This is a great study on the data behind the minimum wage. As we know, the President’s statement of people living on $15,000 a year if applied the minimum wage...
When a team completes a continuous improvement project, everyone feels a sense of pride and joy in doing good work for other team members and the organization. As the Lean journey continues, the question becomes how do we learn from our mistakes to become better and faster? The best way to do this is though project documentation for everyone to see, a project log. This is something that will produce many benefits for the organization. This is also an important task that is not utilized in many Lean and non-lean organizations.
Being the record keepers of financial data, accountants are best suited to assist the lean manufacturing team members to document both the financial and non-financial data of the project. This is due to the neutral status of accounting within the organization by not directly benefiting from the project’s performance through project performance bonus. Also, the accountant is perfectly suited to understand and calculate the direct and indirect impact of the project on the organization by having the ability to review the financial data in micro and macro views. Thus, any correlated financial impact will be gathered by the accountant and properly recorded.
Keeping in the spirit of continuous improvement throughout the organization, documenting the Lean continuous improvement projects will retain the knowledge and insights from the project team in a centralized database. In real time, the organization team members can learn from past projects to develop a project profile for either specific or general types of projects to be completed. This knowledge can be used to assisting in the current project duration, forecasting team member skills and future resource requirements, forecast team member skills and future resource requirements necessary to complete the type of projects required by the organization in the future, and project the future types of projects the organization will complete and their financial impact on the organization.
The first lesson learned is the true spirit of Lean which starts with the Voice of the Customer. This is the process of communication of give and take to ensure that requirements and expectations are clearly defined, documented, and understood by all parties involved. The log will have the aspects of the customer demand to allow for segmenting the data by customer or by the individual aspects of the Voice of the Customer. An example would be to include the critical to success (CTS) factor: Cost, Delivery, or Quality.
The next lesson learned is the overall Lean Assessment of the organization. With all the data collected from the continuous improvement projects, a quick and easy assessment of the data will tell if the organization is at an appropriate Lean Stage in its organization maturity life cycle for specific Lean tools and process improvement initiatives. This can be indicated by using various analytics or metrics. Some examples include how team members are using their Lean skills and tools, trend analysis on projects and team members, financial impact of segmented Lean projects and cumulative of all projects, and additional information from other departments such as the project hours and expenditures for Federal R&D tax credit.
When establishing the database for the Continuous Improvement Project Log (CIPL), a good rule is to start with more than with less. I provided some guidelines to assist with extracting the detail from the project teams to provide the true impact of centralization that will benefit the organization. The first area is to identify who initiated the project idea. This is important to collect because in a lean organization, we want the ideas to flow from the foundation of the organization, bottom-up then top-down. Thus, if your organization is Lean, you will experience a greater portion of projects originating from the pyramid base then top 1% of management (See Figure 1). This relates to the 14 principles of Lean from the Toyota Production System (TPS) (See Figure 2) which organization needs to build their own teams and allow for the teams members that are the closest to the customer initiate process improvements. Also, the foundation base has more people in quantity than top management, so by pure numbers, the foundation will provide more continuous improvement projects than top management and produce more favorable financial impact for the organization.
The next guideline is to list who participated on the team. This can provide significant insight into the metrics in a variety of ways. Looking at the data by department, we can see the participation percentage across the organization. This can assist in determining if the organization needs to allocate resources differently or assist particular departments with increased participation. Also, reviewing the participation profile by department may identify more resource allocation issues to assist with problem solving, i.e. is it the same across all departments. We can review the participation within each department using some of the human resources categories such as job description, seniority, education level, and demographics.
When looking at the hours and dollars expended, we can determine the complexity level of the project. The profiles for both hours and expenditures can provide more accurate forecasting of future project goals, durations, resources needed for best results and specific profile of the team for effective team management. The hours for individual team members can provide a list of top performers with continuous improvement projects, and as indicated before, provide a list of all the qualified hours and expenditures for Federal R&D tax credit.
By listing the STAR method (See Figure 3) to the project log will provide easy and standard reporting of project detail that is familiar to the team members due to its universal approach in many functional areas. STAR is an acronym for Situation, Task, Action, and Result. For example: S – Situation: This is the goal and problem statement for the project. T – Task: Detail of the assignments by team member. A – Action: Lean tools used during the project. R – Result: Conclusion and financial impact of the project. This unlocks the transparency of the project results to shine for everyone to view. We can review the project financial impact to assess the most effective and efficient uses of resources and how to prioritizing and apply for future projects. Also, the financial impact can be correlated by department, person, task, idea generator, etc. for additional analysis. Thus, we can view the results from Voice of the customer though the idea generation stage. This can be a very powerful document for identifying future projects and resource allocation.
Another area to consider is the Lean tools utilized during the project. This can validate that your teams are utilizing all the tools of Lean Six Sigma DMAIC Tool Kit (Define, Measure, Analyze, Improve, and Control) by project by team member. We do not want to use the same tools to fix every problem, i.e. become a “one trick pony”. With analytics and metrics, we can review the trends of the type of tools used and provide organization wide training to assist current and future teams in installing Lean solutions in an effective and efficient manner. We can also determine the tools not being used and ask the questions why we are not exploring such opportunities. There are many aspects in this area to consider and provide many benefits to the organization.
By initiating a Continuous Improvement Project Log, your organization will progress in your Lean journey. This will give you a reliable database to provide analytics and metrics for your Continuous Improvement team and your Lean organization. This is a better measure then a Lean Assessment since it’s a formalized process for the organization, avoids any subjective critique of the Lean process, and aligns with the Toyota Production System and the fourteen principles of Lean to become a learning organization though relentless reflection and continuous improvement. Tasking the accountant for the project record keeping will provide a neutral and financially understanding party to identify the project benefits and provide a database for future projects to utilize.
Let me know if this was valuable and something you would implement at your organization. Contact Information: email@example.com
Gary Kapanowski, CLSSMBB & Certified ASQ Lean Bronze professional, is cost accountant for Moeller Manufacturing, a leading aerospace part supplier, and Lean Six Sigma Master Black Belt Lecturer at Lawrence Technological University Professional Development Center. Utilizing experience with metrics and Balanced Scorecard, Gary earned the 2006 Financial Executive of the Year award from Robert Half International and Institute of Management Accountants. His current focus is to assist office workers with easy techniques for adopting lean in the office to eliminate waste.
As published from Journal of Cost Management, March / April 2016.