The Art of PROCESS IMPROVEMENT
The Smart CEO analyses the concept of manufacturing process improvements through conversations with consultants at Omnex Inc and The Renoir Group
With expanding markets, increasing competition and improving technologies, holding the edge over ones competition is critical for an organisation. To achieve this, it is important to remove all non-value adding aspects from a process and improve its overall efficacy. And this is where Process Improvement (PI), an organisational development tool, can be introduced. Wikepedia defines PI as a series of actions taken by the process owner to identify, analyse and improve existing processes within an organisation to meet new goals and objectives. These actions often follow a specific methodology or strategy to create successful results.
Arun Kumar, vice-president – Asia, Omnex Inc., U.S.-based international consulting, training and software development organisation, explains that the reduction in failure, wastage, variation and increase in uptime and process capability (CPK) is PI. It is not the result of a single project, but, a series of tools and techniques such as statistical process control, failure mode and effect analysis, risk reduction, total productive maintenance (TPM), to name a few, adds Kumar.
Take for instance, the case of a Sydney-based implementation consulting organisation, The Renoir Group, which combines the management tools of lean thinking with Six Sigma practices. “If only one of these is used the improvement process is slower,” explains Van Fleisher, principal, The Renoir Group.
One of the keys to successful implementation of the PI framework is evaluating the need of the customer through a detailed analysis. Fleisher explains that the first step to a successful implementation is understanding the requirements after a detailed analysis, namely, setting down the objectives in measurable terms, deciding the methodology and measuring periodically, depending on the specific process – anywhere from hourly to daily or weekly – to make sure the objectives are met.
“There are a lot of frameworks available for manufacturing process improvements (MPI). Depending on the manufacturing environment, we need to identify the current state of the process,” says Kumar. The issue at stake has to be identified as nonconformance, process variation, downtime or cycle. And then, based on the nature of the issue, design the MPI technique.
Both Kumar and Fleisher say that there are no overnight solutions and that no two organisations can function in the same manner. “Lots of companies launch initiative after initiative and lose focus mid-way. That is where the consultant’s experience comes into play,” adds Kumar.
The right fit
Defining customer needs and project goals, understanding their current status, the opportunities for improvement, the future state and getting the top management buy-in for the project are all important to arrive at the right solution. The key is the project roadmap design and that is based on the concern at hand.
As the Renoir Group case study (see page 40) shows, it is only through its short interval control that demands periodic monitoring, that it was able to find out quickly when a process was off, so, immediate corrective measures could be implemented without delays.
Explaining the Omnex experience, Kumar remembers working with an electronics/ semiconductor company that made chips for LCD screens. It had a high percentage of rejections and failure rates. The problems had been worked on for close to three years before the Omnex team went in. “Basically, all that we did was analyse the data a bit differently and put certain process controls in place. Within a very short period of time, the rejections were brought down drastically. This saved the client tens of millions of dollars in the first year itself.” According to him, there was nothing wrong with the tools the team had used. It was only in the way data was looked at that brought about this change.
A methodology based on what suits the pain area best would work more effectively. Kumar explains, “If nonconformance is an issue, we typically use process review and the 8D (a specialised framework) problem solving technique. If process variation is an issue, then we concentrate on data collection, statistical process control and measurement systems. At times, we bring in Six Sigma to reduce process variation. If downtime/ uptime is a concern, then we use TPM tools for improvement. If timely delivery or inventory management is a concern, we use more lean techniques.”
There is no standard pricing for such solutions. “Usually clients would ask for a per man-day rate, but, the number of days would be up to the consultant to define with the client,” says Kumar. Omnex gives clients a written guarantee or assurance that it will identify the root cause and implement the actions with their teams and meet the project objectives within a specific period of time. A return on investment calculation of about two to five times the investment on the consultant fees is common, but, there are cases where the return has gone over 100 times. “For some of our clients we even offer a pay back in case we fail,” he adds.
Fleisher explains that the projects have paid for themselves historically during the life of the project. “Typically, in a six to eight month timeframe, clients get their money back, so, their investment and what they make neutralise each other. In a year, we guarantee a minimum of a three-time return, though it easily goes up to even 10 times,” says Fleisher.
Commitment from the top
The ultimate measure of success of a PI implementation is when the objectives are met and there is an improved bottom line. But, for this to happen, there has to be a champion at the top level. The involvement need not be on a daily basis, but, unless top-driven, the change is hard to see.
“From our experience, the most important reason that we find projects failing is due to the lack of top management involvement and consultant competency,” says Kumar. Automotive original equipment manufacturers are increasingly looking for vendors with not just an ISO/TS 16949 certification (which is treated as a given), but, vendors who have adopted a roadmap for Malcolm Baldrige or Deming Award or TPM or an operational excellence model. It de-risks the customer’s operational plan of having a true just in time and direct-on-line supply model across all suppliers.
The right tool selection also plays a significant role in determining the project success. Reducing 15 per cent process rejection to 10 per cent is not manufacturing process improvement. “The goal should also be to change the culture of the team to focus on “breakthrough improvement” and reduce it to less than say, two per cent,” adds Kumar. Omnex uses a score card that measures the key performance indicators - which varies from project to project. Typical measures include CP, CPK, uptime, percent rejections, WIP inventory reduction and more. The project metrics have to be designed jointly by the consultant and the client and base lined prior to commencement.
Renoir Group has developed a situational audit model measuring the sustainability of the change. This involves making a process trail, starting with making clients aware of the things that need to change, then working with them to make the change happen, having dry runs before implementing the process. Compliance to the new way of doing things is important. Process change leading to behavioural change leading to cultural change is what makes it sustainable, says Fleisher.
Whether it is to be an organisation-wide change or a phased one will also depend on the commitment level. If the conviction is high, then the implementation can be accelerated, and if low, then taking up one process and demonstrating success will enable conversion of those who are still skeptical. “But it cannot be a one-shot organisation-wide implementation,” says Fleisher. Agrees Kumar, “Phase wise implementation not only communicates the progress to the management periodically, it also allows them to make mid-course corrections to the overall game plan. Moreover, each phase completion motivates the implementation team and also gives them the impetus to go all-out. Ultimately, it is all about changing the work culture; prevention is better than cure.”
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