Project Management Institute

It never ends

Charging your continuous improvement effort might take a culture shock.

Eight years into its continuous improvement program, the Alcoa Fastening Systems plant in Telford, U.K., was posting impressive results. Lead and set-up times had been slashed by 60 percent, freeing up 40 percent of the plant's floor space. By early 2005, the big question was what to do next. Although the program certainly wasn't running out of steam, much of the low-hanging fruit had been picked.

It's a common dilemma. Buzzed-about continuous improvement techniques such as Six Sigma, Kaizen, lean manufacturing and total quality management have made a huge impact on organizational maturity. But as quality metrics soar, businesses wrestle with the challenge of maintaining—and extending—the impetus. When a company improves to an extent that was previously unimaginable, it's difficult to figure out how to take it to the next level.

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BY MALCOLM WHEATLEY // PHOTO BY TIM ROBBERTS

What's needed is an enterprise-wide commitment to embracing continuous improvement as a way of life. Toyota is often heralded as the master of this philosophy. The company's widely admired—and widely emulated—Toyota Production System strives to manage equipment, materials and people in the most efficient manner.

Underpinning Toyota's success is its ability to develop a common language contained within a corporate culture honed over the years to eliminate waste, says Jeffrey Liker, Ph.D., a professor of industrial and operations engineering at the University of Michigan, Ann Arbor, Mich., USA. He is also a noted Toyota-watcher whose book The Toyota Way [McGraw-Hill, 2004] has sold more than 250,000 copies. “Parachuting in Six Sigma Green Belts and Black Belts will give you a start, and will deliver benefits—but go back after a few years and those gains may have evaporated,” he warns.

By contrast, “the Toyota Way is essentially a system designed to provide the tools for people to continually improve their work,” Dr. Liker says. “It's a culture, not just a set of efficiency and improvement techniques. You're depending on workers to reduce inventory, identify hidden problems and fix them. And the workers have a sense of urgency, purpose and teamwork—because if they don't fix problems, production will stop. The Toyota Way actually means more dependence on people, not less.”

A BETTER WAY?

The premise of the Toyota Way is very simple: To do things Toyota's way is to do things better. Through obsessive enterprise-wide focus, the company achieves less scrap, better quality, faster throughput times, lower inventories—and, by the way, happier customers.

But is the Toyota Way for everyone? And can it have applicability in the world of project management?

Quite possibly, says Art Swersey, Ph.D., professor of operations research at Yale School of Management, New Haven, Conn., USA. When he recently had his condominium built—a quintessential construction project, typical of many—he witnessed first-hand amazing amounts of scrap and rework. In other words, waste, scrap and re-work, long since excised on many factory floor thanks to continuous improvement projects, remain very much on the agenda in construction projects, Dr. Swersey says. “The Toyota Way is extremely relevant and potentially extremely useful,” he says.

As with any management remedy, though, care is needed. “Blindly following some prescription that you don't quite understand can lead to disaster,” he warns.

Jeffrey Liker, Ph.D., whose book The Toyota Way first brought the concept to a wider audience, says the philosophy comes down to four Ps:

  1. 1. Philosophy: Think long-term.
  2. 2. Process: Eliminate waste in value streams.
  3. 3. People: Develop, grow and challenge employees.
  4. 4. Problem-solving: Engage employees in continuous learning.

The only “P” that sometimes proves difficult for companies is process. “They think they have to look like a Toyota assembly plant and follow that model. That is not the case,” Dr. Liker says. “They do need to follow the principles around eliminating waste but the exact way they do that technically will depend on their specific processes.”

The rest of the Ps are all straightforward, and companies can understand how they should apply in principle but they're still “extremely challenging to apply in practice,” he says.

“If you make a list of all the companies that have tried to implement the Toyota Way—Boeing, GM, Ford, Chrysler, PPG Industries, Alcoa, Lockheed Martin, Areva, John Deere, Harley-Davidson, hundreds of auto suppliers, and on and on—they have all had a degree of success,” Dr. Liker says. “If you are asking who has risen to Toyota's level and maturity in applying Toyota Way principles, I am not sure there are any. Toyota has been at it at least since the 1940s. …Companies that have been working on the Toyota Way may have tried bits and pieces in the 1990s and started to seriously work on it as a system and philosophy within the last five years. So it is still early in the journey.”

No one said getting that commitment across the enterprise would be easy, though. And establishing that culture isn't an overnight process, he adds.

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It emerges slowly, from shared experiences and lessons built up over time. During his research into Toyota, he interviewed someone who had had learned directly from Taiichi Ohno, the celebrated founder of the Toyota Production System. “I asked him, ‘Did Mr. Ohno ever actually tell you how to do something?' and he said, ‘No—Mr. Ohno would issue a challenge to improve something, and then go away, leaving us to figure it out on our own,'” Dr. Liker recalls. To this day, he adds, Toyota works the same way. Its engineers will come into a supplier's operation, for example, set out an improvement challenge—and leave.

It's not a method that will work everywhere in its purest form, though. In some countries, that kind of targetled approach to improvement runs counter to the local culture, says Andrew Ward, a managing consultant within the project management practice at London, U.K.-headquartered PA Consulting. Motivational techniques that were effective in Europe, for example, had to be significantly modified to be effective in Australia, where he has extensive project experience. “Where there are different cultures, people are motivated by different things—even though the end objective may be the same,” he says. “The skill of the program manager is to shape the translation to new cultures.”

Continuous Expansion

For any company, the starting point is often recognizing that the corporate mindset needs to change. At Alcoa Fastening Systems, the company understood it could no longer rely on manufacturing personnel to fit continuous improvement programs into already crowded agendas. So the company recruited Jonathan Griffiths as business system manager to head up the effort. It's a clear sign that parent company Alcoa in Pittsburgh, Pa., USA, is out to see continuous improvement programs built into the very fabric of all its businesses.

At the Telford plant, there's a deliberate attempt to involve every employee in the plant with some type of continuous improvement program, Mr. Griffiths says. As of August 2006, a whopping 92 percent of the factory's workforce had participated in continuous improvement activities year to date.

The drive for continuous improvement projects has now spread right across the business—and beyond. “Eighty percent of my time used to be spent in activities factory floor, because the problems are very visible, and the data that they will need to solve them is already there,” he says. “Then they discover that the reason some orders are late is because they spent three days in the planning office or got stuck in dispatch—so you start working there, as well. And once you've done that, you start to look at the supply chain and the impact that it is having on efficiency and order timeliness.”

But if it's the ready availability of data on the plant floor that facilitates continuous improvement programs there, the challenge is how businesses can extend their continuous improvement programs into areas where information is scarce. In project or program offices, progress toward project deliverables is measured, but not the efficiency with which inputs are turned into outputs. For most project or program managers, resource usage within budget is good enough. “If it ain't broke, don't fix on the factory floor. These days, I spend the greater proportion of my time in the warehouse or the finance function or customer service,” Mr. Griffiths reports. And a project looking at boosting the performance of a particular subcontractor saw on-time delivery metrics soar from 40 percent to 50 percent to virtually 100 percent. Parts, it turned out, were produced to a wider tolerance than a processing machine had been set up to deal with—causing stoppages that repeatedly brought production to a halt.

Implementing lean techniques in the office can reduce errors by up to 15 percent and shorten lead times by up to 60 percent.

–Michele Bonfiglioli, Bonfiglioli Consulting, Bologna, Italy

The path of progress trodden at Alcoa Fastening Systems is fairly typical, says Sal Puaar, Dusseldorf, Germany-based vice president of process excellence at Celerant Consulting. “Companies often start with the it,” as the saying goes. Continuous improvement holds out the promise of challenging that wisdom, but how, exactly?

The answer is simple, according to Michele Bonfiglioli, chief executive of Bonfiglioli Consulting, Bologna, Italy. Put metrics in place. “Go on a factory floor and you'll see charts everywhere—but no one measures what goes on in the offices,” he says. “In any function or activity, you need to measure what's going on in order to determine improvement levels and targets.”

The flow of document handling, for example, can be improved to increase efficiency, quality and profitability. “Measure how long it takes to complete an activity, and then figure out ways of reducing that,” he urges. Based on work that Bonfiglioli Consulting has carried out with clients such as Telecom Italy, he adds, “implementing lean techniques in the office can reduce errors by up to 15 percent and shorten lead times by up to 60 percent.”

Driving Improvement

At automotive component manufacturer GKN Driveline in Birmingham, U.K., a cultural transformation called Lean Enterprise is targeted to, among other things, achieve literally zero defects. The idea is to harness together all these continuous improvement techniques to create leaner processes. It's quite a goal for a company whose 21,000 employees working in over 40 plants in more than 30 countries produce more than 40 percent of the word's automobile drive shafts.

“It's being rolled out not just within manufacturing, but right across the business,” says Malcolm Bird, director of quality and sustainable development at the company. A thousand of the company's top managers have been undergoing training to establish “a common understanding of what lean manufacturing involves and building up a common ‘lean language’ to deliver it,” he says.

Developing a common language helps any company build support across the enterprise—and hopefully avoid too much of a culture shock.PM

Malcolm Wheatley is a U.K.-based freelance writer who writes for CIO, CSO and Manufacturing Business Technology magazines.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | DECEMBER 2006 | WWW.PMI.ORG
DECEMBER 2006 | PM NETWORK

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