Keys to Implementing a Successful Continuous Improvement Program

6:12 pm - November 14th, 2006

Toyota with its eponymous production system is often held up as a paragon of operational excellence. Yet for every Toyota, there are numerous companies that have tried to implement continuous improvement programs only to see less-than-stellar results.

In fact, according to an Operational Excellence study by Archstone Consulting only about 11 percent of companies have been truly successful with their continuous improvement programs. (For more details about the report, see the January 2006 article “Keep Your Eye on the Ball” from APICS magazine.) The consulting firm defined success as being able to implement an operational improvement that creates tangible results that are sustained over time.

In other words, implementing Six Sigma or lean or the theory of constraints (TOC) wonâ€™t automatically lead to operational excellence. Far too many companies have implemented continuous improvement techniques only to see limited, one-time savings and negligible bottom-line benefits.

So what separates successful programs from less-than-successful ones? According to the consultantsâ€™ analysis, there are four general attributes that separate the winners from the losers. Continuous improvement programs must be:

1) tied to the overall corporate strategy.

2) linked to the strategy through data and metrics.

3) designed as a comprehensive program so that everyone in the organization participates.

4) tailored to the organization.

Or it could be that those struggling companies just arenâ€™t implementing “true Six Sigma,” argues a recent report from the Aberdeen Group. The Lean Six Sigma Benchmark Report found that less than 16 percent of participants in their survey were following a “rigorous” Six Sigma program. Aberdeen defined these programs as having a stringent quality goal, structured problem-solving approach, dedicated training, and prioritized projects. These “true” Six Sigma programs use the DMAIC methodology, require black belts to produce results for certification, and make sure that business impact projects are validated by the finance group. Aberdeenâ€™s study found that true Six Sigma companies reported on average 40 percent more savings than the overall survey population.

Archstoneâ€™s report, however, stresses that lean, Six Sigma, theory of constraints, and other continuous improvement programs are only tools. Itâ€™s important to choose the right tool for the right problem. Archstone points to the fact that 100 percent of the successful companies use both lean and Six Sigma. The bottom line: Continuous improvement does not come from blindly following just one program.

Supply Chain Management Review staff – November 11, 2006