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6252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page^2\626Int. J.
Productivity and Quality Management, Vol. 1, Nos. 1/2,
2006Operations Management, Anderson Schools of Management,
University of New Mexico, Albuquerque, NM 87131 Fax: (505) 277-7108
E-mail: [email protected] and quality improvement: an
implementation frameworkRichard A. Reid
Abstract: Most managers realise that their success is directly
related to effective and continual implementation of process
improvements in their organisations. A major managerial problem has
been the inability to successfully implement change in many firms.
Research shows that the effective application of team-oriented and
data-focused total quality (TQ) improvement tools is not sufficient
to assure the efficacious implementation of change. Nor were teams
that utilised solely the logic tools of the theory of constraints
(TOC) totally successful in implementing change in their
organisations. Firms were more likely to achieve their improvement
goals when they used a structured and repeatable method, rather
than an ad hoc approach, for continuous improvement (CI). Viewing
the situation from an operations management perspective, this paper
presents a logical and well-structured framework for implementing
the CI managerial philosophy to improve the productivity and
quality of the organisation as a whole, as well as its
work-performing processes.Keywords: continuous improvement;
operations management; P-D-S-A cycle; structured framework; TOC
five-step focusing process.Reference to this paper should be made
as follows: Reid, R.A. (2006) Productivity and quality improvement:
an implementation framework, Int. J. Productivity and Quality
Management, Vol. 1, Nos. 1/2, pp.26-36.Biographical note: Richard
A. Reid teaches operations research, operations management, and
systems thinking in the Anderson School of Management, University
of New Mexico. He received a BSME from Case Western Reserve
University, and an MBA and PhD in Systems Research from Ohio State
University. Dr Reid enjoys applying conceptual frameworks such as
Demings P-D-S-A and Goldratts TOC to performance improvement
opportunities in both the manufacturing and service sectors with
students in the classroom and when consulting with organisational
managers. He has written one book, three chapters in other books,
and has published over 120 articles in refereed national and
international journals.1 IntroductionOrganisations are evolving at
a greater rate than at any time in recorded history. Since
organisations are dynamic entities and since they reside in an
ever-changing environment, most are in a constant state of flux.
This highly competitive, constant changing, environment offers
significant managerial opportunities as well as challenges.
ToCopyright 2006 Inderscience Enterprises Ltd.6252 IJPQM
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improvement: an implementation framework27effectively address this
situation, many managers have embraced the management philosophy of
kaizen or continuous improvement (Deming, 1995).
The philosophy of continuous improvement (CI) embraces the
fundamental idea that whatever success an organisation may have had
in the past, in terms of customer satisfaction, it has not reached
its final destination. Because the needs and wants of their
customers are in a constant state of flux, organisations are never
able to fully attain their ultimate goal. Competition and
continuously increasing standards of customer satisfaction have
proven to be endless drivers of organisational performance
improvements. The CI approach constantly seeks to identify and
implement ongoing enhancements in a firms products, services and
processes. During the past two decades, the quality movement has
provided managers with a broad collection of methods and tools to
accelerate the process of improving organisational performance.
These data-driven and team-based total quality (TQ) tools have
promoted the operationalisation of the CI philosophy through
empowering an organisations associates.
It is necessary for organisational managers to realise that
these TQ techniques are valuable because they aid in team learning.
However, the effective application of the TQ tools to help analyse
data collected or to facilitate team-based interaction is only part
of a teams ongoing learning experience. Of equal importance,
however, is the realisation that the use of TQ tools should unfold
in a natural sequence as teams apply them in perfecting the
performance of a process. In other words, it is noteworthy that
approaching problem solving and process improvement in a rational
and orderly fashion usually produces an improved situational
understanding and often elicits a high level of collaboration and
contribution from each of the CI team members.
The purpose of this paper is to present a structured framework
for implementing the CI philosophy in improving the productivity
and quality of work performing processes in organisations. This
methodology illustrates the operations managers role as a
facilitator of indigenous workplace teams using TQ tools in a
logical and orderly fashion within the guise of systematically
improving processes. First, an overview of the basic structure and
enabling processes required for CI is considered. Next, detailed
descriptions and illustrations are presented for each of the three
stages of the CI framework. In particular, Stage 1 provides an
explanation of how the current system performance is assessed from
an operations management perspective; Stage 2 describes how to
evaluate these results within a comparative framework; and Stage 3
presents two structured approaches for designing and implementing a
process improvement plan. Finally, the overall approach is
summarised and some conclusions for the operations manager are
presented.
2 An application-orientated CI framework2.1 The basic processThe
framework for applying the CI philosophy is designed to provide
operations managers with an integrated, systematic and repeatable
process for carrying out their basic responsibilities within an
organisation. To be strategically effective, it is imperative that
CI is directed toward satisfying the needs of the customers and
addressing challenges from competitors. Moreover, it must build on
the organisations internal capacities and capabilities while being
woven into the fabric of everyday work for all employees. This
means that there is a commitment to constantly improve
organisational productivity and quality.6252 IJPQM 03.Reid.qxp
29/11/2005 20:57 Page^2\828
R.A. Reid
As shown in Figure 1, the approach begins with the premise that
the manager is working in an existing manufacturing or service
system that has embraced continuous improvement as a fundamental
operations strategy. The cycle has three major stages:
ascertain current system performance evaluate performance
through comparative frame of reference apply CI principles to
design and implement an improvement plan.Upon completion of these
three stages, the approach returns to the first stage to continue
the ongoing, never-ending, commitment to performance enhancement.
This section describes and illustrates these three stages.
Figure 1 An implementation framework for improving productivity
and quality
6252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page^2\9
Productivity and quality improvement: an implementation
framework292.1.1 Stage 1 ascertain current system performanceThe
rationale underlying this stage is the classic management principle
that management begins with measurement. (Drucker, 1965)
Improvement begins with the operations manager determining the
current performance level of the work processes that comprise the
system. Ascertaining current performance status is a data-driven
effort. The manager focuses on collecting and summarising data to
allow meaningful productivity and quality metrics to be computed
for critical operations as well as the organisation as a whole. The
emphasis on system level measures of performance is designed to
minimise the possibility of optimising individual process operation
to the detriment of total organisational performance. For these
purposes, data should be aggregated by an appropriate time
interval, such as the most recent month or quarter.
2.1.1.1Productivity metricsThe operations manager needs to
collect and summarise data for computing a variety of productivity
performance measures. In particular, several single factor and
multi-factor productivity measures as well as a measure of total
productivity are suggested. The purpose underlying the
determination of various types of productivity measures is to help
identify those problem areas in need of improvement. For example,
stable total productivities in a service firm may hide the fact
that while labour productivity may be increasing, supplies
productivity may be deteriorating. Measuring productivity in
manufacturing firms can be challenging as they seek to increase
their capacities to meet growing demand in the marketplace. For
example, as manufacturers develop additional capacity through
incorporating automation through increasing investments in
production equipment or computers and information support systems,
the substitution of capital for labour is often manifested as an
increase in labour productivity and a decrease in capital
productivity. The multi-factor productivity measure of labour plus
capital reveals the degree of substitution that is occurring
between the two types of resources, as well as whether or not they
are making an overall performance contribution by exploiting
potential synergies and producing an improved measure of total
productivity.
2.1.1.2Quality metricsIn regard to measuring quality, two
focuses are suggested. First, from an internal perspective, the
operations manager needs to ascertain the degree to which the work
performing processes are able to produce goods and services that
conform to predetermined specifications. Secondly, from an external
perspective, the quality focus is directed toward achieving desired
levels of customer satisfaction, or better yet, being able to
delight the customer with products and services being produced by
the organisation. The linking relationship between these two
perspectives of quality occurs in the design process. In
particular, the design team translates customer requirements into
product and/or service specifications and then designs the
processes to be used to create and deliver output from the firm to
the customers so that they are capable of meeting or exceeding
those requirements. From an operations management viewpoint, both
subjective and objective data are gathered and summarised to
identify the current state of quality dimension in an organisation.
To monitor customer satisfaction levels, managers often use
subjective data in the form of customer opinions and attitudes
along with objective performance measures, such as the type and
frequencies of customer complaints. In contrast, more objective
data6252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page^30
30R.A. Reidis often used to measure deviations from
specifications for products and/or services to determine the extent
of variability existing in work performing processes.Although the
Demings (1986) chain reaction has debunked traditional thinking in
which improved quality was thought to be directly related to higher
costs, and hence, lower productivity, many organisations prefer to
create performance indices that combine productivity and quality
metrics. One of these indices, the Quality-Productivity Ratio
(Russell and Taylor, 2006), merges two types of cost components
related to productivity with a single measure of quality to provide
a simple and easily understood performance measure. Other, more
comprehensive indices incorporate multiple dimensions of
productivity and quality in a weighted fashion to create a more
all-inclusive overall performance index for an organisation (Felix
and Riggs, 1983; Reid, 2002). Since productivity and quality are
the cornerstones of successful operations management, consideration
should be given to using one or another of these integrated
indices.
The determination of current performance metrics allows managers
to identify the present status of their organisation along a
variety of productivity and quality dimensions. The right number of
performance dimensions to monitor depends on the type and nature of
the organisation as well as the domain of a particular operations
managers responsibility. Recent developments in measuring total
organisational performance suggest that a balanced scorecard
approach (Kaplan and Norton, 2001, 2004) should be considered. In
this framework, measures of overall organisational financial
performance are balanced with a relatively small set of measures of
customer satisfaction; internal business processes; organisational
learning and growth. Because managers need to know their current
state of performance before they can establish the type and nature
of change, if any, that will be necessary to move their
organisation toward a more desirable future state, the quantitative
documentation of the current performance is the appropriate initial
step in applying the CI philosophy.
2.1.2 Stage 2 evaluate performance through a comparative frame
of referenceOnly a few measures of performance can be evaluated in
an absolute sense. One example is total productivity, which can be
defined as total dollar sales divided by total cost of goods and/or
services sold. For this metric, values greater than 1.00 are
necessary to sustain a for-profit organisation in the long run.
However, many measures of productivity and quality cannot be
meaningfully evaluated in an absolute sense. A major reason for
this is that it makes sense to assess an organisation relative to
some type or measure of expectation. Consequently, in and of
itself, a singular value of most performance measures is often
meaningless. Numerical performance measures usually have to be
considered within a comparative framework. This type of comparison
provides an appropriate perspective for evaluating the
effectiveness of past, present, and proposed managerial action.
There are four basic types of possible comparisons: historical
accomplishments; pre-established goals; competitor performance;
industrial leaders.
2.1.2.1 Historical accomplishmentsComparisons of current
performance with prior indicators of achievement allow operations
managers to determine if current policies and decisions are
supporting improvements in desired directions. Since managers
always want to improve productivity and quality, improvements in
any and all of these metrics are always being sought. As a
V316252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page 31Productivity
and quality improvement: an implementation framework31result,
time-series data are often used to record various the values of
selected indices. For example, it is desirable to see decreasing
rates of product defects as well as lower levels of variability in
key physical attributes as a result of a recent machine-operator
training programme that was focused on improving product
consistency. As a further illustration, it may be appropriate to
account for seasonal fluctuations in demand for services by
comparing current third quarter levels of performance with the
third quarter achievements of the past fiscal year.
2.1.2.2Pre-established goalsAs part of the process for
initiating change in an organisation, specific goals or target
performance levels are often established prior to implementing
plans for improvement. In these situations, it is meaningful to
compare current results with the pre-specified performance
indicators. If performance results indicate that the firm is moving
in the right direction, it may be proper to fine-tune or to
slightly increase the intensity of the existing efforts to meet the
established goals in the near future. On the other hand, if there
is a significant gap between targeted and current performance, then
operations managers will probably consider more pronounced changes
in the existing plans or in the approach taken to their
implementation.
2.1.2.3Competitor performanceMonitoring the performance of
competitors is commonplace amongst all types of organisations. In
order to know whether your organisation is maintaining or gaining a
competitive advantage, it is desirable to continually compare your
current achievements with those of your primary competitors. While
it is not always possible to obtain current information on every
performance dimension directly about your competitors, it is often
easier to acquire comparative indicators than most managers
imagine. In service organisations, comparison and mystery shoppers
are excellent sources for obtaining comparative data, whereas
manufacturing organisations often use reverse engineering to
monitor improvements in product quality. Moreover, trade institutes
and/or professional societies often collect performance data from
their constituents and re-package and distribute it back to their
constituents.
2.1.2.4 Industrial leadersBenchmarking is the search for and
implementation of best practices (Camp, 1995). The purpose is to
learn from other organisations by seeking out, studying, and
emulating their best practices in order to enhance current
organisational performance. Rather than just copying these
procedures, benchmarking requires understanding the underlying
principles and then being able to adapt them to productive use in a
new organisational environment. Moreover, it may involve examining
outstanding performers in other industrial sectors. For example, if
an organisation wants to improve its order-filling process and if
excellence in filling customer orders quickly and accurately
resides within a different industry sector such as catalogue sales,
then operations managers should benchmark with a well-known firm in
that sector.
It is noteworthy that certain frames of reference are more
appropriate for particular types of comparisons than others. For
example, it is logical to compare the performance of an
organisations core competency against world-class performers
regardless of whereV326252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page
3232R.A. Reidthey may physically located. If, on the other hand,
the vast majority of business is local, then comparisons with
regional competitors seem reasonable. In general, managerial
understanding improves and organisational effectiveness accelerates
with increasing numbers of comparisons among differing frames of
reference. Thus, it may be informative to evaluate current labour
productivity with comparable values from the past, a
pre-established target, and competitor performance.
2.1.3 Stage 3 - apply CI principles to design and implement an
improvement planThe overall objective of this stage is to create
and implement an action plan that will eliminate the underlying
cause of significant gaps between the current and desired
performance levels. This stage has four major components or
steps:
design an improvement plan determine performance gaps establish
future performance goals implement organisational improvements.
The first step requires the operations manager to determine the
gaps that exist between current performance levels and suitable
comparative measures. Usually, some of the gaps between actual
achievements (Stage 1) and desired performance levels (Stage 2) are
insignificant or just reflect random and/or inconsequential
perturbations around an acceptable performance value or index.
However, other gaps may reflect serious problems and/or the
continuation of an undesirable trend. It is not unusual to find
that several of the major performance gaps result from one or two
underlying core problems or root causes. This small set of core
problems becomes the focus of attention for the operations
manager.After performing a gap analysis and assessing the overall
situation, the manager will identify a selected set of important
performance measures to concentrate on during the next iteration of
the CI structured approach. This focusing effort involves
establishing some tentative goals or targets for a significant
portion of the under-performing metrics. At this juncture in the
improvement process, it is premature to commit to achieving
specific numerical goals or targets because the underlying cause(s)
for the poorly performing metrics have not been determined.
Therefore, the specification of a set of quantifiable goals to be
achieved during this stage will be delayed until a better
understanding of all of the factors involved and the relationships
between the factors responsible for the less than desirable current
performance and their root cause has been determined.The design and
implementation of the improvement plan is pursued through employing
either of two approaches, namely, total quality management (TQM) or
the theory of constraints (TOC). While there are many structures
and principles in use for creating and executing plans to upgrade
an organisations operational performance, most are adaptations of
one or both of these two structures. Both approaches advocate the
concept that problems reside in an organisations work-performing
processes, and therefore, to effectively address a problem, it is
necessary to understand the relationships between the steps within
a process. Moreover, both subscribe to the systems thinking
paradigm and hence, subscribe to the idea of interdependencies
existing between process steps. This means that a change in one
step in a sequence of dependent steps will create aV336252 IJPQM
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improvement: an implementation framework
33
cascading effect throughout their entire process with the very
real potential of some negative or unwanted effects occurring. Each
of these two approaches has its unique structure for developing and
implementing improvements.
2.1.3.1 The TQM approach to improvementAlthough there are
several standard approaches for implementing the TQM methodology,
one of the more widely used methodologies is the Deming (or
Shewhart) Wheel or the Plan-Do-Study-Act (P-D-S-A) Cycle (Deming,
1986, 1995). Each stage in the cycle is structured in such a way as
to direct the improvement teams efforts towards the goal of
improving a firms performance and at the same time increasing
customer satisfaction. Using the P-D-S-A cycle will provide teams
with the knowledge they need to correct or eliminate any defect
with the design of a product or service or address any obstacle to
total customer satisfaction that may be embedded in a work
performing process.
The P-D-S-A cycle is also known as the seven-step model or
method. This structured methodology provides a repeatable set of
steps, involves a series of team-based actions, and uses various TQ
tools in pursuit of iterating through the Deming Cycle. A brief
description of each step follows (GOAL/QPC, 2000):
Step 1 - define the problem: the objective is to assemble the
right team, reduce the projects focus, and finalise the problem
statement. Step 2 - describe the current process: the teams
responsibility is to create and validate a flowchart of the current
process and verify the current performance with process owners and
internal customers. Step 3 - identify and verify the root cause(s)
of the problem: using various sequences of TQ tools, the team
investigates cause-effect relationships associated with the study
process and its current level of performance. Step 4 - develop an
action plan to implement the preferred solution: before
constructing a detailed action plan for eliminating the root
cause(s), the team generates, evaluates, and selects the best
approach from among the potential solutions and then establishes
specific performance target values to be achieved. Step 5 -
implement the solution: on a pilot basis, the plan is implemented
with the team documenting any necessary changes, measuring
progress, and documenting results. Step 6 - review and evaluate
results. If the planned changes meet the pre-established numerical
goals, and thus, were successful in eliminating the root cause(s),
then the problems symptoms will have greatly diminished and the
improvements need to be standardised within the organisation. If,
on the other hand, the implemented changes did not meet the
pre-determined numerical performance goals, then the team will have
to revisit, as appropriate, steps 3, 4, or 5 to re-determine the
root cause, re-design a new, more effective, action plan, or
re-deploy the original action plan, respectively. Step 7 - reflect
and act on this experience: the team standardises successful
improvements, reflects on the effectiveness of the utilised
methodology and initiates any appropriate changes, celebrates their
success, and continues the improvement process by returning to step
1.6252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page^3434R.A. ReidIt is
noteworthy that the first four steps are incorporated in the Plan
Stage of Demings Cycle while the last three steps correspond
directly with the Cycles last three stages, namely, Do, Study, and
Act. Reid et al. (2000) provide more detailed information on each
step in the seven-step method and document a case study that
required three iterations through the Deming Cycle before the
improvement project was able to be successfully
completed.Empirical-based research (Ghobadian and Gallear, 1996)
has shown that the use of a structured approach, such as TQM, to
guide the team-based efforts in improving operations is more
effective than an unstructured or ad hoc approach. In addition to
providing direction for an improvement effort, the underlying TQM
structure helps the operations manager facilitate team involvement
and effectiveness through a methodology that uses common sequences
of TQ tools. These TQ tools can be partitioned into two types:
result-oriented tools that are data-focused and consequently used
to gather, summarise, and display problem-oriented data resulting
from investigative and measurement initiatives
team facilitation tools that provide guidance to efficaciously
conducting team-based activities (Brassard and Ritter, 1994).
Reid (1999) provides additional information on applying the TQ
tools in a productive sequence within the P-D-S-A Cycle and
documents their application in improving performance levels at a
small independent bakery.
2.1.3.2 The TOC approach to improvementTOC is a management
philosophy that operationalises systems thinking through the use of
an iterative five-step process of ongoing improvement. This process
is designed to focus managements attention on leveraging
managements efforts at a few key resources that constrain the
performance of the organisation as a whole. The rationale
underlying the effectiveness of this approach is that every system
has at least one constraint that prevents it from achieving its
goal, and if managed properly, additional throughput will be
forthcoming. Assuming the initial constraint exists within the
organisation, a brief description of each step in the five-step
focusing process follows (Goldratt, 1990; Scheinkopf, 1999):
Step 2 - decide how to exploit the system constraint: the team
institutes changes in managing the constraining resource so that it
is operating as efficiently as possible.
Step 4 - elevate the system constraint: the current capacity of
the constraint is
increased to allow more throughput to be generated and thus,
breaking the constraint. Step 1 - identify the system constraint:
the team locates the one resource that, if they had more of it,
would increase organisational throughput. Step 3 - subordinate all
other activities: the team takes action in managing all
non-constraint operations and resources to facilitate the
effectiveness of the constraint. Step 5 - go back to step 1 and
find the new constraint: the team must also re-align any policies
changed in steps 2 and 3, above, to reflect the new organisational
configuration.V"356252 IJPQM 03.Reid.qxp 29/11/2005 20:57 Page
35Productivity and quality improvement: an implementation
framework35Often insightful adjustments of policies can be used to
manage the constraint resource as well as the non-constraint
resources via steps 2 and 3, respectively, and improvement teams
are able to increase an organisations throughput with little, if
any, out-of-pocket expenses. With these actions, it is possible to
break the constraint before having to spend significant funds to
increase its capacity in step 4. It is not unusual to break an
internal constraint, only to find that the system constraint has
become external and moved outside of the organisation to the
marketplace. Koljonen and Reid (2000) have developed a flowchart to
help guide practitioners in applying the five-step focusing
process.
Many companies have successfully implemented and continue to
innovate based upon the TOC five-step focusing process (Mabin and
Balderstone, 2000; Noreen et al., 1995). Goldratt (1994) has
developed a set of logic trees or cause-effect diagrams that are
collectively known as the TOC Thinking Processes (TP). Starting
with a set of undesirable effects or symptoms, cause-effect
reasoning is used to deduce the underlying cause (s) or core
problem (s). Other logic trees and systemic-based analyses are then
used to identify and refine solutions that eliminate or neutralise
the underlying cause (s) and replace the undesirable with desirable
effects. Finally, a third set of logic diagrams is used to
construct step-by-step implementation plans. This generic tool kit
(Cox et al, 2003; Schragenheim and Dettmer, 2001) can be used to
help the team understand the system so that the application of the
five-step focusing process is successful. In addition, it is
possible, and even desirable, to use the TQ tools in conjunction
with the TOC/TP logic-based tools.
3 Summary and conclusionsCI in organisations is the essence of
operations management. Firstly, the improvement team must determine
the organisations current status through collecting and analysing
performance data; particularly relevant are metrics that reflect
the status of achievements in productivity and quality. Secondly,
based on a variety of relevant comparisons, gaps between actual and
targeted performance levels are identified. Thirdly, attention is
directed toward determining problems associated with poor
performance and since problems are embedded in processes, focus is
redirected toward improving the relevant work-performing processes
within the study organisation.
In his/her role as team coach, the operations manager guides the
improvement team in selecting one of two alternative approaches to
conducting an improvement project. The TQM approach is directed
toward identifying the root cause of the poorly performing process.
The TOC approach focuses on improving the performance of the system
resource that prevents the organisations goal from being achieved.
Since both approaches provide a viable structure for conducting a
team-based improvement project, it may be advantageous to use
planning and analysis tools from one approach to supplement or
validate results generated by tools in the other approach. Because
the approaches are complementary rather than competing, it is
possible, and perhaps even desirable, to integrate their use within
your CI efforts. Finally, it is critical to remember that improving
the performance of an organisation as a whole can only occur if the
goals of organisationally-based work performing processes remain
aligned with those goals of the total organisation.6252 IJPQM
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