BSBMGT 516 Facilitate continuous improvement Methodologies Total Quality

BSBMGT 516 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, Juran Quality program Concepts and focus Deming 14 steps • Deming cycle (PDCA) • Special and common forms of variation • ‘Statistical thinking’ Crosby 14 steps • 4 Absolutes • Cultural change • ‘Zero-defects’ Juran 3 general steps 10 steps • Pareto principle • ‘Meeting customer expectations’

Lean Manufacturing • Five Systems: • inventory control • set-up improvement • maintenance improvement • productivity improvement • quality improvement. • Seven Wastes: • • over-production waiting or wasted transportation inventory processing inefficiency motion defects.

Lean Manufacturing may be considered a westernised version of ‘Just in Time Manufacturing’ (JIT) and ‘Kaizen’ (Japanese for continuous improvement). During the 1970 s, 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 Implement Analyse 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 • Six sigma 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 skills • communicating verbally and non-verbally • active listening • team problem-solving • negotiating • advocating and asserting values • group decision-making Build participative culture • secure management commitment • value, measure and reward participation.

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 analysis Lean Manufacturing Closed-loop product design ISO 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.

Knowledge management (KM) Hard knowledge Soft knowledge • Capture-Codify-Store model • social: group, team, community of practice model • explicit and verbal • non-verbal, tacit, practice-based (kinaesthetic), situated and contextual, time-bound • procedures and other written documents • ‘traditional’ technologies of document management: • databases • document management systems. • ‘newer’ social networking technologies: • document sharing • work-based social platforms • 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

Develop monitoring strategies: Terms Term Objective Outcome Activities and tasks Metric Baseline/ benchmark Target Data collection methods Definition Something you aim to do to achieve a strategy; a measurable or observable step. A strategy may have several objectives associated with it. The desired end result of a process or activity. Example/s Increase employee satisfaction; reduce resource usage. Completion of performance management process. Units of work that have specific beginnings and Implementation of new, efficient machinery; endings but that should be connected with implementation of training programs for sales important, ongoing work processes or with staff achieving specific objectives. How you measure success; a number, fraction, Litres of water/per garden centre revenue dollar; stock turn ratio = Cost of goods sold ÷ percentage or category or quality. average stock holding. A standard level of performance as defined by Last year’s number of customer complaints; previous measurements or by industry averages. industry average wastage. Success described in terms of a metric; a number. 3% reduction in energy usage. How or where you will gather information on the Accounting systems, ERP software, control charts, defects tracking, audit reports, relevant metrics. 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 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.

• Value Stream Mapping • Process mapping and VSM

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 subprocess 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.

Affinity diagram Solution to maintaining successful process Customer requirement Provide Training Understand requirement Consult customer Know quality Investigate efforts improvement tools Communications Access to information Controls Establish measurement systems Management Establish reward system Employee involvement Interpret customer Provide Identify customer needs operational output Break down barriers Develop corrective Determine process Define process action system capability Provide job security Staff support Clear program goals Project improvement Create steering 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 1960 s, 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 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 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.

• • • interim action adaptive action corrective action preventative action contingency action. Communication Corrective actions Adjust and communicate strategies and tactics as needed When communicating changes, consider: • organisational goals (how does your communication of adjustments advance these? ) • 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: • high level approach to communicating about CI and specific improvements to processes • high level approach to KM • strategic objectives aligned to your organisational strategy. • Procedures: • designed to effect the implementation of your communication strategy and KM practices • approaches include: • written, step-by-step processes • work flows and flow charts • diagrams • Illustrations.

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 • A 3 reporting • progress reports • dashboard reports • defect checklists.

A 3 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: • ensure you 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.