Since Lean Six Sigma arrived in the continuous improvement scene and even before, organizations have pursued streamline and standard processes to increase delivery performance. In many cases, operational excellence areas were built to structure and articulate the continuous improvement process as it was the case with quality control and assurance. Six Sigma brought an objective way to assess not only processes results but also performance in relationship with their complexity. On the other hand, Lean provided a “process approach” to analyse time’s use and its management in relationship with customers’ demand. Although both approaches are highly compatible, the integration of methodologies was not so easy because Six Sigma has been delivered through projects with a learning “before doing” style while Lean came out from the TPS driven through “learning by doing”. Lean Six Sigma took the “project approach” following the DMAIC framework to drive organizational learning and continuous improvements, respectively. A breakthrough would come with Agile, which took not only the Lean philosophy but also its programs and tools to manage projects in a less structure way that the traditional waterfall approach with which also DMAIC projects were managed. But instead of using Agile just like another project management methodology, organizations are looking to use it to manage processes and business units. The challenge of bringing Agile to organizations, presents a strong resemblance with bringing the TPS to an organization. It is interesting to deep dive in the key elements from mainstream methodologies to take into consideration to develop operational effectiveness, delivery performance and agility.

Operational effectiveness and capacity creation

First and foremost, it is important to have the OEE vision of the operational effectiveness in terms of availability, performance and quality. This vision is highly compatible with Gartner’s framework which includes people, process and technology. Moreover, it is possible to establish direct and indirect links between dimensions of the Gartner’s framework with the operational effectiveness indexes. Secondly, the connection between quality and “right first time” is essential to see the impact of the former on process capacity which is precisely describe with the “sigma” level to correlate process’s performance with its complexity. Third, availability and performance can be integrated into a “daily time” that can be also divided within shifts to have an insight of the process capacity. From a highly automated process perspective, it is possible to include within an equation (f(x)=Y) the capacity drivers as variables (Xs) to produce a certain output (Y). In working environments which are heavily reliant on people, it is possible to identify and eliminate non-value-added activities either for customers or the business, called “wastes”, to have streamlined processes. Both approaches can be applied together by first reducing complexity and then modelling with the proper process function (f(x)=Y). While statistics is used to find out the best variables’ “set up” to optimize the process result, a variety of “time studies” can be used to describe how the current “daily time” is being used including DILOs and automated approaches to assess time management. Although high operational effectiveness will increase capacity and ensure quality at the same time, it is not enough to ensure the delivery performance, which depends on how the organization manages the capacity created

Delivery performance and capacity management

One key feature of the TPS, is that not only provides the possibility to increase process capacity through “waste” (Muda) elimination but also enables capacity management by levelling (Heijunka) un-evenness (Mura) between process as well as by correcting and preventing overburden (Muri). Moreover, the JIT is all about having and fullfiling with a “schedule” as it can be grasped from the BTS’ components which include volume, mix and sequence. Furthermore, the JIT deployment proved to be a challenge for western companies’ rigid structures and led to the development of the Theory of Constraints by Dr. Eliyahu Goldratt to manage capacity to maximize “throughput” and minimize “inventory”. While the TOC would have also an E2E perspective, it would focus on restrictions (Bottlenecks) and their management with a problem-solving approach. On the other hand, Agile would take stability and flexibility concepts from the TPS’ “levelling” program (Heijunka), which also includes demand’s predictability, to manage project’s capacity to maximize delivery performance. Besides “Heijunka” and the “takt time”, the MILO approach can be used to not only described the current process plan but also to assess its compliance as well as the associated risks. Finally, Agile would also take Visual Management and Kanban concepts to both reduce the management cycle but also to match process capacity with the daily demand to ensure the delivery performance. Although methodologies and tools are important, the organizational structures and culture can be barriers too difficult to overcome because a streamline organizational design, motivational leadership, engagement, knowledge and change management are essential features to deploy this new operating model.

Developing dynamic and stable operational effectiveness and delivery performance

Although most of the concepts and tools applicable to organizations came from the TPS itself, Agile provides the opportunity to reframe them in a new context to draw out new meanings and ways of driving transformation as well as of designing and managing organizations. To begin with, the Agile transformation enables working with “workstreams” instead of “projects” in addition to “process leaders” instead of “belts”. Moreover, by moving from “project” to “process” approach it is possible to drive a transformation from “within” instead of pushing it from “outside”. Furthermore, the organizational learning is driven from a “by doing” approach instead of the former “before doing”, which helps the organization to develop both empowerment as well as accountability in teams and leaders, respectively. Another aspect to consider is not only to have streamline processes but simpler organizational designs with a customer centric E2E approach and fewer “spans of control”. However, this process architecture won’t be functional without people’s engagement and a motivational leadership style to develop the appropriate organic architecture. Moreover, once that flexibility is achieved by creating also transparency in performance with a reduction in the management cycle, it is of fundamental importance to look for stability avoiding traditional standardization processes that usually end up in rigidity. Furthermore, through knowledge and change management it is possible to drive living “standards” which are “in place” and “in use” on daily basis but also can be modified according to the demand and operational context to maximize both delivery performance and effectiveness. As Edward de Bono pointed out, “Creativity involves breaking out of established patterns in order to look at things in a different way.”

Thanks for Reading.

Kind Regards.

Marcelo Sauro is an internationally experienced performance and improvement senior manager. He holds an Executive MBA and Master of Science degrees and has helped people and organizations to transform themselves. Not only he led E2E transformations in Global Business Services, R&D, Supply Chain and Finance organizations at all levels within the LATAM and EMEA Regions, but he is also experienced in several industries including Life Science, Healthcare, Insurance, Fintech, Technology, Telecoms, FMCG, Chemicals, Automotive, Energy and Mining. Since 2015, he has been researching and developing content in agile and resilience through Value Ways, while working under contract for customers such as MetLife, Novartis, Vertiv (Emerson NP) and Experian among others. Previously, he worked for more than 7 years as Master Black Belt for a LATAM-based consulting group, which had ASQ, Qualtec and Oriel as business partners. Prior to that, he worked for more than 10 years at BASF and GSK in positions of growing responsibility in the area of Operational Excellence. Marcelo is currently working at Ferring's “International PharmaScience Center” (IPC) for the Global R&D organization in Copenhagen. To find out more please visit www.value-ways.com.

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