CI 101

How do you align Kaizen with Business Objectives?

When you have specific business improvement goals as part of your Business Plan and strategies, it is easier to identify where you should focus on kaizen activities.  But even if this does not exist, you can still align your kaizen to your business goals.  Let’s take a look at how you would do it under each scenario.

Before I continue, I want to clarify something.    Previously I defined strategy as the framework that establishes what the organization will do to deliver value and how it expects to accomplish target revenues and profits.  However, it is common to use the word strategy while talking about the activity, policy, or process designed to achieve the objective.  For example, to support the objective increase in sales from x to y, the process or activity z (strategy) grow business by 10%.  To be consistent, I will use the activity or process to indicate the way to achieve the objectives.

When it’s time to develop next year’s goals, you group the business plan with the continuous improvement plan.  Achieving those goals means achieving the desired conditions for profitability, delivery, quality, and people.  From these statements of intent, you move to develop specific objectives, which are a clear target or destination.  To make your business map more effective, you also established what are you going to do to achieve them, and how you are going to do it.  At this time, you can identify in what department or area this activity will have more impact on the KPI’s and use the information to plan specific projects.  The kaizen events will help to achieve the objectives.  Kaizen is very powerful when used as a tool to improve the process to close the gap with the objective.   

When the business plan does not include the improvement plan, you can still align kaizen with it.  Your team is dealing with problems that impact productivity, quality, cost, and delivery.  Daily kaizen, and events, can help to overcome those challenges by improving the process and solving operational problems.  You can start doing daily kaizen at any time to start tackling their pain points, but some recurrent issues with high impact in the business deserve a kaizen event.

As always, you need to understand the problems first.  Talk with the team, key players, customers, and learn about their pain points, challenges, and needs.  A brainstorming session with the team would be a good start to generate ideas for possible kaizen events.   The next step is to validate those ideas, to see if they align with the objectives or drive the business KPI’s.  With a refined list of kaizens, the next step is to prioritize based on the effort vs. impact or benefits level.  After this, you are ready to start planning kaizen.

The important part for both processes is to align kaizen with the business objectives, which should target KPI’s that measure customer satisfaction, quality, delivery, and cost.  Let’s keep improving!

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 highlight the waste on the process while drawing your process map. 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.