Continuous Process Improvement

George D. Robson

• Publisher: Free Press
• Year: 2010
• ISBN:
  9781451602463
• Topic: Business
• Subtopic: Business General
• Index: Business

During the past decade Japanese companies have derived many of their competitive advantages from streamlined work-flow processes. Desperate to replicate the Japanese systems, American managers have bought into countless theories advanced by management consultants which, lacking a methodology, have proved fruitless and frustrating. Now, from inside a world-renowned learning organization, comes that methodology.
Continuous Process Improvement (CPI) is an improvement and problem-prevention system created and developed by George Robson to "empower" natural work teams in three General Electric businesses. Composed of a logical set of steps, at the heart of which is "Process Flow Diagramming, " CPI focuses on and simplifies the critical elements of work flow processes and eliminates those parts that add no value.
Not only has this methodology helped these GE businesses save in excess of $35 million during the first two years of implementation, but similar techniques are now being employed by leading-edge companies throughout the world. CPI is a transportable system that not only has profoundly changed manufacturing practices, but has been applied with equal success in all areas of a business. Robson shows how the "Iceberg Phenomenon" can identify the measurable benefits of accurately accounting for direct and indirect costs by carefully tracking expenses. Planning for the true costs of customer service, marketing concessions, and retraining can turn unplanned losses into short- and long-term returns on investments. Robson focuses on activities that are critical to quality in design and production and demonstrates how non-value-added work can be eliminated. The staggering cost of re-work, calculated in "The Rule of Tens, " is reduced by catching mistakes before they escape to subsequent stages of handling. The CPI system, which has been widely praised within General Electric, will be of broad interest throughout the business and university communities.

1

Why Bother?

DURING THE THIRD QUARTER OF 1989, the service arm of a major corporation (for convenience and anonymity we’ll refer to it as SERVCO) projected that they would exceed their revenue target for the year and began to address their goals for 1990. The challenge was to continue to increase revenue, hold current manpower levels relatively constant, reduce inventory, “significantly” improve cycle time across the entire operation, reduce the supplier base, keep current customers happy, and expand the number of customers for whom they were performing repairs and product overhauls. Sound familiar?

Faced with the formidable task of trying to achieve these goals, the staff began looking for a starting point. The one thing that kept appearing as their customers’ highest priority was “the time to repair hardware.” The perception was that it always took too long. Factoring this in with corporate expectations, they chose to approach their task in a nontraditional way by using continuous process improvement (CPI) methodology, tools, and techniques. Rather than trying to attack all things in their previous reactive, firefighting manner, they decided to focus on reduction of repair cycle time and tie all other efforts to it.

The change began by narrowing their purview to the “critical few” processes considered essential to attaining business plans and goals which included reduction of repair cycle time. The initial focus was narrowed to five processes for which natural teams were selected for CPI training.

Let’s digress briefly from SERVCO’s problems to determine what this thing called CPI really is. The objectives here are (1) to introduce you to the general concept of continuous process improvement and (2) to help you develop a working definition of CPI from a personal perspective and from the viewpoint of your “natural work team.” If you’re wondering what is meant by the term “natural work team,” it’s all the people who work together daily and “own” a particular process. We’ll get into the process ownership concept in the section “Why does CPI work?”

CPI is fundamentally a toolbox of skills and techniques applied with a simple methodology to stimulate continuous improvement and control of processes. The processes are in turn used to satisfy customer needs and expectations, both internal and external to a business.

Take a moment to define, in your own words, the meaning of the word “process.” If you are working with a team, and you should be to get the maximum benefit from this book, share your definition with all your team members. Then consider Webster’s* definition:

Process: A particular method of doing something, generally involving a number of steps or operations.

Compare your definition with Webster’s and decide if you need to alter yours. Typically, people have found that the dictionary version reinforces what they initially recorded. Before sharing any further thoughts or definitions with your team, let’s get back to the business scenario.

SERVCO opted to begin the process in a nontraditional manner with a heavy commitment to management training. They wanted to send the message through the organization, “We’re serious about this.”

The process began as a pilot in the fourth quarter of 1989. Doing the right thing at the right time was of supreme importance. By beginning training and implementation at a time when the traditional focus was primarily on meeting year-end shipments at all cost, the management team sent another clear message that things would be different. They were and still are.

As you might expect, along with the changes came some good news and some bad. The good news was that repair cycle times had been reduced in more than ten major business processes. Improvements ranged from 24% to 60%, and all were accomplished by the natural teams, with the support and direct involvement of the management team. Some teams involved key suppliers in the process and none required or recommended capital expenditures. After one year of training and implementation, SERVCO had 28 active process improvement projects that applied CPI methodology on a daily basis with an average reduction of 47% in repair cycle time.

The bad (but not unexpected) news was that the real world still existed. Change from the previous modus operandi was going to take time, patience, and persistence. The modified processes and implementation of the methodology were healthy albeit fragile. A few skeptics were still not buying into the process, causing opposing challenges the management team would rather not have to cope with. However, the team persisted, the process worked, and the results were well worth the effort.

Business plans for the future took on a clear focus involving customer needs and supplier partnerships. The improvement purview was expanded to include processes related to inventory while maintaining customer satisfaction and further reducing cycle time. A clear message was sent that the business would continue to integrate CPI methodology into management and daily activities.

This business grew and flourished because the management team chose to do things differently. They continue to use the simple tools and techniques of CPI to ensure customer satisfaction and improve daily operating processes. The dramatic reductions in repair cycle time not only led to improved customer satisfaction, they also translated directly into improvement of the bottom line. What more could a business want than a growing clientele, a healthy balance sheet, and a successful launch into a rapidly changing and challenging decade?

The global business world of the 1990s represents an arena where complacent businesses, managers, and others who are not receptive to change will most likely perish. To survive, let alone flourish, businesses in the ’90s must meet the ever increasing and more demanding challenges of:

• Dynamic customer expectations

• Expanding worldwide competition

• Strategically implementing state-of-the-art technology

A strong, healthy business today is the direct result of meeting the challenges of the past. However, to remain strong and productive and be the natural choice of the customers, some changes will most probably be required.

If you don’t believe what you’ve read so far, or if you don’t intend to open yourself to change to meet the challenges of the 1990s and the twenty-first century, don’t bother reading any further. Why? Because you and the people around you will most probably be doing something else in the very near future. If you haven’t figured out the answer to “Why bother?” it’s because business as usual isn’t good enough!

However, if you do believe what you’ve read so far, the information and methodology presented in the following pages can help you improve your business. As you proceed, remember that CPI is not a panacea, nor is it a solution looking for a problem to solve. Proof exists to illustrates that it is possible for any business to experience SERVCO’s success. There is nothing magical about it. Simply apply the methodology presented in the following chapters. Be aware that it takes leadership, time, patience, and persistence to make it happen and last. It’s entirely up to the business team members whether they choose to change or chance ending up a casualty of the 1990s. CPI can help make that change successful.

What Is CPI?

Ground Rules

Before getting started with the logic, skills, and techniques that make up CPI, let’s establish some fundamental ground rules for creating the appropriate environment. They must be treated as canonical and adhered to at all times. It is essential that these ground rules be clearly articulated, understood, and abided by within each and every team and that they are fully supported at and by all levels of management. All successful CPI teams follow these basics. As you peruse and internalize them, you will begin to understand why they are emphasized.

1. Be open. Don’t be afraid to share an idea. Remember, it’s yours and it represents an expression of yourself. As you listen to other people’s ideas, be open, supportive, or passive. Never attack! It kills ideas and erodes trust.

2. Be supportive and noncritical. When someone expresses an idea, be supportive and you’ll be surprised how it is returned. Contribute in a noncritical manner. Remember, criticism kills ideas. Open support nurtures and encourages participation and builds trust.

3. Be positive. After listening to an idea or comment, respond positively. Try forcing yourself to say something like, “I like that idea because . . .” Remember, around every donut hole there is a donut.

4. Be willing to share your thoughts and feelings. Express your ideas no matter how insignificant or dumb you think they might be. When you share your thoughts and feelings you make yourself vulnerable. You will discover that when you are vulnerable, most people will want to help. Open sharing is a great team-building activity.

5. No finger pointing. Never be threatening. Remember to check your hand to see how many fingers are pointing back at yourself when you point at someone else.

6. K.I.S.S. (Keep it straightforward and simple). This is a cardinal rule of CPI. If you are tempted to try to make something complex, don’t. If you are attempting to solve a complex problem or address a complex process, break it down to its simplest form, then proceed.

7. Have fun. When people have fun together, the stress level goes down, defenses go down, and creativity is enhanced. Never take yourself too seriously. I still hate to hear my wife tell me to “lighten up.” But it always works. Learn to laugh at yourself or a bad situation. Remember, only you can control your attitude and outlook.

Defining CPI

Recalling the earlier exercise where you defined “process,” now expand your definitions to include the terms continuous and improvement. Webster defines these terms as:

Continuous: Going on or extending without interruption or break, unbroken, connected.

Improvement: An increase in value or in excellence of quality or condition.

Using your definitions and the reinforcement of Webster, your team should develop and record a definition of continuous process improvement. When your discussion has achieved a consensus, make sure it is reinforced by Webster’s terminology.

Since you have now de...

Table of contents

• Cover
• Dedication
• Preface
• Acknowledgments
• Chapter 1: Why Bother?
• Chapter 2: Getting Started
• Chapter 3: What’s Critical?
• Chapter 4: Listening to your Process
• Chapter 5: The Next Step
• Index
• Endnotes
• Copyright