Tips from Top Executives on How They Improved Efficiency in Their Business
When it comes to identifying and removing errors from a business plan to better a company’s performance, strategies such as Lean, Six Sigma and Kaizen have been employed across the globe to improve management and tasks, increasing profit overall. What blossomed from the manufacturing industry has now been executed in a wide variety of business channels, including health care, automotive, information technology and hospitality.
As businesses look for new ways to resurface from the recession, executives are looking for new opportunities to incorporate Lean, Six Sigma and Kaizen concepts to reduce costs and increase efficiency. Companies of every size have profited from using these business strategies. Here are tips from executives about the integration of these strategies and how they’ve benefited their company.
STAND IN THE CIRCLE
Toyota implemented Kaizen initiatives early on in the Company’s history with the creation of its “Customer First” policy for providing products and services to best satisfy customer needs. “The concept of continuous improvement was born during this age with the idea of always keeping your mind open to the customer and seeking ways and opportunities to make people's lives more prosperous,” says Rick Hesterberg, Assistant Manager of External Affairs for Toyota Motor Engineering and Manufacturing, North America. “Today, this concept resonates throughout the entire company and every manufacturing facility across the world.”
“At Toyota, we value first-hand experience as the best way to transfer knowledge and skills,” Hesterberg continues. “Kaizen thinking and skills are usually developed over time based on practical experience. Managers are expected to participate in both structured and unstructured kaizen activities on the shop floor in order to develop their skill and ‘Kaizen Eye’”.
“Probably the most important aspect of driving Kaizen thinking throughout the organization is to create an environment that not only encourages Kaizen, but allows it to grow,” he says. “Management must create a safe environment for Kaizen, engaging employees and removing barriers to their success.”
“Another key point is to ‘Stand in the Circle,’ that is, go to gemba and deeply understand the current condition and what is really taking place prior to engaging in Kaizen,” Hesterberg says. “Kaizen can't take place in an office, it can't be based on assumptions; it must take place in the real place that values add is happening with a deep understanding of the actual facts.”
Hesterberg says that Toyota has shared their kaizen and problem solving strategy with many companies over the years. “An important point to understand is that the concept of a 'silver bullet' does not exist. There is not one tool or system to adopt from the Toyota Way or Toyota Production System to achieve best results. It is a practice that is built-in to our culture.”
“For example, when we hire a new team member, we instruct them that they have the authority and responsibility to stop production (and on system) if they see safety or quality compromised at any time. And, we desire their ideas on making improvements to their process. After all, they are the experts. No one knows the process better than the person working in that area. So, from the first day of employment, the team member is engaged.”
DMAIC PROJECTS WITH KAIZEN EVENTS
Leading healthcare provider CIGNA began using Lean Six Sigma in 2003 and today, has earned national recognition for its commitment to service and quality due to its integration of the strategy. Hundreds of projects and Kaizen events have been completed, saving the CIGNA millions of dollars and improving their reputation in the marketplace. Additionally, in 2006, a panel of Lean Six Sigma experts recognized CIGNA’s former Chairman and CEO Ed Hanway as Lean Six Sigma CEO of the Year.
Len Javinett, Director, Enterprise Lean Six Sigma for CIGNA says the original impetus for Lean Six Sigma came from their Project Management Organization, which is the arm of the business responsible for large, company-wide systems development projects. “The primary focus was on improving basic operations. The strategy was to introduce the concepts of Lean Six Sigma on a voluntary basis, encouraging (but not requiring) employees to learn and apply the principles and tools to improve the way they worked,” Javinett says.
On a voluntary basis, individual departments selected employees to attend Black or Green Belt training, which included selecting and completing a Define, Measure, Analyze, Improve and Control (DMAIC) project. The size and scope of projects varied, but most were relatively small and local. As experience was gained, some larger, cross-functional projects were launched, with some even including suppliers or customers.
“In addition, lean experts were hired into the company to augment the DMAIC projects with local Kaizen events,” Javinett says. “In some cases, the student and project were selected to address a specific business need, while in other cases the training was considered to be a developmental opportunity for the employee, with the selected project not being critical to the business.”
The combination of hundreds of local projects and Kaizen events eventually raised service levels, reduced costs and improved productivity, all while retaining existing customers and gaining new ones.
“Overall, the introduction of Lean Six Sigma has had a positive impact on the business and is therefore recommended. The program could have been more strongly encouraged - perhaps even required rather than voluntary - to accelerate learning, application and achievement of results. The Lean Six Sigma effort could have been rolled out within the context of a total quality system, as described in models such as the Baldrige Award framework. All of these [findings] are now guiding our next steps as we kick up our improvement efforts to a higher level.
MAJOR RETURNS ON INVESTMENT
Office solutions giant Xerox has deployed more than 7,500 Lean Six Sigma projects since the Company adopted the practice in 2003. Former CEO Anne Mulcahy noticed a trend with other CEOs in the market who were noticing major benefits from the strategy. Today, Lean Six Sigma has been deployed globally in their business units, corporate offices, manufacturing departments and within customer locations to improve their bottom line business results.
“Back in 2003, a small team was put in place to explore how Lean Six Sigma could benefit Xerox,” says Aqua Porter, Xerox’s Vice President of Lean Six Sigma Strategy and Business Excellence. “The team was floored with the promises of Lean Six Sigma and we realized we couldn’t afford not to implement the strategy.”
Senior leaders identified Xerox’s biggest opportunities for Lean Six Sigma and strategies were set into place to improve manufacturing costs, administrative productivity, improved use of equipment and how to better service customers, among others. To date, Xerox has seen a 300 percent return on investment.
“There has to be a strong commitment from leaders in order to properly integrate Lean Six Sigma into your company,” Porter says. “The results of these strategies must mean something beneficial to everyone and not just an exercise of quality. It’s also important to find a balance that Black Belt leaders are able to speak of the technological skills needed but also understand the soft skills.
“Start with a proven recipe for Lean Six Sigma, tweak it when necessary and as the business evolves and as the Company’s knowledge of the strategy grows,” Porter continues. “Results should also be measured regularly to make sure the strategy is continuing to benefit your company and that the ROI grows.”
GREEN BELT, BLACK BELT
Tyco International, a leading provider of security products and services, fire protection and detection products and services, has implemented Lean Six Sigma strategies since 2003. Waste elimination and business efficiency projects were implemented in North America initially and were expanded to other international facilities in the following years. Green Belt training was also part of Lean Six Sigma’s integration into Tyco and the implementation of Kaizen facilitator training their North American and international offices.
Tyco also measured the success of Lean Six Sigma over 2007 to 2009 to calculate which business segments have proved beneficial to the strategy. More than 300 Tyco employees became Green Belt certified, along with 104 Black Belt and 19 Master Black Belt certified employees. Additionally, all business segments increased their number of project closures in 2009 with a huge global push to increase the use of Kaizen events to drive cost savings. In 2008, Tyco completed 1,300 projects resulting in $207 million in cost savings.