Business Performance Improvement – A Starting Point (Part 1/2)
I’m pleased to share with you a guest article by my colleague Nicholas Scott. It provides a useful overview and guide to four main business performance methods. I have found that many business owners, executives and managers either don’t know of all of these methods, or are confused as to how they differ. Even among professional practioners, we have discussions on their definition and application!
Each of the methods moves your organization to a different result or destination. Just like when you travel, you need to know your destination. If your destination is Paris, then don’t get on the flight to New York! In the same way, choose the right improvement method. So, before you start your improvement journey, you need to know where each of the methods will take you before you get on board.
Business Performance Improvement A Starting Point
by Nicholas Scott, Traverse Technical Management Consulting Ltd.
Business performance improvement. A powerful concept but, where do you begin?
Many different management philosophies exist leading to a confusing pile of books and articles for a manager looking to improve business performance. In this article, I will look at three different yet complementary systems that are commonly used to create significant changes across an organization. To differentiate from tools and processes that are focused on a specific management area such as marketing or human resources, I will look at four different systems, Lean, Six Sigma, Quality Management and Organizational Excellence. For each one I will provide a basic overview and look at the core principles behind the philosophy to identify the similarities that exist between each system and provide suggestions on choosing if for your organization.
What is it?
Lean manufacturing is a proven approach to reduce waste and streamline operations based on the Toyota Manufacturing System. Lean manufacturing embraces a philosophy of continually eliminating waste so that the amount of effort dedicated to the value added activity of their business (work that the customer is willing to pay for) increases. The ultimate intent of a Lean system is to maximize the value delivered to the customer while expending the minimum amount of resources.
A lean manufacturing system allows companies to thrive in a global market demanding higher quality, faster delivery and lower prices for all types of products and services.
- Specify value from the standpoint of the end customer by product family.
- Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.
- Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer.
- As flow is introduced, let customers pull value from the next upstream activity.
- As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.
How advanced is it?
Lean can be applied to small to enterprise size business that have developed procedures and work processes and are looking to reduce waste from their processes.
What is it?
Six Sigma was developed by Motorola in 1985 and as a management philosophy, the Six Sigma approach improves the quality of products by identifying and reducing the source of process variations and defects. Key to the Six Sigma method is finding and eliminating the root cause of any discovered variation or defect. This is accomplished with quality management methods and statistical methods that remove the guesswork from problem analysis. Six Sigma also creates within the organization a specific infrastructure of employees who are experts in applying Six Sigma methodology.
Six Sigma Principles
- Focus on the customer.
- Identify and understand how the work gets done (the value stream).
- Manage, improve and smooth the process flow.
- Remove Non-Value-Added steps and waste.
- Manage by fact and reduce variation.
- Involve and equip the people in the process.
- Undertake improvement activity in a systematic way.
How advanced is it?
Six Sigma can be applied to medium to enterprise size business that have developed procedures and work processes and have effectively removed obvious forms of waste from work processes and are looking for methods to remove process defects and errors.
Reprinted with permission 2013 Traverse Technical Management Consulting Ltd.
Continue reading Part 2 of this article to learn about Quality Management, Organizational Excellence and Common Themes of these various methods.
In the meantime, don’t forget about my book which is for sale on Amazon. It is a fictional process improvement story that every business owner and manager can relate to.