Chapter 7: Continuous Improvement and Lean Quality Management

Introduction

Organizations continuously improve their way of doing business according to the ever-rising customers’ demands and expectations, globalization and increasing competition. To build continuous improvement culture is seen as a source of competitive advantage.

To realize continuous improvement initiatives, many quality management and process improvement systems have been used. Lean, Six Sigma and the Lean Six Sigma approaches are the popular performance improvement programs not only in manufacturing, but also in the service and public sectors. In addition to lean and six sigma synergy, there are several lean tools recently joined with the six sigma. To benefit from these tools, it is vital to get the support from top and middle managers. It is important to encourage workers and all members involved in the process. Total quality starts with personnel quality and the main difficulty in implementation is to implement the quality principles to the personal life.

Conceptual Framework of Continuous Improvement

Continuous Improvement (CI) has a lot of definition made by many scholars. Almehareb and Graham-Jones define CI as “a continual appraisal of what have been done, what is yet to be done, what needs to be done and actions taken and yet to be taking” . Related to the goals of CI, it can be seen “a journey which is directly linked to the organizational performance” and “a source of competitive advantage”.

As it is defined as a journey, CI never ends, and it is a process. An organization creates and sustains a culture of continuous improvement with the Continuous Improvement Process (CIP). There are seven steps in Mansir and Schacht’s “Continuous Improvement Process Model”:

Step 1: Set the Stage for Process Improvement
Step 2: Select a Process to Improve
Step 3: Define the Process
Step 4: Standardize the Process
Step 5: Tighten the Process
Step 6: Improve the Process
Step 7: Assess Improvement Performance

CI cannot be carried off without individual improvement. Therefore, Mansir and Schacht also presented an “Individual Improvement Model” consisting of seven steps:

Step 1: Envision Personal Improvement
Step 2: Enable Personal Improvement
Step 3: Focus on Improvement
Step 4: Improve Your Job
Step 5: Improve Yourself
Step 6: Help Others Improve
Step 7 : Evaluate Improvement Progress

As expected, top management commitment is found to be the most important factor. Without leadership, it cannot be possible to create a cultural environment that stimulates change for improvement. Training and education are determined as the second important factor. It shows the significance of tailor-made training programs for CI implementation.

Continuous Improvement Process (CIP) in an Organizational Perspective

Five primary aspects of an organization are affected from CIP transformation. These aspects are environment, structure, individual and team activity, communication, and integration. Increasing the emphasis and availability of education and training, tailoring the reward and recognition system to reinforce improvement-oriented behaviors.

Structural changes include forming teams to define and implement the improvements, to define and take active ownership of work processes and relocating functions to reduce process times or to better address customer needs. Creating and implementing ideas and suggestions for improvement and differentiating between the necessary and the unnecessary, including making an effort to straighten up, putting things in order, cleaning up, and maintaining equipment are related with individual activity. To improve the frequency, timing, and quality of more open, personal, and relevant communication is another aspect. Both vertical dimension (to upper and lower management levels) and the horizontal dimension (to other equivalent levels) of the organization are affected from changes about communication. The integration of functions and disciplines is affected by CIP in the organizational perspective. The reduction of organizational and functional barriers is handled in this context.

Continuous Improvement Process (CIP) Principles

CIP includes eleven compatible and mutually supporting principles: constancy of purpose, commitment to quality, customer focus and involvement, process orientation, continuous improvement, system-centered management, investment in knowledge, teamwork, and conservation of human resources, total involvement, and perpetual commitment.

In the Continuous Improvement principle context, there are crucial steps as stated below:

• Promoting small improvements
• Research and development - innovation
• Measuring performance
• Improving through projects
• Communicating with data
• Reducing process variability
• Reducing the vendor base
• Preventing defects
• Managing upstream processes

A Lean Perspective to Quality Management

Lean is one of the main constructs in continuous improvement, and generally, it is synonymous with eliminating wastes. It is true that lean is a continuous improvement process. lean thinking is not only a CI tool, it is a philosophy. Toyota Production System (TPS), developed by Eiji Toyoda and Taichi Ohno after the 2nd World War, is the starting point of this philosophy. TPS is a production system in harmony with Japanese culture. TPS is characterized by continuous process improvement via waste reduction. The two main themes in TPS are jidoka and Just-In-Time. Lean is an integrated socio-technical system but rather than viewing lean as a philosophy, management tends to concentrate on tools.

Elimination of wastes, reduction in production time, reduction in inventory and operating cost, improvement in customer satisfaction are some of the advantages of lean. Also, with more robust processes, it leads to less errors. Lean puts a big emphasize on people and it empowers its staff technically by training and building multi-skilled teams. Lean as a business improvement method is to produce better products or deliver better services using fewer resources.

Types of Wastes

Lean thinking focuses on eliminating wastes because it is defined as an “antidote” for wastes by Womack and Jones. In practical manner, generally seven muda are known as “seven wastes” but as it is mentioned in Toyota web page, there are three types of waste mentioned within the TPS: Muda, mura and muri.

There are seven types of muda as explained below:

Overproduction – Producing items more than required at given point of time is the first type of waste.

Waiting – Workers or products wait for raw material, the machine, information, etc.

Unnecessary Transport – This waste is about the material/human transportation from one place to another place.

Over processing – Working on a product before the requirement is called over processing.

Excess Raw Material – Over processing waste is the reason of this kind of waste.

Unnecessary Movement – This waste is about ergonomic factors which affect the workers’ quality of working life.

Defects – According to the quality problems, this waste can occur. Some of the parts need to be reproduced or diminished.

Unused Employee Creativity or unutilized skills is stated as the eighth muda by Liker. It is about loss of getting better ideas, improvement, skills and learning opportunities by avoiding the presence of employee. Mura is a Japanese term used for “unevenness” or “irregularity”. Eliminating mura is important in Just-In-Time (JIT) system, one of the main pillars of the TPS.

Lean Principles

Womack and Jones (2010) show the difference of lean as: “We are putting the entire value stream for specific products relentlessly in the foreground and rethinking every aspect of jobs, careers, functions, and firms in order to correctly specify value and make it flow continuously along the whole length of the stream as pulled by the customer in pursuit of perfection.”. This statement includes the five principles of lean: Value, Value Stream, Flow, Pull and Perfection.

“Value” is the critical starting point in lean context. Activities which do not create value are seen as waste. All the activities are classified in three categories in a “Value Stream”: Value added, non-value added and non-value added but necessary. Womack and Jones call non-value added but necessary activities as “Type One Muda” , which create no value but seem to be unavoidable with current technologies or production assets. On the other hand, “ Type Two Muda ” is used for non-value added activities that create no value and are immediately avoidable. “Flow” principle is about “progressive achievement of tasks along the value stream so that a product proceeds from design to launch, order to delivery and raw materials into the hands of the customer with no stoppages, scrap or backflows”. “Pull” principle is the opposite of “push” principle. “A system of cascading production and delivery instructions from downstream to upstream in which nothing is produced by the upstream supplier until the downstream customer signals a need” is the definition of pull system. The last principle of “Perfection” is about continuously improving the value, value stream, flow and pull.

Lean Quality Perspective

Lean Quality perspective differs from traditional quality perspective. Jidoka, poka-yoke, andon and hansei should be explained to show this difference.

Jidoka: Jidoka is a Japanese term used for “Autonomation – automation with human intelligence”. Jidoka is the quality perspective of lean and has different approaches in contrast to traditional quality studies.

Andon: Andon is the Japanese form of “Signal” and it is one of the lean tools. Jidoka cannot be thought without andon. Andon is a visual aid which highlights where action is required and it is vital to detect the problem. A pull-cord or button is used to activate the alert generally.

Poka-Yoke: Mistake-proofing is called as “Poka-Yoke” in Japanese. Poka-yoke helps a worker to avoid (yokeru) mistakes (poka). To eliminate defects by preventing, correcting, or highlighting errors as they occur is the aim of poka-yoke. Poka-yoke is not a single approach to reduce inadvertent errors. In the other approaches, data from process outputs to suggest how best to manage the process is used.

Hansei: Hansei is a Japanese word used for “self-reflection”. In reflection meetings (hansei-kai), experienced failures are identified and clear plans for future efforts are being created to take appropriate action to avoid reoccurrence.

Lean and Total Quality Management Relationship

Lean and Total Quality Management (TQM) are both universally applicable approaches to improve the quality and the performance in an organization through continuous process improvement. To increase customer satisfaction both of these focus on customer needs and emphasize continuous improvement. However, there are some differences concerning origin, methodologies, tools, and effects. It is shown that organizations gain benefits from combining these complementary concepts.

Kaizen and Other Continuous Improvement Related Lean Tools

Kaizen is the Japanese form of the “Continuous improvement”. (https://blog.toyota.co.uk/kaizentoyota-production-system) Literally it means change (kai) for good (zen). Masaaki Imai introduced kaizen as an umbrella concept for a large number of Japanese business practices.

Various production and quality management tools are encompassed under the Kaizen philosophy umbrella in a broader way. On the other hand, Kaizen is about “improvement of the workplace (gemba) derived from proposals from the workers on the basis of a quality control circle (QCC) and a suggestion system” in a narrower way.

To make the process more efficient, effective, under control and adaptable are the aims of the Kaizen. Seven statistical tools such as pareto diagrams, cause and effect diagrams, histograms, control charts, scatter diagrams, graphics and control charts can be used to solve problems in Kaizen. Leadership is the most important factor to implement the Kaizen successfully. Strong commitment by executives, long-term orientation, a sense of oneness, trust and teamwork among all levels of personnel, and willing cooperation of workers are the other important factors.

The Japanese and the Western management approaches differ from each other. Western approach favors innovation based on technological breakthroughs. On the other hand, Japanese approach emphasizes small incremental changes under existing technology.

Although Kaizen activities started in manufacturing industry, it is successfully implemented in service sector.

Selected Components of the Kaizen Toolkit

The components in this toolkit are related and often overlapping. 5S, Suggestion System, Quality Control Circles (QCC) or Quality Circle (QC), Total Quality Control (TQC), Total Quality Management (TQM),

Toyota Production System (TPS), Just-In-Time (JIT) System, and Kanban System are the components.

5S is defined as “the system of rules and standards for organizing, cleaning, developing and sustaining a productive work environment”. 5S is considered to be the most basic step.

The ideas and suggestions of employees are communicated upwards through the management hierarchy with a suggestion system. Placing suggestion boxes in common areas, implementing formal programs with committees reviewing ideas and rewards given for successful adoption of those ideas are some of the examples in this context.

Just-In-Time (JIT) is one of the two pillars of TPS with jidoka. “Just-In-Time” term is used to stress “making what is needed, when it is needed, and in the amount needed” in a ‘pull’ system. Setup time reduction, small lot production, the use of kanbans, level production scheduling, and preventive maintenance are the core elements of JIT.

Kanban is the Japanese word used for “Signboard”, and it is used as a communication tool in the JIT production. As mentioned before, “pull” is one the five lean principles. To operate ‘pull’ type production system, Kanban system is used.

Other Related Lean Techniques

There are a plenty of lean tools in literature which have Japanese names generally. Here some of them highly related with Kaizen will be introduced briefly: Gemba, genchi gembutsu, value stream mapping, nemawashi and hoshin kanri

Gemba is the Japanese word used for “the place where the real work is done and where value is added”. Gemba usually refers to “shop floor” in manufacturing.

The English version of “Genchi Gembutsu” is “Go and see for yourself”. It is highly related with “Gemba”. To determine the facts and analyze root causes it is important to go and see the location or process where the problem exists.

Value Stream Mapping (VSM) is the starting point in a lean implementation. VSM is a systematic process consisting of defining product family, documenting current state, designing future state and developing an implementation plan to attain future state.

Nemawashi is the Japanese word used for “building consensus”. The company seeks the opinion of employees about the decision during Nemawashi and shares of information about decisions.

Hoshin Kanri (HK), which is also known as policy deployment, is a strategic decision making tool. It is defined as “a way to focus the organization, align goals and plans among all levels and functions, integrate objectives and strategies into daily operations, and review progress to facilitate learning”.

Lean Six Sigma

Lean Six Sigma is defined as “an emerging technology which is used to improve the performance, efficiency and customer satisfaction to sustain in competitive manufacturing and nonmanufacturing environment”. The evolution of lean six sigma is described from the starting point “six sigma”.

Six Sigma

Six Sigma- an advanced version of TQM - is defined as a “well-established approach used to identify and eliminate defects/failures in business by focusing on process performance characteristics that are very critical to quality”. Six Sigma is developed based on Statistical Process Control (SPC) and used as a quality technique for continuous improvement. The other underlying concepts are total quality management (TQM) and Deming philosophy. Six Sigma’s implementation facilitates the achievement of continuous quality improvement without losing profitability as its unique feature.

Lean Six Sigma

Pepper and Spedding define the Lean Six Sigma (LSS) as “a structured and systematic approach for results improvement that perform statistical analyses in order to reduce the incidence of defects in the final product at 3.4 defects per million and eliminate waste around all the production process”. Both “lean” and “Six Sigma” are two widely used and recognized continuous improvement initiatives.

The role of the lean methodology is on material and information flow in between two processes, on the other hand, the focus of Six Sigma is on the improvement of value adding steps within the processes. It is important to be careful to sustain the balance between the two continuous improvement approaches in this integration.

LSS Implementation and Critical Success Factors

Although the origin of both Lean and Six Sigma is the manufacturing sector, there is an increasing trend in the services industry.

CSFs are crucial as they are the key determinants to the success and failure of a LSS implementation. The most leading CSF is the support, dedication and commitment of top management.

One of the most common 10 leadership styles (5-Level, affiliative, bureaucratic, participative, servant, Six Sigma leader, transactional, transcendent, transformational, visionary) is “Six Sigma Leader” who advocates higher standards of leadership effectiveness through the foundational principles of Six Sigma, and is a model anyone can aspire to regardless of whether the company uses Six Sigma or not. In literature, it is discussed that there is a need for a new leadership paradigm because there is no existing style of leadership that consists of all of these characteristics.

Skills and expertise ranked highest in importance in six sigma; employee involvement and culture change in lean manufacturing. Moreover, barriers, challenges and failures of implementation of a LSS project could be directly relational with the success factors

Benchmarking in Continuous Improvement

Benchmarking is simply defined as “a continuous process of performance measuring by the comparison with the strongest competitors or leader enterprises in the field”. Benchmarking is the process of understanding what is important for your organization’s success, understanding your own processes, finding and learning from others whose processes are better than yours, then adapting that learning to improve your performance. Benchmarking is far more than copying. It requires deep self-assessment and the ability to translate practices that work in another context into a process appropriate to your own organization.

Benchmarking is the formal and structured process of searching for those practices which lead to excellent performance, the observation and exchange of information about those practices, the adaptation of those practices to meet the needs of one’s own organization, and their implementation.

Critical Success Factors (CSFs) are a group of essential elements that help the organization in achieving its objectives, ensuring better business performance. On the other hand, the measures that quantify the performance of the organizations are referred as key performance indicators (KPIs).

Types of Benchmarking

Benchmarking is categorized by Meade (2007) in two ways. In the first class, there are four types of benchmarking. Comparisons are made against another department within one’s organization in “internal benchmarking”, on the other hand with direct competitors in “competitive benchmarking”. The third type is “industry benchmarking” in which the benchmarking partner is not a direct competitor, but share the same industry. The last type in this class is “generic benchmarking” in which comparisons of processes and practices are made regardless of the industry or field of the partner. The second classification is based on practices or processes which are benchmarked: process, performance, or strategic. Process benchmarking focuses on discrete work processes and operating practices. On the other hand, products and services are compared in performance benchmarking. As a last type of benchmarking in this class, strategic benchmarking examines how companies compete.

Benefits of Benchmarking

The discovery of innovative approaches is one of the most important benefits. The balance between quantitative and qualitative measurements of processes and outcomes is the strength of benchmarking. To help to overcome resistance to change, to provide a structure for external evaluation, and to create new networks of communication are the benefits listed by practitioners.

It is important to show the criticism of benchmarking in addition to the benefits. Hammer & Champy’s critic is about producing a restrictive framework for innovation and seeking to be only equal to the best. The other critique made by Wolverton is placing organizations in the role of followers rather than leaders. He also adds that an organization could not prepare for the future with benchmarking process. The cost and difficulty of benchmarking are also criticized.

A Benchmarking Guide

In this section, the stages of the benchmarking process in the context of Curtin University’s Quality Framework by Meade (2007) will be described. This model consists of four major phases: The Approach phase, the Deployment phase, the Review phase, and the Improvement phase.

The approach phase starts with selecting a benchmarking topic. The other important step in this phase is identifying the measures which will be used to collect the data. The other important step of this phase is selecting a benchmarking partner.

The Deployment Phase starts with Data Collection from own organization and the benchmarking partner. Site visits are planned and conducted to collect data. The second step is related to analysis of Data. In this context, three key questions need to be considered in comparing data:

• Is the partner better?
• How much better are they?
• Why are they better?

If a performance gap is determined, then the magnitude and causes of this gap need to be identified. After data comparison, target goals for improved performance need to be established. This step is seen as one of the original goals of the benchmarking process. These goals need to be at least equal to the benchmarking partner’s performance. An action plan for improvement will be developed, and the benchmarking report about the findings of the benchmarking will be presented lastly in this phase.