Do you need a quality strategy?

I know I’ve said it hundreds of times, but I’m going to repeat it. The continuous improvement goal is to deliver the customer the highest quality, at the shortest lead time, at the lowest possible cost. For that reason, the focus of your CI activities is quality, cost, and delivery. We also know that continuous improvement is a people’s system. For that reason, the most influential job of a leader is to develop himself and develop the team. With those things in mind, your business should have strategies for each of those areas. A quality strategy is a must.

You need a quality strategy

Without customers, businesses would not exist, and yet, many do not have a quality strategy. Unfortunately, business owners or leaders wait until they have a customer crisis on their hands to create a quality strategy. While practicing continuous improvement, the customer defines value. There is no way to have a CI culture without a quality strategy. This strategy will provide a clear path to create products or services with the highest quality possible.

Given how important quality is, it deserves to be considered a key business strategy. The first step to create a strategy is to assess the current state and establish a vision. Part of this assessment is to understand the customers’ specific needs and desires. What do they value? What is important? Use the concept of “Go and See” to answer these questions. Visit your customer, or at least have a conversation about this. Nobody can answer what does the customer needs better than the customer itself.

Changes in mindset, be clear about your quality strategy and goals

If currently, the organization emphasizes cost over quality, leadership needs to highlight the change in mindset as part of the culture change from traditional to continuous improvement.  During the period leadership seeks to understand how the current culture would affect the CI implementation, they will have to look for understanding how the company views and understands quality.  Do people outside the quality department feel any responsibility for the product or service quality?  Do the team members understand how their work affects quality?  How their actions affect customer satisfaction?  Be crystal clear about this while creating or improving standard work.  

Customer needs and quality

Translate the customer needs into your business language to establish the performance indicators and to create breakthrough objectives.  Your quality strategic plan will tell people how to close the gap between the actual and goals.  While this plan cascades throughout the organization, make sure to use the appropriate KPIs and internal language for the tactical level.  PDCA is a tool that helps to create, deploy, and implement the plan as well as reviewing its effectiveness and adjust it when necessary.

Leadership needs to learn and teach how to shift their mindset from production planning and cost decision-making to a quality driven decision-making process.  The success of this new way to frame decisions rides on leadership modeling of the new behavior, just like with continuous improvement and lean Thinking.  To answer the initial question, yes, you do need a quality strategy.  Quality does not happen by magic; it needs to be part of your business strategy.

Takt time and inventory control. What is this?

Take time is the rhythm of the process
Take time, the rhythm of the process

In continuous improvement, there is something called takt time.   Takt is a German word used to indicate the beat of the music.  In CI, we used it to designate the rhythm or beat of a process.  It is intended to tell us the rhythm or cadence at which a product or service should be completed. In other words, how much time between units.  With takt, we try to accomplish two things. One is to produce anything more than what the customer needs. The second is to avoid inventory.

Take time calculation

One challenge to accomplish this is that we never know for sure how much the customer demand will be. Looking at numbers in real-time is the fastest and better indicator of whether things are going as expected.  Historical data tells you what you can expect. By comparing this number against what you are selling, you can adjust the inventory.  You can increase, decrease, or even stop before you have too little or too many.  If you are flexible, you can even swap your focus to the item that is selling more.  What does any of this have to do with takt time?

Takt is the available time divided by customer demand.  The resulting number tells you how often you need to complete one product or service.  It provides some cadence to the process.  Be aware that takt is not the same as cycle time. Cycle time is how much time it takes to complete the product or service.  Let’s see an example of how you can use it.

Example of how to calculate takt time

In Breakfast 24, a cafe that serves sandwiches and breakfast all day. The owner knows that their high-demand days are Tuesday to Thursday.  Those days, they sell between 70 to 80 sandwiches during the first four hours of the morning.  They prepare and have ready some components for the sandwiches, like lettuce, tomato, bacon, and others.  They don’t want to cut too much lettuce and tomatoes because they want to cut them as close as possible to the time the customer requests them.  Not everybody likes salad on their morning sandwich. Historical data said that 45% of their customers do.  With those numbers, they calculated a takt time for those 4 hours.  To satisfy customer demand, the kitchen needs to complete a sandwich with salad every 7 minutes.

On average, every 7 minutes, a customer requests a sandwich with salad.  If they want to have enough lettuce and tomato for, let’s say, the next 30 minutes, they need to prepare enough for four sandwiches (30 ÷ 7 = 4.29). If they want to have enough for one hour, they need enough salad for 8 to 9 sandwiches.

Each hour, they have a visual cue that tells the cook helper if they are selling what they expect or more.  If one day, sales are slower, when the helper comes back to prepare more, he will see that they still have inventory, so he will prepare salad just enough to complete eight, not the entire batch of eight.  If, on the contrary, they are selling more than expected, the cook will notice that he used all the inventory in half an hour, and he will ask the second helper to prepare more.  The inventory number that will trigger the request, as well as who will be responsible to prepare it are part of the standard work for that task.

Standard Work, Inventory Control, and Demand

Takt is a number to use as a reference to learn about the process demand.  Standard work has three components, job sequence to complete the job, how often needs to complete the product or service to meet customer demand (takt time), and the amount of work in process inventory.  Every cook helper will follow the same standard work, which means that all of them will follow the same steps in the same order, and they know how often they need to prepare the amount of salad inventory and how much.  That is how you can control inventory using takt time.  If you don’t like the German word, call it something else, it does not matter.  The important thing is that you are not creating any more inventory than what you need.  

Customer demand, do you want to satisfy it?

Why do you need to understand customer demand?

When you practice continuous improvement, the goal is to provide your customers with the highest quality, at the lowest cost, in the shortest time by eliminating waste.  You aim to provide them with the value they are looking for at the time they need it.  Understand and satisfy customer demand is not an easy task.  To understand customer demand, you need to understand the volume, the mix, and the variability.

Understanding demand

How does the sales volume of your products change over time?  Is it seasonal?  Can you identify peaks and troughs?  For example, the sales of all kinds of outdoor sports gear have their peak during the summer, while arts and crafts increase during the winter.  Fall and winter are baking seasons, while the summer is grill season.  

How the mix of products that you sell looks like?  There is a good chance that 80% of your sales are made up of 20% of your products.  Finally, you need to understand the variability of the demand.  Are those volumes steady, or do they change often?

In a perfect world, you would be able to produce what they need; at the time they need it.  But the world is not perfect, and most probably, you respond to volume, mix, and variation by overproducing and creating inventory.  Both things are waste in the continuous improvement world.

How to respond to demand changes

To respond to all these changes without over-producing, you need to be flexible.  Design the work area to allow for changes.  Consider the use of worktables and equipment on wheels that you can move when you need to change the configuration or layout.  Team flexibility is critical to react to changes in demand or mix.  Make sure that cross-training and people’s development never stop.    

Another critical piece is to schedule your product to respond to those changes without the ups and downs of demand.  You do that by using production leveling.  Using the volume, mix, and variability information, you can classify your products this way.

  1. Runners – Top sellers, orders with high volume and high frequency with little to no variability.
  2. Repeaters which are moderate volume and order frequency.  Their variability is moderate too.
  3. Cats and dogs or strangers which are low volume and frequency with high variability.

After you classify your products within one of these categories, you are ready to design your leveled schedule.  Your goal is to set up a series of workstations that build products as per demand.  You can have dedicated lines for your runners while grouping similar repeaters with similar ingredients or materials in the same work area or lines.  Cats and dogs are so infrequent that you should consider making them to order.

Use your data to understand your customers, the customers or their buying habits give you the answer you need to improve your processes.  Knowing all the details about demand will help to satisfy your customer demand without incurring high inventory costs and all kinds of waste caused by overproduction, which is the worst of the 7 wastes.

What are your business goals?

you can achieve your business goals with continuous improvement

I bet that one of your business goals 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?  

Business goals and continuous improvement

Continuous improvement achieves the goal by continuously eliminating waste. To achieve your business goals, you need to learn what it is and eliminate it. Your customers don’t have problems paying for activities that transform materials into finished goods or processed information. We call those activities value-added.  However, they are not willing to pay for the waste in your process.

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

What is waste? The seven types of waste in continuous improvement

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

  • Transportation is an essential part of operations, but it does not add 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 a 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. For example, 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 are lack of training, not trusting in their capacity to improve processes, and siloed thinking.

Achieve your business goals with continuous improvement

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 us, and we will work together to improve your business processes from the customer’s perspective.