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What is Organisation Design?

feyiz —  December 23, 2014 — Leave a comment

You could start with a question perhaps, to build up the basis of the story. A question like: “How many patent applications did your esteemed company made in the last year?” How do you manage your NPD processes? After all, new products do not just fall out of the sky, they require a well-structured methodology that, in very broad terms, transforms ideas and concepts into detailed design with engineering specs followed by testing and refining and finally resulting in a new product.

Efficient management of NPD processes is a prerequisite for obtaining the best outcomes from NPD and an effective methodology would help you to achieve them. This is where System Elements step in. (Please see the visual below)

gotogemba_NPD_everst_2 

1.We all know the phrase that an organization is as good as its people. But it is in our hands to build a structure for our organization which is flexible, goal-driven, and clear enough in order to take the best out of our people. For that, an organization needs Leadership, clear identification of tasks, a highly-efficient working environment and involvement of all employees. Leadership is crucial for providing both short- and long-term road map for all the shareholders in the organization. A good road map eliminates bad decision-making and helps the company to focus on what really is important. Tools such as Hoshin Planning help companies to build business objectives through systematic planning and methodology and by communicating these objectives throughout the company and by closely monitoring their status there should be no question in employees’ mind about the next step which the organization would take.

QUOTE FOR INSPIRATION: “Where do bad decisions come from? Mostly from distortions and biases – a whole series of mental flows – that sabotage our reasoning. […] Though we cannot get rid of them, we can learn to be alert to them – monitoring our decision making so that our thinking traps don’t cause judgment disasters.”

Combining good leadership with precise tasks and roles, confusion would be cleared away. Assume an absurdly simple tool such as a Project Charter. If you fill it with vague information about what will be done in a new product project without defining the scope, deadlines, expectations, the whole project team would be running around asking questions “OK, I’ve done that, what’s next?”. And that would be a waste of resources. A project charter must be supplemented with a RACI which basically defines every person’s roles, responsibilities and accountabilities. But these are not “bullet-proof”. What happens if there is a little bump on the long road of new product development? Every step taken should have a B-Plan, an OCAP (Out of Control Action Plan) which is to be used when a problem occurs during the process. It should clearly define our reaction to possible problems similar to a process flow and drives us to investigate the reasons of the problem through integrated problem solving.  What we have talked so far are merely baby steps for a high performance work system.

2.While strengthening the organization structure on one side, we also lean over the engineering process to make it more robust. Your methodology should deal with the new product development in four main pillars (elements): robustness in development process, in manufacturing, in usage period and a quicker time to market. Firstly, you must find a way to transform what customer wants into product characteristics. That is listening to the voice of the customer. You have to deliver the products that the customer wants; otherwise you can throw away all our designs to the trash because the customers won’t buy them. Also you should learn from our past mistakes. Post-Mortem analysis of previous projects would provide you ample empirical knowledge by collecting historical data and analysis of prior projects, creating a project-based learning technique. Then you have to convey the past knowledge into the current designs, evaluate it with respect to different inputs, factors so that it would be robust and serve customers’ need without failing. When used in complementary with each other, P-diagram and design FMEA are useful tools where you would be able to see the effects of the different contributors to the design. You have to be careful and very thorough during design development and cover all the bases. If not, you would face lots of iterative turn-backs to design development during manufacturing which would make the whole process a nightmare. That said, a designer’s job does not end when the design is finished. The design cannot be thrown over the wall to manufacturing for them to complete the new product. A collaborative approach is needed between departments in order to create a fail-proof environment during the manufacturing process. Problems are inevitable but it is our responsibility to monitor the current status closely, detect errors and eliminate any errors through root cause analysis. It is the definition of Poka Yoke.  Another crucial item is to increase the productivity of production. By establishing a cellular manufacturing environment wherever possible, the level of outputs would be optimized. But for cellular manufacturing architecture we need modularity in the process and product design.

It is a necessity to manage the NPD process throughout the product’s whole life cycle. The life-cycle of course includes the in usage period. Your methodology needs to concern with building a solid infra-structure for post-production. You should integrate necessary tools into an “After Sales” service covering all bases. Service FMEA would prove itself to be a powerful tool to analyze and act upon the possible failure modes that might happen in post-production.

 All the effort you put into the design, manufacturing and in usage period is basically for two things: Robust designs and Rapid Time to Market. Rapid time to market should be focal point when we establish a robust design and we cannot quicken time to market if the design/product is not robust. It is a continuous loop and requires elimination of all kind of wastes. Value stream mapping would help us to identify where the waste lays and value stream design builds an environment waste-free. On top of that, the most powerful tool to quicken time to market is the capability of parallelizing functions/tasks which would enable the completion of sub-tasks simultaneously. This is so-called concurrent engineering, which requires a lot of effort especially at the beginning of projects but with a clear organization structure, with precise tasks and roles it reduces the time elapsed and increases the quality of performance. Supplementary tools such as SIPOC maps a high-level process diagram which starts from the customer and move back to the suppliers.

3.Once a new development project is over, what do you do? Just forget everything you have done or try to maintain standardization? At this point, you should be interested in product related standardization and process related standardization.  And on top of them, as a knot that binds these elements, we have Knowledge Management.

Considering product related standardization, architectural modularity/platforms in designs should be more or less similar to modular design. This type of modularity combined with element commonality not only provides standardization across designs and production but also reduces the time to market since we will not start from scratch in every single project. Different modular product components constitute specific parts of a project and these modular components can be used in similar projects which share common processes and knowledge. A modular architecture makes standardization possible through common components and interfaces. This can be enjoyed both in terms of economies of scale (since standard components would be manufactured in high volumes) and of ease of product change (when there is a need to upgrade, add-ons or a need to change components due to wear and consumption). Modularity also enables decoupling of interfaces which is determined by defining functional tasks that allows design and production activities to be specialized and focused.

 Similar to the rationale of modular product architecture, commonality is described as the level of asset-sharing within different products in a product family.

Product related standardization should be achieved simultaneously with process related standardization. We need standardized processes that are independent of the individual, so that if someone with high experience leaves the process would continue without faltering. This type of standardization could be achieved through standardized work place documentation, standardized material supply and standard control points where In-process control could be conducted.

And all this effort in standardization should be managed. We have to transfer the standardized knowledge and convert know-how so that every single related employee in the organization could access to it and understand it. At this point, visual management tools are very helpful.

4.Once again even if the design is over, the product is sold and every step is standardized, it does not mean that we have reached the ultimate perfect state. That state does not exist. Instead we have to continuously improve the overall process bit by bit, estimating problems before they occur and eliminate them, make the process leaner and waste-free.  Continuous improvement starts with the start of the project and unlike the project itself it never stops. Accumulating problems at the end of the project serves no purpose; on the contrary it is a waste of time and resources. The objective must always be to achieve the best possible outcome. As a high-volume manufacturing company tries to achieve six sigma level in their process outcomes, we must demand the same standards in our processes by designing them for six sigma. Design for Six Sigma is a means of developing, or improving products that enable Six Sigma Level of performance in production while focusing on customer satisfaction and robustness (An outcome of DFSS is that the product can be produced at predictable levels of costs and risks).

In addition to these, we have to see what the competitors are up to, what are the best practices and most importantly where do we stand? We must be able to assess ourselves with the comparison of what we targeted and what we have actually achieved. And that’s an effective Management System.

The last key element of Your Innovation Methodology is to be to create and sustain stable processes. Continuous improvement is not possible if your processes are unstable in the first step and stable processes are not possible without continuous improvement. It is again a closed loop. We always have to assure that the quality of our outcomes in various steps of the process is stable and matches with the objectives. Using quality loops and applying its tools would ensure that we always deliver at the desired performance level. Detecting gaps in the flow of the process, analyzing the reasons of instability and prioritizing actions to overcome the gaps are means to achieve the desired state.

Now, all the methodologies and elements and tools we have talked so far would be impossible to implement all at once to any organization in the blink of an eye. It would be too much to absorb too impossible to implement. Therefore we need a structured way to break the methodology into manageable parts.

The first thing to start with is to provide you with the “Short Term Focus”. Management system that I have just talked about is an efficient reporting and control mechanism that would allow you stay on track. In addition to that, short term focus is enabled by short controls which are basically check points designed for the specific characteristics of the process.

And then we move to the “Single Tool Approach”. As I said it would be too much to handle with all the methodology and tools so instead we ease our way in with the introduction of core tools such as Value Stream Mapping and Value Stream Design, fast issue problem identification, root cause analysis. You must remember that these studies must run in parallel with each other. You cannot identify a problem in the value stream and just leave it there to be. You have to determine the root cause and design the stream in such a way that it would be problem-free.

Next comes the “System Approach” in which management tools such as supplier management, CRM, MSA (Measurement System analysis), DFSS are integrated into existing processes on a higher scale to provide smooth transitions between the stages of the methodology.

5.If an organization truly embraces and owns the improvements itself then standardized and consistent utilization is possible. Then the next stop would be to maintain operational excellence through knowledge management, creating a self-learning environment and an attitude of always being customer-centric.

Field management absolutely requires hard work and big effort. Management of all employees and all the on-going daily life under the constant pressure of providing productivity from the upper management is quite a substantial task. On top of that, high quality expectation creates more and more weight on the people especially who are in charge of delivering the results.

Management of the field via right tools with appropriate KPIs will convey your organization to success. The thing which should be born in mind is that the ultimate target should be to achieve a structure in the field where the shop floor people would be able to manage themselves autonomously. No Line Manager, No Executive Chiefs, no pushers. Only empowered employees, team leaders and supervisors. By setting right tools and KPIs you will be able to achieve this structure, which now seems a “will o’ the wisp”, though it is not actually.

We cannot say that there is a de facto tool-box approach for field management that is applicable to every single environment, since the requirement of different organizations varies. However there are tools which have proved themselves, and are ready to be used.

In order to create a proper self-managed shop floor phenomenon, basically we need six tools, which are stated as “*Field Management Blocks”; namely, Standardization, Communication, Layered Process Audit, Problem Solving, On-Time Reaction and On the Job Training. Additionally KPI Management and Employee Empowerment are the key components, which complete the whole picture.

Field Management, gotogemba  Management System

Field Management, gotogemba Management System

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You set your goals, everything seems all right for the middle management and for the white-collars, the targets are known. How about the blue-collar employees? How much do they aware of the future and today of the company?”

Target deployment is the basics of “Management by Objectives”. It’s an effective tool to deploy company’s objectives to the whole organization. The main objective of target deployment is to identify, implement and follow-up the company’s objectives systematically. Unfortunately, in many companies, targets are not deployed from top management to lower levels. If blue-collars are lucky, they pick up the targets from time to time.

Target deployment is very important in terms of providing to speak same language in between the field staff and senior management. Additionally, it brings a systematic approach to the company targets. We can say that the flow of information becomes leaner and target follow-up becomes much easier. As a result of all of these employees, no matter what stages they are in, will be aware of their contributions to the success of business and make proud of it. This awareness provides the motivation,which is essential for efficient operation.

However, there is an important point which should be kept in mind regarding target deployment.Do you think that it is enough to set the targets annually? Absolutely not! Targets should not be live alone in a wall panel somewhere in the production area until turning to yellowish group of papers. The key implementation is to follow up the targets in short intervals, questioning them and make sure that they are understood by the employees.

What should be the base of Target Deployment?

The principles of a company can be set by identifying its reason of existence (mission) and the future state where it wants to position itself (vision). The vision & mission concepts put forwarded by the company are completed with the company values and vision and mission can be achieved via the strategy the company created.

Vision, mission, values and related strategies can be managed by creating breakdowns in the targets.The balanced scorecard is a simple and unique tool can be used to catch the desired level.

Starting point is to establish the balance score card. BSC provides company organization, to transform per-determined targets into actions to achieve vision and mission.

The targets which are created in respect of vision&mission are grouped under four strategic areas, and being detailed from top to down. The key question here is “How the vision will be accomplished?”

The four strategic areas are named as, “Financial”, “Customer, “Business Processes” and “Employee” perspectives.

The answer to the question, how to achieve the vision in terms of financial perspective, should be able to provide logical and numerical data. Increase the sales revenues €2.000.000 in next three years would be a good example.

In respect of “Customer perspective ”; development of loyal customer relationships, for “Business Processes Perspective ”; improvement of operational excellence, the decrease of field failure rate by %8 in three-year, would be some noticeable examples. Ultimately, regarding “Employee” perspective, personal development of each single employee and empowerment of them are worth to take into account.

Above mentioned four strategic perspectives are the core components of the BSC. Key Performance Parameters are derived from these titles.

How to deploy the targets?

All Targets and related KPIs should be delivered relevant department heads in the beginning of the year.

Determined targets should cover short, mid and long-term planning duration.Short term can be defined as one year, mid-term as one to four and long term as four to ten years duration.

Undoubtedly, blue collars will not pay attention to the targets more than one year, but the middle and top management have to know them clearly.

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Which tools are needed for Target Deployment?

The answer is quite simple, establishing the KPIs and follow up.

The best way of establishing KPIs would be using KPI tree systematic. From top to down follow up, it will help you to determine the KPIs and their breakdowns. Additionally, It provides to see the big Picture.

KPIs are derived from business objectives namely, quality, cost, and delivery. The first step is establishing the first level of KPIs. The first level of KPIs should be the parameters which are used for measuring the overall performance of the company and followed up by the middle and top management. They do not need to compromise all details of the sub-KPIs.Second and lower levels of KPIs are directly derived from the upper levels.

The process starts with the routine follow-up of the targets by both white and blue collars.The determined KPIs should be delegated to employees by management. Targets and KPIs should be transparent and clear and should be handed over in written as well.

White collars can follow-up the KPIs via e-mails or from the wall panels.However, in order to inspire the blue collars and motivate them through the right direction, “ Target Deployment Card” implementation is the tool which is perfectly suited.

Target Deployment Card should include KPIs for blue collars and the targets as well. Monthly results are written on the cards by employees and are reviewed with their managers.Thus, employees will be able to see their contribution to the company success and follow up their performance.

Target Deployment Card for Blue Collars:

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