2nd Building Block of a Continuous Improvement Culture | Operational Excellence Quick Hits

Speaker 1: (00:05)
In the last session, we talked about the first building block in the continuous improvement culture pillar. The first building block was workforce capability and flexibility. This session’s going to be on the second building block, which is focused improvement initiatives. So in order to have that continuous improvement culture, we must be constantly focused on improving the overall performance of the organization. So the focused improvement initiatives are directed towards improving the performance metrics of the organization. So in the foundation piece, if we’ve defined the KPIs or the key performance indicators, then this building block, you need to be able to tie each focus improvement initiative to the KPIs. So if the focused improvement initiative isn’t going to improve one of the KPIs, then don’t waste your management attention, focus on something else.

Speaker 1: (01:04)
So how do we get focused improvement initiatives? How do we identify what to work on? We use the five focusing steps. So the five focusing steps are step one, identify the system’s constraint. Step two, decide how to exploit the constraint. Step three, subordinate everything to the constraint. Step four, elevate the constraint. And step five, if the constraint’s broken, go back to step one. Ideally, we don’t want to break the constraint. We want to maintain the constraint at some point in our system so that we have control. And if we have control, then we can maintain capability and stability.

Speaker 1: (01:44)
So this step one, identify the systems constraints. So either the constraint’s going to be external to the organization, which means we need more sales, or internal to the organization, which means we have an internal constraint. So whichever one it is, you need to focus on opening that capacity. So if it’s in the market, you’re going to do some work to get more business for the organization. If it’s internal, we want to do some work to open up that capacity.

Speaker 1: (02:13)
At this point, we want to make sure we squeeze everything out of the system before we make any investment. So I’m amazed at the level of improvement that can happen when you have focus. So I’ve seen processes being improved by as much as 70, 80, 90, 100%, so that’s doubling the capacity of the process.

Speaker 1: (02:38)
So if we know where the system’s constraint is, second step is decide how to exploit. So we’re not opening up the capacity here because what we don’t want to do is open up the capacity on the constraint and have it shift and not knowing where it’s going to shift to, then we lose control. So before we elevate the constraint, we want to understand, “Okay, what can we do to open up capacity?” Once we decide that, then how is that going to affect the rest of the system?

Speaker 1: (03:05)
So step three is to subordinate everything to the constraint. So if we understand how much capacity we’re going to expose by exploiting the constraint, then we say, “Okay, if we’re going to gain that much capacity at the constraint, then we need to make sure that we elevate all the other resources so we maintain protective capacity and we maintain that unbalanced capacity so we can have balanced flow.” We still want to maintain balanced flow. Then once we decide, “Okay, here’s what we need to do. Here’s what we need to do to make sure we remain unbalanced,” then we elevate the constraints. When we elevate the constraint, we gain that extra capacity in our system without disrupting the overall system and maintaining stability.

Speaker 1: (03:58)
Then, if by chance the constraint is broken, then we want to go back to step one. The only reason I would see to break the constraint is to strategically move it to a position where either it’s very difficult to elevate capacity or it’s very expensive to elevate capacity in that area. So those are the two things we want to consider. If we don’t break the constraint, then elevate, we maintain stability and flow and we can manage the organization from one point in our system.