By Kevin J Duggan, Founder of the Institute for Operational Excellence
Published by Operational Excellence by Design eNewsletter
Imagine this scenario: A customer gives us an order, the factory produces the products, and the order ships, autonomously, without any management intervention. No meetings, no expedites, no shifting priorities, no direction setting. Like turning a key to start your car engine, it just happens.
Sound like a dream? It’s not. Many companies have achieved a state where the people who build the product understand the flow to the customer and can correct that flow when it becomes abnormal. And it didn’t happen through Kaizen, brainstorming, or other Continuous Improvement techniques. It happened by design.
Deliver By Design
Most manufacturers spend a lot of time on building size, the right equipment to meet production capacity, the physical layout of the factory, and so on. But they don’t pay as much attention to the day-to-day activities that a business must carry out to get its products to the customer.
On the manufacturing floor, for example, sales may know what the customer wants, but how will each operator know what to work on next? How will we know whether the operation is on time? What will we do if there is a problem? In most cases, managers are charged with making these decisions; how an operation runs is left up entirely to the leader in charge.
When designing a bridge, building an aircraft, or any other product, an engineer uses the laws of physics, design criteria and design principles to create something that, when brought to life, will function as intended. Rather than management setting policies and procedures and holding production meetings, the flow in our operations should be designed the same way: to seamlessly deliver a product or service every time it receives an order from the customer. We should not have to wonder whether the orders will be finished on time, with perfect quality, and delivered to the customer when the customer wants them. The order should come in from the customer, and the operational side of the business processes the order with no interruptions and then delivers the product.
Breaking the Continuous Improvement Cycle
In many operations, management is charged not only with running the operation but also with improving it. Whether that means lower operating cost, reduced inventory, reduced lead time, increased productivity, better quality, or better on-time delivery, once a particular goal is achieved, management sets a new one. This cycle of goal setting and achievement continues as management finds new areas to improve.
If we follow this method, we are incapable of knowing whether the operation is performing as designed because a design never existed in the first place. Instead of only giving people management tools to improve the operation, there should be a more formal and process-oriented way that would enable our operation to deliver repeatable results time after time.
Would we feel comfortable sitting on an aircraft while it was in flight and watching the pilot and flight crew brainstorm on where to improve, then trying a rapid improvement or Kaizen event to make the improvement? Or, would we feel better watching the captain use a checklist to ensure that the aircraft is performing correctly, in accordance with its design specifications along with a predefined checklist of adjustments to make as needed?
Similarly, we should design the performance of the operation and then ensure that it performs in accordance with the design specifications.
Setting a Destination
The first step is to set an exact destination for the operation. Then we are able to plot an exact course or road map for getting there so each employee knows exactly where the company is going and where she is going. They know the steps along the way. They can see for themselves the signposts that tell them that they are going in the right direction. And they know when they have arrived at that destination.
What is our destination? We are trying to create an operation where each and every employee can see the flow of value to the customer, and fix that flow before it breaks down. Leveraging this aspect of Operational Excellence lets each employee know what the company is trying to accomplish and what he needs to do in his specific area if he is to contribute. Each employee understands how her activities flow the necessary material or information through several processes to the customer. Each can see whether the flow is working normally or abnormally, and each knows what to do when flow starts to become abnormal.
Avoiding Management Muscle
In Operational Excellence, we do not create flow to increase productivity or efficiency. We create flow simply to see when it stops. The idea is to get every employee to know whether the flow of product to the customer is normal or abnormal. When flow is interrupted, it reveals problems. In an organization without stable processes, the flow is interrupted so routinely that problems are a way of life, and management needs to get involved to direct and support the flow.
If they cannot fix the problem quickly, they escalate it to the next level of management. Managers contact other managers. E-mails and voice mails are exchanged. Managers begin making decisions to try to solve the problem and restart the flow. Each person works independently until all the managers realize that they need to get everyone on the same page, and there is only one way to do this: have a meeting.
One way or another, eventually a decision is made, issues are resolved, and flow to the customer resumes. The need for management to control the system and fix it when it breaks down has been accepted and embedded into the design of the system. And that’s the problem: we didn’t set out to create flow that gets fixed by the employees beforeit breaks down.
The Operational Excellence approach is different because employees are tasked with carving a pathway where material can flow to the customer, a robust flow where each employee knows
What do I work on next?
Where do I get my work from?
How long will it take me to do my work?
Where will I send it?
When do I send it?
To get to the point where there is a reasonably stable and visible flow requires some work. The system must be properly designed. The improvement or design of flow is not left up to brainstorming; it is done by following hard and fast principles that will create a process that we can use to achieve Operational Excellence, they are:
- Design lean value streams.
- Make lean value streams flow.
- Make flow visual.
- Create standard work for flow.
- Make abnormal flow visual.
- Create standard work for abnormal flow.
- Have employees in the flow improve the flow.
- Perform Offense Activities.
When we apply each of these principles, we will have a roadmap to reach our destination. Each employee understands how to create true flow. They also understand what normal flow is, and, therefore, what abnormal flow is. They know what to do when things are going right, and what to do when flow starts to break down. When problems arise, employees who work in the flow are trained to use standard work, similar to the visual checklist a pilot would use. Very little management is needed to deliver the product to the customer. When this happens, we have reached the destination of Operational Excellence.
When the employees who build the product can also adjust and fix the flow before it breaks down, and do all this with little or no management, then what will the managers be doing, since they are not chasing parts, people, and suppliers and so on? In a world of Operational Excellence, managers will be busy growing the business.