I include risk management in this course because poor risk
management is the second highest contributor to failure in projects or in major
changes in operations for manufacturing and service organizations. (Don’t
forget that team dynamics is the primary contributor to failure in such
activities.) A second reason for including risk management is that
inexperienced managers are the ones that typically ignore risk management or
just give it lip service. If you are going to be an effective leader you must
understand and practice sound risk management. Risk management is the topic of
the following lecture.
I include theory of constraints because it is often left out of
treatments of control and in some traditional approaches to manufacturing this
failure leads to promoting techniques that are inappropriate and cause
inefficiencies. The lecture following risk management is an introduction to
theory of constraints and I hope it leads the student to further study of this
important topic.
The remainder of this course addresses that portion of control
that deals with what is typically called process improvement or quality
improvement. The objective of the process improvement part of control is to assess
work processes and to make continuous improvements to these processes so that
employees’ jobs are easier and more cost efficient due to fewer and fewer
quality problems and to reduced use of resources; including labor, materials
and maintenance.
There are many versions of process improvement in use. Six
Sigma and total quality management (TQM) are two popular versions. Kaizan is a
Japanese term for continuous improvement and many organizations use this term
to describe their process improvement work. Sometimes Kaizan is used to
simplify processes without gathering data and some quality gurus are critical
of non-data driven process improvement. Another term used by manufacturing
organizations is Lean. Lean is using a set of tools or methods that improves
manufacturing processes by eliminating waste and errors. Some organizations
combine Lean and Six Sigma into Lean Six Sigma. Whereas both Six Sigma and TQM
are proven to be effective I favor TQM, or data driven Kaizen if you prefer the
Japanese term. Let me give short descriptions of the two approaches and then
discuss the reasons I favor TQM.
Six Sigma thoroughly trains a small number of people and then
empowers these trained specialists to work with other workers and managers to
improve processes throughout the enterprise. These specialists get titles
according to the amount of training they have received, e.g. those with
extensive training are usually called black belts or master black belts. An
experienced manager is selected to manage the specialists and their process
improvement activities. Other managers are given overview training so that they
know what to expect and what is expected of them.
In the version of TQM that I have practiced all employees in
the enterprise, workers and managers, receive about 50 hours of basic training
in process improvement techniques. A very few receive additional training in
special techniques and serve as a resource to all the workers and managers.
After training, all workers and managers are empowered to work on process
improvement of the processes they own, i.e. the processes they use in their day
to day work. There is a coordinator to authorize teams and facilitate access to
any data needed by the teams or to the specialists that provide analysis beyond
the capabilities of the team. The authorization is necessary to prevent workers
from getting involved in several teams at once and impacting productivity by
spending too much time on process improvement at the expense of process
execution.
Either of these approaches is effective and if your enterprise
is already involved in one of these or a related approach then stick with it.
If your enterprise is not yet involved in process improvement then I strongly
recommend the TQM approach. The advantage of TQM is that it empowers every
employee to control processes they own. This empowerment results in two
benefits compared to approaches like Six Sigma that empower only a few
specially trained personnel. First, empowering employees to have control over
their own processes is highly motivating. It is one of the things required for
employees to reach Maslow’s highest level of needs fulfillment, i.e. self-actualization.
Second, employees at any level know more about the processes they own than
their supervisors, or any specialist, because they are more intimately involved
with the processes. They feel, smell, hear and experience details of their
process that supervisors or specialists do not experience. They are better at
recognizing what aspects of their processes need improvement first, second and
so on. They are also better at developing improvement approaches because often
they have been thinking about better ways to do their job for a long time. They
are inclined to look for improvements that make their job easier as well as more
cost effective.
The disadvantages of the Six Sigma type approaches from my
experience are that sometimes the workers resent outside experts coming to
change their work processes and the outside experts aren’t as familiar with the
work processes as are the employees that own the processes. I have observed
that the process owners tend to create simple and effective improvements
whereas the highly trained experts tend to go for elegant and expensive
improvements, but not necessarily any better improvements. Another disadvantage
is that the experts attack the most important processes first and work their
way through enterprise processes a few at a time, depending on how many experts
there are. With TQM all processes are subject to attention at any time. The process
owners naturally prioritize processes they own but even simple processes get
attention that are unlikely to be addressed in a Six Sigma approach until all
higher priority processes have been addressed.
An apparent disadvantage of TQM is that all employees must be
trained and therefore the training costs tend to be higher than for Six Sigma,
assuming only a few employees are given the full Six Sigma training. I believe
this extra cost is more than offset by the more comprehensive attack on process
improvement that TQM achieves and from the increase in employee motivation that
results from empowering employees to have control over their own processes. TQM
also requires a more careful introduction to empowering employees after they
have been trained. There must be boundaries to the empowerment and these
boundaries must be carefully communicated to the employees as they are
empowered. Otherwise employees adapt their individual definitions of
empowerment and some naturally expand the boundaries beyond what is acceptable
in an efficient enterprise that is under control. Obvious examples of items
employees are not empowered to change include recipes, standards and accounting
rules; changes of which must be handled very carefully and usually with
management involvement.
Exercise
This is an introductory lecture and no exercise is required
unless the student is unfamiliar with text book methods of control for
manufacturing, projects and service organizations and with the differences
between financial accounting and management accounting. If you aren’t familiar
with these methods of control and cost management then take the time now to
learn the basics. It is important to effective process improvement that changes
to processes do not violate sound basic principles. It may be frustrating to
put this course on hold while you study other subjects for several weeks but it
is beneficial in the long term. If you are familiar with these basics then go
on to the next lecture.
If you find that the pace
of blog posts isn’t compatible with the pace you would like to maintain in studying this
material you can buy the book “The
Manager’s Guide for Effective Leadership” at:
or hard copy or for nook
at:
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