New Book Part 8

In my last post we completed our discussion on the Ultimate Improvement Cycle (UIC) by presenting the deliverables you should achieve as you complete your first rotation of this cycle.  In this post we will continue our discussion on the UIC and dig a bit deeper into what you can expect to happen as you complete the cycle.

The UIC accomplishes five primary objectives that serve as a springboard to maximize revenue and profits as follows:

• It guarantees that you are focusing on the correct area of the process or system, to maximize throughput and minimize operating expense and inventory.
• It provides a roadmap for improvement to ensure a systematic, structured and orderly approach to improvement, to maximize the utilization of your improvement resources.
• It integrates the best of Lean, Six Sigma and TOC strategies to maximize your organization’s full improvement potential.
• It ensures that the necessary up-front planning is completed in advance of changes to the process or organization, so as to avoid the “fire, ready, aim” mindset.
• It facilitates the synergy and involvement of the entire organization, needed to maximize your full return on investment. In short, you will see a “jump” in profitability!

Step 1a

I will now discuss, in more depth, each step required to achieve these five primary objectives. Step 1 can best be characterized in one word—Identify. As stated earlier, all of Step 1 is a series of activities aimed at identifying, rather than taking action on. What we are attempting to do in this first step is collect information that will become the basis for our well-conceived action plan for improvement. So, as you go through Step 1, we know there will be a near-irresistible urge to make changes, but don’t do it yet. The success of the UIC is dependent on the development of a coherent plan and avoiding the “fire, ready, aim” scenario that has become one of the primary causes of failure of many improvement initiatives. Resist this urge!

In Step 1, I have combined identification of the value stream, from the Lean cycle; identification of performance metrics, from Six Sigma; and identification of the current and next constraint from the Theory of Constraints. The flow and inventory analysis is completed by simply reviewing the completed current state VSM or Process Map for location, and volume of inventory within the system. The performance metrics analysis is done by meeting with all departments and leaders to determine what metrics are tracked at all levels of the organization. If your company is like many others, you will be surprised by the number of performance metrics tracked. We also recommend that you determine how the metrics are communicated throughout the organization.

Identifying the current and next constraint is the most important activity in Step 1, simply because the constraint will become the focal point for most of your improvement activities. One of the easiest ways to locate the constraint is by walking the process with your team, during the development of the current state VSM or a Process Map. As you walk this process, you will be identifying both the location and volume of raw material, WIP and finished goods inventory. Typically, the location that has the highest level of inventory will be the current constraint, and the step with the next highest level will be the next constraint, but not always. Look also for policies and procedures that have been implemented that might be policy constraints. An example might be using the performance metrics, manpower efficiency or equipment utilization in every process step. Take your time and do it right, because it will be worth it in the end. Remember, the operative word here is to simply identify, and not take action, just yet. So, how do you identify the right performance metrics? In my next post we will answer this question and continue on our cycle of improvement.

Bob Sproull