Business System Improvement Build Process
2 Year, High-Level Plan
- Phase 1: *** Build Management Buy-in, Initialize Program, & Set up Initial Efforts ***
- Management Commitment. Benefit: Executive Buy-In and Commitment – Week 1
- Start a Business Office of Operational Excellence.
- Meanwhile, start the build of your Business System Guiding Principles. This includes goals, and responsibilities designed to create an agile and robust company, if not currently existing.
- Educate the Management Team on the System Improvement Process.
- Phase 2: *** Staff up the Team, Build Project Charters, & Select Improvement Projects to Start ***
- Staffing. Benefit: Staffing Initiated, Project Selection, and Success Metric Agreement – Week 2 – 4
- Start the project off by bringing in 3 Black and 2 Green Belts. Start this early because this will take time and is a Critical Success Factor. Each Black Belt averages $1 million of cost savings.
- Start of Project Charter Build. This provides much-needed direction and project management guidance.
- Select Improvement projects: (Your System is comprised of Value Streams and Overhead functions). Map Value Streams on critical business systems and poor-performing business systems. Lean Six Sigma Project Selection by using ROI as the method.
- Phase 3: *** Standardize, Flow, Pull, & Initiate Continuous Improvement ***
- SDD – Standardize, Document, and Display. This is key to optimizing Operations.
- Investigate Production Leveling Options if appropriate. This smoothes your operations and helps if you implement “Pull” methodologies.
- Identify areas of Flow. This is the ideal move from one process to another.
- Evaluate andon as an option. andon means that you stop to fix a defect when detected. Toyota still averages 800 a year. This helps create a learning organization.
- Find ripe areas to implement Pull.
- Initiate build of Continuous Improvement Program materials with 1 Black Belt. Establish Bogey, 6ms improvement is the Toyota Continuous Improvement bogey.
- Define Value Stream Managers.
- Phase 4: *** Establish Success Metrics, & Introduce Lean Six Sigma Tools ***
- Establish the Metrics that demonstrate System Success.
- Explore important Lean Six Sigma tools.
- Phase 5: *** Reporting, Map more Value Streams, Document, & Educate ***
- Initiate Monthly Reporting.
- Above all, Map and Improve the performance of each Value Stream (VS). VS’s, as an example, include every process between customer order and customer delivery. VS performance is important, Process performance may not be. VS’s move your business to create a focal point on Value Delivery. A Value Stream gives businesses:
- – Profound Knowledge of Value Stream processes,
- – Built-in performance metrics,
- – Value Stream velocity improvement,
- – Decreased Value Stream cost, and
- – Increased Value Stream output quality.
- Document and Promote the successes of targeting Value delivered and building project inertia.
- In addition, initiate an Education and Instruction Program to increase improvement velocity.
- Estimated Progress Milestone: At the end of the first quarter you will have put in place all the parts needed to optimize the implementation of your Production System. At least 6 Value Streams are Mapped and Improved. The next steps accelerate your march forward.
- Phase 6: *** Start Supply Chain Work ***
- Supply Chain. Control it, don’t let it control you. Include it in your strategy.
- Align your Supply Chain into 6 tiers of partners.
- Tier 1: Critical and Just-in-Time,
- Tier 2: Critical and Just-in-Time possible,
- Tier 3: Critical but no Just-in-Time,
- Tier 4: Other suppliers that deliver Just-in-Time,
- Tier 5: Other suppliers Just-in-Time possible, and
- Tier 6: Other non-critical suppliers.
- Explore enhanced relationships with Tier 1.
- Determine which Tier 2 Suppliers could move to Just-in-Time. Toyota receives supplies every 2 hours.
- Within contracts, push for increased Sigma.
- Determine which Tier 2 Suppliers could move to Just-in-Time
- Phase n: *** Ramp up program ***
- (Optional, based on aggressiveness) Hire additional Black and Green Belts. This will ramp up the improvement effort through your company.
- Select additional critical Value Streams to Map, and so on throughout the whole company. The company now has a focal point on the value it creates for customers.
Estimated Progress Milestones:
At the rate of 5 Values Streams Mapped and Improved every 4 weeks you will have:
- First Quarter: 9 Value Streams, Kata Continuous Improvement stated
- Second Quarter: 24 Value Streams, Kata Continuous Improvement maturing
- Third Quarter: 39 Value Streams, Kata Continuous Improvement starting to show benefits
- Fourth Quarter: 54 Value Streams, Kata Continuous Improvement operating smoothly
- Second Year: 114 Value Streams (or more if you continue to staff up)
Benefits of your new Business System:
- Profound Knowledge of your Production System
- Operational Excellence (a competitive advantage)
- Increased Value Stream velocity
- Decreased costs
- Improved product/service quality
- Above all, Continued Improvement with a quest for Perfection
This is a big effort, but measurable benefits start within the second month. This effort will move your business to constantly change, create an improvement culture, and comes with Performance Metrics. Your business is now on its way to excellence.