CONTINUOUS IMPROVEMENT

Continuous improvement in a management context means a never-ending effort to expose and eliminate root causes of problems. Usually, it involves many incremental or small-step improvements rather than one overwhelming innovation. From a Japanese perspective continuous improvement is the basis for their business culture. Continuous improvement is a philosophy, permeating the Japanese culture, which seeks to improve all factors related to the transformation process (converting inputs into outputs) on an ongoing basis. It involves everyone, management and labor, in finding and eliminating waste in machinery, labor, materials and production methods.

The Japanese word for continuous improvement, kaizen, is often used interchangeably with the term continuous improvement. From the Japanese character kai, meaning change, and the character zen, meaning good, taken literally, it means improvement.

Although kaizen is a Japanese concept, many U.S. firms have adopted it with considerable success by combining the best of traditional Japanese practices with the strengths of Western business practice, in other words, by merging the benefits of teamwork with the creativity of the individual. Some refer to its implementation in the West as lean manufacturing since, when combined with the principles of just-in-time (JIT), kaizen or continuous improvement forms the foundation for the concept of lean manufacturing.

HISTORY OF CONTINUOUS
IMPROVEMENT

Following the defeat of Japan in World War II, America wanted to encourage the nation to rebuild. As with the Marshall Plan in Europe, General MacArthur asked a number of leading experts from the U.S. to visit Japan and advise them on how to proceed with the rebuilding process. As history would have it, one of these experts was Dr. W. Edwards Deming. Deming was a statistician with experience in census work, so he came to Japan to set up a census. While in Japan, he noticed some of the difficulties being experienced by some of the newly emerging industries. Many Japanese manufacturers were faced with huge difficulties stemming from a lack of investment funds, raw materials, and components, and from the low morale of the nation and the workforce. Based on his recent experience in reducing waste in U.S. war manufacture, he began to offer his advice.

By the mid-1950s, he was a regular visitor to Japan. He taught Japanese businesses to concentrate their attention on processes rather than results; concentrate the efforts of everyone in the organization on continually improving imperfection at every stage of the process. By the 1970s many Japanese organizations had embraced Deming's advice and were very quickly enjoying the benefits of their actions. Most notable is the Toyota Production System, which spawned several business improvement practices utilized heavily in Japan, including JIT and Total Quality Management (TQM).

Despite the fact that much of the foundation of continuous management and other Japanese concepts originated in the U.S., Western firms showed little interest until the late 1970s and early 1980s. By then the success of Japanese companies caused other firms to begin to reexamine their own approaches. Hence, kaizen or continuous management began to emerge in the U.S. concurrent along with the increasing popularity and use of Japanese techniques such as JIT and TQM. In fact, continuous improvement is a major principle of and a goal of JIT, while it is one of the two elements of TQM (the other is customer satisfaction). In some organizations, quality circles have evolved into continuous improvement teams with considerably more authority and empowerment than is typically given to quality circles. In fact, management consultants in the West have tended to use the term kaizen to embrace a wide range of management practices primarily regarded as Japanese and responsible for making Japanese companies strong in the areas of continual improvement rather than innovation.

KAIZEN ATTITUDES NECESSARY
FOR IMPLEMENTATION

Most Japanese people are, by nature or by training, very attentive to detail and feel obligated to make sure everything runs as smoothly as possible, whether at work or at home. This attitude enhances the functionality of kaizen. However, this is not typically the case in the West. To encourage the kaizen attitude, organizations require a major change in corporate culture; one that admits problems, encourages a collaborative attitude to solving these problems, delegates responsibility and promotes continuous training in skills and development attitudes.

The driving force behind kaizen is dissatisfaction with the status quo, no matter how good the firm is perceived to be. Standing still will allow the competition to overtake and pass any complacent firm. The founder of Honda has been quoted as saying, "In a race competing for a split second, one time length on the finish line will decide whether you are a winner or a loser. If you understand that, you cannot disregard even the smallest improvement." Although continuous improvement involves making incremental changes that may not be highly visible in the short term, they can lead to significant contributions in the long term.

Organizational performance can improve from knowledge gained through experience. Lessons learned from mistakes mean those mistakes are less likely to be repeated, while successes encourage workers to try the same thing again or continue to try new things. While this learning process occurs throughout the system it is particularly important for accomplishing the long-term improvement associated with continuous improvement. In order for continuous improvement to be successful, the organization must learn from past experience and translate this learning into improved performance.

Part of the learning process is trying new approaches, exploring new methods and testing new ideas for improving the various processes. So experimentation can be an important part of this organizational learning. Naturally, many of these worker-led experiments will fail, so it is important to recognize that there is some risk associated with this experimentation. If management is uncomfortable with risk, it may be reluctant to allow any real degree of experimentation. Obviously, management cannot risk disabling the production process itself or endanger the well-being of the workforce, but the complete absence of risk can reduce the vision of those involved in the continuous improvement process. Improvements will generally come in modest increments of progress. Therefore, management must recognize that some experiments will fail as part of the learning process, and avoid the temptation to harshly judge the perpetrator as having new but unsuccessful ideas. Some even feel that it is critical to establish an environment that reinforces the notion that risk is good. Again, this involves consistency in management's attitude toward change and the empowerment of employees.

The achievement of continuous improvement requires a long-term view and the support of top management. But it is also important that all levels of management actively support and become involved in the process. Proper support structures of training, management, resource allocation, measurement, and reward and incentive systems must be in place for successful adoption. This includes a willingness to provide financial support and to recognize achievements. It is desirable to formulate goals with the workers' help, publicize the goals, and document the accomplishments. These goals give the workers something tangible to strive for, with the recognition helping to maintain worker interest and morale.

Kaizen also requires that all employees in the organization be involved in the process. Every employee must be motivated to accept kaizen as a means by which the firm can achieve a competitive advantage in the marketplace. All involved must push continuously at the margins of their expertise, trying to be better than before in every area. Japanese companies have been very successful with the use of teams composed of workers and managers. These teams routinely work together on problem solving. Moreover, the workers are encouraged to report problems and potential problems to the teams; their input is as important as that of management. In order to establish a problem-solving orientation, workers should receive extensive training in statistical process control, quality improvement, and problem solving.

Problem solving is the driving force behind continuous improvement. Actually, it can be said to become a way of life or a culture that must be assimilated into the thinking of management and workers alike. Workers are trained to spot problems that interrupt, or have the potential to interrupt, the smooth flow of work through the system. When such problems do occur, it is important to resolve them quickly. Also, workers are trained to seek improvements in the areas of inventory reduction, set-up time and cost reduction, increasing output rate, and generally decreasing waste and inefficiency.

Unfortunately, workers in a continuous improvement system have more stress than their counterparts in more traditional systems. This stress comes not only from the added authority and responsibility but also from the fast pace inherent in the system. There is little slack built into the system and a continual push to improve. For this reason, firms stressing continuous improvement have suffered severe criticism from some labor unions.

BENEFITS OF KAIZEN

The benefits of continuous improvement manifest themselves in numerous ways. In an August 2004 article, Perry Flint examined how American Airlines' Tulsa MRO base has seen dramatic improvements after implementing continuous improvement initiatives. The base is the largest such facility in the world with some 8,000 employees and 3 million square feet of docks and shops across 300 acres. Continuous Improvement teams in their components and avionics shop have helped reduce $1.5 million in inventory requirements while freeing 11,600 sq. ft. of shop space; repairing broken cargo door torque tubes in lieu of purchasing a new replacement has resulted in a savings of $250,000 per year; turnaround times for overhauls have improved more than 38 percent, and replacing parts only as needed on the 737NG has resulted in a savings of $100,000.

These improvements have been made possible through employee and union buy-in, the creation of employee-led work teams, and the realized benefits, after implementation, of employee-recommended improvements and streamlined procedures. The employee-driven improvements are integral to the success of the Continuous Improvement process. The changes are not force-fed by management, thus the employees are less resistant to the changes and recognize the necessity and value in implementing these alternative methods.

A case history of the kaizen training implementation at Pace Micro Technology details the improvements after an update to a continuous improvement program, including an overhaul of intranet support for continuous improvement activities. These improvements resulted in 238 ideas registered on the continuous improvement intranet that were either in action or waiting for teams to begin work, after just nine months. Of those, 39 teams had completed their work and realized a financial benefit of £1.1 million. In addition, there was 71 percent involvement across the organization. Leadership at all levels in the organization has led to the success at Pace, with individuals modeling behaviors, encouraging and enabling others to act, inspiring a shared vision, challenging the status quo and taking risks.

Through kaizen or continuous improvement, firms are able to produce better products and services at lower prices, thus providing greater customer satisfaction. In the long term, the final product will be more reliable, of better quality, more advanced, cheaper and more attractive to customers.