The majority of manufacturing companies are pursuing strategic initiatives to improve business performance. They range from traditional Lean and Total Quality programs, to include a more recent IT-driven focus on creating a Real-Time Enterprise (RTE).
Despite the widespread adoption of such initiatives, recent research shows that companies do not make full use of the many core practices associated with these programs. This is the conclusion of a study conducted over the summer of 2007 on behalf of the Manufacturing Enterprise Solutions Association (MESA) by Julie Fraser at analyst firm Industry Directions.
The report indicates that while significant progress is being made, piecemeal implementation of the available fundamental practices from performance improvement programs is hindering companies from realizing the full potential of these initiatives.
While there is a rich and proven body of “best tools and practices” to call from, companies are struggling to piece together the right combination of core practices from a smorgasbord of improvement programs and options that will work best for them. The complexity inherent in choosing the right menu for one’s company and competitive circumstances is evidently causing many companies to leave unrealized performance gains on the table.
Out of 40 surveyed practices covering all three performance improvement areas, only four practices are used by all of the companies. These widespread practices include:
• 5S workplace organization (Lean)
• Standardized work or method sheets (Lean)
• Corrective action and preventive action (CAPA) (Total Quality)
• Kaizen (Lean and Total Quality)
Clearly, this research reflects the popularity of Lean and Total Quality. It also highlights the challenges managers have in selecting the right tools to implement for their organization. The MESA research focused, for instance, on a subset of 12 Lean practices. In our own research, we have identified over 50 different Lean tools. Can the essence of Lean and quality principles be boiled down to four key practices? It is a stretch by any imagination to respond with an unequivocal “yes.”
Six Dimensions Help Increase the Likelihood of Success of Strategic Initiatives
Whether your strategic improvement initiatives include Lean, Six Sigma, Total Quality, RTE, or something else, you can help improve the likelihood of success by attending to a number of key issues from the outset. We have posed these dimensions in the form of questions to illustrate the importance of integrated thinking.
The answers will be unique to each company and competitive circumstances. There are not necessarily any right or wrong answers. Yet, in general terms, the richness of practices deployed in each dimension have enormous performance improvement implications.
Are your improvement initiatives:
Focused on the Business Objectives? A full 80% of respondents report that having metrics aligned with the business needs make them more effective. Of this group, it is unclear what portion of activities are directly tied to the business objectives.
Systematic? Does the organization have a systematic way to implement each improvement philosophy according to the unique circumstances of the company and business opportunities? Many companies simply pick and choose among practices to implement without an overall framework to ensure (a) that the practice is best suited for the particular situation and (b) the overall success of the program.
Integrated? Nearly half of respondents indicate that departmental metrics are commonly in conflict, and about one quarter are in conflict between management levels. Among the companies with more than one metric conflict, employees can find themselves in situations where ill will develops due to working towards conflicting goals.
Holistic? Are improvement programs properly integrated within and between the different approaches, and with other functions of the business? Do they enhance overall business performance or simply produce isolated improvement and/or difficult-to-sustain change?
Dynamic? How do improvement initiatives account for a dynamic market and operational environment? How do they deal with changes in product demand and complex operational dynamics on the plant floor? The MESA survey, for instance, highlighted that a large portion of companies do not adjust metrics to keep pace as business needs change, increasing the risk that their metrics become irrelevant.
Customer Focused? The Total Quality findings were striking for their disconnection with customers. “Another surprise is the limited use of customer-defined quality and value practices, which are a foundation for ensuring that quality programs are implemented in areas that matter to the market.”
Profit Mapping addresses the gaps highlighted above head on. It is a complementary approach. You can keep doing what you are doing. However, if a strategic initiative falls short in a dimension, we advise embracing appropriate change in core practices to overcome the deficiency and realize the full potential of the improvement effort.
Incorporating Profit Mapping into existing strategic initiatives takes management vision and leadership.
“While many have declared their intention, manufacturing companies must now show the vision and leadership to change processes, mindsets and supporting technologies to reliably achieve ongoing improvements across their organizations.” MESA, 2007
Rigorous implementation of strategic initiatives has produced significant gains over the years, yet much work remains. If it were easy, we would all be reaping the full benefits and have probably moved on to tackle other sources of competitive advantage by now.