NPA: Business Improvement Techniques Contributing to the Application of Continuous Improvement Techniques (Kaizen)

Aim of the Unit This Unit — Contributing to the Application of Continuous Improvement Techniques (Kaizen) — is designed to help you undertake improvement activities in your workplace and produce measurable benefits. It involves contributing to the planning of the continuous improvement process, carrying out activities to make improvements and recording business benefits.

Objectives of the Unit To introduce: the ideas of value and waste the basic principles and benefits of performance measurement and process diagnosis the use of key performance measures and process diagnostic techniques to drive continuous improvement

Learning outcomes After completing the Unit, you should: understand what is meant by: value and waste the Eight Wastes performance measurement process diagnosis understand the importance of effective performance measurement and process diagnosis understand how performance measures and process diagnosis techniques can be used to monitor process performance and identify areas for improvement

Kaizen Kaizen is a Japanese word meaning improvement. Kaizen calls for never-ending, continuous improvement. It involves everyone — managers and workers alike. It focuses on process improvement.

Kaizen principles Everyone is involved: Quality begins with the customer. Customer needs are always changing and expectations are rising, so continuous improvement is required. Everyone is involved: Top management: establish the strategy, allocate resources, put systems, procedures and structures in place Middle managers: monitor performance, ensure employees are educated to use the appropriate tools Supervisors: maintain the rate of suggestions, coach team members Employees: make suggestions, learn new jobs, use the tools, participate!

Continuous Improvement Plan-Do-Check-Act Continuous Improvement Plan Do Check Act What needs to be done to improve? Does it work? Implement and standardise Try a solution on a small scale

The three elements of work Value adding Maximise any work that changes the nature or shape of the work. Non-value adding Minimise any work that is unnecessary under current conditions, and does not increase the value of the work. Waste Eliminate all unnecessary work.

Eliminating waste The wastes apply to all sectors. The wastes relate to productivity. By reducing waste we work smarter rather than harder. The opposite of waste is value adding. If an activity does not add value it could be reduced or eliminated. You can remember the wastes by asking, ‘Who is TIM P. WOOD?’

The Eight Wastes Transport Examples: Unnecessary movement of materials, products or information. Every move adds time to a process, and world-class organisations are passionate about reducing time. Examples: materials constantly being collected or delivered the actual or virtual chasing of information ('Who has that expenses figure? Marcy? Okay I'll ask Marcy… Marcy says Hector has it...’

The Eight Wastes Inventory Examples: Any work-in-progress that is in excess of what is required to produce for the customer. Inventory tends to increase lead times, prevents rapid identification of problems and increases space, thereby discouraging communication. Examples: physical piles of forms (eg in inboxes) physical materials around the factory people standing in line waiting to be served

The Eight Wastes Motion Examples: Needless movement of people. If people have to bend, pick up, stretch, etc, there is a higher risk of accidents, and ultimately, quality and productivity suffer. Examples: walking between offices or to equipment constantly switching between different computer domains or drives bending or stretching to perform the task

The Eight Wastes Poor utilisation of knowledge Any instance where human potential is not capitalised on. This requires clear communication, commitment and support. Examples: not acting on a suggestion for improvement putting people in roles that don’t require them to use their special skills and attributes

The Eight Wastes Waiting Any delay between when one process step/activity ends and the next begins. Customers do not appreciate being kept waiting. Examples: waiting for information machines or people waiting to carry out the work

The Eight Wastes Overproduction Production of goods or service outputs beyond what is needed for immediate use/adding more value to a service or product than customers want or will pay for. Overproduction leads to storage time and costs, risk of obsolescence, delay in detecting defects. Examples: overpurchasing office supplies, just in case adding more information than is necessary to a report

The Eight Wastes Over-processing Examples: Using processes that are not quality-capable/creating overly elaborate solutions where a simple one would suffice. Over-processing leads to increased chances of defects, longer lead times, transport etc. Examples: processes that involve too many approval steps and sign-offs excessive distribution lists using a sledgehammer to crack a nut

The Eight Wastes Defects Examples: Any aspect of the service that does not conform to customer needs. Their impact may be felt further downstream from where they occurred. Defects need to be traced back. They cost money. Examples: missing a deadline a bug in the website faulty goods

Performance measurement — introduction What is a performance measurement? Why is it important to measure performance of a business, activity or process?

Performance measurement – what is it? The practice of measuring how well an activity, process or system is performing and comparing the measurement to the planned level of performance. ‘It is difficult to manage what you cannot measure.’ 19

Why measure? provides factual data rather than ‘gut feeling’ or ‘hearsay’ shows current performance reveals how well the process is operating to support the requirements of the customer identifies and helps prioritise opportunities for improvement enables measurable improvement targets to be set helps informed decisions to be made puts the ‘stake-in-the-ground’ enables the process or business to benchmark provides for a fair measurement system provides the basis for accepted accountability 20

What is benchmarking? A reference or measurement standard that is used for comparison. Internally: acting as the base/starting point of an improvement process so that improvement can be assessed and the methods to be used to raise the benchmark addressed acting as the basis for comparison between departments and/or companies in a group Externally: for comparing the performance of the organisation with that of other organisations, to enable: specific competitor-to-competitor comparisons. the basis of comparison of similar functions, services or products with the industry in general, or to industry leaders comparison of common business processes or functions, irrelevant of the industry concerned

The benefits of benchmarking Benchmarking forms the basis for setting realistic targets for improvement and action plans to achieve those targets. Benchmarks give indications of the change in needs of the internal and external customers. Benchmarks give the starting point for continuous improvement, and allow realistic (small) targets to be set. Benchmarking allows assessment of how improvements are being made. Where critical/shortfalls are identified, benchmarking allows priorities to be established. In addition to helping to define how the organisation is performing, benchmarking can help in setting of performance standards and can be helpful in identifying new ways of doing things.

Measurement and data analysis

Measurement and data analysis Characteristics of an effective measurement system only measure the things that matter aligned to the effective and efficient delivery of what the customer requires quantitative, objective measures wherever possible rapid and clear indication of performance use performance measurement and data analysis to drive, review and manage continuous improvement effective feedback of measurement data fair measurement system 24

Measurement and data analysis Measures can either be: Quantitative Qualitative The quantity can actually be measured Subject to personal judgement/ perception 25

What do customers want? What do you want when buying a meal? tasty food nice presentation good value cheap no waiting polite service doesn’t poison you Quality Cost Delivery Health and safety NOTE – animated slide Get the team to come up with what they would look for in buying a meal. Group them into QCD H&S, but get the team to guess the titles. All the meal characteristics can be measured in terms of QCD H&S

What do customers want? What do clients want from a project? free from defects on budget on time no accidents Quality Cost Delivery Health and safety NOTE – animated slide Get the team to come up with what they think a client would look for in a project and get group them into QCD H&S, but get the team to guess the titles. All the project characteristics can be measured in terms of QCD H&S Maybe useful to capture what the team currently measures on flipchart

Measures used in industry sectors The seven QCDS & R ‘operational’ measures Measures are commonly classified into four or five categories: Category Measure Quality Not right first time (NRFT) Delivery Achievement of plan Planned activities complete Cost People productivity Budget adherence Safety Relationships Client satisfaction

Not right first time (NRFT) A measure of the ability to deliver the defined specification of works Quantity of defects Not right first time = Agreed unit of measure Example: a new build housing project measures the number of defects found in all properties being worked on for a given time period. The total number of defects measured was 112, in 22 properties. Therefore: The average not right first time = = 5.1 defects per house 112 22 29

No. of planned activities No. of incorrect activities Achievement of plan A measure of whether planned activities have started on the planned date and taken the planned duration, and the accuracy of the plan Achievement of plan = No. of planned activities No. of incorrect activities x 100%  30

Planned activities completer (PAC) A measure of the percentage of planned activities completed as promised at a weekly planning level Planned activities complete = No. of planned activities No. of incomplete activities x 100%  31

Number of person hours worked Productivity A measure of the ratio between work completed and the person hours used to complete the work Work completed People productivity = Number of person hours worked Example calculation: Productivity of two gangs doing mechanical first fix in a construction project Gang A completes six rooms per week with a three person gang. Gang B completes five rooms per week with a two person gang. 32

Cumulative planned cost Cumulative actual cost Budget adherence A financial measure of actual cost against planned cost to date Budget adherence = Cumulative planned cost Cumulative actual cost x 100%  Budget adherence This measure is related to the cost predictability measure as mentioned previously. As a project proceeds there should be a related cost plan — ie how much will be spent as a cumulative total through the life of the project. Here ‘life’ often just refers to the construction period, but could also include costs from cradle to grave of a project and would include design, mobilisation, construction and maintenance. Effectively, it gives a measure of how well the project costs are being controlled in-line with a defined rate of spend and an on-going total of spend. Again as for the planned activities complete, a percentage calculation is made to assess how closely the budget is being followed. This is an important measure since it will indicate the flow of cash for a project. 33

Health and safety A measure of the organisation’s safety performance. Examples of measures include: accidents recorded within a given time period number of days without reported accidents reportable accidents near misses or non-reportable accidents number of accidents relative to number of people on-site Additional measures are used to help define the level of health and safety competence on-site, and these include: percentage of people on-site with health and safety qualifications percentage of people on-site who have been site-inducted 34

Customer satisfaction This is a qualitative measure. With qualitative measures come subjectivity. To ensure fairness and consistency, a rating scale is often used. 35

Display of data It is important to display data in a form that is easy to see and understand. To be useful, collected data needs to be: analysed and displayed in a timely manner clear and concise to a recognised standard that everyone knows Common ways to display data include: trend charts bar charts or histograms pie charts Pareto charts 36

Display of data The trend chart A chart used to show performance over a time period. It is possible to track the trend of the recorded data and to compare performance against a defined target. 37

Display of data The bar chart Number of defects per property 2 4 6 8 10 12 14 1 3 5 7 9 Property number Quantity TARGET Data period: 19–23 Mar 07 Sample size: nine properties Date drawn: 26 Mar 07 Drawn by: J Smith A chart used to display the quantity or frequency that a particular measured factor occurs within the measurement period. Quantity could be the number of times it occurs and/or the associated cost. 38

Display of data The pie chart An easily recognisable way to show the number of factors that contribute to the item being measured and the quantity or percentage proportion that each factor contributes to the whole. 39

Display of data The Pareto chart The Pareto chart shows the related items that are embodied within the measured quantity, ranked in order of magnitude. Additionally, the proportion that each factor contributes to the measured quantity is shown as a cumulative percentage line. 40

The data trail Using measured data to direct focus for improvement What makes up the 50% defects? What contributes to the radiator defect problem? 41

Root cause analysis — Five Whys Why am I always late for work? Because the bus that I get takes the long route. Why? Because I usually miss the direct bus. Because I leave the house late. Because it takes so long to get ready. Because I can never decide what to wear.

Root cause analysis — fishbone used to brainstorm the possible causes of a problem known as a Fishbone, Cause and Effect or Ishikawa diagram the problem is stated at the head of the fish causes are stated under a number of headings on the bones some headings you could use: Men/Machines/Methods/Materials/Measures/Mother Nature Places/Procedures/People/Policies Surroundings/Suppliers/Systems/Skills

Root cause analysis — fishbone

Standardisation through SOPs Standard Operating Procedures (SOPs) are used to make sure that the fixed problem remains permanently fixed. They ensure that the quality procedures are maintained. SOPs can be used as training aids to ensure mistakes are not repeated.

How to produce a SOP Inconsistent process Capture current way of working through example: work observation of more than one process expert collated statements from more than one process expert Identify key points pertaining to safety, quality and ease. Where work methods differ, agree the current best method of working. Document agreed method in the Standard Operation Sheet (SOS). Deploy and monitor as appropriate.

How to produce a SOP Consistent process Conduct a Work and Waste activity on current process. Identify improvements. Incorporate improvements to existing Standard Operating Sheet (SOS). If current SOS does not exist, capture current way of working, incorporating improvements into the SOS. Agree and trial the improved process. Deploy and monitor improved ways of working. Agree next review of the SOS.

Example SOP

Summary What is the definition of value or value added? What is the PDCA Cycle? What are the Eight Wastes? Why is performance measurement important to a Kaizen activity? Why is it important to solve the root cause of a problem?