Preparation 2: Set your Improvement Target
Give the team a challenging Target
Have a target that makes a difference
So think about the reason why to do so. What do you want to achieve? When is the mission considered to be successful?
Define the primary goal of this improvement effort:
- In terms of halving or doubling!
- Aim for „zero loss”, 100% elimination
Define the secondary targets e.g.;
- “gaining knowledge from 3th party”
- “integrate our process with the process of down- and up stream processes” etc.
Give the team a clear motivation WHY you give this target. Why do you need 50%? Why not 45 or 56%?
Isn’t it all just about cutting cost?
This is the traditional approach: “When cutting cost, we earn money”. Mathematically this is true.
You step on the gauge and discover you are far too heavy, cut of a leg, gauge again and discover: ‘Aha that is better!’
A too simple reasoning? Indeed! And yet it is being applied over and over again. Look at the impact of many of such ‘cost cutting measures’ on the whole ‘system’. What were the consequences?
All of them…
- Motivation,
- workload,
- loyalty,
- sustainability,
- quality
What was the long term effect?
Eliminating losses is something quite different from cutting cost.
| ! |
When eliminating losses, the cost will automatically go down, while at the same moment the ‘system’ will run easier because it is freed from a burden. |
But more important is the fact that eliminating losses means you have to know where the ‘value’ is hidden. Eliminating losses cannot be done without having focus for the value.
In other words: having focus on the elements that make the difference for our existence.
This course has been written from a firm and unshakeable belief:
| ! | Quality, Safety and Profit are a RESULT and not something that can be directly raised. There is no switch to turn on when quality, safety or profit are demanded. It is a predictable and inevitable result of something else: Solid and smart designed processes. |
All Pigs are equal…
‘All pigs are equal but some are more equal than others’.
…A famous phrase from George Orwell.
So why, you may ask, am I always talking about ‘the customer’ when talking about value? Isn’t the supplier or the employee as important as the customer? When their needs are not fulfilled, how can we fulfill the needs of the customer?
That is all very true and indeed in the end the needs of the customer can only be fulfilled in an optimal way when this is in harmony with all stakeholders. As soon as óne involved party is paying the price for the benefit of another (ie the supplier is ‘squeezed’, child labor is applied, the environment is wasted) in the end this will turn against the organization and against the interest of the other parties.
But this is only true when you take the long term systemic perspective. And that is what this book is about. It is a matter of vision, believe, value…
There is a simple yet important economic reason why the customer is always referenced first when talking about ‘value’.
| ! |
From ALL stakeholders, the customer is the ONLY one that BRINGS money. All others come and GET money from the organization. So as soon as the customer stops bringing his money, all others will dry up sooner or later. |
Remember, when talking about ‘the customer’ I mean the one who uses the outcome of your organization, so it may be as well ‘the citizen’, ‘the patient’ etc. And again we see the complications of this principle in some types of organizations where now at once a tension exists between the interests of the one that brings the money (and economically fuels the process) and the one who really uses and benefits the process.
Setting goals and measuring
So when we look at our processes it has to be clear what they should achieve for us. The processes have to create a value; either via our core business, or indirect by delighting the customer or nice or not, simply because it is a legal obligation.
The organizations goals and the derived goals for the processes we are going to review will somehow have to reflect this.
Achieving goals means…
Reading this, it may seem so obvious that you can hardly believe this is not already done. Yet in practice we find tons of fundamental problems on those essential 3 points.
Are the right goals known and clearly defined?
Be not surprised when there is a lack of clear and unambiguous goals or even worse: when the goals given are inducing exactly the opposite behavior from what actually is needed or wanted.
Due to the traditional approach of ‘cost cutting’ you may find several situations where sub-optimizations leads to undesired side effects and even raise of costs and decrease of value-creation.
Example:
The buying department is bonused on cheaper buying. They manage to buy cheaper boxes with a slightly higher variance on cutting size, gaining 15.000 euro yearly.
The boxes cause problems on the packaging lines leading to regular standstills, causing lost capacity worthwhile the 10-fold of the gained buying price. The down-spiral starts: Production is no longer meeting their targets, becoming frustrated, trying to make up lost time by refusing to release the equipment for maintenance etc.
Quantify the consequences of the goal!
Lets say you indicated that you wanted to achieve an 80% reduction in throughput time. A nice goal. Can you argue why 80%? why not 75 or 83%? What would be the consequences of 80% (in concrete terms). In what percentage of cases would what happen? Or how much money would it make? Or how much more……
in other words; can you quantify why and what would happen if you and the team achieved this goal?
Quantifying this kind of consequence often makes it easier to implement later difficult change or free up time for the team; after all, people now know what they are doing it for!
