CI 101

Do you still think that continuous improvement is not for you?

Some companies have been dealing with the COVID-19 pandemic much better than others, at least for now.  Over the past few weeks, I have seen and shared through my Twitter and Facebook accounts examples of how lean companies have handled the crisis.  The common denominator for all of them is they keep the focus on the same things, people, and customers.  They also use different continuous improvement tools to learn and adapt to the new normal in record times.  How did they do that?  Using lean thinking and not taking their eyes from the basic principles.

The term “lean thinking” was coined by James P. Womack and Daniel T. Jones, it is used to describe the process of making business decisions based on the Lean Principles.  Womack and Jones book, Lean Thinking: Banish Waste and Create Wealth in Your Corporation presented and talked in detail about those principles. 

  1. Customer Value 
  2. Identify all the steps in the value stream and eliminate waste.
  3. Make the value-add steps flow.
  4. Let customers pull value from the next upstream activity.
  5. Continuous Improvement 

Since the first principle is to define value from the customer point of view, it is logical to start the crisis response looking at how value changed for internal and external customers.  As a leader, you are responsible for your employee’s health and well-being while they are working.  To provide a safer possible workplace, revise the value stream to identify how it needs to change, how the flow will be affected and corrected, and finally implement the changes.  While doing this, keep the communication with your employees and customers to make sure that you are adapting to their new needs and priorities.

Improving the process is an activity that never stops.  Every day new information comes out that makes it necessary to change something on the process.  Lean companies can face this challenge easier than others because they developed people to become problem-solvers. They focus on the problem cause and possible solutions using PDCA, 5 Why, and other tools.  It is better to have an army of problem-solvers than just a few people, or worst, just you.   

The heart of the lean system is people involvement, a highly motivated team continuously seeking the best way.  To keep the heart healthy, you need to maintain a respectful, free of blame, and honest work environment where the team feels they are being cared for, and their feelings and ideas matter.

I don’t know if lean or continuous improvement is the antidote against the economic crisis, we are living in.  Based on my experience, I know that it is better than traditional management, and it works for any industry, of any size.  Industries with a small profit margin, like restaurants, will benefit from this type of thinking more than anyone.  Changing the decision-making process and how you conduct business is a better route to become profitable and flexible.  

If you keep doing what you always did, you will get what you always got. Henry Ford

CI Tools

What is customer value and how do you define it?

The journey to transform your business into a continuous improvement enterprise should start with the definition of value. The CI business management model defines the value of a product or service from the customer’s point of view. How much your product or service is worth for the customer? What are the expectations?

How do you find the answer to those questions? Only the customers themselves can tell you. There are a couple of ways to get their input, talking with them, or using social media. The best time for a conversation is right after they received the product or service. Ask about their experience. What do they like? Do they have any suggestions? Listen to what they have to say and watch their demeanor. Social media accounts are another way to receive feedback from customers. Review the comments and ratings often. You can also create polls to survey their opinion.

The information from these three different sources will give you the value definition from the customers’ point of view. Value definition is a critical piece to start your continuous improvement quest. You will use it to classify each process as value-added or non-value-added. Value-added activities are those that transform input into output or change materials or information. In other words, the customers are willing to pay for it. Everything else is non-value-added or waste.

When you go to a restaurant, you expect to receive on a reasonable amount of time the plate you ask. You also expect that the staff follows any special instructions like cooking the meat the way you request it. You will pay for the food and the service without hesitation. If the restaurant messed up with your plate, that is a defect. Now they have to prepare a second plate, which is overproduction. Both things are waste or non-value-added activities. I bet that you, the customer, are not willing to pay for them.

Businesses need to complete various processes that are critical for operation but do not add value to the customers. Examples of necessary non-value added activities are hiring, payroll, and month-end financials.

The entire flow from the customer order to product or service received is drawn using a value-stream map (VSM). VSM is a special type of flow chart where you can visualize the flow of information and materials. This map is a tool that allows you to see waste and plan how to eliminate it. How to create a VSM will be the subject of a future post.

The priority of continuous improvement is to eliminate waste. Waste elimination will create faster and bigger results. Second, it is to challenge and reduce the necessary non-value-added activities. Minimize the quantity of non-value-added steps will further improve flow and reduce costs. Finally, you will work on optimizing value-added steps.