1. Unit 11 Perekayasaan Semula (Reengineering) dan Kaizen

2. Bahagian 1. Kaizen

3. KAIZEN Assoc. Prof. Dr. Jegak Uli

4. Unit Objectives To understand the basic concept of kaizen To understand the basic concept of kaizen To compare Western and Japanese approach to management To compare Western and Japanese approach to management To compare the innovation and kaizen- based strategy To compare the innovation and kaizen- based strategy To describe the elements and umbrella of Kaizen To describe the elements and umbrella of Kaizen

5. KAIZEN – THE CONCEPT KAIZEN as originally defined in the book of: "KAIZEN, the Key to Japan's Competitive Success", by Mr. Masaaki Imai, is: KAIZEN as originally defined in the book of: "KAIZEN, the Key to Japan's Competitive Success", by Mr. Masaaki Imai, is: KAIZEN means improvement. KAIZEN means improvement. Moreover, KAIZEN means continuing improvement in personal life, home life, social life, and working life. Moreover, KAIZEN means continuing improvement in personal life, home life, social life, and working life. When applied to the workplace KAIZEN means continuing improvement involving everyone - managers and workers alike. When applied to the workplace KAIZEN means continuing improvement involving everyone - managers and workers alike.

6. KAIZEN – THE CONCEPT Kaizen means improvement Kaizen means improvement Kaizen means ongoing improvement involving everyone, including both managers and workers Kaizen means ongoing improvement involving everyone, including both managers and workers Kaizen philosophy assumes that our way of life – be it our working life, our social life, or our home life – deserves to be constantly improved Kaizen philosophy assumes that our way of life – be it our working life, our social life, or our home life – deserves to be constantly improved

7. KAIZEN – THE CONCEPT The message is “not a day should go by without some kind of improvement being made somewhere in the company” The message is “not a day should go by without some kind of improvement being made somewhere in the company” Simply staying in business required unending progress, and Kaizen has become a way of life Simply staying in business required unending progress, and Kaizen has become a way of life

8. KAIZEN – THE CONCEPT 1. Means improvement 1. Means improvement 2. Ongoing improvement involving everyone – top management, managers, and workers 2. Ongoing improvement involving everyone – top management, managers, and workers 3. “There will be no progress if you keep on doing things exactly the same way all the time” 3. “There will be no progress if you keep on doing things exactly the same way all the time” 4. It is everybody’s business 4. It is everybody’s business

9. WESTERN VS JAPANESE APPROACH TO MANAGEMENT Western West’s innovation-and results-oriented thinking West’s innovation-and results-oriented thinking Innovation strategy is technology driven and thrives on fast growth and high profit margins Innovation strategy is technology driven and thrives on fast growth and high profit margins Practice of reviewing people’s performance strictly on the basis of results and not rewarding effort made Practice of reviewing people’s performance strictly on the basis of results and not rewarding effort made Japanese Japanese kaizen and its process-oriented way of thinking Japanese kaizen and its process-oriented way of thinking Its messages is one of improvement and trying to do better Its messages is one of improvement and trying to do better It does not mean that innovation can or should be forgotten. It does not mean that innovation can or should be forgotten. Both innovation & Kaizen are needed Both innovation & Kaizen are needed

10. JAPANESE MANAGEMENT Has two major components: 1. Maintenance – activities directed toward maintaining current technological, managerial and operating standards 1. Maintenance – activities directed toward maintaining current technological, managerial and operating standards 2. Improvement – those directed toward improving current operating standards 2. Improvement – those directed toward improving current operating standards 3. Improvement can be broken down into KAIZEN and INNOVATION 3. Improvement can be broken down into KAIZEN and INNOVATION

11. JAPANESE MANAGEMENT In Japanese management, three (3) functions should happen simultaneously within any organizations: 1. Maintenance, 2. Innovation, and 3. KAIZEN.

12. 1. Maintenance By maintenance, we refer to maintaining the current status, the procedures are set and the standards are implemented. By maintenance, we refer to maintaining the current status, the procedures are set and the standards are implemented. People in the lower level of organization mostly do that, they maintain their standards. People in the lower level of organization mostly do that, they maintain their standards.

13. 2. Innovation By Innovation, we refer to breakthrough activities initiated by top management, buying new machines, new equipment, developing new markets, directing R&D, change of strategy etc. By Innovation, we refer to breakthrough activities initiated by top management, buying new machines, new equipment, developing new markets, directing R&D, change of strategy etc.

14. 3. KAIZEN In the middle there is KAIZEN, small steps but continuing improvement. In the middle there is KAIZEN, small steps but continuing improvement. KAIZEN should be implemented by the lower/middle management and the workers, with the encouragement and direction of the top. KAIZEN should be implemented by the lower/middle management and the workers, with the encouragement and direction of the top. The top management responsibility is to cultivate a KAIZEN working climates and cultures in the organization. The top management responsibility is to cultivate a KAIZEN working climates and cultures in the organization.

15. JAPANESE MANAGEMENT Kaizen signifies small improvements made in the status quo as a result of on going efforts Kaizen signifies small improvements made in the status quo as a result of on going efforts Innovation involves a drastic improvement in the status quo as a result of large investment in new technology and/or equipment Innovation involves a drastic improvement in the status quo as a result of large investment in new technology and/or equipment

16. WESTERN MANAGEMENT Western perception of management is given in Figure 3 Western perception of management is given in Figure 3 There is little room for KAIZEN concept There is little room for KAIZEN concept The worst companies are those which do nothing but maintenance – no internal drive for kaizen or innovation The worst companies are those which do nothing but maintenance – no internal drive for kaizen or innovation

17. Comparison of Innovation and Kaizen-based Strategy Innovation: Creativity Creativity Individualism Individualism Specialist-oriented Specialist-oriented Attention to great leaps Attention to great leaps Technology-oriented Technology-oriented Information: closed, proprietary Information: closed, proprietary Functional (specialist) orientation Functional (specialist) orientation Seek new technology Seek new technology Line + staff Line + staff Limited feedback Limited feedbackKaizen: Adaptability Adaptability Teamwork (systems approach) Teamwork (systems approach) Generalist-oriented Generalist-oriented Attention to details Attention to details People-oriented People-oriented Information: open, shared Information: open, shared Cross-functional orientation Cross-functional orientation Build on existing technology Build on existing technology Cross-functional organization Cross-functional organization Comprehensive feedback Comprehensive feedback

18. Important Elements of Kaizen 1. A systematic and collaborative approach to cross-functional problem-solving 2. A custom-driven strategy for improvement – seek to satisfy the customer and serve customer needs 3. A system approach and problem- solving tools

19. Important Elements of Kaizen 4. A process-oriented way of thinking and people’s process-oriented efforts for improvement 5. A gradual rather than abrupt change 6. Everybody’s business

20. The Kaizen Umbrella Customer orientation Customer orientation TQC (total quality control) or CWQC (Company-wide Quality Control) TQC (total quality control) or CWQC (Company-wide Quality Control) Robotics Robotics QC (Quality Control) Circles QC (Quality Control) Circles Suggestion system Suggestion system Automation Automation Discipline in the workplace Discipline in the workplace TPM (Total Productive Maintenance) TPM (Total Productive Maintenance) Kamban (signboards, cards or chits) Kamban (signboards, cards or chits) Quality improvement Quality improvement Just-in-time (JIT) Just-in-time (JIT) Zero defects (ZD) Zero defects (ZD) Small-group activities Small-group activities Cooperative labor- management relations Cooperative labor- management relations Productivity improvement Productivity improvement New-product development New-product development

21. Problem-solving is the Starting Point of KAIZEN The starting point of kaizen is to recognize the need The starting point of kaizen is to recognize the need This comes from recognition of a problem This comes from recognition of a problem If no problem is recognized, there is no recognition of the need for improvement If no problem is recognized, there is no recognition of the need for improvement Complacency is the arch enemy of KAIZEN Complacency is the arch enemy of KAIZEN

22. Problem-solving is the Starting Point of KAIZEN It emphasizes problem-awareness and provides clues for identifying problems It emphasizes problem-awareness and provides clues for identifying problems Once identified, problems must be solved Once identified, problems must be solved Thus Kaizen is a problem-solving process Thus Kaizen is a problem-solving process Kaizen requires the use of various problem-solving tools Kaizen requires the use of various problem-solving tools Improvement reaches new heights with every problem is solved – the improvement must be standardized Improvement reaches new heights with every problem is solved – the improvement must be standardized

23. Kaizen and QC Circles, TQC, CWQC A QC circle is defined as a small group that voluntarily performs quality-control (QC) activities within the shop A QC circle is defined as a small group that voluntarily performs quality-control (QC) activities within the shop The small group carries out its work continuously as part of a company-wide program of quality control or TQC (total quality control) or CWQC (company-wide quality control) and improvement within the workshop The small group carries out its work continuously as part of a company-wide program of quality control or TQC (total quality control) or CWQC (company-wide quality control) and improvement within the workshop

24. Kaizen and QC Circles, TQC, CWQC Over the years, QC has been elevated to SQC (statistical quality control), and then TQC or CWQC Over the years, QC has been elevated to SQC (statistical quality control), and then TQC or CWQC TQC and CWQC mean company-wide Kaizen activities involving everyone in the company, managers and workers alike TQC and CWQC mean company-wide Kaizen activities involving everyone in the company, managers and workers alike QC circles have played an important part in improving product quality and productivity QC circles have played an important part in improving product quality and productivity

25. Insemination of KAIZEN into the Organization Not a day should go without some kind of improvement being made somewhere in the company. Not a day should go without some kind of improvement being made somewhere in the company. When KAIZEN is adapted in organizations and management perspectives, however, it is easier to talk about it than to implement it. When KAIZEN is adapted in organizations and management perspectives, however, it is easier to talk about it than to implement it. It is very natural that people will propose some kind of change in their own work place, when they become unsatisfied with their present conditions. It is very natural that people will propose some kind of change in their own work place, when they become unsatisfied with their present conditions. Some of the improvements could be carried out right away. Some of the improvements could be carried out right away.

26. Insemination of KAIZEN into the Organization Perhaps, the boss won't even notice them. Perhaps, the boss won't even notice them. However, when approval is required, several kinds of responses from the boss could have taken place. However, when approval is required, several kinds of responses from the boss could have taken place. The ideal situation is that the boss encourages their subordinates to carry out their ideas. The ideal situation is that the boss encourages their subordinates to carry out their ideas. The boss then appreciates the efforts or gives recognition. The boss then appreciates the efforts or gives recognition.

27. Insemination of KAIZEN into the Organization That's what people expect when they propose something. That's what people expect when they propose something. The positive response given by the boss will then develop trust with the subordinates and stimulate other improvements. The positive response given by the boss will then develop trust with the subordinates and stimulate other improvements. Cumulatively, this will create momentum for continuing improvement. Cumulatively, this will create momentum for continuing improvement.

28. BASIC TIPS FOR KAIZEN ACTIVITIES Discard conventional fixed ideas. Discard conventional fixed ideas. Think of how to do it, not why it cannot be done. Think of how to do it, not why it cannot be done. Do not make excuses. Start by questioning current practices. Do not make excuses. Start by questioning current practices.

29. BASIC TIPS FOR KAIZEN ACTIVITIES Do not seek perfection. Do it right away even if for only 50% of target. Do not seek perfection. Do it right away even if for only 50% of target. Correct it right away, if you make mistake. Correct it right away, if you make mistake. Do not spend money for KAIZEN, use your wisdom. Do not spend money for KAIZEN, use your wisdom.

30. BASIC TIPS FOR KAIZEN ACTIVITIES Wisdom is brought out when faced with hardship. Wisdom is brought out when faced with hardship. Ask 'WHY?" five times and seek root causes. Ask 'WHY?" five times and seek root causes. Seek the wisdom of ten people rather than the knowledge of one. Seek the wisdom of ten people rather than the knowledge of one. KAIZEN ideas are infinite KAIZEN ideas are infinite

31. Bahagian II: Perekayasaan Semula (Reengineering)

32. Reengineering: some basic concepts Assoc. Prof. Jegak Uli

33. The Official Definition The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance. The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance.

34. The Key Words dramatic -- improvements not marginal, not 5 or 10 % but quantum leaps. dramatic -- improvements not marginal, not 5 or 10 % but quantum leaps. radical -- going to the roots of things. Starting over, reinventing. radical -- going to the roots of things. Starting over, reinventing. process -- a group of related tasks that together create value for customers e.g.. order fulfillment. process -- a group of related tasks that together create value for customers e.g.. order fulfillment. redesign -- the design of processes, how work is done redesign -- the design of processes, how work is done

35. What Reengineering is Not it is not downsizing it is not downsizing it is not restructuring it is not restructuring it is not a fad -- it works, brings about huge improvements it is not a fad -- it works, brings about huge improvements it is not more of the same -- it is revolutionary. Focus on end to end processes and not specialization of labor it is not more of the same -- it is revolutionary. Focus on end to end processes and not specialization of labor

36. The Three Cs CUSTOMERS -- more sophisticated, demanding, more alternatives, more knowledgeable CUSTOMERS -- more sophisticated, demanding, more alternatives, more knowledgeable COMPETITION -- no longer local and gentle, but more global and cutthroat. COMPETITION -- no longer local and gentle, but more global and cutthroat. CHANGE -- change from trad.focus on planning, control, and managed growth to emphasis on speed, innovation, flexibility, quality, service, and cost. CHANGE -- change from trad.focus on planning, control, and managed growth to emphasis on speed, innovation, flexibility, quality, service, and cost.

37. Top Ten Ways to Fail 1. Giving only lip service to reengineer 1. Giving only lip service to reengineer 2. Don’t focus on processes 2. Don’t focus on processes 3. Spend a lot of time analyzing the current situation 3. Spend a lot of time analyzing the current situation 4. Proceed without strong executive leadership 4. Proceed without strong executive leadership 5. Be timid in redesign 5. Be timid in redesign

38. Top Ten (contd.) 6. Go directly from conceptual design to implementation 6. Go directly from conceptual design to implementation 7. Reengineer slowly 7. Reengineer slowly 8. Place some aspects of the business off- limits 8. Place some aspects of the business off- limits 9. Adopt a conventional implementation style. 9. Adopt a conventional implementation style. 10. Ignore concerns of your people 10. Ignore concerns of your people

39. The Primary Ingredients Leadership Leadership The Reengineering Team The Reengineering Team

40. The Tools of Reengineering Leadership SIGNALS -- Explicit Communications SIGNALS -- Explicit Communications SYMBOLS -- Personal Behavior SYMBOLS -- Personal Behavior SYSTEMS -- Measurements and Rewards SYSTEMS -- Measurements and Rewards

41. The Profile of a Reengineer Process oriented Process oriented Holistic perspective Holistic perspective Creativity Creativity Restlessness Restlessness Enthusiasm Enthusiasm Optimism Optimism Persistence Persistence Tact Tact Team player Team player Communication skills Communication skills

42. The Content of Reengineering Work Understanding the old processes and customer requirements Understanding the old processes and customer requirements Inventing a new process design that shatters old assumptions Inventing a new process design that shatters old assumptions Constructing the new process-- details of operations, taking care of implications, training Constructing the new process-- details of operations, taking care of implications, training Selling the new way Selling the new way

43. The Context of Re-e Efforts Uncertainty -- uncertainty eliminated gradually Uncertainty -- uncertainty eliminated gradually Experimentation -- iterative. Designing on paper must be followed by trying in reality Experimentation -- iterative. Designing on paper must be followed by trying in reality Pressure -- must proceed at fast pace. Always operate under conditions of great urgency and intensity Pressure -- must proceed at fast pace. Always operate under conditions of great urgency and intensity

44. Focus of Team Members Must share dedication to three things: Must share dedication to three things: – The process being reeingineered – The needs of the customer of that process – The team itself

45. Example of team characteristics CARING CARING DARING DARING SHARING SHARING

46. Problem, Rule, and Assumption PROBLEM -- a specific performance shortcoming of the process e.g.. slow cycle time. PROBLEM -- a specific performance shortcoming of the process e.g.. slow cycle time. RULE -- a specific aspect of the process design that causes the problem e.g.. must have specialist for each task. RULE -- a specific aspect of the process design that causes the problem e.g.. must have specialist for each task. ASSUMPTION -- a belief that gives rise to the rule e.g.. the work is complex ASSUMPTION -- a belief that gives rise to the rule e.g.. the work is complex

47. Principles for Overcoming Resistance to Change Resistance is natural and inevitable -- Expect it. Resistance is natural and inevitable -- Expect it. Resistance is not always apparent -- Find it. Resistance is not always apparent -- Find it. Resistance has many motivations -- Understand it Resistance has many motivations -- Understand it Deal with people’s concerns not their arguments -- Confront it Deal with people’s concerns not their arguments -- Confront it There’s no one way to deal with resistance -- Manage it There’s no one way to deal with resistance -- Manage it

48. The Key Mechanisms for Overcoming Resistance INCENTIVES -- positive and negative INCENTIVES -- positive and negative INFORMATION -- dispel uncertainty and fear INFORMATION -- dispel uncertainty and fear INTERVENTION -- one-on-one connection INTERVENTION -- one-on-one connection INDOCTRINATION -- make change seem inevitable INDOCTRINATION -- make change seem inevitable INVOLVEMENT -- make people part of the effort INVOLVEMENT -- make people part of the effort

49. Selling the Change Impediments to communications Impediments to communications Ten Principles of Reengineering communications Ten Principles of Reengineering communications

50. Impediments to Communications Disbelief Disbelief False familiarity False familiarity Fear of layoffs Fear of layoffs The rumor mill The rumor mill Sloppy execution -- incomprehensibility, abstractions, complexity, and clichés Sloppy execution -- incomprehensibility, abstractions, complexity, and clichés

51. Ten Principles of Re-eng Communications Ten Principles of Re-eng Communications 1. Segment the audience 1. Segment the audience 2. Use multiple channels 2. Use multiple channels 3. Use multiple sources 3. Use multiple sources 4. Be clear 4. Be clear 5. Communicate, communicate, communicate 5. Communicate, communicate, communicate

52. Ten Principles (contd.) 6. Honesty is the only policy 6. Honesty is the only policy 7. Use emotions, not just logic 7. Use emotions, not just logic 8. Heal, console, encourage 8. Heal, console, encourage 9. Make the message tangible 9. Make the message tangible 10. Listen, listen, listen 10. Listen, listen, listen

53. References Hammer, M. and Champy, J. Reengineering the Corporation: A Manifesto for Business Revloution.HarperCollins, New York, 1993 Hammer, M. and Champy, J. Reengineering the Corporation: A Manifesto for Business Revloution.HarperCollins, New York, 1993 Hammer, M. and Stanton, S.A. The Reengineering Revolution: A Handbook. HarperCollins, New York, 1995. Hammer, M. and Stanton, S.A. The Reengineering Revolution: A Handbook. HarperCollins, New York, 1995.

54. The End