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BSBMGT516 Facilitate

continuous improvement
Methodologies

 Total Quality Control (TQC)


 Quality Functional Deployment (QFD)
 Breakthrough Thinking
 Concept Management
 Theory Of Constraints (TOC)
 Process Reengineering
 ISO standards
TQM: Deming, Crosby, Quality program Concepts and focus

Deming 14 steps • Deming cycle (PDCA)


• Special and common forms of variation
• ‘Statistical thinking’
Juran

Crosby 14 steps • 4 Absolutes


• Cultural change
• ‘Zero-defects’

Juran 3 general steps • Pareto principle


10 steps • ‘Meeting customer expectations’
Lean Manufacturing
• Five Systems: • Seven Wastes:
 inventory control  over-production
 set-up improvement  waiting or wasted
 maintenance  transportation
improvement  inventory
 productivity  processing
improvement inefficiency
 quality  motion
improvement.
 defects.
Lean Manufacturing may be considered a westernised version of ‘Just in Time Manufacturing’ (JIT) and
‘Kaizen’ (Japanese for continuous improvement). During the 1970s, Toyota built a culture in their plants of joint
responsibility between managers and workers to reduce waste of space and materials. With the implementation
of Lean/JIT/Kaizen, Toyota reduced car production time from 15 days to one.
The three steps to lean implementation are:

1. Acceptance stage – usually involving a trained Lean facilitator to lead the change and build buy in for the
continuous improvement system.
2. Technical stage – involving an event such as a process mapping to identify wastes and opportunities for
change.
3. Sustainment stage – involving the communication, training and integration of the changed process into the
workplace culture, the way things are done.
Benchmarking

Four approaches include:


 internal benchmarking
 external
best practice
benchmarking
 competitive
 sector benchmarking.
 Internal benchmarking, which has a narrow scope comparing processes undertaken by business functions and
departments of an organisation either within one geographic location or across multiple locations
 External best practice benchmarking, whose aim is to identify best practice no matter what the sector or location. Such
benchmarking is broad, and for that reason has the potential for stimulating radical change; it holds out the possibility of
breakthrough discoveries through comparison with world best practices
 Competitive benchmarking, which focuses on key competitors within the sector. Such benchmarking holds out the
promise of being relatively easy to apply because of the similarity of issues between the businesses being benchmarked
 Sector benchmarking, which is a broader type of benchmarking that makes benchmarking data available to all in a sector.
This type of benchmarking data makes it simple to identify general industry trends, but, because of its non-targeted nature,
difficult to derive specific recommendations for key process improvements linked to organisational strategy.
Six Sigma (DMAIC)

Define Measure Analyse

Implement Control
The second variation of the Toyota production System (TPS) is Six Sigma. While the driving principle of Lean
is reducing waste, the key principle of Six Sigma is measurement. Both methodologies, however, are ultimately
directed at achieving customer value. The Six Sigma methodology concentrates on measuring and improving
those outputs that are critical to the customer.
Six Sigma follows the DMAIC methodology and has the following key
concepts:
 Everything we do is a process. Each process has inputs and outputs and substantially changes the inputs to add value for the
customer.
 Every process has measurable characteristics.
 Measurements follow a frequency distribution
 Customers have differing expectations of process performance.
 Three sigma is the normally accepted standard across industries. Most observations fall within three sigma using such a
standard. A normal distribution curve has 99.74% of all outcomes falling within three sigma to the right or left of the mean.
 Three sigma applied to a continuous and high-volume process still adds up to a lot of failed expectations
 Sixsigma is a philosophy as much as it is a methodology and a quality metric. Implementing a philosophy means affecting
culture and ways of thinking about quality that pervade an organisation.
Develop strategies for participation

Deploy interpersonal Build participative


skills
culture
 communicating
verbally and non-  securemanagement
verbally commitment
 active listening  value,measure and
 team problem-solving reward participation.
 negotiating
 advocating and
asserting values
 group decision-making
Develop a communication strategy

Consider your:

 purpose and objectives


(aligned to organisational
plans)
 audience, including
stakeholder power and
influence
 message
 medium.
One of the most important tasks in implementing continuous improvement across an organisation is
developing a communication strategy. To develop a communication strategy, you will need to
determine your communication objectives and promotional activities, and your audience
characteristics and needs. Your communication strategy should also set out how you plan to craft
and customise your message to meet those needs and use the appropriate media to achieve your
communication objectives. You will also need to consider other important aspects of planning such
as resources and budgets as well as who will be responsible for delivering or managing
communications
Approaches to meeting sustainability
objectives

Life-cycle Lean
analysis Manufacturing

Closed-loop ISO
product design Standards
Peter Wells in Business models for sustainability identifies several principles for sustainable business models:
 resource efficiency
 social relevance
 localisation and engagement
 longevity

 ethical sourcing

 work enrichment.
Following the above principles allows organisations to factor sustainability into the development of overall business models and
strategies. It is useful to point out that organisations do not necessarily value sustainability at the expense of financial gain.
Integrating sustainability principles into business models may, in fact, generate substantial value for environmentally and socially
engaged customers and investors.
It is easy to see how implementing continuous improvement methods can achieve a range of sustainability related sources of
increased value, including increased revenue or lower wastage costs.
Develop training, coaching and
mentoring processes

Ensuring people have the


capability to participate in CI
includes:
 training
 coaching, including team coaching
 mentoring
 providing ongoing feedback on
performance.
To ensure individuals, and the organisation as a whole, has the capacity to effect continuous improvement
changes, you will need to integrate your approach to continuous improvement with performance management
processes. This means putting in place processes for integrating continuous improvement with performance
management. In effect, this means facilitating individual and team goal setting and performance planning
processes and then ensuring the development of workforce capacity through provision of the required training,
mentoring and ongoing coaching required to keep individual and team performance aligned to continuous
improvement objectives.
Hard knowledge Soft knowledge
Knowledge management
 Capture-Codify-Store  social: group, team, community
model of practice model
 explicit and verbal  non-verbal, tacit, practice-based
 procedures and other (kinaesthetic), situated and
written documents contextual, time-bound
(KM)

 ‘traditional’ technologies  ‘newer’ social networking


of document technologies:
management:  document sharing
 databases
 work-based social
 document platforms
management
systems.  just-in-time resource
planning or ordering
systems.
In order to implement continuous improvement, you will need to develop systems to manage information flow. You will
need to ensure the right people have the right information at the right time to create maximum value at whatever point or
points in the process of customer and stakeholder value creation they are responsible for. To avoid overwhelming
employees, and in conformity to Lean principles, for example, it may also be important to ensure employees have just the
right amount of information at the time they need it. After all, people’s memories may be taxed by too much information in
the same way as a worker’s capacity to function is impeded by holding more parts in hand than necessary to perform an
assembly line task. To manage knowledge, you will need to manage hard and soft forms of knowledge as well as supporting
technologies and frameworks.

Hard knowledge=Know what


Soft knowledge=knowhow
Term Definition Example/s
Objective Something you aim to do to achieve a strategy; a Increase employee satisfaction; reduce
resource usage.
Develop monitoring
measurable or observable step. A strategy may
strategies: Terms have several objectives associated with it.
Outcome The desired end result of a process or activity. Completion of performance management
process.
Activities Units of work that have specific beginnings and Implementation of new, efficient machinery;
and tasks endings but that should be connected with implementation of training programs for sales
important, ongoing work processes or with staff
achieving specific objectives.
Metric How you measure success; a number, fraction, Litres of water/per garden centre revenue
percentage or category or quality. dollar; stock turn ratio = Cost of goods sold ÷
average stock holding.
Baseline/ A standard level of performance as defined by Last year’s number of customer complaints;
benchmark previous measurements or by industry averages. industry average wastage.
Target Success described in terms of a metric; a number. 3% reduction in energy usage.
Data How or where you will gather information on the Accounting systems, ERP software, control
collection relevant metrics. charts, defects tracking, audit reports,
methods customer satisfaction surveys.
To monitor operational progress against planned improvements in areas such as safety, customer service,
productivity and other goals, you will need to develop a monitoring strategy. As a manager working in the context of
a performance management system, you will need to set clear expectations for people working in particular roles.
You will need to set a quantitative baseline for performance by developing performance metrics to enable
monitoring, align performance metrics to organisational goals, and use tools such as balanced scorecards to track
organisational and individual performance against key result areas. Above all, a system for monitoring quality should
be used to motivate improved performance in the areas that matter, not simply to collect data.
Metrics: KPIs

KPIs may be:


 Input
 Process
 Output
KPIs should be ‘leading’ indicators,
meaning they measure key drivers of
improved performance
Objectives, targets and the KPIs that measure performance against objectives and targets can be classified into three types:
input, process and output.

Input KPIs measure the activities that are designed to facilitate improvements in performance results. These activities
include management actions to implement performance management and achieve organisational goals such as holding
performance review meetings, coaching or providing training.
Process KPIs measure the efficiency of processes, for example, the number of times stock is sold or used over a period of
time (inventory turnover or stock turn). Another example, more geared towards the measurement of individual performance
might be contribution to the improvement of team processes or the support of co-workers to do the same.
Finally, output KPIs measure the results of inputs and processes. These could include productivity levels or number of sales
per month for example.
Process mapping and VSM

• Process mapping

• Value Stream Mapping


Qualitative tools for facilitating continuous improvement session include, for example: Process mapping, VSM, Affinity diagrams,
brainstorming, Fishbone diagrams, 5-Why

Let’s look at a few of these

Process mapping is completed at different levels of detail. The highest level map, a ‘Level 0’ map, contains the inputs and outputs
with the process designated in one box.
A ‘Level 1’ process map has more detail showing the relationships of the output of one sub-process as the input of another sub-
process.
Most process maps do not go below ‘Level 4’ maps, which are more like work instructions due to the level of detail.
An example of a ‘Level 1’ process map for the DMAIC process in Six Sigma is shown here on the left.

Value stream mapping is a tool to assist teams to visualise all the value-creating steps, and sources of waste, which occur from
the procurement of inputs to delivery to the customer and all the information flows which support the process. The ultimate
objective is to reduce waste, defined as steps or activities associated with the process that do not add to value to the customer.
Solution to maintaining successful process

Customer Understand Interpret customer Provide operational


Consult customer Identify customer
requirement requirement needs output
Affinity diagram

Know quality
Provide Training Investigate efforts
improvement tools

Access to Employee Break down


Communications
information involvement barriers

Establish
Develop corrective Determine process Project
Controls measurement Define process
action system capability improvement
systems

Establish reward Clear program Create steering


Management Provide job security Staff support
system goals committee.
An affinity diagram is a special type of brainstorming process that is used for organising large groups of
information into meaningful categories. It helps us to clarify and make sense of a large or complex problem
Force field analysis diagram
A useful technique for looking at all the forces working for and against the
implementation of an improvement is ‘Force Field Analysis’. By carrying out the
analysis, you can plan to strengthen the forces supporting a decision, and reduce
the impact of opposition to it.
Fishbone (Ishikawa)
diagrams
Kaoru Ishikawa, who pioneered quality management processes in the Kawasaki shipyards in the 1960s,
developed Ishikawa diagrams.

To create a fishbone or Ishikawa diagram, follow these steps.

1. Determine the problem.


2. Determine the major possible cause categories: the standard causes are Materials, Machines, Methods,
People and the Environment.
3. Determine subsidiary causes and keep determining subsidiary causes until you have got to root cause
Histograms
In addition to qualitative tools for identifying performance problems and identifying potential
improvements, there are a range of quantitative tools for monitoring and controlling performance.
Such tools facilitate and rely on statistical inference to identify issues and trigger remedial action.
As such, qualitative tools are essential to statistically focused continuous improvement
methodologies such as Statistical Process Control (SPC) and Six Sigma, discussed in the previous
section.
Let’s look at a summary of popular qualitative tools.

The histogram evolved to meet the need for evaluating data that occurs at a certain frequency.
This is possible because the histogram allows for a concise portrayal of information in a bar graph
format.
Because frequency distributions of process variables typically have bell-shaped histograms, which
taper slowly down from a central mean, this kind of distribution is called ‘normal’.
Note that, however, while quantitative analysis of frequency distributions and histograms can supply an
answer to the question of whether a process is performing optimally and is amenable to statistical analysis
and control, it can provide only limited answers as to what to do to improve quality. Moreover, you might ask
yourself whether an ‘improvement’ really makes any difference to your business, say to cost control,
wastage expense, competitiveness, or how much your customer is willing to pay for more certainty. Recall
that, according to Joseph Juran, quality means only meeting customer expectations. Anything done over and
above this represents waste. To answer qualitative questions such as these, you will need to supplement
quantitative analysis with the use qualitative tools such as Value Stream Mapping or brainstorming.
Control charts
A control chart measures the variation of a measure over time. The measure has control limits around an average
target figure. See the example below of the proportion of defects per day.

Control charts:
 Demonstrate how consistently a process is performing, and whether an attempt should be made to adjust it
 Compare the process performance to the customers’ requirements
 Facilitate quick evaluation of the results of quality initiatives designed to improve process consistency.
Control limits are generally set at 3 standard deviations above and below the mean. Therefore, for example, if an organisation is
using Six Sigma methodology to define a defect as occurring six standard deviations from the mean. This practice provides a margin
in which a process that appears to be crossing control limits can be brought under control before actual wastage occurs.
Scatter diagrams
Scatter diagrams make the relationship between two continuous variables stand out visually on the page in a way that the raw data,
presented in a table, for example, cannot. Scatter diagrams may be used in examining a cause-and-effect relationship between
variables, such as cost and quantity

There are a number of dangers inherent in confusing correlation, either calculated or apparent in scatter charts,
with causation.

In interpreting causality for the purpose of improving operations, you will need to be careful not to make unwarranted or invalid
assumptions. It is important to know how your business works, bringing your common sense, technical expertise, and experience
to bear on quality problems. Qualitative techniques, discussed previously, are useful for determining valid root causes and sources
of value. In general, quantitative statistical techniques improve reliability of mathematical inferences and are more effective and
reliable with more data; qualitative techniques, on the other hand, can help establish the validity of fundamental claims and
relationships between factors and elements of business processes.
Adjust and communicate strategies
Corrective actions
and tactics as needed

Communication
 interim action When communicating changes, consider:
 adaptive action  organisational goals (how does
 corrective action your communication of
 preventative action adjustments advance these?)
 contingency action.  pre-existing communication
policies, processes and
strategies
 stakeholder needs and
influence
 efficient KM.
As a result of monitoring and improvement activities, it may become necessary to adjust strategies and tactics
and communicate changes to various stakeholders. Overall, your process improvement approach may not be
aligned to strategic objectives. For example, you may have chosen the wrong continuous improvement
methodology or tools to address the particular performance issues that exist within your organisation. Ineffective
implementation of the right approach may also be the problem. You will need to identify a range of strategic
issues, consider a range of tactics to correct performance issues, and communicate changes in accordance with
organisational requirements.
Establish communications processes

• Strategies: • Procedures:
 high level approach to  designed to effect the
communicating about implementation of your
CI and specific communication strategy and
improvements to KM practices
processes  approaches include:
 high level approach to  written,step-by-step
KM processes

 strategic objectives  work flows and flow charts


aligned to your  diagrams
organisational
 Illustrations.
strategy.
Whatever communication process you determine, you should ensure it aligns with the overall communication
strategy, as discussed in Section 1, for continuous improvement. Processes should therefore take into account the
importance of building support through encouraging participation, ownership and opportunities for providing
feedback. Processes should also make it easier for those responsible to carry out their duties providing access to
resources or information necessary.
Procedures are tools to help employees implement a policy of strategy determined at a higher level.

Written procedures, as discussed in Section 1, are a form of hard knowledge management. In the capture-codify-
store model, procedures and processes are developed by teams of experts, cross-functional teams, or workers with
experience in carrying out the processes. Information is gathered, sometimes using a variety of the tools discussed
in Section 2, the procedure is written down, and then stored appropriately for distribution to those that need to
follow the procedure to complete their work.
Record and report on team
performance
Reporting options include:
 management reports
 sustainability and triple bottom line reporting
 strategy on a page
 balanced scorecards
 A3 reporting
 progress reports
 dashboard reports
 defect checklists.
A3 reporting
Defect checklist
Finally, a defect check sheet is a form for collecting and analysing data. It is a generic tool that can be adapted for a wide variety of
purposes, including continuous improvement.
To create a defect check sheet, follow these steps.
1. Determine what problem will be observed. There may be multiple problems. You may want to brainstorm the problems with
the team doing the work being observed.
2. Determine when and how long to collect data for.
3. Design the form – see a generic form below for measuring on each day. The form may be designed to collect data
4. Label all the spaces on the form.
5. Test the check sheet to be sure it collects the test data you want.
6. Record the data whenever a problem occurs with a tick or cross and total the problems observed across shifts, days, people,
machines, sources of raw materials, etc.
Incorporate information
into future planning
To plan future improvements, you should:

 ensureyou cover all the


elements of planning
 include input from all
levels of the
organisation through
‘top-down, bottom-up
planning’.
To facilitate ongoing continuous improvement, you will need to rely on up-to-date monitoring and
reporting activities. You will also need to ensure continuous improvement activities and the views of all
stakeholders feed into future planning.

The planning process itself should ensure this inclusion as well as including all areas of importance to
achieving strategic goals and practically embedding change within the organisation. In this way, planning
allows for strategies to stay aligned with organisational goals, and to evolve to meet future challenges.