In my consultations with manufacturing, service, logistics and distribution companies, I always make one key point: Don’t jump blindly into a collective attempt to improve operations.
Before organizations are ready to undertake operational improvement, there are six prerequisite beliefs or preconditions that should be instilled in the company culture and processes. Once these ideas take root, then improvements can be successfully launched and sustained.
The organization is a chain of dependent functions. Thus, systems thinking must replace individual thinking.
Given these premises, all organizational functions must necessarily play a role in the final outcome of an operational improvement plan. Until individuals and departments cease to protect their own turf and begin to collaborate as a team, real and sustainable progress will not be accomplished.
Total involvement of the workforce is imperative.
Business schools commonly teach that improving profits requires first reducing expenses. Typically, one of the immediate steps is to reduce the size of the workforce. In manufacturing, for example, this has proven to be the wrong approach to gain the necessary buy-in to an operational improvement initiative.
Why would anyone be willing to participate in streamlining the operation, when such a mission puts their future in jeopardy? Beyond lowered morale, workforce reductions have not proven successful as a precondition to working toward operational improvements. Instead, your organization must collectively decide that the key to making money now is an unrelenting focus on increasing revenue, rather than reducing operating expenses.
Improvement is never-ending.
Successful and sustainable improvement is always predicated on the fact that once improvement starts, the process never ends. Today’s optimal systems and processes will be outmoded tomorrow, and only companies that evolve and adapt will survive.
Every process contains excessive waste and variation that must be identified, reduced, and/or completely removed.
Variation corrupts a process, rendering it inconsistent and unpredictable, while waste drives up both operating expenses and inventory. Improvements in both of these areas go directly to the bottom line as you improve the throughput of your process.
Root causes of problems must be identified and dealt with immediately.
Improving operations requires a commitment to reject temporary fixes to problems as they are exposed. In many companies in need of operational improvements, there are problems that have been hidden within excessive amounts of inventory used to guard against their negative effects. Your organization must be committed to determining and addressing the root cause of problems and implementing effective and sustainable solutions. Otherwise the operational improvement effort simply won’t work; kicking the can down the road is no longer an option.
The flow of products through your processes is dictated by your bottleneck operation.
Time reductions made in non-bottleneck steps will not increase the speed of product flow within your processes. The key is to improvement is to first identify your bottleneck operation, and then exploit it to the fullest. In conjunction with this, it is imperative that your non-bottleneck resources never run faster than your bottleneck to avoid explosions in work-in-process inventory.
Once your organization has eagerly embraced these concepts, the never-ending journey to perpetual improvement begins. Simply giving lip service is not sufficient; your daily actions in creating accountability to these principles, and enacting them as standard practices will be predictive of your eventual and continued success.
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