In an inflationary economy, one of the best ways to improve productivity and the affordability of your products and services is through continuous improvement. Organizations that make it a priority generate extraordinary returns on their investment that beat inflation. Although continuous improvement is driven and measured by metrics, there is a deeply personal element, too. When your staff buys in and company culture encourages it, earning the benefits of continuous improvement becomes a natural part of business.
Numerical and personal aspects of continuous improvement go hand in hand. To help your company’s continuous improvement program grow, start by measuring your current level of effort. One method is to calculate your continuous improvement index. This is a reliable indicator of continuous improvement success and is defined as the number of implemented improvements per employee per year. The higher the index, the more successful the program. Although the index does not show the results in terms of productivity gains or financial savings, it does provide a window into how well employees are embracing continuous improvement and management’s commitment to continuous improvement. Thus, it is more of a leading indicator.
To calculate your continuous improvement index, first ask two fundamental questions:
- How many employee suggestions did your organization generate last year? This assesses employee engagement.
- How many of those suggestions were implemented last year? This evaluates corporate responsiveness.
To find the number of implemented improvements per employee in the course of a year, follow this process:
1. Divide the number of suggestions generated by the total number of employees. Let’s say a company with 50 employees received 100 suggestions last year: 100 / 50 = 2.
2. Find the percentage of suggestions implemented by dividing the number of suggestions implemented by the number of suggestions generated. Perhaps the company in our example implemented 20 of the received suggestions: 20 / 100 = 0.20 or 20%.
3. Multiply your answer to step 1 by your answer to step 2 to find the number of projects implemented per employee: 2 x 0.20 = 0.40.
According to the American Productivity and Quality Center, the average rate of engagement in the United States is one suggestion submitted per year for every seven employees, and only 20% of these are implemented. Following our above calculation process, this translates to (1 / 7) x 0.20 = 0.029 implemented improvements per employee per year. World-class organizations such as Toyota and Exxon Chemicals implement more than 40 improvements per employee per year.
Add in personal insights
Start your continuous improvement efforts at the frontline because this area usually is closest to your main product, process or customer. Involve frontline employees so they can help identify pain points. Ask them to document their typical workdays by listing their regular activities and the amount of time spent per activity in minutes. Use a simple spreadsheet-based daily activity journal, such as this one.
Have them rate what portion of the activity in minutes is a value-add or something a customer would pay for. In other words, does the activity improve the quality of the product or service? Does it help you deliver it faster? Any portion of the activity that does not meet one of these criteria can be considered a non-value-add or waste. Examples of waste in an operation include mistakes and rework; waiting; walking; searching for information, tools or supplies; and grappling with equipment problems.
The amount of time for the value-added portion of the activity plus the amount of time for the non-value-added portion of the activity should equal the total time for the activity.
Next, rank each wasteful activity using a severity-frequency scale. Severity is defined in terms of the impact on time. For a severity-frequency scale, use three severity levels:
- Low-severity activities account for only a minor impact with one or two minutes of waste.
- Medium-severity activities have a moderate impact and account for three-five minutes of waste.
- High-severity activities have a significant impact and account for six or more minutes of waste.
Frequency is defined in terms of occurrence. For a severity-frequency scale, use three levels of frequency:
- Low-frequency activities happen once a week or less.
- Medium-frequency activities happen two or three times per week.
- High-frequency activities happen four or more times per week.
Projects with both high severity and high frequency are legitimate pain points.
Once you’ve analyzed the activity data, empower your employees by allowing them to choose the continuous improvement projects to implement. Although some may be resistant to any change at all, remind them that these improvements will make their work easier, safer and more efficient. Then, encourage your workers to start with minor improvements that can be implemented by an individual within a day or so.
Alternatively, you can conduct a kaizen event — or an accelerated continuous improvement effort that lasts two or three days, during which actual changes are implemented. Whatever improvement process you choose, keep in mind that the goal at first is to have employees apply continuous improvement tools and techniques, see results, and be inspired to start changing your company’s culture regarding continuous improvement. Then, your company can unlock the financial and operational benefits of high-performing processes.
Click here for an example of a daily activity journal. Feel free to make a copy and use the template at your own organization.
Learn how to provide your team with the knowledge, processes and tools to streamline supply chain operations. Visit the ASCM talent development page.