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The Importance of Lean Continuous Improvement

time clock 9 min read • October 29, 2020 lean continuous improvement
carl waddill

Carl Waddill

Evocon Partner

The importance of lean continuous improvement (LCI) is the extent to which it has transformed the way that manufacturers operate. The mindset that lean continuous improvement embodies drives ever-higher performance levels through its iterative approach for realizing incremental improvements.

What is Lean Continuous Improvement?

Before we begin a note about our use of the term ‘lean continuous improvement’.

In this article, we are using lean continuous improvement (LCI) as an umbrella term synonymous with continuous process improvement, process improvement, business process management and continuous improvement.

We acknowledge that technically speaking, these terms have different meanings. For example, Lean is a philosophy that includes continuous improvement (Kaizen). We are using it is an umbrella term due to our experience that in practical use on the shop floor, the terms have a considerable amount of overlap.

That said, we explore the importance of LCI by answering the following questions.

  • What is lean continuous improvement, and where did it come from?
  • What is Kaizen, and how does it relate to PDCA?
  • Why is lean continuous improvement significant in manufacturing?
  • What are the benefits of lean continuous improvement?

Origins of lean continuous improvement

The origins of lean continuous improvement began after Frederick Taylor’s scientific management principles were widely adopted during the industrial revolution. Industrial production capacity increased rapidly. Manufacturing companies leveraged massive economies of scale and pushed the limits of vertical integration. These dramatic changes generated wealth on an unprecedented scale.

Factory workers enjoyed rising wages. However, the widespread practice of standardization and minimization of repetitive and tasks served to deskill, marginalize, and limit their contribution. Workers were told what to do and not to think about how to improve the work. Using workers’ ideas as the basis for improvement was out of the question.

Process improvement was the preserve and privilege of management. As you can imagine, removing the shop floor from the improvement process also excluded the valuable direct knowledge of the production process itself. Decision making suffered as a result.

The problem was widespread enough that a young engineer, Henry Gantt, broke ranks with his mentor Fredrick Taylor. In 1901 Gantt presented his ideas to the American Society of Mechanical Engineers. He advocated for ”paying liberal compensation for improvement of work and offering special inducements to workers.”

This reintroduction of the worker into the improvement process is arguably the beginning of modern lean continuous improvement.

Early pioneers

Early pioneers of lean continuous improvement were National Cash Register and Lincoln Electric. Their stories are remarkable as the systems they created were profoundly ahead of their time.

Of these early pioneers, the most progressive and successful program was at Lincoln Electric. The plan was so successful that it resulted in workers being “over-paid,” according to the U.S. government that first attempted anti-trust litigation. Ultimately, the government filed suit under the war powers act and dismantled the system.

In an ironic twist, the U.S. Government went on to mandate that the Japanese use the same system that Lincoln had developed. This mandate directly led to the rise of the Japanese quality movement and laid the groundwork for Kaizen and the Toyota Production System.

Source: Adapted from America’s Most Successful Export to Japan: Continuous Improvement Programs, MIT Sloan Management Review (1991)

Why Lean Continuous Improvement is Important

Modern manufacturing is a network of interconnected processes. It is these processes that form the operational system for the production of finished goods. Often these processes cross departments, work cells, and unofficial “silos.”

The complexity means that improving processes can be complicated. Indeed, improvement requires a disciplined methodology and sustained effort. In other words, it can be challenging work.

A welcomed challenge

The reason manufacturers embrace the challenge is because successful improvement programs are highly beneficial. These benefits, which we explore in further detail in the next section, help explain the importance of lean continuous improvement, but there is more to the story.

Lean continuous improvement is essential because:

  • Customer loyalty is primarily driven by the delivered value of a product or service.
  • Value creation and delivery is the output of business processes.
  • Consumers have grown to expect improvements to delivered value in highly competitive markets.
  • To continuously improve delivered value requires businesses to improve their value creation processes continually.

Thus, lean continuous improvement is a means of survival in the modern global economy.

Opportunities for improvement are limitless

All manufacturers and businesses have opportunities for improvement. The most evident and well-know are improvements that:

  • Decrease manufacturing defects
  • Lower scrap cost
  • Shorten cycle times
  • Reduce lead time

Many other areas exist as well, such as improving:

  • Workforce cooperation, engagement, morale, and job satisfaction
  • Managerial practices
  • Better product design by including a feature that meets consumer needs or increases reliability and productivity
  • Improve industrial process productivity by examining ways to reduce employee ‘wait’ time or ways to minimize any unnecessary movements

The Benefits of Lean Continuous Improvement

Lean continuous improvement programs unleash employee experience and creativity to improve both products and processes.

According to CMTC, manufacturers that have successfully adopted lean continuous improvement often realize numerous benefits such as:

  • Increased productivity
  • Improved quality
  • Lower costs
  • Shorter lead times
  • Higher levels of employee engagement and morale
  • Less employee attrition

Other benefits include:

  • Greater efficiency
  • Fewer defects, errors, and scrap
  • Increased innovation
  • Increased profitability

As we see in the list of benefits above, success with lean continuous improvement in manufacturing leads to a wide range of benefits. Moreover, these benefits are often multifaceted and additive to one another.

The additive aspect is worthy of exploring, as it indicates a common thread that exists amongst all benefits. This commonality explains why each benefit tends to serve the others. For example, improved quality leads to increased productivity, which leads to lower costs and shorter lead times.

Increasing delivered value

Increasing an organization’s value creation abilities is what lean continuous improvement is all about. To remain competitive, manufacturers must consistently strive to deliver the highest value to its customers.

Lean continuous improvement is a proven means of accomplishing this goal, and this is precisely why it is vital to manufacturers.

Higher levels of customer satisfaction

What product features are customers willing to pay for? What steps in your production process would your customer deem to be of value?

Fundamental to LCI is understanding your customer’s perceptions of value.

Answers to the above questions and other similar questions guide manufacturers to accentuate and improve the things that they do (that create value). Similarly, they guide us to eliminate or minimize anything that is non-value added from the customer’s perspective. Anything that is not adding value is waste.

It follows then that by reducing waste and improving sources of value creation, you also improve the end product. It is this improvement in value that leads to higher levels of customer satisfaction.

Kaizen

Kaizen is Japanese for continuous improvement. It embraces the idea that continuous improvement involves everyone and makes no distinction between workers and managers in this regard.

Three pillars form the foundation of Kaizen:

  • a company’s most valuable asset is its people;
  • quantitative analysis of process data is the best basis for improvement;
  • processes that evolve through small, incremental improvement are superior to those born from radical change.

Why is incremental change better? 

Breakthrough innovation or radical changes are so dramatic and evident that competitors are aware of them and can copy them with relative ease. For example, Uber’s breakthrough change introduced a mobile app to hire a driver instead of calling a cab. Uber’s competitors, such as Lyft, and Bolt, soon adopted these breakthrough innovations. Another example would be the iPhone.

On the other hand, small incremental changes remain protected. They are proprietary in nature, and besides, each little improvement is hardly worthy of the business world’s collective attention.

Over time these small changes add up to significant improvements in a company’s ability to create value. With knowledge safely inside the company, they can enjoy an advantage in the marketplace from having a superior process. Or at least it takes longer to find its way into competitor’s processes, and it is probably rare that it ever will.

PDCA – Plan, Do, Check, Act

pdca
pdca mobile

At the core of Kaizen is the PDCA cycle. After working with W. Edwards Deming in the 1950s, the Japanese incorporated a methodology they referred to as the Deming Cycle into Kaizen. Since then, part of the Kaizen philosophy is the use of the Deming Cycle to guide and motivate improvement activities.

PDCA stands for the four stages of the improvement cycle: Plan, Do, Check, and Act.

Learn more: What is PDCA? 

Conclusion

In this article, you have learned why Lean Continuous Improvement (LCI) is essential to manufacturers. You should be able to explain:

  • What LCI is and origins?
  • What Kaizen and PDCA are, and the steps are involved?
  • Various benefits of a successful LCI program.

The next step is to keep learning more or to begin transforming your improvement efforts with a free trial of Evocon. Evocon harnesses your process data through automation and visualization. The result of the automation is faster improvement cycles, which means more improvements can be realized without adding additional resources and time.

Sources

  1. H.L. Gantt, “A Bonus System of Rewarding Labor,” Transactions of the American Society of Mechanical Engineers (1901)
  2. J.F. Lincoln, Lincoln’s Incentive System (New York: McGraw-Hill, 1946).
  3. Schroeder, Dean M., and Alan G. Robinson. “America’s Most Successful Export To Japan: Continuous Improvement Program.” MIT Sloan Management Review, 1991, https://sloanreview.mit.edu/article/americas-most-successful-export-to-japan-continuous-improvement-programs/.