The principles of continuous improvement have been part of the manufacturing industry for many years. At their best, the results are remarkable.
We worked with one automotive company to use continuous improvement to release 25 percent of employee time, deliver a 50 percent improvement in scrap, and achieve an inventory reduction of over 35 percent. For a large life sciences business, we applied it to drive revenue growth by delivering 30 percent extra capacity across all plants.
As in all industries, however, one of the biggest challenges for manufacturers is making sure that their systems deliver the sustainable benefits expected by the business.
It is an unfortunate truth that, despite the wealth of experience around, and the many tried and tested approaches available, many systems fail to really engage and energise the business.
As a result, they do not deliver the expected results. So if the costs are highly visible, but the benefits less so, how can leaders stop their continuous improvement activity from appearing like an irrelevant and unnecessary overhead?
In our experience, we have seen a great deal of otherwise excellent continuous improvement activity failing to make the grade because of three common pitfalls. If leaders take the right steps to avoid these pitfalls, they stand a much greater chance of success.
Often, there is no clear vision of what a manufacturer’s continuous improvement group is aiming to achieve and little guidance on how it should be applied.
To avoid this confusion, the business and the continuous improvement team must be clear about what their purpose is, what the benefits are, and how to engage the wider organisation.
This means getting a framework in place to provide information in a way that is relevant to the business and in a language they understand.
It should support the communication of the benefits, principles, tools and techniques and share stories of its success. For example, if your system releases 1,500 hours of employee time in the first year, you need to make sure that everyone know about this and how it was achieved.
In many situations the link between business objectives, performance targets and improvement activities can be missing. Establishing clear alignment between these three areas – and tracking performance accurately – is therefore vital to success.
You should implement a process to roll out business strategy throughout the organisation and establish metrics, targets and reporting to support it.
By getting the process in place, you create the performance gap used to focus the direction of continuous improvement activities. This approach applies regardless of which business objectives you are targeting.
Many continuous improvement systems rely on centralised expert teams. These teams often fail to really engage and energise the organisation; they can easily become disconnected from the business.
Frequently, experts who have been trained in all the right methodology and tools don’t have the necessary business context and coaching skills to deliver the change through working with employee teams.
As well as a grounding in the methodology, you need the right change management, coaching, infrastructure, and on-going learning mechanisms. This must be in place throughout the entire organisation, from senior leadership to the shop floor.
Continuous improvement activity is too valuable to be dismissed as ‘too hard’ by manufacturing businesses. But, for it to be a success, leaders must ensure they are working hard to engage the business and win their support.
James Wright and Steve Fountain are manufacturing experts at PA Consulting Group