“Left to themselves, things tend to go from bad to worse.” – from Murphy’s Laws
"It's getting better
A little better all the time" - from “Getting Better,” Sgt. Pepper's Lonely Hearts Club Band - The Beatles
So which is it? If your organization has a culture of continuous improvement you’re probably singing along with The Beatles. If not, you may be singing the blues. And, even if you are getting better, are you truly getting better all the time and in all the places that you could be?
The pressure to drive down costs and time to delivery has been a constant over most of my career, and probably in yours as well. This has been especially pronounced in the manufacturing sector as start-ups and international competitors have taken advantage of opportunities afforded by new technologies and the global economy. They have attacked cost and delivery to grab a share of market and when quality issues threaten to hold them back they vigorously respond by making marked improvements. Older, established companies who ignored the threat have either shrunk in size or disappeared from the landscape.
Smart, well-managed companies have reacted to this attack by reengineering their manufacturing processes and increased productivity in order to match or beat competitive pricing and delivery. Those who are really smart have also evaluated their engineering and business processes for reengineering opportunities. What they have not done is fall into the automation trap. We’ve all seen and heard promises from companies offering big savings in time and money by using their products (hardware or software) to automate operations. The trap is the temptation to go for what appears to be easy and quick fixes provided by these vendors. What is wrong with this is you 1) run the risk of automating a wasteful operation, 2) improve the operation but not the entire process, 3) potentially miss a cheaper, more elegant solution, and 4) face resistance from employees who perceive this as a move to eliminate their positions.
The terms process and operation are often confused. What is a process? It can be defined as the flow of information or products through a department, group, division or company. More fundamentally, it is the flow of activities from a specified beginning action until a specified end action is reached. Improvement involves reducing the time it takes to reach the end action, improving quality and reducing the footprint required for the complete process. So, what is an operation? This is where people and equipment interact with the flow of information, product or activities in the process. It is a subordinate step in the process but can be considered to be a process itself if it involves multiple steps.
No process remains stable and no process improvement lasts. The Murphy’s Law quoted above applies to all processes. Processes are in one of three states. They are either out of control, under control but in need of improvement or under control with continuous improvement implementations. We have to continually work at keeping processes as lean and waste free as possible. Processes tend to grow longer and more complex over time. One example is that we add more oversight like inspections and sign-offs as quality problems appear in the process, adding more steps where delays and errors can occur.
We tend to overlook many business and non-manufacturing processes that appear to be mundane, traditional or isolated from the bottom line. We do this at great risk. Many business or support processes can be the source of the very bottlenecks that keep engineering and manufacturing processes from being implemented effectively. How could this be? I once worked for a company that had a process for disposing of surplus equipment that typically had little or no book value. This process typically lasted for months, required about 100 approval signatures and generated an incredible amount of paperwork to get rid of a single machine. Over the years several groups tried to reengineer this process, but because it was not a manufacturing process they did not garner management support. All those signatures were required because sometime in the past a machine was disposed of that was deemed by management to still have some useful life left on it. What a waste of time and resources for no appreciable return.
Have you ever heard of the 95/5 rule? Most people haven’t, or if they have, are skeptical that it could apply to any of their processes. It simply states that typical processes consist of 95% non-value adding time and only 5% value adding time. The issue raised with this rule is the definition of value added. Economists and industrial engineers have differing view points on this term.
Wikipedia defines it in an economic way: Value added refers to the additional value created at a particular stage of production or through image and marketing. In modern neoclassical economics, especially in macroeconomics, it refers to the contribution of the factors of production, i.e., land, labor, and capital goods, to raising the value of a product and corresponds to the incomes received by the owners of these factors.
The Six Sigma web site defines value added as: To be a value added action the action must meet all three of the following criteria: a) the customer is willing to pay for this activity, b) it must be done right the first time, c) the action must somehow change the product or service in some manner.
The Six Sigma definition is what we are interested in. In a competitive environment costs that do not contribute to value adding must be reduced to a minimum, not passed on to customers. In order to do this we must eliminate waste. Waste in a process is any activity that does not result in moving the process closer to final output or adding value to final output. There are seven main wastes: overproduction, inventory, waiting, transportation, motion, process (useless steps in a process) and defects.
The Practice of Process Improvement
1. Select a process that, if improved, will have a positive impact on the organization. It could affect finances, quality, delivery, customer satisfaction or a combination of these. The object is not to eliminate people - it is to improve the process so people can be freed up to increase throughput or take on additional business for customer satisfaction.
2. The process must have a clearly defined beginning and end; otherwise the scope will be too broad to accomplish any meaningful objectives. All processes involve steps that are processes in their own right and may be the subject for another improvement project, so you need to stay focused.
3. No process improvement can take place without involvement of a process owner. Who are process owners? They are people who have the most to lose or gain from this process and have authority to lead reengineering the process and to implement recommended changes. Their job, prestige or promotion may be on the line. They must communicate their desire to improve the process and provide support and guidance to the process improvement team.
4. A team has to be organized by the process owner to map the process, reengineer it and implement the new process plan. This team is made up of personnel who represent and are key participants in the operations, internal or external customers and possibly knowledgeable outsiders. They must have authority and time allocated to carry out their task without interference. Many organizations have problems with allocation of time for the team. It has been proven it is always cheaper and faster to allow the team adequate time to complete the project than to meet over and over again in an ad hoc fashion to try and fix process problems. Avoid the temptation of hiring a consultant as a substitute for the team. Nobody knows your processes as well as your own people.
5. The process must be mapped (or diagrammed) as it actually is, not as people think it works or how it was originally designed to work. This is one of the most time consuming parts of the improvement process because it involves breaking the team into smaller teams for interviewing, observing & timing steps in the process. To avoid bias, small teams work in areas that they are not involved in themselves. Often, steps are uncovered that teams or process owners were not aware of. The map is then assembled by the whole team for analysis.
6. After the map is complete the team studies each of the steps with the goal of shortening the process. There is the obvious reason that a shorter process means less cost, but there are other considerations as well. A process with fewer steps means there are fewer chances for things to go wrong and if they do go wrong it is easier and quicker to fix them. Also, a shorter process means results are in customers’ hands sooner.
7. How do we shorten the process? I’ll bet a lot of you said we could automate some of the operations. Well, you’d be mostly wrong. The first thing we want to do is eliminate all non-value adding operations where possible. There are some limitations because we must keep legal and physical requirements in mind. The next thing we want to do is consolidate related operations – especially those in physical proximity to each other. And finally, we want to simplify or automate by looking at remaining operations and evaluate them as processes within the larger process. We automate only when we are sure all waste has been eliminated or minimized. Unfortunately, many organizations spend great sums of money on automating wasteful processes and end up with improvement in one or more operations in the process but with no reduction in overall throughput time.
8. The biggest failures in process improvement are lack of implementation of the redesigned process and reexamination of the process on a regular basis. Just as in sports, follow through is key to success and differentiates pros from amateurs.
There is nothing wrong with automation. Especially when done the right way. Don’t automate wastes in your processes and don’t ignore people issues. Instead, get everyone involved in improving the process and automation will return greater rewards for your investment.