Continuous Improvement Methodologies to Drive Results

Continuous improvement methodologies dial up the delivery of manufacturers’ processes and systems, workforces and technologies. They instill leadership behaviors which drive results. Not all methodologies are the same but, by demanding iterative gains, the concept of continuous improvement has been a cornerstone of the progress of the world’s leading manufacturing organizations over the last 50 to 60 years.

This blog unpacks some of the main trends and approaches behind continuous improvement methodologies, and why this is important for organizations in 2022 and beyond.

Where it all started: the evolution of continuous improvement methodologies

Ever since the start of production lines and workstream processes more than a century ago, manufacturing organizations have been striving to improve. Better, faster, with cheaper or fewer inputs, higher quality, in closer step with all other parts of the business: improvement has always been, and remains, at the heart of manufacturing operations.

The idea that improvement could be systemized and continuous, a deliberately planned means to drive results, took deeper root in the 1960s. Building on the thinking of American pioneers like Henry Ford, the engineer Frederick Winslow Taylor, and the statistician and management consultant W. Edwards Deming, Japanese manufacturer Toyota developed the Toyota Production System.

This was a watershed – a defined culture of approach to the disciplines of manufacturing. Since then, continuous improvement has been embraced by manufacturing companies looking to optimize their production floors and broader business processes. It is understood to be a foundation for excellence and the key to all-round competitiveness.

Today, as organizations embrace the promise of digital technologies, the next generation of production systems require revisiting continuous improvement methodologies. Leaders and managers need to understand the core options, and how to orchestrate their digital transformation, while maintaining a best practice foundation.

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The 5 main continuous improvement methodologies

Under the same banner of continuous improvement, the concept has evolved into different modes and methods, each with certain unique characteristics. There are five well-known methodologies, with varying degrees of similarity and crossover:

Lean

The most widely recognized and commonly used, the central idea of Lean manufacturing is in the minimization of waste and overproduction, and the maximization of customer value. This “more, for less” ambition plays out across all aspects of manufacturing operations and, beyond operations, to the entire value chain.

The constant quest is for perfection: by ceaselessly interrogating inputs and ways of working (root cause analysis); by seeking to optimize the flow of all parts of machine production and human work; by finetuning every logistics point in the value stream.

Six Sigma

Reducing costs, saving time and effort, and achieving total customer satisfaction: These are the goals of Six Sigma, too. The main difference compared to Lean management methods is an emphasis on numbers. Six Sigma seeks to prove improvement. Statistical measures and evidence are vital for any project or initiative, and the bottom-line return-on-investment (ROI) is regarded as a litmus test for decision-making.

Six Sigma may be seen as a purer or more absolutist version of Lean. But it also emphasizes culture change – including motivation and teamwork – as a qualitative aspect which gears production.

The methodology also incorporates two simple yet powerful problem-solving frameworks or sub-methods:

Define, Measure, Analyze, Improve, Control (DMAIC), which drives process improvements
Design, Measure, Analysis, Design, Validate (DMADV) is a unifying methodology for creating new processes and products

Overall, although the Six Sigma methodology weighs the value of data, it orients toward a holistic continuous improvement methodology.

Supply chain optimization

As its name suggests, supply chain optimization (SCO) focuses on the raw materials, input process goods and finished inventories that constitute the physical “supplies” in the chain. Purchase costs, direct manufacturing costs, operating expenses such as transportation and distribution, and all associated inventory holding costs: nuances within all processes, and all along the chain, are examined to eke out extra gross profit margin.

A feature of SCO is the use of mathematical modeling software tools to identify inefficiencies such as bottlenecks and highlight opportunities to segment customers.

Optimizing schedules, optimizing inventories, optimizing the information and coordination across all resources – these continuous improvement initiatives are intended to trim any excess costs from the supply chain.

Hoshin Kanri

Also referred to as Hoshin Planning or Policy Deployment, Hoshin Kanri’s focus is to achieve a unified direction, and to continuously refine and refocus that direction so that manufacturing operations align with the organization’s strategic objectives.

This applies, top-down, to every facet of operations. Manufacturing’s hour-by-hour, day-to-day targets and critical success factors (CSFs) are constantly reviewed for progress against middle management’s tactical implementation goals. These are, in turn, monitored for the accomplishment of leadership’s identified strategic benchmarks.

Hoshin Kanri is distinguished from other continuous improvement methodologies by its reliance on, and weight attached to, a very focused vision, which is clearly communicated throughout the organization.

Total quality management

Like SCO, the clue for total quality management’s (TQM) point of difference is in its name. TQM emphasizes quality: The methodology is driven by a mission to provide unblemished products for customers, and a quest for ongoing quality improvement and customer satisfaction.

This customer-focused approach demands accountability throughout all levels of operations. Customers are sometimes defined internally as both a further quality control and as a simulation of customer-centricity.

Achieving the highest quality is viewed as a management discipline influencing, by design and implication, all management activities.

The shift from traditional Lean-based systems

Rest assured that, whichever established continuous improvement methodology your organization has adopted, a best practice foundation is in place. By definition – whether Lean, Six Sigma, TQM or one of the other methods – leadership and senior management understands that everything matters and that a continuous improvement culture keeps the company dynamic and prepared for change.

This is vital, because smart factories now require next-generation production systems, or digital operating systems (DOS). To maintain competitiveness and attain new levels of innovation and productivity, it has never been more important to gear for operational flexibility and agility, and for end-to-end speed and visibility of the entire value network.

Continuous improvement should shift accordingly. As internal capabilities have changed, so too have the demands upon plant managers and supply chain officers. Identifying problems is not enough because today’s operations often involve such complexity that changes in one area have an unforeseen and unpredictable knock-on impact elsewhere. Nor is it necessarily helpful to drive yet further efficiencies because the marginal gains are ebbing as access to technologies closes gaps between large and small industry players. Consider, too, that productivity improvements implemented as cost-cutting programs may buffer short-term results but hinder the organization’s future outlook.

Taken together, the transitioning industry, competitive context, and the capabilities of DOS means that a more holistic and sustainable continuous improvement methodology is needed. Leading manufacturers now seek to apply continuous improvement in various directions, and in multiple ways – simultaneously.

Integrative improvement is that methodology. By aligning improvement initiatives across the entire organization, and by orchestrating transformation between functions, people, processes, and systems, it represents an evolution of continuous improvement.

The benefits of an integrative improvement approach

All five continuous improvement methodologies have advantages rooted in their respective, specific focuses. Integrative improvement can be seen as a “meta” improvement philosophy. Blending the best learnings and practices from all established continuous improvement tools and methodologies unlocks value in ways each individual methodology cannot.

Similarly, established continuous improvement methods have shortcomings: Does Six Sigma allow enough latitude for innovation? Could TQM fall too deep into customer-centricity at the expense of the bottom line? Is Lean at risk of being too focused, inadequately agile for today’s volatile business environment?

Therein is the crux. Manufacturing has moved into a new paradigm, and although established, traditional systems and methods continue to provide strong and necessary foundations, their limitations have been exposed. There is a growing realization that gaining the full potential of digital technologies hinges upon the organization’s digital transformation – including upgrading continuous improvement methodologies.

Continuous improvement is still needed. It will deliver, because improvement means doing better. But now is the time for a fresh approach – an integrated continuous improvement model – for even better results.

Download Digital operating systems: The organizational need for guidance to find out how an integrative improvement system can support your organization’s digital continuous improvement journey.