Today’s management model review covers Kaizen/Gemba.
Kaizen/Gemba is all about eliminating waste. Waste reduces margins. Time spent dealing with waste is time not spent on profit-generating activities, so by successfully working through Kaizen/Gemba and reducing waste, we should see improvement in margins, sales volume, and other metrics.
The 5 Fundamental Elements of Kaizen/Gemba are:
2) Personal discipline
3) Improved morale
4) Quality circles
5) Suggestions for improvement
These 5 elements are supported by Kaizen events – forums for employees to discuss possible solutions to business problems, or to suggest general improvements or changes.
There are 7 Primary Areas of Waste in Kaizen/Gemba:
1) Defective products
5) Excess inventory
7) Extra processing
Steel distribution hits on all of these! And we’ll be looking at them in more depth in tomorrow's video, but here’s some highlights:
How much time is wasted on claims? How could your claims process be streamlined or improved? What are you doing with your vendors to ensure product integrity from manufacturer to customer (incl. processing and handling)?
Excess inventory means people cut pricing aggressively when they need cash, to avoid year-end inventory taxes, or simply to get the product moved as replacement costs drop. How is your procurement strategy contributing to this type of waste?
When did you last competitively bid your trucking and other logistics costs? When was the last time you asked your vendors to look at those as well?
Pipe hits the docks. An upsetter goes down. Truck gets lost, breaks down, and so on.
PE, or bare pipe in inventory? This raises questions at both the product management level, and the sales management level. It may also be that these two departments / individuals are not communicating effectively.
How quickly and efficiently does the product move from manufacturer to processor, to customer. Where do errors commonly arise, and how can they be mitigated or eliminated?
Prove up, threading or heat treat rejects, bad ends, dents, no drifts. As a manufacturer, what are the gaps in your QC policies that result in these issues? As a buyer, do you have an efficient way of dealing with these issues and recouping costs?
The 5 elements of Kaizen/Gemba will work to create the necessary pillars / behaviors / competencies / structures that go into eliminating waste and maximizing capital resources.
Kaizen/Gemba necessarily involves communication among and between internal departments, vendors, customers, logistics providers and others. You cannot use this model by yourself.
Everyone has to be working toward the objective of reducing waste. This starts with the individual.
When everyone is working and pitching in, the morale of the team is bound to improve. Seeing gains in efficiency will also improve morale, as work is done faster and more effectively.
Kaizen/Gemba starts to gain momentum among those involved. Improvements beget further improvements.
Suggestions for improvement
Your company culture is now centered around maximum efficiency. Communication improves and the company’s overall mindset shifts from fixed to growth.
Have you used Kaizen/Gemba or something similar? What are your thoughts on this model?