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How to create a culture of Continuous Improvement when you have no money.

What would you do if one day your accountant walked in and said Ok boss, we have no money and the bank is going to have to step in. They are going to keep us afloat and let us trade out of the problem, but we need to improve what we do. They want us to increase our productivity, reduce our money tied up in WIP & stock, oh, and they will not let us spend money!

Your first reaction may well be to bury your head in your hands then, when you are done with that, phone a local recruitment agent to see if they can help you find your next role because let us face it, what is being asked of you is impossible right? Not really, that is pretty much the situation Toyota found itself in in the late 1949 / early 1950, effectively bust, zero money to spend and massive change needed. Since then, they have been making profit every year until the market crash of 2009 and they returned to profit in the 3rd quarter of 2010, well ahead of their competitors. The key for them was embedding a culture of Continuous Improvement.

 Changing the profit formula

When companies start to look to improve, they tend to spring for the wallet first. They may buy a new faster machine, fancy tooling, new benches, reduce headcount, in fact they can normally find a myriad of other things to spend their money on. The other side of things, they go after their suppliers to screw down the prices and at the same time they look to their customers and increase the prices. The age-old formula on how much you sell things is 

In other words, it does not matter how much it costs you to make something you will just add on your % profit you want to make and then sell to your customers at that point. That means you accept all the waste, extravagance, scrap, or rework levels and inefficiencies and you are going to pass 100% of that onto your customer and hope they pay for it. That drives a behaviour of either accepting a smaller profit because you have hit the market cap of the selling price or, more likely your prices are going to keep going up, and as a result you sell less. What happens if we flip the formula? What behaviour would that drive? What if the formula you focused on was:

Again, imagine that your selling price is at a point you really cannot (or should not raise it) you still what your profit level, so the only option you have is to reduce the actual cost. That was the approach that Toyota took when they wanted to develop their continuous improvement culture. The only thing they could attack was the actual costs, but in a way that did not cripple the company. That is the challenge you have as well, so how do you do that with no or little money?

Our Top 10 free Continuous Improvement ideas

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leanDeveloping your continuous improvement culture can be quick and it does not have to be complicated, here are our top 10 things you can do:

  1. Get everyone involved and pointing the same direction. Level with your employees, tell them exactly the situation you are in and why you need to change. Get them involved in developing ideas for change, by including them in the conversation you also set the boundaries for their ideas.
  2. 5s! (or housekeeping) – Tidying things up, making sur everyone has the things they need exactly where they need them, that everything actually has a home and everything you don't need is removed will get a lot of wins. People do not have to wander around looking for things, so they spend more time working on what they need to be working on and not looking for things. There is more room to work, safety levels go up and things that are out of place and work in progress shows up quicker.
  3. Reduce the work in progress – by limiting how much work you have on the floor at any one time you again get several easy wins. You unblock the flow of the factory; you free up space on the floor and again find problems quicker. When a problem pops up you must fix it there and then, and everyone knows it's a problem.
  4. Have daily huddles at the start, and possibly the end of the shift. Talk about how you performed that day, highlight the gap or the improvement and what things were a challenge. Ask for ideas, on the problems that you have prioritised, ideally get the team to priorities the issues as part of pulling them into solving the issues.
  5. Implement a Kanban process – use this to limit the work in progress and even out the flow within the business, it will take you towards a just in time process. Importantly however do not attempt Just in time until you have stability and better quality!
  6. Fix the problems you find, quickly. Find all the small niggles that just steal time, that is where the famous lean wastes can come into play. By looking to fix them quickly it helps to re-enforce the need to do them in house with what you have. You will get push back from people saying it is just a sticking plaster, and maybe it is, but that is OK until you can afford for it not to be. In my experience internal ingenuity is always underestimated and gives better results for less.
  7. Implement Visual management tools everywhere you can. These again do not have to be expensive, white boards and markers work great, laminating signs and using markers to colour over is great. A personal favourite is laminating some red & green paper back to pack, instantly I have a status card for an operation. I can walk the floor looking for the prized red card. Why prize the reds?.. that's your problems, it's your chance to improve things.
  8. Do not build scrap or rework – keeping a process going that has any level of rework or scrap is just crazy, it's like leaving your hot water tap at home running. You may still have hot water, but you are going to be paying a lot for it!
  9. Improve your change overs – any time you must change over a process you lose output. By reducing the time, it takes to change over you get free capacity. Again, doing got out and buy fancy tools, challenge the team to figure out what they can do with what they have. Can you pull people from other areas that are not as busy to help out? If you have done your 5s you already have all the tools needed for this area, but have you got all the materials you need for the next job? Never start a change over until you have everything for the next job.
  10. Document your standard work processes – write down exactly how you do each job. That creates a standard that everyone can follow all the time, the best current method and, more importantly it gives you a baseline to improve on.


All these things can be done cheaply with what you already have and everyone of them doing well and often will dramatically improve your operation, more importantly, it will dramatically improve your engagement with the team and make them feel more fulfilled when they walk out the door at the end of the day.

Ready To Start Your Lean Journey?

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Ready To Start Your Lean Journey?

Make a booking now and find out how we can help you Make Things, Better

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Wednesday, 04 August 2021

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