We want to discuss about two important concepts for a Lean Transformation, Hoshin Kanri & Daily Management, both are critical factors for a cultural shift and performance improvement at a company level, unfortunately they are not so well understood.

Hoshin Kanri management aligns the activities of people throughout the company so that the company can achieve key goals and react quickly to a changing environment.¹

How is the Hoshin Cycle Managed?

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1.-Strategic Planning, The direction.

The first and very important point is to define a direction, that’s comparing the company’s multi annual goals vs. the current condition, its critical to understand the current organization’s capabilities to clearly understand the gaps to the desired condition and the goals.

2.- Hoshin Deployment, what do we need to do?

Once the direction is established, we will define what we need to do at every level and each department of the organization to achieve the milestones and goals established, we can normally split it on company, department and group level actions.

 

We will define by which means we will achieve them, here we  focus on the process, since each organization and department will find their way according to their specific situation, here is critical  to establish a Daily Management System, where we will establish the standard actions to be perform at each leadership  and team levels to assure we are daily aligned to the main objectives.

 Why is important to link the Hoshin Kanri with Daily Management?

We cannot foresee the future, so we will always have to iterate, observe, learn and adjust, and the only way to do this in an effective way is in a daily manner

Shop floor effective management is the way we manage the company ship daily, this give us the capability to react and correct as soon as we discover deviations and unplanned stops, this will always happen.

Effective daily management without a solid strategy (long term strategic vision) wont go so far, in order to boost the performance into the right direction we need to match both and control them in a frequent manner.

 3.- Controlling by Metrics, how are we doing?

Define the ways we will measure it, we should review and define which Indicators will give us the sense of direction and establish the frequency of review for each level.

• Main KPI’s
• Sub KPI’s
• Process Indicators

Whit this we will assure everybody at every level understand how is contributing to the main goal.

 4.- Check and Adjust the direction,

For the different Indicators structures (Company to Group level) there is also a frequency of review, these can go from Daily, Weekly, Monthly and Quarterly reviews, this will give the capability to study and react the sooner the possible to keep the way towards our goals.

This 4 steps cycle is performed repeatedly at every level of the organization during the year, until we reach the objectives established, normally at company levels are annually new goals.

 

 

References: 1 (Shiba, Graham, and Walden, 1993)

Many companies have made several efforts to improve and even create waste free processes from the beginning, though some of them are very well planned and designed, we have found many times that these promising benefits do no last so long.

Then, what is the problem? is it a matter of discipline? Or maybe the Lean principles cannot be applied on those companies?

Using a “Lean tools implementation” approach, without really developing a daily improvement mindset in the organization, will create fake sense of improvement and short life of the possible benefits.

One of the many issues is that those companies do not consider is Entropy, which in simple words, can be explained as a measure of disorder within a system, the second law of thermodynamics, says that entropy in a system will never decrease.

 

If we take this concept as analogy in a Business process, (as described to me by Jeffrey Liker), Entropy means that companies (and all its processes) are living systems that naturally tend to decay, and if we don’t make nothing it can reach to chaotic levels.

 

Business processes are influenced by many variations sources (new people, new technologies & methods, new competitors, regulation changes and so on).

All companies will suffer these variations in a small or big amount, examples of small, daily variations occurs when, one operator don’t arrive to work or just quit, when some tools start to disappear, machines start to have small malfunctions, the package boxes of the raw material come now in different sizes or quantity, new temporal stocking places appear on the shop floor and warehouse, workers without proper qualification and training, and the list of small deviations goes on and on.

It is then, when our people will start to adapt from the original standard and find the way to make the things happen. 

Traditionally managers will blame the workers for deviating from the defined standards and will also point lack of discipline, but the reality is that many people deviate from the standards with good intentions, because the defined standard is no longer the more efficient or even viable.

As most of the times this is a management issue, they are responsible to create the framework (strategy and resources) to develop and maintain the right standard conditions and fight back the entropy.

Which kind of manager are you? Are you blaming others for not keeping the discipline or do you accept that business is dynamic and will be always change (normally for worst if let alone).

So keep on mind that continuous improvement is a DAILY duty and should be done at all levels of the organization (most important at middle and top management level).

So, what are you doing to foster a daily continuous improvement mindset?