Strategic KAIZEN: A Story of a Chaotic KAIZEN and 2 Improvement Strategies

1) A Story of a Chaotic Kaizen at Board Meeting 

The history of my Strategic KAIZEN concept begins more than 15 years ago. I was on a visit to a company that had manufacturing and assembly as a type of production (manufacturing regime: repeated lot – machine shop, plastic injection and assembly lines).

Among other things, I witnessed a funny activity in front of a board meeting. A team of a kaizen project presented the results of a kaizen project for breakdowns (the problem: at an assembly line there were on average 6 mechanical breakdowns per month with an average of 360 minutes per month). The project team was very proud of the solutions and results obtained. The mechanical breakdown time has been reduced by half.

Then I asked three questions:

1) What is the sales trend in the next 12 months?

2) What is the average working time to make quality products of the line in the last 6 months?

3) What is the cost and profit impact of this kaizen project?

They said that the sales trend is decreasing for the products of that line and that the average OEE for the last 6 months was 64%. They said that the costs have been reduced but they could not say too many pertinent details and that the breakdowns do not affect the quality of the products.

Then I asked:

Why was this kaizen project chosen to increase the line's effectiveness and capacity against the background of decreasing sales trends?

They said that in their culture each department must come up with proposals for improvement projects at the beginning of the year and then lead them to implementation. They considered the kaizen project for mechanical breakdowns to be important.

But was that kaizen project really good enough?

Hasn't the opportunity to choose a more profitable kaizen project been lost?

A more detailed analysis found that the resources allocated to the kaizen project and the results obtained due to declining sales were not a feasible kaizen project and that the opportunity cost was affected. Moreover, the costs did not decrease as a result of this kaizen project, but they increased slightly as significant sums of money were allocated for line subsystem replacements. In fact, unit profitability has declined.

After a while they came to the conclusion that they needed a strategic approach to Kaizen's projects for the target profit.

That's how I started to develop my concept of Strategic KAIZEN applied intensively and already published in my 4 books so far.

So, Strategic KAIZEN is paramount because just Kaizen, Kaikaku, Gemba Kaizen and other traditional ways of making improvements are no longer enough.

I explained these in one of my books: ”For example, in the context of reducing sales volumes, the reduction of manufacturing unit costs could not be achieved if a project to improve equipment effectiveness for Manufacturing Cost Improvement (e.g.: reduction/elimination of breakdown losses) is planned and implemented on a background of equipment already at overcapacity. The unnecessary increase in equipment productivity at that time by improving equipment effectiveness, in the context of a decrease in sales volumes for the products made with the equipment, could even lead to an increase in manufacturing unit costs, an increase due to the project costs for the equipment effectiveness improvement (reduction/elimination of equipment breakdown losses)”. pp. xxv-xxvi (Posteuc?, 2019).

2) Strategic KAIZEN: 2 Basic Strategies for Manufacturing Cost Improvement (MCI) to Support External and Internal Manufacturing Profit

Depending on the probable trend of sales, increasing or decreasing, for the whole company or for certain products, a company can choose the Strategic KAIZEN projects as follows:

- aim at focusing on fulfilling the multiannual and annual manufacturing target profit, especially through external manufacturing profit through maximizing outputs (“E”) - the predominant need for productivity growth by improving effectiveness (reducing losses- not effectively used input); or

- ”aim at focusing on multiannual and annual manufacturing target profit fulfillment, particularly through internal manufacturing profit through minimizing inputs (“I”) - the predominant need for productivity increase through improving efficiency (waste reduction - excess amount of input).”. pp. xxxvii (Posteuc?, 2019).

In my third book I presented 15 real and detailed projects of Strategic KAIZEN and KAIKAKU to achieve the Target Profit:

"Examples of annual MCI means implementation, implementing the KAIZEN and KAIKAKU annual strategic projects for MCI, will be presented in Part Two and Part Three of this book." p. 137 and from p. 177 to p. 286.

”(...) and by planning, deploying and implementing the Strategic KAIZEN and kaikaku projects for MCI (step 4: annual action plan for MCI for each PFC).” p. 137 and from p. 145 to p. 146;

”The pressure increase in annual Manufacturing Cost Improvement means targets of the 9 Strategic KAIZEN projects”. p. 160; 

”Stake to improve CLW associated with people cycle time reduction at an assembly lines: 25% of annual MCI goal (third place as weight; two Strategic KAIZEN projects were selected out of the seven to eliminate bottleneck on the line; one of the kaizen projects for bottleneck removal was on line 2).” p. 198;

”Stake to improve CLW associated with breakdown time elimination: 35% of annual MCI goal (first place as weight; one Strategic KAIZEN project was selected out of seven); p. 205;

”Stake to improve CLW associated with set-up, settings, adjustments, time improvement: 15% of annual MCI goal (third place as weight; one Strategic KAIZEN project was selected out of seven).” p. 211;

”Annual MCI goal: $14,500,000; (...) Stake to improve CLW associated with line 2 lead time reduction: 6% of annual MCI goal (sixth place as weight; 1 Strategic KAIZEN project was selected out of 15)”. p. 265.

3) The concept Strategic KAIZEN was published in the 4 books

• Manufacturing Cost Policy Deployment (MCPD) (3 books; 2017, 2018, 2019);
• Speed-Based Target Profit (SBTP) (1 book; 2020).

The concept of Strategic KAIZEN has over 20 practical applications and over 230 explicit appearances in the texts of the 4 books.

Thank you,

Dr. Alin Posteuc? – CEO, Exegens; the author of the concept of Strategic KAIZEN, the MCPD system and the SBTP paradigm.

4 Books on Strategic KAIZEN: https://lnkd.in/gtGNWtJ

#mcpd #exegens #strategickaizen #sbtp #Lean #kaizen