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)

“Whenever there is a product or service for a customer, there is a Value Stream, the challenge lies in seeing it”

 

Why? – Main reasons of VSM

When planning our improvement efforts, It gives a complete picture of the actual condition, in a value flow approach (material and information flow), this help us to focus in the overall system efficiency and not isolated efforts.

 

And principally, it supports the point of turning department/functions as partners and align them in common goals.

 

What is a Value Stream Map (VSM)?

A value stream is the chain of steps performed to create a product or service, this chain can include activities that add value and many times, waste and unnecessary activities.

Then a Value Stream Map plays a critical role for Deploying the Organization’s strategy (what we call Hoshin), it is the connection between the company’s strategic goals and the execution on the operations.

It can be conducted in Manufacturing processes, or Business processes (like Product Development, New Product Introduction), the challenge to measure and visualize them differ on each process but the principles remain the same.

1.- Select the Family of Products/Processes

This step is mainly easy for steady high volume environments, where the equipment is mainly dedicated to a single or few similar products which runs in a fast pace.

The challenge comes for when equipment or people are shared with several products, and the combination of products can be infinite or its “make to order”.

One rule of thumb to define a product family is, the products that go through at least 80% of the same processes and the work content between the products variations is no more than 30% of difference”, if a product doesn’t comply with any of these requirement you should not included in your Value Stream Family.

2.- Develop a Current State Map

The materials and information flow are equally important for the entire process, walk and review both of them by yourself, then draft the process.

 

3.- Develop a Future State Map

After understanding the opportunities from the value stream, the team should define a future state VSM, which is a target condition to achieve on the next 3 to 6 months, depending on the needs of the value stream you can focus on the Quality, Productivity, inventory, Safety, Cost, Delivery and others.

4.- Define and Action Plan.

One we have a future state map, we will define which actions we will experiment to achieve that target condition, remember, that this is a continuous process that will require to iterate and experiment to find the desired solution for each specific problem, process owners should the the main responsible for this challenges.

Once that we achieve that current condition, we will re-do the cycle to identify the next future state, this matches very good with the Toyota Kata routines.

For some it may seem an unnecessary “tool” and for others it’s a “one time” work, but VSM is the compass that guides you in the short term (3 to 6 months) to keep aligned with your long term multi-annual objectives,

 

Who?

Normally is recommended to involve multi functional members to have an integral understanding of the activities (supply chain, manufacturing, quality, sales, engineering, maintenance, IT and related functions), also functions with decision must be involved in the development and review of the Map, they should understand first hand the process being analyzed and improved.

There is in several organizations a function called Value Stream Manager, who is in charge from coordination the activates across all the functions to ensure that the product/service will be delivered under the desired conditions.

How? – Main tips

• As you conduct several cycles of mapping the information becomes more solid and useful for taking decisions, don’t stop on the first version, conduct reviews and updates every time you have significant changes (lay out changes, product introduction, kaizen projects, equipment changes and so on).
• Use other analysis and visualization methods to complement and help you to better understand your process, some of the commonly used are SIPOC, Man-Machine Chart, Spaghetti Diagrams, Yamazumi Charts, among others.
• The team that creates the maps the process will be the same that develop the counter measures, so involve the decision makers from the beginning, they must understand which is the actual condition, in order to develop the countermeasures
• Develop your own solutions, Don’t copy solutions from other processes, even when they are from your own company, a solution for one process may not be suitable for another.
• There is no crystal ball, testing hypothesis is the only way to find out if you are correct, but you should do it in a structured, standard way like PDCA with A3 reports or Improvement/Coaching Kata Cycles.

 

 

We try to cover details that are not discussed in normal conceptual description of Value Stream Mapping, there is a lot of good definitions and step by step information in how to conduct a VSM.

We want to let some questions for you to share:

• Is your company using Value Stream mapping?
• Its working good for your company? Which benefits have you perceived?
• Which are the main challenges to adopt this approach in your company?

Share your comments with us.

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?