Those of you familiar with the world of business will have encountered many phrases and jargon. Some you might understand, but there are likely to be an equal number about which you have no clue. One sentence that is often heard in the boardroom and during management meetings is continuous improvement. If you have come across this term before but don’t quite get the whole concept, read on for more information.
What is Continuous Improvement?
Put simply, continuous improvement refers to the steps a business takes to become more efficient and innovative. These steps and processes are in place to promote long-term business success. By continually re-evaluating and searching for ways to improve, you’re helping build a successful business.
A thriving business never stands still. The constant shifting and focusing on process improvement is vital. Systematic evaluation of products and company processes is a habit most prosperous organizations practice.
Continuous Improvement Model – What is it?
The whole concept of a continuous improvement culture may seem a little daunting, but it doesn’t have to be. Some of the best analytical minds have developed systems that work. Formal lean management strategies include Kanban, Six Sigma, and Kaizen. While these are methodologies you can implement, you may find them confusing or complicated at first.
The terminology and structure of continuous improvement tools can seem incredibly complicated but don’t worry. Any steps you take to enhance your business process, product, or service are just as effective as these more complicated improvement projects. Let’s simplify the process by breaking it down into more manageable steps.
When looking at a continual improvement model, consider the following:
- Improvements are not always significant shifts
- Changes and incremental improvements don’t have to be expensive for them to be effective
- Employees can help with ideas and implementation of your improvement projects
- Development is an ongoing, measurable process
CPI Changes Are Not Always Significant Shifts
It’s important to remember that massive changes aren’t always necessary. Using small steps as part of your continuous process improvement initiatives is possible. You can still make a difference. Making substantial changes often feels intimidating, so breaking it down makes it feel more manageable. It helps a continuous improvement initiative seem more manageable to you, your management team, and your employees.
Using a continuous improvement model this way allows you to make changes regularly. There’s no need to wait for a significant shift in your strategy. Take small steps towards your goal. It will help you achieve it quickly, and everyone will be comfortable with the new direction.
Changes Don’t Have to be Expensive to be Effective
Do you have concerns about the costs of implementing continuous improvement in your business? A new idea doesn’t necessarily mean you have to make a significant financial outlay. By analyzing your business practices, you can learn how to streamline activity. Many of the incremental changes you make can remove specific steps in a process. By taking out unnecessary or out-of-date processes, you save money.
New machinery, tools, or software may be an excellent long-term investment, but you don’t have to buy them straight away. If you have a minimal budget, look at the end goal but choose lower-cost options first. The incremental savings will add up over time. You can invest these savings in the more costly parts of your continuous improvement business strategy.
Employees Can Help with Ideas and Implementation
A crucial part of any business strategy is your employees. A small business owner or large corporation should make employees part of any plan. Any continuous improvement mindset needs to consider employees’ ideas. They are the ones handling things day-to-day and have the best insight into possible improvements. They are also going to be more aware of any problems and whether a continuous improvement model is going to help.
Get everyone together for a brainstorming session. Ask for ideas. Help your team come up with the plans by guiding the meeting with questions such as:
- What will save you 5 minutes in your workday?
- What irritates you at work?
- Are there any problems that need resolving?
- Is it possible to improve your workload?
While it may seem counterintuitive to ask for feedback, it’s a useful tool when problem-solving. The points raised may seem small, but they could result in a positive change. Asking employees from all levels gives you a bottom-up strategy. Fixing minor problems at the beginning of the process helps with opportunities for improvement further up the chain.
Asking employees to come up with ideas also helps with engagement and implementation. If someone feels part of the process, they are more likely to adopt the change. An employee who feels like a valuable member of the team will also want any strategy to be a success.
Development is an Ongoing, Measurable Process
Identifying the need for change and implementing an improvement cycle is not enough. You also have to measure the progress and effectiveness of any changes continuously. By looking at the measurable effect of new processes, you know if they can be helpful elsewhere. That small change to the sales process might be useful to the production team too, for example.
Measuring the effectiveness of changes also keeps track of their financial viability. If the process does not have a positive return on investment, is it necessary? Saving money may not be the goal, but an economic quality or gains and losses should be part of the measurement process.
How Often do I Measure my Organization’s KPI’s?
Key Performance Indicators or KPIs, help organizations monitor the health, quality, and performance of their business. A single organization may have several KPIs in use, which allows for different branches or staff at various levels to assess performance.
A KPI typically shows vital metrics that are in alignment with the organization’s overall strategy. They help employees and managers view the bigger picture and gauge business performance and quality. They can also help drill down into the details of an action or result.
Dependent upon their scope and frequency of data collection, you can assess them on a daily, monthly, or quarterly period. They help the workforce and managers understand if they are meeting the business goals.
The frequency of measuring KPIs may increase from time to time; for example, when rapid feedback is essential. Such feedback may be needed change is occurring in the business.
KPI Components and the PDCA cycle
Various data sources might make up the KPI. Hence, they may include financial performance, sales revenue, customer loyalty and satisfaction, retention, returns, complaints, and market share.
The PDCA cycle (Plan-Do-Check-Act) is a popular four-step management method and continuous quality principle that businesses use. The PCDA cycle is similar to the Shewhart cycle, Deming circle, or the control cycle.
Practical and straightforward, the PDCA cycle works hand-in-hand with a KPI. The PDCA cycle puts the action in place, while the KPI shows the result. They are excellent tools for managing change, solving problems, and testing quality improvement. The KPI lets an organization check its effectiveness before changing work methods and procedures.
Value Stream Mapping
Value stream mapping, or VSM, is a technique that analyzes and manages lean manufacturing processes. If you have a business that makes or produces items, it is a useful tool. This lean process improvement model uses symbols to indicate the information and workflows. It gives you a complete picture of the materials and data you need to deliver your product to the customer.
You can apply VSM in other situations, for example, school improvement. Basically, this type of system visualizes the whole procedure. You get to see all the steps taken from inception to completion or sale. Having a visual representation helps identify problem areas and aid in problem-solving.
Lean value stream mapping is becoming more common across various industries. Whatever business you are in, value stream mapping can be a good thing. You’re able to pick out where a process is getting stuck or slowing down. You’re then able to come up with solutions to get your business working more efficiently.
What is a Pull System?
Another phrase that you may have come across is a pull system. In a nutshell, it is a lean continuous improvement technique that reduces waste in the production process. Production only starts when you have a customer for the end product. Working this way is a technique that reduces overhead and storage costs.
You only create products or put time into a project when there is a demand for it. The activity doesn’t focus on forecasts or what might be. Instead, you put your resources and energy into things you are going to sell. Working this way means you don’t have large stockpiles or pay for the cost of holding and storing products.
Applying a Pull System to your Business
If this sounds like a good business strategy for you, implementing it takes a few simple steps. It is a manufacturing strategy, but it can apply across different industries. As a workflow management tool, a pull system can be useful in managing production and employee time. To create a pull system, you need to:
- Establish pull signals – the signal to create a product or for an employee to do a specific task.
- Control the stages – the pull system can be useful if split into work stages. Identifying these stages allows you to control the amount of work completed at each point.
Why Use a Pull System?
It allows team members to focus on individual tasks and therefore delivers many advantages to your business. These include:
- Faster delivery
- Waste reduction
- Higher productivity
- Better efficiency
All of these things give you a boost when it comes to business efficiency and waste management. The pull system allows you to adapt to changes quickly. You create individual tasks instead of bulk actions. So, if changes are needed, adapting becomes a natural part of the process.
What is Takt Time? And Why Is It Important?
Takt is a German word that means pulse or beat. Hence, we often think of Takt Time as the heartbeat of a business. Takt Time is the rate at which you need to complete a product to meet client demand. If you get a product order every two hours, then you must produce a product every two hours. Takt Time is an excellent tool for finding the best production levels.
Takt Time is essential to businesses because it helps them to align work processes. You want the stock to meet demand, but you don’t want to build up a large inventory.
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Takt Time Equation
Takt Time is easy to calculate. You divide your total available production time by your average customer demand. To complete an accurate equation, you should only use the available time of your workforce. You should exclude breaks, shift changeovers, and maintenance downtime.
Companies can quickly and easily put Takt Time to work and reduce waste in the production process. Japanese firms use Takt Time to great effect, maintaining a continuous flow. This method also reduces storage costs and limits overproduction.
Operational Excellence – How to Measure it?
The benefits of achieving operational excellence are something that businesses of all sizes are beginning to explore. If you have heard the phrase but don’t fully understand it, we will investigate it further now. The term refers to a process that gives you a competitive advantage using operational management strategies. You have your methods and improvement strategies, but you also have to measure them.
Factors you measure include:
- External factors
- Internal benchmarks
External Measurements of Operational Excellence
An essential element for measuring your business success is how you’re doing in comparison to your competitors. Is your business outperforming others in your industry? It doesn’t just apply to sales figures. It could be customer satisfaction or business retention too.
Operational Excellence Internal Benchmarks
Any business efforts you implement can be measurements of operational excellence. There are several benchmarks to consider:
- Cost of performance improvement in comparison to the value it delivers
- How many operational initiatives are happening and their current status
- Value increase over the last financial period due to specific changes
To gain operational excellence, you must commit to the relevant goals you’re setting. The aims you choose must be challenging but achievable. If you smash targets, you may be setting them too low. However, if you’re far off your mark each year, you may be aiming too high. Find the right balance for improving your business while continually moving forward.
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Process Management Software
If you’ve been struggling with your strategies, you may consider a software solution that can help. Business Process Management software is a tool that can streamline the growth-driven design process. Identifying and applying changes can be time-consuming. Software for process management can handle the task for you. Using this type of software allows you to create revisions quickly and, therefore, more effectively.
A performance management improvement program takes away the constant need for emailing and updating each other. When you want to assign tasks and let everyone know what to do, the program does it for you. As the first changes happen, the next job goes to the relevant party. It removes a lot of steps and makes business change implementation much more efficient.
A good process management program includes:
- Company rules – a set of rules that manages the change and initiates specific tasks if something happens
- Automation – transfers tasks to relevant employees automatically
- Monitoring – a snapshot of how the process is going and highlights any issues
You’ve been exploring the many continuous improvement process strategies, but what now? If you’ve been finding the information useful, how do you apply it to your company? It may feel like these strategies are difficult to understand or implement, but they don’t have to be. Some tips to help you start the improvement initiative include:
- Start small – having a big final goal is good, but it can feel like too much. Start with small changes and go from there.
- Get advice – speak to others in a similar position, ask employees, and research strategies.
- Look for events in your area, for example, kaizen events
- Monitor progress – any new ideas or processes need monitoring to make sure they work.
- Don’t stop trying – improvement is always possible; don’t stop looking at ways to improve your business practices.
Are you looking for new business improvement initiatives? Have you found effective solutions that can help others? We’d love to hear from you, so leave a comment below and share your thoughts.