Change Management Using PDCA – Assessing the New Reality | Operational Excellence Quick Hits

Speaker 2: (00:00)
In last week’s session, we talked about the plan, do, check, act cycle and the act step and establishing the controls so that the improvement doesn’t backslide. So now we’re going to talk about the continuous improvement culture. So starting the PDCA cycle again. So we we’re still focused on this continuous improvement culture pillar. And when we look at the PDCA cycle, we’ve been through the process once. Now, we want to understand what’s the next level of improvement that we’re going to focus on. So again, we want to look at where the system is being constrained and where we have disruptions in the flow and where we can leverage those improvements to improve the overall performance of the company. So, first we want to define the system or process. So now that you’ve made changes, the system is going to be different. So now we look at the system again, and then when we define that system, we want to assess the current situation.

Speaker 2: (01:07)
What is the process? So we’re going to look at the processes that make up the system and understand where there’s disruption. Again, the processes described by the IPO model, which is a series of actions or step that take inputs and convert them into desired outputs. It’s our input process output. So when we define the system or process, the first step to optimize a process is to define the system to be improved. So this involves defining the process boundaries, defining the process inputs, documenting the process activities and measuring the current level of performance. So when we define the boundaries, we want to look at what’s the initiating activity of the process, and what’s the ending activity of the process. So we need to define those boundaries so we can understand what we’re evaluating. When we define those boundaries, then we can understand within that system, where is the constraining operation or where is the problem that’s causing the most disruption in the flow.

Speaker 2: (02:13)
So we can use process mapping techniques. We can do process flow diagrams. We could do flow charts before we do those activities. We want to define what the boundaries are. Then when we look at optimizing the process, we want to look at two measures. So the first measure is utilization. So when we’re looking to optimize a process, and again, we want that to be the constraining operation because optimizing processes that aren’t to constraint doesn’t help improve the system performance. So we’re looking at utilization. So utilization’s the time that the process is working, doing value added work compared to the available time of that resource. So of course if it’s a constraint, we want high utilization. So improving utilization increases the process uptime. Then we could also look at efficiency, which is comparing the output against some expected standard output, usually expressed in a unit of time.

Speaker 2: (03:13)
So one thing before we start measuring efficiency, we want to make sure that the standard that we’re using is good. So if we don’t have a good standard, then of course our efficiency measures aren’t going to be accurate. Before we measure efficiency, make sure the standard that we’re comparing the output of the system against is a good known standard. So what is efficiency? It’s looking at that output over time. So improving efficiency will increase the output when the process is functioning.

Speaker 2: (03:44)
So the first measure, utilization, we’re trying to look at the time that is functioning and not functioning. And then efficiency, we’re looking at when it’s functioning, is it producing a high rate of effectiveness? And that can be both the cycle time that it’s being produced and the quality coming off that process. So if you’re familiar with the OEE measurement, which is overall equipment effectiveness, we’re looking at three elements, the utilization, the efficiency, and the quality coming off the process. So when we start to look at this, we’re looking at where’s the opportunity to improve that effectiveness of the process. And again, we want to break down that in fine detail and make sure we understand what are the elements of the process, and then talk about how we’re going to optimize the process. So in next week’s session, we’re going to talk about how to go about optimizing the process, looking at utilization, efficiency, and quality.