Judging success: A new metric for your process improvement program
Last week while I was talking to some of the attendees of a seminar, I asked them about the KPIs that their companies are using to measure total savings from Continuous Improvement (CI) efforts at a corporate level. And what do you think they said? If you guessed financial figures, you’d be right.
Financial figures may be an apt measurement for reporting purposes. But do they give the overall dimensions of your CI efforts?
Reporting a single financial savings figure for the entire organization masks the true picture. What is usually seen is that some departments are involved in improvement efforts to a greater extent than others. Manufacturing companies usually report majority of the savings from the shop floor compared to other supporting functions, for instance. As long as the total target is met the performance of the organization is considered good.
To have more granularity, some organizations go a step further by setting financial savings targets by functions, departments or locations. For measuring staff involvement, organizations set targets on certification levels and number of projects participated in by staff per year. All these measurements are right but may not measure the full breadth of your implementation. The reason is none of these measurements are targeting on processes.
How often do you review your processes?
Among all your business processes, how many are reviewed and improved during your CI journey? And how many of them are touched upon at regular intervals depending on the needs of the business? Do you have a KPI to measure these?
If not, let me illustrate a measurement that can surface the other missing dimension of your CI efforts and will complement the others you may already have for measurement.
% On Time Business Process Review: Set target time intervals to review or revisit all your business processes using the CI Tools. Map the Value Stream, review the process and improve it by involving all the stake holders of the process. Some may end up as a Kaizen Blitz or others as long term CI Projects. Set the review intervals at every six months, twelve months or two years depending on the process, the industry or the markets you are in. Set short intervals for reviews, if your markets are changing too fast like Telecoms and FMCG, you cannot afford to wait for long.
Measure how many of your business processes are reviewed or revisited in their respective target time intervals. This will give the % On Time Business Process Review for your organization. Interestingly you will find that some of your business processes are often touched and some are untouched with respect to the changes in the market or the business and it will give an idea of the breadth of the CI implementation across the organization.
In a big manufacturing company for instance, processes such as Sourcing, Configuration management, Engineering Support, IS, Finance, HR, Customer Service are also equally important and need to be improved from time to time to make the overall organization successful. It doesn’t matter if big savings are not reaped from these reviews. But at least it is worth to make the effort to revisit all your processes at regular intervals. You don’t know what the hidden wastes are and you will be surprised when you expose them.
Like companies with mature CI programs, companies which are just starting their CI journey and still in the roll out stage, can also apply this measurement. They can start setting the target time intervals for review of each of their business processes, even before setting the total financial savings targets from the CI Program. Regular monitoring and initiation of actions based on your % On Time Business Process Review will shift the gears of your organization from a reactive to a proactive mode thereby equipping it to face the challenges present now and in the near future.
As the challenges to stay in the markets we are in, are getting complex, our business processes need to be continuously improved to overcome that. And CI is a journey that every staff and process in the organization needs to be involved. Understanding all the dimensions of your CI efforts will help you to correct the course of your journey and take the organization to greater heights.