What is the importance of a Continuous Improvement (CI) program? And how can a company that adopts such program can benefit from it? This is the case of a large 500 Life Science Distributor, that achieved success by the sheer decision to implement CI
Written by: Adrienne Pelleg, Tefen's PA, with the collaboration of Maria Silva, Consultant
"A continual improvement process, is an ongoing effort to improve products, services, or processes. These efforts can seek 'incremental' improvement over time or 'breakthrough' improvement all at once." (Wikipedia)
In an early Tefen article, we've written about Continuous Improvement (CI) programs, and explained what they are and the way they work. To sum, the constantly changing markets, technologies and culture, affects customers' preferences and their economic behaviors. As a result, many organizations are struggling to keep up with these fast-paced changes. This leads companies to work harder, longer, spend more money – all with little success in gaining a competitive advantage.
This raises the thought, that organizations and their operations need to change. Therefore, companies need to take a look at their processes, and see if they may become obsolete or may need some changes – just like some technologies might.
A robust Continuous Improvement program enables organizations' processes and culture to change and improve. Embedding a CI culture into an organization’s DNA will allow it to remain current and nimble enough to successfully change with, rather than react to market conditions.
The client, a Fortune 500 Life Science distributor, wanted to create a culture of Continuous Improvement (CI) throughout their organization, embracing the pillars of quality, efficiency, and self-sufficiency. The company had (and still has) eight distribution centers (DB), or else called "sites", and it sought to implement the CI culture in all of them. They asked Tefen's help in the implementation of the CI plan.
Management knew the company was embarking on a culture change journey, which would impact the company for years to come, as they aimed CI to be embedded in the company’s everyday fabric.
Initial in-depth diagnostic work revealed network wide improvement opportunities as well as site specifics ones, with the sites not necessarily having identical issues.
The client decided, from the network perspective, to focus on significantly reducing damage costs incurred annually. The secondary focus of the CI launch should be determined by the individual distribution centers as they prioritize site needs and projects.
As in most CI cultures, small incremental steps can lead to systemic cultural change. By assessing their existing culture, the leadership team decided to look for tangible, quick, local and impactful wins to encourage their workforce by showing the benefits and positive changes that can transpire. This is due to the fact, that quick Wins are part of the project plan to encourage employees, as they see tangible outcomes.
Launching a brand new continuous improvement program requires a careful consideration of the initiative’s architecture, staffing considerations as the CI core team is built, detailed rollout plans, communication plans, and target goals (many companies need to prove ROI on the project). Plus of course, providing the right platform for all sites to share and utilize best practices on a systemic basis.
The framework: The client determined the optimal executive oversight and leadership hierarchy, realizing robust executive sponsorship was a key to CI cultural entrenchment. The champion team, roles and responsibilities, territories and communication plans were formulated.
1. The champion team and network: The client elected to start the CI program with pilot sites, and use these sites to train the team as CI leaders were onboarded. At each site, Tefen and the CI leaders conducted a diagnostic assessment, using qualitative and quantitative data to determine site needs. Energetic site management prioritized initiatives and dedicated work streams. Teams began digging into root causes, garnering data, generating peer opinions, and socializing CI activities (letting peers know what is going on and getting input from colleagues).
2. Tools: Lean tools mastered by the CI Managers included multiple observations studies, process mapping, root cause analysis, SIPOC mapping, spaghetti mapping, root cause analyses (fishbone and prioritization exercises), plus more. CI leaders mastered the tools and are now training their use to others in the company. Leaders led kickoff meetings (both for all site employees and individual work streams), work stream teams, and became site partners in the CI journey.
Pilot sites results were formidable. Not only was an entire Continuous Improvement infrastructure created and a team established, but many projects gained significant traction.
Sample successes include:
* Realized network cost savings on internal damages – $11M in the first year; ROI at the end of year was 1 to 30
* 29% decrease in internally damaged product occurrences
* 25% reduction of overtime, leading to efficiencies and head count reduction
* Added focused, critical KPIs
* Right First Time at DC site increased from 83% on average to 94%
* 62% error reduction on Automated Picking System
* 92% decrease in unsigned returns paperwork sent by the customer, significantly minimizing rework loops
* Wave replenishment improved by 70% at DC
* Established tiered communication routines
* Developed more robust, interactive town hall meetings
* Built new communication and management routine infrastructure
* Ongoing efforts continue after project's end: internal damages reduction, case pick
* APS (Advanced Production and Scheduling) error reduction by 62% in Midwest DC