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Oct 20, 2010

Five Reasons to Implement Kaizen in Non-Manufacturing

Kaizen is a proven performance improvement tool. Adopted from Toyota, Kaizen generates breakthrough improvements quickly, without huge capital investments and/or extensive commitments of employ time. Kaizen is an efficient, effective technique for producing change in manufacturing operations.

Kaizen improves performance in non-manufacturing situations as well. Ideal for a wide variety of industries, it's well suited for non-manufacturing situations like those found in professional services, corporate headquarters, and branch offices. Entities like finance departments, corporate headquarters, national banks, and hospital emergency rooms all benefit from it.

Kaizen is appropriate for relatively straightforward, simple problems, problems that don't involve numerous functions or complex processes. It is also appropriate for well-defined problems or when the dissatisfactory performance of the current state is due to only a few factors that don't vary widely over time. The format for Kaizen can be individual, suggestion system, small group, or large group.

Reasons why a non-manufacturer would implement Kaizen include the following:

Lowers costs

Services differ from manufacturing. More variety exists in services than production. With manufacturing, the ideal is to produce the same product at the rate of customer demand. Manufacturers abhor variety because it slows production and creates the potential for incurring costs.

With services the ideal is to accommodate variety. A call center, for example, must handle as many different types of customer events as possible. Many events are the result of something not done or something not done right. Thus, services generate costs by "failure demand."

Kaizen focuses on eliminating failure demand. Employees make suggestions on how to do things right and use Kaizen to make changes. By helping workers get it right, Kaizen minimizes the need for, as well as the cost of, doing something or providing a service. Obviously, the more things a service or non-manufacturer does right, the less cost it generates.

Immediate Results

Kaizen takes place one small step at a time. It's driven to resolve specific problems. Instead of tackling large improvements, Kaizen makes minor enhances that solve large numbers of small problems. Thus, firms see Kaizen results quickly, encouraging them to make more suggestions. Large capital projects and major changes are still needed, but the real power of Kaizen is in making small improvements continually that improve processes or reduce waste. In short, Kaizen concentrates on making fast changes cost-effectively.

Reduces waste

Kaizen methodology involves making alterations, looking at the results, and then making additional alterations to improve the processes. These changes reduce waste, that is, eliminate activities adding cost only. Waste includes activities like overproduction; people, materials, or information waiting; unnecessary motions by workers; and unsynchronized transportation. It also includes excess inventory, correcting defective work, and unnecessary processing steps.

Energizes Employees

Kaizen depends on employees suggesting changes. For example, in 1999 alone, 7000 employees at a Toyota plant in the U.S submitted over 75,000 improvement suggestions, of which 99 percent were implemented. Kaizen encourages employees to come up with more and more of these small improvements, motivates them to improve their work lives, excites them about their work, and challenges them to be responsible for change. In other words, it empowers employees, enriches the work experience, and motivates workers.

Increase Productivity

A major national bank used Kaizen whenever it wanted to attack process speed and efficiency problems. The projects were all well defined, involved participants pulled off their jobs for only a few days, and included a cross-functional team. The projects also supported a cross-functional view of the process or work area.

Using Kaizen, the bank achieved cycle time improvements ranging from 30 percent faster to nearly 95 percent faster, measured sometimes in minutes and other times in days. One administration process went from 20 minutes to 12, and a complaint resolution process dropped from 30 days to 8. An added bonus for the bank was an increase in revenues. One high level project enabled the bank to charge for a service it had never charged for before. New revenues ran between $ 6 million and $9 million.

Kaizen produced similar results in an emergency room application. Standardizing layouts and stocking exam rooms increased nurse availability by 35 hours per week. Establishing a transportation procedure increased availability of patient care associates and nurses by 84 hours per week. Leveraging the existing ED information system reduced cycle time 71 per cent, to an average of 42 minutes.

Kaizen is a powerful improvement tool. It isolates employees from day-to-day tasks for a few days so they can concentrate on specific activities, like problem solving and improvement exclusively. Companies using kaizen find that they not only reduce waste and see immediate results, they also increase productivity, lower costs, and energize employees.