10 ways to improve your business
- Kaizen is a process of continuous improvement in a company, which involves encouraging employees to come up with ideas for improvements in the company. This method reduces costs, improves the quality of products or services and increases employee engagement.
- Under the P-D-C-A (Plan-Do-Check-Act) model, plan, execute, check results and implement improvement activities.
- In analyzing problems in a company, it is important to involve as many people from different departments as possible, because each employee can look at the problem from a different angle and help identify the deepest causes of the problem.
- Using tools such as Ishikawa diagrams and Pareto diagrams can help effectively identify and eliminate the root causes of problems in a company.
- Methods such as FMEA make it possible to analyze and evaluate potential defects even before production begins, making it possible to take preventive measures or reduce the risk of defects.
- Lean management is about eliminating waste and focusing on adding value for the customer by streamlining production, logistics and quality control processes.
- The use of the Just-In-Time strategy and the Kanban system helps reduce inventory and increase production flexibility, which benefits the company despite incurring additional costs due to more frequent deliveries.
What does the success of a business depend on? Most people will probably answer this question by pointing to the right strategy, innovation and the ability to hit consumer tastes. Of course, this is true, but often when companies with a similar profile compete, the one that is able to operate more efficiently, thus producing better products at a lower price, wins. How can quality and cost advantages be achieved at the same time? By using techniques that lead to continuous product improvement and the elimination of defects and waste. Let's take a look at ten methods by which you will influence the improvement of your business.
Also known as "small steps method", Kaizen is the process of continuous improvement of an enterprise. In the article "Kaizen, or how to involve employees in improving the enterprise?" we described the concept in more detail and presented some of the techniques involved. In short, it involves encouraging employees to come up with ideas for improvements in the company.
Kaizen, by gradually improving all aspects of the company's operations, aims to achieve the following goals:
- Reduce the execution time of the work process and improve quality;
- Technical adjustment of system components;
- Creating evaluation and reward criteria;
- cost reduction;
- Improving the ergonomics of workstations.
The creator of this model, William Deming, was an American statistician with a background in quality management who did consulting work for Japanese companies after the war. Among other things, his concepts influenced Kaizen He advocated a philosophy of continuous improvement and improved communication between management and employees. An extension of the acronym (Plan-Do-Check-Act) can be translated as "Plan-Do-Check-Act" and represents a four-step process for flexibly implementing change.
The first stage, that is planning, refers to knowing the cause of the problem we are facing. At this point, it is worth remembering one of the Kaizen principles of "5 Why". Let's try to figure out what is most responsible for the situation by "five times asking why." Of course, just asking "why" is not always enough, so in the following paragraphs I will describe diagrams that allow us to break down problems and find the most crucial ones. Knowing the cause of the problem, we can get all the information that could potentially help us solve it and move on to the next step.
The next step is attempt to solve the problem. As we already know, Kaizen is all about small steps, so to begin with we don't turn the whole company upside down, we just test the idea on a small scale. In this case, "execute" means "try," full implementation takes place only in the last stage of the cycle. This approach will be better because our ideas can sometimes go wrong. Caution in action gives us a certain amount of flexibility and allows us to adapt solutions to reality.
Once we've tried our solution, it's time for the third stage which is analysis of its effects. It allows us to find out how right the idea was and how effective it was. Of course, the result of the trial does not have to be judged by a zero-one system. Even if the solution is good enough to be implemented in full, the "test period" allows us to learn about its imperfections and improve them. "Check" should not be based only on control, but rather on studying the results of the experiment conducted.
The final phase is the full implementation of the revised solution. The previous three stages give us confidence that the results will be satisfactory. Of course, this is not the end of the process, because Kaizen, with which the P-D-C-A model is closely related, is a continuous improvement, the cycle comes full circle and begins again; once the process is complete, we must look for more areas we could improve. Repeating these four steps brings the company closer to excellence.
3. ishikawa diagram
The tool, developed by a professor at the University of Tokyo is used for cause-and-effect analysis and is also called a "fishbone diagram." It involves writing an effect, usually a failure, in place of the "head," and placing the overall reasons in a diagram shaped like branching bones. Following the aforementioned "5 Why" rule, we can add factors that influenced each reason. We can repeat this process until our analysis is sufficiently detailed. It is important to involve as many people from different departments of the company as possible, otherwise the analysis will not be complete. Employees with different experience will be able to look at the problem from a different angle, so the chance of identifying the deepest causes will increase significantly.
The principle of constructing a diagram is best demonstrated by an example. Let's assume that the problem in the company is ineffective, protracted meetings and we want to find out why this is happening.
The use of such an analysis has various benefits. First, the participation of a team composed of employees from different departments and levels gives us the confidence to consider all possible causes of the problem. Second, the nature of the chart emphasizes the search for "sub-causes," i.e. factors that did not contribute to our failure directly, but it is these that need to be eliminated so that the situation does not recur in the future. In addition, the delineation of effect and causes in graphical form is accessible and provides a starting point for listing those factors whose influence on the final result was greatest.
4 Pareto diagram
The Pareto principle states that 20% of factors generate 80% of effects. Having a complete list of causes of failed meetings thanks to the Ishikawa diagram, we could select those whose negative impact is the greatest, and eliminating only them would give satisfactory results. Meeting efficiency is hard to quantify, but if we measured, for example, the number of individual causes of complaints, we could construct a Pareto diagram on this basis. It boils down to a bar chart showing the frequency of individual observations and allows us to see which causes of a problem occur most often. Of course, eliminating them first will give the best result. Going back to our example with meetings, one solution would be to survey employees about the reasons for their dissatisfaction with meetings. Identifying the key factors allows you to act precisely and therefore more efficiently.
Another method is used to analyze potential product defects even before they arise. To do this, we try to predict what defects are likely to occur and locate their causes, for example, using a fishbone chart. Once we create a chart with the listed abnormalities, we rate on a scale of 1 to 10 their following parameters: probability of occurrence, difficulty of detection and importance to the customer. The product of these three numbers allows us to determine how serious a defect is and identify those that most need attention. It can be said that the idea of this method is similar to the Pareto diagram, but we apply it before the start of production, which allows us to prevent the occurrence of defects or reduce their negative consequences (for example, by increasing the chances of their detection).
We are already able to know the causes of a problem, identify the key ones, and even predict them before they occur. What if we design the system so that certain errors can't happen? That's the idea behind the poka-yoke method, which can be translated non-literally from Japanese as "mistake-proof." We see examples of it in everyday life; a sim card with a cut corner that can't be inserted the other way around, or the sound that reminds us to remove the card from an ATM after withdrawing cash. During office work, it's also easy to make a mistake due to inattention, so it's a good idea to find options to make sure it's prevented or signaled. Examples include the spell-check option in a word processor, which catches some typos for us, or gmail, which notices the word "attachment" in the body of an email and asks us if we forgot it.
7 Lean management
Lean management is most applicable to the previously mentioned waste. The key postulate of this management concept is to "slim down" the company, by getting rid of all processes that are not absolutely necessary and do not in themselves provide value to the customer. The first company to put this method into practice was Toyota.
In order to identify waste and thus find an opportunity to improve operations, we need to ask ourselves the following question: "What is the customer of our products and services willing to pay for?". Usually, a large part of the processes performed, such as transportation of materials or company bureaucracy, generate costs without making the customer willing to pay more. Following a few rules helps to reduce similar losses. First, try to respond to demand rather than anticipate it. Misguided forecasts cause overproduction and overstocking, resulting in higher costs (for example, maintaining a larger warehouse). Consuming warehouse space through poor inventory management certainly does not add value for the customer.
Obviously, a flexible response to demand requires a maximum reduction in the time between placing an order and delivering the product to the customer. Another important point, therefore, is to streamline the production process (eliminating downtime and waiting) and logistics. This topic is being developed by Just-In-Time and Kanban techniques.
As mentioned, defects are also wasteful, hence the emphasis on rigorous quality control. If we don't do something right the first time, the customer won't be willing to pay for the fact that we have to correct after ourselves. The use of methods such as FMEA and Poka-Yoke can reduce losses associated with having to make corrections, service defective products and accept complaints.
A prerequisite for the success of the Lean approach is, as with Kaizen, continuous improvement, and in particular searching for activities that do not bring value to the customer and eliminating them. It's worth asking yourself whether all the internal documents, signatures and emails created are actually necessary for the company to function.
Companies often face a choice between two types of waste. If one wants to ensure continuous production, it is necessary to hold more inventory. Inventory reduction, on the other hand, brings tangible savings, but can result in equally undesirable interruptions in production, in case of delayed delivery. Of course, this problem mainly affects manufacturing companies, and it is with them in mind that the following concept was developed.
Just-In-Time method, or "just in time." stipulates that a minimum amount of inventory is maintained and that materials needed for production come to the company when they are needed. But how can such synchronization with suppliers be achieved? It is certainly not easy and requires very good communication. Therefore, it is better to work with fewer suppliers that can be trusted. Location will be an important factor - the closer to our plant, the better. The most important thing is to transmit demand information to suppliers, Toyota used the Kanban method for this purpose, which in itself is so popular and interesting that it deserves a separate item.
Just-In-Time works well for companies that are able to standardize their production. In addition, often the key to success is the right contract with the supplier, which shifts much of the responsibility for the entire process and the need to maintain inventory. Something like this is possible when the company has a strong negotiating position with suppliers and can dictate its terms to some extent. On the other hand, a similar effect can be achieved by integrating suppliers into the company, but still the success of the venture depends on their ability to meet the exacting requirements.
A method to help implement Just-In-Time is Kanban, which is. logistics system to maintain relatively constant inventory levels. It involves automatically placing an order with a supplier when specific stocks fall by a set amount. Originally, special slips of paper were used for this purpose, which traveled from the acceptance of delivery to the release of the finished product, when they returned to the supplier constituting the order. Today, the system is electronic, which makes it even more useful.
Importantly, this process applies not only to suppliers outside the company. If production is divided into stages between company departments, one department can be a supplier to another. In this case, too, continuity of production is important, so the release of a product further generates a signal via the Kanban system to a department earlier in the supply chain, and in this way orders can be pulled all the way to outside suppliers.
The entire Just-In-Time system requires more than frequent deliveries, which significantly increases costs and may seem unprofitable. However, Toyota's experience shows that benefits such as inventory reduction and flexibility far outweigh the losses, and using this strategy pays off.
Six sigma, is the most formalized of the methods presented, in the introduction of which the participation of a specially trained consultant is integral. At the same time, the popularity of this method prompts me to introduce it. The name refers to statistics - sigma is the average deviation from the mean, or standard deviation. In this case, the term is used to determine the probability of a defect, and a process with a value of 6 sigma allows less than three defects per million products.
Although the introduction itself suggests that the method is extremely complicated, in practice it uses many methods common to Kaizen or lean management, such as the already described Pareto diagram, Ishikawa diagram or FMEA. A certain innovation is the special emphasis on measuring specific results - each project should result in an increase in profit. In addition, decisions are based more on hard numbers than on assumptions and opinions.
Six sigma has both supporters, who emphasize its positive impact on the performance of companies such as GE or Motorola, and opponents, who believe that it uses the same methods as other quality management systems and is distinguished only by the introduction of hierarchical structures of consultants. In the case of companies smaller than the aforementioned Motorola and GE, the very implementation of the concepts presented earlier will yield the most tangible results.
Key to success
The ten methods I've listed are the most well-known quality management concepts that are worth being aware of (Kaizen, lean management, 6σ) and the most, in my opinion, useful techniques that can be used right away (Ishikawa chart, Pareto principle, P-D-C-A). Returning to the question posed in the introduction, the key to a company's success is to seize every opportunity in the pursuit of excellence. Among the ten ways presented, each company is sure to find one that will give it a sustainable competitive advantage.
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