In business, there are three main reasons organizations engage in continuous improvement activities. They are:
• To realize financial benefits
• Increase customer satisfaction
• Improve employee satisfaction. (Safety and sustainability can be broken out separately, if desired.) All of these benefits fully apply to supply chain organizations and supply chain functions.
Regardless of what type of organization you are in, some of the most commonly seen challenges in supply chain include reducing costs to remain competitive, implementing new products and services, planning and capacity issues, incoming/outgoing delivery issues, inventory issues and service provider issues. Customer complaints, incomplete shipments, long manufacturing cycles, poor scheduling, transportation issues and incomplete or incorrect orders are other frequency seen issues.
"Another significant key is to identify and work with an external partner that not only understands training, but also how to implement the total program for your organization"
Every issue mentioned above involves a broken business process that can be mapped, analyzed and improved. There is also data associated with each of these issues that can be utilized to find the waste or the source of potential errors in the processes and procedures. There are also tools within CI that can ensure that the errors or inefficiencies, once solved or improved, will not reoccur. In short, CI methods provide the ability to diagnose and solve real-life issues so the supply chain becomes more competitive.
If continuous improvement can help elevate the performance of a supply chain organization, what is the best approach to drive these improvements? Let’s examine the three of the most prevalent CI methodologies. They are Lean, Six Sigma and Lean/Six Sigma (LSS). The methodologies are different in their implementation, their benefits, and their impact on a business. Lean is mostly centered on the reduction of waste. It is usually an event-based activity in a part of an organization to improve it by reducing or eliminating sources of waste such as defects, overproduction, waiting, transportation, inventory, motion, extra processing or non-utilized resources. These are known as the 8 wastes of Lean. Both Six Sigma and LSS are project-based methodologies, where an issue is identified that the business needs to solve, and then a trained project leader and a small team follow the DMAIC process to solve the problem. DMAIC stands for define, measure, analyze, improve and control. There are tools associated with each DMAIC phase utilized to improve the supply chain process. Each of these methodologies is based on the fact that everything we do in business, supply chain included, is the result of executing a series of processes (steps) to deliver a product or service.
Regardless of the methodology, the keys to a successful implementation of continuous improvement are the same, no matter in which business or department it is being implemented. Some of the critical keys to success are:
• Strong leadership support
• Selection of good people to participate in and lead CI
• Selection of business relevant issues (top down and bottom up)
• Good CI methodology training
• Delivering early results that demonstrate business value to leadership
The most critical is often viewed as leadership support. However, while it is important, lack of leadership support can be overcome by delivering good early results in financial benefits or resolving customer issues. This can drive an upward spiral of support that will then begin pulling CI rather than CI having to be pushed into an organization.
Another significant key is to identify and work with an external partner that not only understands training, but also how to implement the total program for your organization. They must be flexible to work with your cultural issues and obstacles. Also, they do not have to be large. At Ingredion Incorporated, a $6B Fortune 500 company, we have had great success with smaller firms around the world as partners. Even our lead partner is a smaller firm that is expert in implementation as well as training, so choose quality over size.
One of the most important aspects of a successful CI implementation is delivering significant and relevant business results. This is accomplished by doing a number of things. One is to choose your best people to lead and participate in CI. There is an adage that applies here very well, “you get out of it what you put into it”. Even if you start small, having the best people is a major factor. Another is to choose and improve issues, very early, that the leadership will take notice of. It is important to broadly communicate not only the results of the CI efforts, but that the solutions are complete and lasting solutions, rather than the “band-aids” that are applied to most business issues. Also, communicate the effectiveness of using a structured CI methodology. This is done through the implementation of a transparent and visible communication process. Lastly, realize that CI is not a once and done event. There are always issues and opportunities for improvement. CI has to be resourced and managed every day, or it will fade away and justify people saying it was the flavor of the month. If you do the above, over time, it will become part of everyone’s daily activities.
In a perfect world, your organization would be perfectly prepared to initiate a continuous improvement effort. That means:
• The entire leadership team is fully aligned, supportive and committed
• The organization has set goals for continuous improvement and has committed resources to achieve the goals
• There is a detailed plan to not just initiate continuous improvement, but to sustain it and make it part of the culture.
The reality of it is that no organization has all of the above when they begin and some have none of the above. What you need to do is work with what you have and show success, even on a limited scale. As the saying goes “success breeds success,” as you show success, it will be rewarded with increasing levels of support and resources. Is it challenging? Of course! But the alternative of not undertaking continuous improvement is far worse.