Systems Thinking at the Root of Waste Reduction

High Performing Organizations Evolve

The landscape of business has changed rapidly. To control their adjustment to the “new normal” leaders are looking for efficiency from every part of their organization. Achieving this efficiency requires alignment of every organizational component through Systems Thinking.

When Lean management practices used by the Toyota Motor Corporation were first introduced in the Western Hemisphere, many new adopters expected outcomes with efficiencies like those realized by Toyota. While experiencing some of the benefits of waste and cost reduction, business leaders have often been frustrated by the unfulfilled promises of Lean. A key component we sometimes find missing in organizational adoption of Lean techniques is the Management approach of Systems Thinking.

Systems Thinking involves the flow of information and materials across all organizational work centers and through internal and external Value Streams. A Value Stream is a type of system map that illustrates an end-to-end sequence of events that takes a product or service from inception to the point where the customer receives the intended value of that product or service. The interconnectedness of all parts is not a new concept to business professionals; however, the reason for optimizations on specific parts of the systems may be. In the Systems Thinking approach, continuous improvement requires that organizational leaders create a culture embedded with techniques for selecting a portion of the system for optimization at the right time. Creating a culture where Systems Thinking can thrive often requires a change in management philosophy.

The Shop Floor is a Reflection of Management

If we were to evaluate your percentage of project and maintenance costs, would we find a majority of expenditures supporting customer facing initiatives? Or, does your organization spend too much time dealing with unplanned work, including Work In Progress, in the form of problems, defects, and miscommunication? To begin to root out unplanned work issues, it's important to closely examine an organization’s culture.

If you want to understand an organization’s culture, don’t read their written Vision and Mission statements. Instead, spend a week with their production staff. The direction given by supervisory staff on a daily basis will tell you more about what’s important to the leadership team than any published Goals, or Vision and Mission statements. The Lean phrase for this concept is “going to the Gemba.” Gemba is the Japanese word for “the actual place”, referring to where value added work occurs. An important related Lean concept is the “Gemba walk,” which is a deliberate, focused, structured, outcome-based, bi-directional coaching session. These walks are not to be confused with “management by walking around“ (MBWA), which is a common misinterpretation of Gemba walks.

The takeaway here is the following: personnel assigned to carrying out value-added tasks in your organization spend time every day doing something. Is the aggregation of those assigned tasks focused on adding customer value, or are they focused on dealing with problems? From a systems improvement perspective, identifying value-added and non-value-added activities requires a clear understanding and analysis of how information and materials flow through an organization’s value stream(s).

Clarification Needed

Having clarity on how your value streams operate is foundational to optimization. Knowing the full flow, including personnel by role, processes at a high level, and measures will help you understand the impacts of system modifications. The expectation is that a change in a work process of a system will result in a downstream impact. Managers intend those impacts to be positive; however, that isn't always the case. Having a clear picture of an organization’s systems can aid in root cause analysis and future state designs. The CertainPoint Lean Team teaches a combination of Value Stream mapping and Process mapping to gain that clarity. Regardless of your chosen mapping approach to your organization’s processes, ensure that it provides clarity for each level of leadership with the appropriate level of details.

Focus on Key Constraints within the System

In his landmark book The Goal: A Process of Ongoing Improvement, Eliyahu Goldratt outlined the Theory of Constraints. While there is a lot to this topic, in short, the Theory of Constraints states that any system can produce only as much as its critically constrained resource. Successful organizations understand that optimizing individual parts that do not focus on their key constraints is, itself, a wasteful activity. Deeply embedding your management approach to affect the operations of systems is key to optimization. Gemba walks should be centered on coaching around obstacles and focusing flow optimization at key constraints within the system. Understanding all of your system flows and the People, Processes, Measures, and Tools involved in those flows is foundational to understanding where key constraints occur.

Lean Management is a mindset.

Methodology and framework tools are important elements to implement our vision. However, leadership management philosophy is a greater predictor of success, as it drives the daily problem-solving approach. How the entire leadership team reacts to problems sets the tone for continuous improvement or stagnation.

There is a common misinterpretation that the stoppage of production to solve problems is a waste activity. Many executives often, and incorrectly, think, "If we solve the problem and move on, we don’t need to worry about the problem any longer, correct? Besides, solving the problem will take too long. We have production schedules to meet."

From a systems perspective, the cumulative time of dealing with problems, rework, the cost of poor quality, and lowered customer satisfaction, often far exceeds the time needed to fix the problem at the root cause. Additionally, if the root cause is not identified and corrected, then the probability of reoccurring issues is high. Without countermeasures to prevent errors within a system, any problem you might have is likely to happen again, which will cause higher defect rates, increased costs, productivity loss to rework, and reduced customer satisfaction.

Key Takeaways

• A high-performance system, especially one where humans are involved, requires optimization across the entire value stream and not just at an individual work center level.
• Optimization requires a clear understanding of what work centers are involved in a particular value stream, the process capability of each work center, and the key constraints within the flow.
• Targeted improvements that focus on the key constraints and consider the entire flow of information and materials are necessary components of high performance.