In a previous blog post, John Vaughan-Jones lifted the lid on benchmarking. In this post, Glenn and Iain contextualise benchmarking in terms of integrative improvement.
It is becoming increasingly clear that integrative improvement is the new approach to continuous improvement (CI). Without integrating all functions, processes and initiatives across the value chain, performance improvement methodologies such as Lean, Six Sigma, etc. are simply not sustainable. Organisations such as Apple, Procter & Gamble, Dell, and Toyota are acknowledged as the leaders in end-to-end supply chain excellence. However, despite all that’s been written on the advantages of standalone improvement methodologies, few companies have achieved sustainable success as a result of their adoption. The few that have typically underwent concurrent and significant organisational transformation.
The traditional approaches to improvement in the value chain has been through functionally focused projects to take out cost (save money), execute a transaction (launch a product) or solve a problem (reduce excess inventory or stockouts). While these are necessary improvement initiatives, they do not provide a systemic and sustainable approach to building organisational capability and culture.
‘Integrative’ as applied to business improvement is an evolving concept. The word ‘integrate’ is defined as: ‘to combine and coordinate diverse elements into a whole’. The term originated in the world of medicine and basically promotes dealing holistically with the parts of the whole as a whole. When applied to business improvement, the concept of promoting or fostering integration is central, and the distinction between one-time mechanistic improvement (via putting in place a project management organisation and system) and continuous improvement through holistic integrative ongoing processes, is important. Thus to deliver sustainable operations excellence, an organisation needs a robust integrative improvement system. This allows it to embed operations excellence in the very fibre of the business, rather than treating improvement as a disconnected set of projects.
The integrative improvement system can be defined as a standardised system that simultaneously and interdependently drives operational improvement across all functions and processes – and it provides a codified road map to do this. It requires three key structural components:
- Maturity- and process-based transformation
Transferring process improvement ownership from technical experts to front-line teams requires structural reorganisation around lateral processes. A maturity-based management system needs a three- to five-year execution road map and must be capable of tracking maturity in terms of delivery. A shift in leadership style from ‘cop’ to ‘coach’ is also necessary.
- Functional integration
The upshot of an integrative approach is an organisation primarily designed around processes, products, and customers, not functions. It ensures that functional improvement requirements (e.g. planning, procurement, IT, quality, maintenance, HR) and the improvement methodologies used are on a common platform and executed simultaneously, in concert with one another.
- Sustainability through a three-tier system
Sustainable improvement does not result from the mere application of improvement tools and processes. The introduction of Lean, Six Sigma, autonomous maintenance, one point lessons, 5Why problem-solving, visual management, etc. are not sustainable without supporting systems and underpinning management principles. Sustainable change requires a three-tier system – management principles, operating systems, and tools.
Best practice maturity
An organisation’s initial approach to operational improvement is typically project-based and often takes place only in selected functions. Organisations initially identify their critical systems, draw up policy documents, and audit operational areas to ensure compliance with these. Organisations also typically adopt one or more standard improvement methodologies. A separate implementation function is usually created, and the approach adopted often varies across areas of the organisation.
As an organisation’s understanding of operational improvement matures, it begins to move from project-based improvement to a more inclusive, process-based approach. This results from the recognition of the limited number of systemic opportunities that a project-based approach can address. The benefit of engaging all organisational levels to attack situational and systemic problems eventually also becomes apparent.
A recent industry trend is to develop and implement operational or performance systems, e.g. TPS. While several such systems have been introduced, there has been no shared framework to date that enables the understanding or benchmarking of such systems.
TRACC has developed an online benchmarking tool (the Integrative Improvement System Diagnostic) that enables an organisation to swiftly and accurately determine its value chain maturity in terms of operational excellence and the gaps in its operational improvement system. The assessment is designed around five stages of maturity and the nine key themes required in an effective integrated improvement system:
- Training and Development
- Roles and Responsibilities
- Knowledge Management
- Results and Tracking
The five stages of maturity:
- No Operational Excellence
- Functional Excellence
- Integrative Improvement System
- Learning Network
Stage 5 is the ‘holy grail’ of operations excellence. Here, all aspects of the demand-driven value network are evaluated for their potential provision of improvements in both competitive advantage and delivery of value to all stakeholders. Systems facilitate learning and collaboration across the entire value network.
So the key behind the adjective ‘integrative’ is the ongoing process centred around the holistic, maturity-based coupling and alignment of work in order to build the capabilities and culture to continuously improve. Integrative performance improvement is an evolutionary process that does not involve step changes between levels. Through its effective use, the concept of what constitutes a value chain will evolve over time and as maturity increases. Attaining each stage also allows a progressively increased return on investment.
The TRACC IIS Diagnostic is a confidential and FREE online high-level assessment tool of your organisation’s maturity, and its capability to implement, develop, and sustain an operations excellence culture. Ideally, it should be completed by a multifunctional group of senior leaders across the value chain. The more sector data gleaned, the better you will be able to benchmark your results against Fortune 500 leaders in several industries.
For best practice operating strategies to have a sustainable impact, we recommend that it be implemented as part of a process-driven integrative improvement system.
|The TRACC framework helps organisations build standardised and integrated good practice and performance capacity across their Plan, Source, Make and Deliver functions. Simultaneously it accelerates their collaboration and alignment capacity to build world class end-to-end value chains, enabling the organisation itself to become the ultimate source of sustainable competitive advantage.