What happened to improving productivity?

In my recent travels across the U.S,  I have been watching continuous improvement teams select measures for improvement.  Recall that by seeing and eliminating waste, we have the ability reduce defects, shorten lead-times, reduce cost, and grow our business.  I coach that every improvement project needs one key measure and the other measurement dimensions can be used as balancing measures.  Regardless of what we pick, when taking on a lean project we should always target 10% plus improvement.

So why the blog?  What's happening?  In my recent surveillance, many organizations, particularly service organizations and public institutions are leaving cost off as a key measure.  Productivity is essential!  What exactly is productivity and why is it critical? 

Productivity is the measure of how efficiently a process converts inputs into outputs. It is important for businesses and government institutions because it affects their profitability / budget, competitiveness, and customer satisfaction. Lean is a management approach that seeks to eliminate wasted time and activity which will help improve productivity (if you are looking for it!). Lean  can help businesses generate the following benefits:

• Reduce costs by minimizing inventory, eliminating defects and re-work, minimizing overproduction, shrinking waiting time, and reducing transportation, motion, and processing to optimize labor resources.
• Shorten lead-times by reducing unnecessary waiting.
• Increase quality by introducing error-proofing, standardization, and customer feedback.
• Accelerate innovation by empowering employees, involving suppliers, and experimenting with new approaches to work.

In a lean improvement system, productivity is targeted by using three primary tools:

1) Takt time to understand the rhythm of work.

2) Direct observation determine the manual cycle times of processes.

3) Loading diagram or the cycle time / takt time bar chart to determine people power requirements necessary to meet takt time and balance work among team members.

Even if productivity is not your primary focus, you are always better served to understand the impact of your work on productivity.   When you eliminate wasted time and activity, there is generally an impact on your people resources.  We want to understand this impact so we can use this available capacity to generate more value to customers at the same cost!  This is the ultimate win/win! We improve our bottom line, avoid wasted human resources, and still meet or exceed customer requirements.

More specifically, I saw two lean improvement projects where the solution was to add a resource. No analysis of people power was performed.  If we believe 95% of our systems are non-value added, the solution approach should have been to eliminate some waste to create capacity for a resource in lieu of hiring a new role and adding cost. Maybe a resource was needed, but the analysis was never done so we don't know for sure. 

Bottom line...."don't forget about productivity"

In the big picture, productivity equals wealth.  This is a phrase that means that the more efficiently a process converts inputs into outputs, the more value it creates for both society and the business. 

Productivity is important for both countries and companies because it affects their economic growth, profitability, competitiveness, and living standards. Higher productivity means that more goods and services can be produced with the same or fewer resources, which can lower costs, increase profits, and raise wages. Higher productivity can also lead to more innovation, better quality, and higher customer satisfaction, which can create more demand and market share.

Lean Blessings,

Ron

Ron Bercaw,  President and Sensei

Breakthrough Horizons

www.breakthroughhorizons.com

LinkedIN: https://www.linkedin.com/in/ron-bercaw-882a0a8/