and engaged teams participate in the improvement process and create value. You cannot focus on the tools while ignoring the people’s part.

The second misconception is the idea of delegating the implementation. CI thinking is opposite to traditional management, for a successful implementation the company culture has to change. This change only happens if it is coming from top to bottom. Top leaders need to learn and practice CI every day, everywhere, just like the rest of the team. They show commitment by supporting and actively participating in the transformation.

Another mistake is believing that CI is a cost reduction tool. Do not start this journey without a clear purpose. Why do you want to do it? If the answer is cost reduction, think again. Go and see, ask why, and show respect will lead you to achieve cost goals. But that cannot be the purpose. Instead, think about changing lives or creating value.

The biggest misconception is believing that CI is only for manufacturing companies. Continuous improvement, Best Business Practices, Danaher Business System and Lean Manufacturing are different names for a way to conduct business. The foundation for all of them is the Toyota Production System (TPS). The name Lean Manufacturing shifts your attention to manufacturing, and TPS makes people focus on cars. I prefer to use continuous improvement or Best Business Practices. Those are general terms with no reference to any industry.

Now you know what not to expect from continuous improvement. If you haven’t yet, read my post What is Continuous Improvement and Why you Need it? You will see why you need it in your business.

CI 101

What are the rules to fix problems?

One common mistake for a manager or business owner is trying to “fix” problems looking at reports. Those reports are full of old information. They are good to know what happened, but they don’t tell the whole story.

If you are a basketball coach, you won’t try to call the shots just by looking at your team stats from the office. You will go to the basketball court, where the action is. You will observe how the individual members of the team react to the defense or offense play of the rival team. If you see something wrong, you will ask for a time out to discuss a change in strategy. You are observing every move, focusing on what the team needs to do to improve their game, and win. You can not be effective in doing the same thing looking at the score only.

As a business owner, when problems arise with a specific process, you need to do the same thing. Always go to the area where the action happens first. If it is a problem with customer service, observe how your employees interact with customers. If it is an issue related to the quality of the food, try it yourself. Does it look and taste as it should?

Sometimes it is not obvious what is wrong. In that case, focus your attention on the process tools, equipment, and standard work. On the food quality example, you confirm something is off with the quality but don’t know what. Focus your attention on how close is the execution to the standard work or recipe. Observe if the cooks are using the right ingredients, the right quantity, or following the recipe steps.

As soon as you find out the issue, take a temporary fix on the spot. This temporary fix will not solve the problem. To fix it, you need to find the root cause of the problem. Do not try to guess or assign a cause based on your experience, engage the team on this exercise. Once you know the cause or causes of the problem, you can plan how to fix it. To prevent a recurrence, you need to update the standard work.

To success on your continuous improvement journey follow these simple rules while fixing problems:

  • When a problem arises, go to the place where the action or process happens first
  • Check all the relevant things: equipment, tools, materials, standard work
  • Take temporary solutions on the spot
  • Find the root cause
  • Standardize to prevent a recurrence

To acquire knowledge, one must study; but to acquire wisdom, one must observe. – Marilyn Vos Savant

CI 101

What is a system?

A system is a set of principles or procedures working together to achieve a defined goal. Continuous improvement or Lean is a business management system designed to create customer value with fewer resources. Each part of the system has a purpose or objective. Many times only one or two lean principles are implemented, but not the system. Perhaps that is the reason why the expected results are not obtained.

The goal of lean or continuous improvement is to provide the customer with the highest quality, at the lowest cost, in a shorter time. The foundation of the system is stability and standardization. The pillars to achieve that goal are delivery time and quality. The heart is involvement, highly flexible, and motivated team members that are always improving.
Each program or principle connects with one of those components. For example, 5S and standardize work are critical for process stability. Continuous flow is one of the activities to achieve shorter delivery times.

How do we take care of the system’s heart? One of the most important principles of lean is respect. It is important to treat our team members as human beings and not a commodity. We show respect by taking the time to develop their skills and helping them to be successful. Create opportunities to learn using lean tools and encourage them to improve their work. Employee participation in improvement activities is a way to increase engagement. It gives them a chance to win achieving success in their efforts to create simple and safer processes.

Little by little, I will continue to share other activities or tools connected with the goal, foundation, pillars, and heart of the Lean System. Continuous improvement is not a supermarket of tools to pick and choose those you like more. You don’t need to use all the tools available, but you have to support all the system components. What makes Lean good is not the effectiveness of individual tools, but the synergy between them to achieve the goal.

CI 101

What is ​Standard Work?

You need to measure what you want to improve. A metric is a measurement you use to track and assess the condition of a process. It gives you information about how the process is working and provides a baseline for improvements. After each improvement cycle, the resulting value is the new goal for your process parameter.

You use the current value of a metric or process parameter to know whether the process meets the goal or it needs adjustment. For example, the safe internal temperature for cooked chicken is 165° Fahrenheit. That value is the process parameter goal. If at the end of the process the actual temperature is 165° or more, the chicken is safely cooked. If it is less than 165°, you need to adjust. In this case, you adjust the process by cooking the chicken a little longer until it reaches the goal. How do you get the expected results every time?

In this example, you have a recipe. That document states all the ingredients and the instructions to cook the chicken. It includes the oven temperature setting and a range of time to cook the chicken. Also, it includes the process parameter goal, the cooking temperature for the chicken. If you follow those instructions, every time the chicken will be cooked and will taste about the same.

Standard Work (SW) is a simple written description to perform a task. SW is the safest, highest quality, and most efficient way to execute a particular task. Once you establish SW, it becomes the only acceptable way to do the process it describes. It contains the sequence of steps to complete the task, the process parameters, and their goals.

Update the standard work every time a process parameter or the steps change. Training for Supervisors and employees is critical to ensure everybody follows the standard. After training, it is time to improve again!

CI 101

How do you reduce operating expenses?

There are two ways to increase profits, to increase revenue or reduce costs. Operating expense is a common headache for business owners, are you one of them?

These days consumers have more choices and more information than ever. They know that with so many competitors, they have multiple options for the needed product or service. To survive and be successful in this environment, cost reduction is critical. How do you reduce operating expenses?

Unfortunately, when it comes to cost reduction, the first thought is to reduce team members. Another common idea is to cut materials cost by buying inferior quality. You can not afford to do anything that affects the quality of the service or product. The best solution to cost expenses is to identify and reduce waste.

Waste reduction has to be an everyday activity, it is not a one-time event. With the help of your employees, you can improve your business working with continuous improvement basics. The basic activities of CI are housekeeping and organization, waste reduction, and standardization. You know already what waste is, in the next weeks I will talk about the other two.

Assessment of your business processes to identify waste reduction, standardization and organization opportunities is the best way to improve. Do not start this process as an excuse to cut manpower. Reducing team members is not, and never will be a continuous improvement goal.

CI 101

How can you create changes in your business?

Often business owners see something that tells them that something different needs to be done. Perhaps it is a recurring problem or realizes that the business is not reaching financial goals. What is the solution? You need to identify what areas need change and prioritize. How can you create changes? There are two major ways to create change: innovation and continuous improvement.

More often than not, innovation is a high-cost solution. While it is necessary to keep yourself ahead of the game, I like to start somewhere else. My first stop in creating improvements is to use common sense, low-cost solutions.

What are common-sense solutions? It is to approach a problem using good judgment. For example, let’s use one of my favorite low-cost tools: housekeeping and organization. Will you agree that keeping a clean and organized workplace is common-sense? Why do you think it is? Perhaps because you know some of the following facts:

  • Clutter and disorganization are against productivity, reduces the ability to concentrate.
  • A messy workplace causes anxiety, stress, and has the potential to foster a negative state of mind, like feeling overwhelmed.

Your good judgment tells you that an efficient workplace is cleaned and organized. A lack of cleaning and organization is a visual indicator of inefficiency. You know that this condition has to change.

To improve housekeeping, you can buy a fancy computerized program or use a simple low-cost solution. Your new high-cost application will help you to create checklists, assign responsibilities and follow up on the cleaning activities. But it will not help you to ensure the workplace is clean and organized.

An alternative is to use 5S, a housekeeping and organization program. This program along with waste elimination and standardization are the basics of practicing continuous improvement. CI is about creating small changes using common-sense solutions that are easy to implement and follow. When you add up all those changes you will see a huge improvement in the overall performance of your business.

CI 101, Customer Satisfaction

What are your business goals?

One of your goals as a successful business owner is to deliver high-quality products to the customer at the lowest cost. The goal of lean or continuous improvement is to provide the customer with the highest quality, at the lowest cost, in a shorter time. It sounds to me that both goals are the same, what do you think?  

Continuous improvement achieves the goal by continuously eliminating waste, and you need to learn what it is and eliminate it. Waste is any activity that the customer is not willing to pay. They don’t have problems paying for activities that transform materials into finished goods or processed information. We call those activities value-added.  

The customer does not pay for the cost of fixing errors, waiting time, or excess inventory. These activities are non-value-added or waste, and the target of continuous improvement is to eliminate them.

Waste has seven categories: transportation, inventory, motion, waiting, over-production, over-processing, and defects. There is another category added later, which is underutilization of people’s talents.

  • Transportation is an essential part of operations, but it does not act any value from the customer perspective. The goal of CI is to minimize transportation to the minimum necessary.
  • Inventory of raw materials is also a necessary evil, but you do not want to have excess inventory. Excess inventory is at risk of being damaged or become obsolete.  
  • Any motion of a person’s body that is not related to adding value is waste. Poor ergonomic designs make people move their bodies more than necessary causing safety and productivity issues. 
  • Waiting for materials, for approvals, for a phone call, or for shared equipment to become available are all examples of waste.  
  • Over-production is when we make too much because we are producing ahead of the real demand. Over-production creates more waste in the form of inventory, motion, waiting, and others.
  • Over-processing is doing more than what the customer requires. A common example of this is when you receive items in a box that is three times the appropriate size.
  • defect is when we make a mistake, or produce defective items. Fix defective products comprise time, material, and other resources.  
  • Underutilization of people’s talents is not letting people work at their full capacity. Examples of this are lack of training, not trusting in their capacity to improve processes and siloed thinking.

You can use a process map to highlight the waste on the process. Make sure that you eliminate or minimize waste while designing the new process. Your strategy to increase profitability is to eliminate waste.

What are your business goals? Is one of them to deliver a high quality product at a low cost? Are you targeting to increase your business profitability? Do you want to grow your business? If you answer yes to any of the last three questions, then continuous improvement is the business strategy you are looking for. Contact me, and we will work together to improve your business processes from the customer perspective.

CI 101

Do you know the difference between metrics and KPIs?

How do you know if your business is successful? Do you use metrics? Or do you use key performance indicators? What is the difference between them?

A metric is a measurement you use to track and assess the condition of a process. These measures give you information about how the process is working and provide a baseline for improvements. KPI stands for a key performance indicator. It measures how well the business is doing against a goal. Key performance indicators are strategic, and metrics are tactical.

Let’s use the Yummy Broths restaurant that specializes in soups as an example. One process for Yummy is cooking a plate of chicken soup. To measure the status or condition of this plate, the owner can use the cost per plate, sales per day, or the quantity of the ingredients per batch. One goal for Yummy Broths is to increase the gross margin by 20% before the end of December 2020. The owner decided to track the cost of goods sold (COGS) as the KPI.

KPIs are metrics, but as the name indicates they are key metrics. Not everything is key, otherwise, nothing is. KPIs are like vital signs for the business. Metrics are tactical because they measure the daily business activities that support the accomplishment of the goals. The KPI will let you know If something is wrong, other metrics will help explain why.

The restaurant owner decided to increase profit by reducing the cost of goods sold rather than increasing revenues. The standard is 31% of the sales or less. When the COGS reaches 40%, Yummy Broths owner knows that something is wrong. He knows that for his business profitability, inventory cost is vital. One way to control it is by making sure cooks use the right amount of ingredients to prepare each recipe. Looking at the ingredients used, he realized that compared to the standard, the ingredients per batch are off. Cooks are using more quantity than the recipe asks for. Now he can take action to correct the performance against the goal. Meeting the ingredients per batch standard will support achieving the COGS.

There are two critical things about KPIs, selection, and follow-up. Select indicators that aligned with the business objectives. Always look for the best way to measure the progress towards the goal. Also, since they are critical, monitor them weekly. Do not wait until the month-end because it will be too late to do something if you need it.

Now that you know the difference between metrics and KPIs, go check if you selected the right metrics to measure your business goals.