If our conversations with business leaders are any indication, the theme of 2023 is how to get more productivity out of existing resources. The uncertain economy and difficult labor market are forcing leaders to think creatively about increasing productivity this year.
Fortunately, Lean business process management is ideally suited for this challenge. Lean organizations constantly work toward optimizing every process for maximum results. Productivity through Lean is about total effectiveness, not just efficiency. While it takes effort and often investment in supporting technologies, the ROI can be significant.
The Principles of Lean
People often assume that cost-cutting and Lean management go hand in hand. In other approaches, the direct focus on cost-cutting can end up being very counterproductive when goals like safety, quality, and customer service are harmed.
While it is true that the end result of Lean is usually cost savings, that is a byproduct of adhering to the five principles of lean:
The value of your products or services can only be defined by the customer. Everything they are willing to pay for represents value; every other process, feature, or material is wasted. Lean processes are those that produce maximum value with minimum waste.
The Value Stream
Value flows through the product lifecycle until the customer ultimately consumes it. Mapping the value stream helps Lean organizations identify opportunities to eliminate wasteful processes and activities and to improve connections between teams, sites, and organizations.
Ideally, the flow of value is steady and uninterrupted. Lean organizations look for blockers of flow and find ways to remove them through effective problem-solving.
Many of the wastes categorized by Lean organizations result from work-in-progress building up before the following process is ready to take it in. The principle of pull is about limiting materials, inventory, and work-in-progress to what is called for in real-time — not too much, yet not too little. This approach reduces the opportunity for error, minimizes inventory, and speeds cycle times.
Lean organizations embrace the fact that continuous improvement is the key to increased productivity. Although perfection is impossible, it must always be the goal. Otherwise, apathy sets in, and "good enough" becomes the standard.
Lean Tools and Techniques
How do these principles look in action? Lean organizations have developed several practical and easy-to-implement tools for identifying ways to increase productivity. Any organization can take advantage of some or all of them in 2023.
Standard work is the bedrock of continuous improvement. It is the documented current best practice for any task or process. Standard work is essential because if each operator performs the job differently, it is impossible to create a baseline for improvement or to determine if a change represents an improvement. The standard is designed by the people who do the work, and it is accessible in the place where work gets done. We need to think through the questions of "what needs to be standardized?" and "how standardized does it need to be?" We don't standardize for the sake of standardizing. We do so to reduce waste and improve performance.
Plan, Do, Study, Adjust (PDSA) is a continuous improvement cycle for implementing positive change. Process-level improvement on the existing work is best performed by operators, with support from leadership and stakeholders. The team begins by defining the problem and creating a plan for addressing it (Plan). They theorize about potential solutions and implement the most likely to work, testing those changes first on a small scale (Do). Next, data is collected to determine if the change caused the anticipated positive results (Study). If the change is successful, the Standard work is edited to reflect the new process. If not, a new potential solution is tried (Adjust).
The 5 Whys
The most effective way to increase productivity is to find the underlying or "root" cause of problems and address those rather than applying workarounds. The 5 Whys problem-solving technique helps teams determine the root cause by stating a problem and then asking why until the fundamental flaw is revealed. Five iterations are usually enough to find the reason. Pro tip: it's not always exactly five. Keep asking why until you seem to be getting to an actionable root cause instead of a symptom.
Kanban is a visual management system that makes it easy to find interruptions in flow and monitor a pull system. Traditionally, this meant controlling inventory in a manufacturing process. In other settings, the most common form (often managed electronically) is a Kanban board that includes cards for each piece of work-in-progress. The card moves from one process state to the next until it is completed.
The 8 Wastes of Lean
Lean organizations look to eliminate waste in every form that it takes. To make waste easier to spot, Lean teams look at eight categories of potential waste:
Defects: Errors that require inspection and rework.
Inventory: Excess storage of materials or products.
Transportation: Unnecessary movement of goods, raw materials, or equipment.
Motion: Unnecessary movement of people.
Over Production: Producing more of a product or part than is immediately needed.
Over Processing: Features or materials that don't add value to the customer.
Waiting: Stalled processes or people waiting for upstream inputs.
Human Potential: Employee talent and ideas that are not leveraged.
How to Keep Focused on Productivity Improvement
With all of the day-to-day tasks folks need to take care of, it is common that productivity improvement takes a backseat despite great intentions. To avoid that this year, consider some of these methods to spotlight Lean productivity improvement.
Many Lean organizations use daily huddle meetings in which each team gathers for a brief (10-15 minute) meeting or call to discuss the day's improvement activities. A Kanban board or a huddle board is used to organize the discussion.
It is much easier to get employees to engage with Lean if they understand how their continuous improvement efforts relate to the big picture. Lean leaders often use a process called Hoshin Kanri, which sets out the breakthrough long-term goals of the organization and then breaks them down into annual and department goals. Each goal gets an owner. This approach helps to align the measures of employee performance, improvement projects, and KPIs with the strategic plan. Often, the X-matrix management tool is used to visualize the objectives.
The impact of recognizing employees who engage in Lean productivity improvement can't be understated. It is essential for the individual employee and helps cement a culture that values improvement and signals to the entire organization that leaders care deeply about efforts to implement positive change.
Lean Continuous Improvement Technology
Organizations can undoubtedly enjoy the productivity improvements of Lean tools without integrating technology to support it, but enabling software goes a long way toward getting the most out of every effort. It also makes it possible to calculate the impact of Lean and justify additional investment in the approach. The core features of Lean software include:
With an improvement platform, employees can submit ideas for improvement whenever they spot them. The most effective solutions are cloud-based with mobile apps, so opportunity collection is location-independent. Good ideas don't have to wait until the team member is in the office.
Once an idea is submitted, the system routes it to the right person to review and manage its implementation. This makes improvement software very different from an old-fashioned, passive suggestions box. In addition, once an idea is selected for implementation, alerts and notifications help ensure that it moves smoothly to completion.
Reporting is one of the most critical features of Lean technology. Leaders get a real-time view of the improvement activities and results of every part of the organization. They can coach teams falling behind and recognize those enjoying productivity improvement. The reporting feature also makes it possible to calculate the financial and non-financial impact of improvement.
Moving an organization's Kanban or huddle boards off the wall and into the cloud makes it possible for team members to participate from wherever they happen to be. It also creates an archive of all past improvements so that each new project can build on the last.
If you decide to make 2023 the year your organization goes Lean, we are here to help. We're happy to share how our customers have increased productivity, saving millions of dollars and delighting customers simultaneously.