continuous improvement

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INTRODUCTION Continuous Improvement:
It is defined as an ongoing effort to improve products, services, or processes. These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once. Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility.

Continuous Improvement is both a mind-set and a range of techniques to review and evaluate work processes. As a mind-set, it is a way of approaching work so that a culture of innovation and creativity is encouraged. As a range of techniques. Continuous Improvement generates results: competitive

advantage, business growth, improved quality, profit/shareholder value, business success

Continuous Improvement includes approaches such as Benchmarking, Re-engineering, Quality Management, Organizational Reviews, Performance Management etc. Continuous Improvement can be applied at a whole of government, agency or functional level and to a range of structures, systems and processes.

The continuous improvement principle can work well for us in dealing with existing problems. A customer complaint or perhaps a cluster of them may signify a problem that needs to be addressed. However, the process works equally well to deal with improvements that stem from external sources. Benchmarking, for example, may show that another organization, similar to our own, may be able to achieve a superior performance, or an individual may suggest an idea that can significantly alter the approach to delivery. The problem in this case is that someone else is doing it better, and our team need to address how they can adapt our systems so that you can at least equal or perhaps outperform those other organizations. We don‟t just need to sit and wait for things to go wrong before you can develop organizational effectiveness.

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”You don't just need to sit and wait for things to go wrong before you can make improvements.”

Stage model of continuous improvement:
The continuous improvement principle can be implemented with a simple four stage model (Plan, Do, Check, Act). At the “plan” stage the task is to find out what is going wrong and to propose solutions. In the “do” stage the selected solution is implemented on a small scale. In other words the solution is tested before the organization commits to implementing it across the board. The “check” stage involves measurement to show that the desired outcome is being achieved. The final step “act” results in a full scale implementation, if there are positive indications from the previous stage. Following implementation of one improvement, then of course the whole process can begin again focused on a different problem. So we have continuous improvement.

Need of continuous improvement:
The figure below illustrates why there is need of continuous improvement .When companies gain maturity in project management and reach some degree of excellence; they achieve a sustainable competitive advantage. The sustained competitive advantage might very well be the single most important strategic objective of the firm .The firm will then begin the exploitation of its sustained competitive advantage. Unfortunately the competition is not sitting by idly watching our exploit our sustainable competitive advantage. As the competitions begins to counter attacks. We may loose a large portion, if not all, of our

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sustained competitive advantage. To maintain effective and competitive, the organization must recognize the need of continuous improvement.

There is always a risk of counter attack by the competitors. When there will be the counter attack on the organization by the competitors. Continuous improvement allows a firm to maintain its competitive advantage even when the competitors counter attack. The organizations that produce excellence are those that continuously improve.

The Continuous Improvement Model
     Review Result Root cause Recommend Revise

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The Continuous Improvement Model can be summarized as follows:

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Review
Understanding business process flow and outlying events (what could happen, what should happen and what did happen) gives Balance Risk a special insight that is embedded in our programs to test and review Client and Supplier systems. This allows Balance Risk to go beyond the traditional “tick and tie” set up and summarization of testing and delve deeper into cause/effect relationships. Preliminary review and engagement preparation drives quality cost versus benefit recommendations that can be implemented to reduce cost and increase profitability while effectively managing risk.

Results
Consulting work involves accumulation of data and summarization of results. What you do to make the effort meaningful and subsequently how you utilize the data differentiates Balance Risk from other consulting firms. Balance Risk takes an “ownership” point of view in analyzing the results of our efforts. We know that the essence of improvement lies in the details. Having an appreciation of the processes and culture allows Balance Risk to make the right call when it comes to defining what caused the problem or identifying an opportunity worth pursuing.

Root Cause
Understanding what is causing the problem versus describing the symptoms comes from specialized training and a lifetime of experience. Having intimate knowledge of processes and being able to appreciate both the culture and intent of existing controls provides an independent reference point to provide subjective comments and offer constructive appraisals of the effectiveness of Client processes.

Recommend
Balance Risk prides itself on providing cost effective solutions that take into account the Client‟s risk appetite and ability to execute change to gain the intended benefits. Along with recommendations, Balance Risk suggests new and improved metrics to measure the success of the change and quantify benefits.

Revise
Getting a continuous improvement environment institutionalized takes Executive Level support. A collaborative team approach inspires workers to make the extra effort and strive to do what is beneficial for the company and in line with management objectives. Balance Risk works with Clients to implement

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change and ensure metrics are in place and controls are functioning to optimize productivity while managing cost.

Continuous improvement through ‘learning curve’:
Continuous improvement increasingly strives to improve the performance of production and service firms. The learning curve provides a mean to learn and track that improvement. For managers to improve processes effectively, they need a more scientific theory of CI and the LC. The learning curve also known as experience curve which is a measure of a relationship between an increase in per worker productivity associated with an improvement in labor skills from on the job experience, the adoption of new production and managerial techniques and so on . The learning curve or experience curve phenomenon affects average cost in a way similar to the way of any technical advance that improves productive efficiency .learning through production experience permits the firm to produce output more efficiently at each and every output level. The rule used for representing the learning curve effect states that the more time the task has been performed, the less time will be required on each subsequent iteration. This experience is first quantified in 1936.at “Wright Patterson Air Force Base” in US where it was determined that every time total air craft production doubled the required labor time decreased by 10-15% By gaining repetition through repetition saves time, cost, and increase out put and the organization thus gains competitive advantage .the below figure explains how firms achieve maximum output my utilizing minimum time.

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Reasons for the effect:
The primary reasons for why experience and learning curve effects apply ofcourse are the complex process of learning involved.         Labor efficiency. Standardization, specialization and methods improvements. Technology driven learning. Better use of equipment. Changes in the resource mix. Product redesign. Network building and use cut cost reductions. Shared experience effects.

Learning curve theory argues that it takes less and less effort and time for thing done in repetition. for optimal learning to take place make sure there is interest and motivation in the thing being learned otherwise learning and performance will be compromise .learning curve theory can be applied to every aspect of business and life.

Continuous improvement process:
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CASE STUDY

INTRODUCTION:
If you needed proof that collaboration was key to success in business, you need look no further than the award-winning print work that’s being
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produced by Toyota.
Toyota Motor Co. was established as an independent and separate company in 1937.The founding family's name is Toyoda.Toyota Motor Corporation commonly known simply as Toyota and abbreviated as TMC is a multinational automaker head quartered in Tokyo, Aichi, Japan. Toyota‟s core business was the manufacture and sale of automobiles. A successful company they have a presence in more than 170 countries. Toyota Motor Corporation is Japan‟s number one carmaker. Toyota has international presence in over 170 countries worldwide. It manufactures cars, pickups, minivans, and SUVs include models such as Camry, Corolla, 4Runner, Land Cruiser, Sienna, the luxury Lexus line, and full-sized pickup trucks. It has huge financial strength.It is the second largest car manufacturer in the world, after General Motors It is obvious that there is something special about Toyota. The Japanese automobile manufacturer currently has the fastest product development process in the world. New cars and trucks take 12 months or less to design, while competitors typically require two to three years. Toyota has phenomenal quality levels, that rivals can only dream of matching. Toyota has turned operational excellence into a strategic weapon not merely through tools and quality improvement methods but a deeper business philosophy rooted in understanding of people and what motivates them. Its success is ultimately based on its to build deep supplier relationships, and to maintain a learning organization. Jeffrey Liker is an authority on Toyota. Liker gives an excellent account of how Toyota has become one of the best managed companies in the world. He also outlines how other companies can learn from Toyota and improve their way of doing business. Toyota developed the Toyota Production System after World War II. While Ford and GM used mass production, economies of scale, and big equipment Ford and Chevy dominated the market when Toyota, a virtually unknown importer, opened its first American car dealership in California in 1957. More than 50 years later, Toyota is now the world's biggest carmaker, earning top marks from experts and customers alike for quality and innovation.

Toyota’s missions statement and vision statement
Mission Statement:
To attract and attain customers with high-valued products and services and the most satisfying ownership experience. And most respected and admired company in the world.

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Vision Statement:
To be the most successful and respected car company and Toyota aims to achieve long-term, stable growth economy, the local communities it serves, and its stakeholders.

Toyota’s four core values:
    Customer first Respect for people International focus Continuous improvement and innovation.

5 Secrets to Toyota's Success:
U.S. News asked David Magee, author of How Toyota Became # 1, to highlight some of the reasons for
Toyota's success:

Long-term planning.
Instead of responding to trends, fads, and quarterly numbers, Toyota looks far down the road and tries to develop products that will resonate for a long time. The best example is the Prius hybrid which debuted eight years ago, when a gallon of gas in the United States cost a mere $1.50, and the average car buyer cared more about cup holders than gas mileage. The iconic hybrid, of course, turned out to be a breakthrough vehicle, and Toyota sold its 1 millionth Prius this month. With gas prices and fuel economy now a top concern, the Prius has helped Toyota take a commanding lead in hybrid technology.

Studious speediness.
Suppliers sometimes complain that Toyota takes forever to make a decision. But that's usually because the company exhaustively researches all its options, then makes sure all the major stakeholders agree on a course of action. Once Toyota decides to build a car, however, the turbocharger kicks in: Toyota can move a product to market faster than almost all of its competitors.

An open mind.
Toyota learned many of its early lessons from Americans, studying Ford Motor Co.'s production lines and the theories of management guru W. Edwards Deming. That helped Toyota gain a foothold in the United States, the world's biggest car market, even though the company was an outsider

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whose home market of Japan was vastly different. Decades later, Toyota still shows a knack for figuring out what customers want, sometimes predicting American tastes better than the Detroit automakers that supposedly have home-field advantage.

Obsession with waste.
Toyota's "continuous improvement" ethos is legendary throughout industry, but Magee believes the real secret is a profound disdain for inefficiency—whether it's wasted time, excess material, or a scrap of trash on a factory floor. "At a lot of companies, if something's going well and it's profitable, they'll move on to something else," Magee says. "But if Toyota can attach a hood in eight minutes, they'll find a way to whittle that down to four minutes, then two minutes, then who knows..."

Humility.
Quick, name a famous Toyota executive. Can't? Well, here's why: Toyota's company culture emphasizes teamwork over individual stars. "Toyota executives don't see themselves as bigger than the company or the customer or the product," Magee says. "It's the most humble company I've been in." At Toyota factories, the plant manager doesn't even get a reserved parking space, a perk that is practically universal among manufacturing companies.

The Toyota Culture Of Continuous Improvement:
As I conduct assessments at organizations that have made attempts to implement lean manufacturing, I consistently observe similar results. The company has sometimes received assistance from an outside source, either in some form of training or kaizen event. There is a lean cell here and some form of a pull system there. Some attempts have been made at a 5-S implementation, with a couple of tool boards in place and a few documents posted that no one looks at. Changeover time at some equipment has been reduced, and there is some form of a Total Productive Maintenance program with a preventive maintenance schedule that is not up to date. In truth, however, such companies are not truly implementing lean. This failure to implement the Toyota Production System (TPS), or lean manufacturing, is a result of management‟s inability to create a true lean culture.

Continuous improvement in a management context means a never-ending effort to expose and eliminate root causes of problems. Usually, it involves many incremental or small-step improvements rather than one overwhelming innovation. From a Japanese perspective continuous improvement is the basis for

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their business culture. Continuous improvement is a philosophy, permeating the Japanese culture, which seeks to improve all factors related to the transformation process (converting inputs into outputs) on an ongoing basis. It involves everyone, management and labor, in finding and eliminating waste in machinery, labor, materials and production methods. TPS, or lean, has been around for a few decades; the concepts and tools are not new. Companies embrace the lean tools but do not understand how they work together as a system. They will adopt a few of the lean tools but always fail to recognize the most powerful principle that Toyota recognized decades ago: A continuous improvement culture is needed to sustain lean. At Toyota, everyone within the organization, from executives to shop-floor workers, is challenged to use their initiative and creativity to experiment and learn. We often hear labor advocates criticize assembly line work as being oppressive, and claim that menial labor robs workers of their mental faculties. However, this could not be further from the truth with respect to lean. When Toyota sets up assembly lines, it selects only the best and brightest workers, and challenges them to grow in their jobs by constantly solving problems. All areas of the organization (including sales, engineering, service, accounting, human resources, etc.) are staffed with carefully selected individuals, and the company gives them directives to improve their processes and increase customer satisfaction. Toyota invests time and money into their employees and has become the model for a true learning organization. The importance of teams and teamwork is a way of life: team-building training is required, and it is put to practice daily. This investment in its employees far exceeds that of the typical organization that focuses on making parts and counting quarterly dollars. So, what can companies learn from Toyota? The most important lesson is to develop a continuous improvement culture and stick with it. Organizations have a tendency to jump around from program to program based on the latest “buzzword.” It is difficult to build a learning organization when the program changes from month to month. Companies must start their lean culture transformation with a philosophy of continuous improvement. The change must start from the top, and this may require an executive leadership shakeup. Everyone from the bottom up must be involved in the transformation. This includes training in lean principles, team building and problem solving. Use middle managers as change agents to drive the transformation. To truly understand the power of a continuous improvement culture, we again look to Toyota. Toyota employees generate more than one million process improvement ideas annually. The more astounding number is the fact that 90 percent of those ideas are implemented. There is no secret to why this occurs. Toyota executives have created a culture that encourages and rewards this behavior.

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SWOT ANALYSIS: Strengths:
 Successful brand - Toyota has developed a trusted brand based on quality, good performance and for being environmentally friendly.  Innovation - Toyota is at the forefront of car manufacturing innovation. It was the first car manufacturer to embrace lean manufacturing (known as Toyota Production System) which is a faster, more efficient process which leads to less waste compared to the traditional batch and queue method of manufacturing. It also applied JIT (Just in Time manufacturing) and smart automation.  Product Development - Key to the success in the car market is new models which stimulate demand and loyalty to the Toyota brand. Toyota has reputation for producing cars which are greener, more fuel efficient, and of good performance. Toyota has sought to meet government requirements (for reducing the impact on the environment), economic changes (as prices of fuel - oil continues to rise) through the development of hybrid fuels. Toyota was the first car manufacturer to market hybrid (gas and electric) fuel, with the launch of Prius model, ahead of competitors.  It successfully entered markets and penetrated them with both manufacturing and sales subsidiaries. Toyota gained first mover advantages by presence in globally strategic markets (Asia, Europe, US) first, whereas its nearest rivals (Ford, GM) gained footholds in only 2 of (US and Europe). Toyota is well positioned to take advantage of the growth in South East Asian markets of China and Pakistan  Toyota has moved to a global manufacturing model. Car manufacturing sites are expensive, requiring high fixed cost investment. Toyota has moved its manufacturing sites to where factor costs are lower (without comprising on quality) and now manufactures different parts of the car and carries out assembly in different locations around the world. It has been particularly successful at gaining cost efficiencies (locating and obtaining suppliers, components in low cost locations) and compared to the manufacture and assembly of cars in one location.

Weaknesses.
 According to the New York Times, the world‟s number one automaker has recalled more than 14 million vehicles since 2009. Thursday‟s recall covers 769,000 sport utility vehicles and 20,000 Lexus sedans,

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and added approximately 1.4 million vehicles to its November 2009 recall, which the company describes as being related to “floor mat entrapment.” 

In the process of growing the company, management appears to have abandoned the continuous improvement philosophy that made it great this is just because in the rush to grow, the company had to add-on many new employees and suppliers. Regrettably, these new hires and vendors were not adequately trained in the methods of TQM. Toyota was consequently unable to replicate its DNA.



The company's organisational structure has become inefficient as the company became more complex. This hindered Toyota's ability to manage its international network of subsidiaries, branches, and companies.



The weakness of its organisational strategy reflects to the speculations over the likely performance of Toyota in the future, as the company‟s financing section is swamped down by hefty outstanding debts.



The firm is not in risk of bankruptcy, but the Toyota management is in a tight spot, and has to be extremely vigilant to not make it any tighter.

 

There is also a notable management issues within the company.

Finally, because of the increasing competition, the company has witnessed a decline in overall sales, a weakness on their part as they have somehow failed to overcome the challenges that additional competition brings.

Opportunities.
 Toyota Motors Company has the distinct opportunity to have cleaner engine emissions, in alignment with their corporate responsibility to become environment-friendly. 

Saturation, over supply in the developed world, has led manufacturers to look to China, India and emerging markets where population, income and demand is growing. However, these countries have national brands which are growing in popularity.



Through working with environmental groups to help clean the environment, they also have the opportunity to further enhance their image to the general public. Since they have already started investing in Solar Power, the end is a more viable prospect. Toyota could further widen the scope of their opportunities

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through specialising and rationalising its worldwide operations on a regional basis and to develop a network organisation in which its subsidiaries would increase their transnational linkages .  Besides Toyota learning about the possibilities of producing quality automotive products in their areas of operation at a comparative cost advantage, other relevant factors could bring about new opportunities for exporting vehicles: the parent company's efficiency-seeking strategy; its competitive disadvantage in the small-car segment of the market and the competitors' moves in this market-segment; and the new more flexible regulations in the respective countries in which they have manufacturing plants.  Further, with Toyota‟s existing capability to innovate on automobiles, they have the opportunity to penetrate a still larger scope of market.

Threats.
 As with any firm in the automotive industry, Toyota faces very tight competitive rivalry in the auto market. Competition is escalating, with the threat of new entrants continuously flowing into the market from South Korea, China and new plants in Eastern Europe (2007).



Toyota is also exposed to the risk of movement in the price of raw materials such as steel, glass, rubber and fuel. The key economies in the US, Europe and the Pacific are also experiencing slow downs lately. These economic factors are latent threats for the company under analysis.



Further, substitute products such as Natural gas, Electricity, Ethanol, Vegetable oil, Sunlight, Water poses a distinct threat to the sustainability of company sales.



While Toyota strategies responded to the local opportunities and competitive advantages that were built over time in different national markets, the competitiveness of foreign operations was also dependent upon the company's management capabilities and its overall position in the industry worldwide. If such factors were to perform under expectation, their competitiveness in the international scene would suffer seriously (2007).

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Conclusion and Recommendations:
 Embracing the continuous improvement principle has one other very strong positive impact on the organization, aside from producing a better quality service which keeps customers happy and making the internal delivery more cost effective to keep your bosses happy.  The continuous improvement principle requires active engagement of teams of our employees in the task of improving the way that the organization works. It is they that have the detailed knowledge required to improve the way that the service is delivered to its customers, and by involving them in the selection of problems to be addressed and in the teams that seek better solutions, you are increasing their influence on their own organization. Increased employee motivation may result in even more effective working that you had imagined.  The continuous improvement principle can work well for us in dealing with existing problems. A customer complaint or perhaps a cluster of them may signify a problem that needs to be addressed. However, the process works equally well to deal with improvements that stem from external sources.  Benchmarking, for example, may show that another organization, similar to your own, may be able to achieve a superior performance, or an individual may suggest an idea that can significantly alter the approach to delivery. The problem in this case is that someone else is doing it better, and your team need to address how they can adapt your systems so that you can at least equal or perhaps outperform those other organizations. We don‟t just need to sit and wait for things to go wrong before you can develop organisational.  The philosophy of kaizen is one of Toyota‟s core values. It means „continuous improvement‟. No process can ever be declared perfect but it can always be improved. Kaizen in practice means that all team members in all parts of the organisation are continuously looking for ways to improve operations, and people at every level in the company support this process of improvement. Kaizen also requires the setting of clear objectives and targets. It is very much a matter of positive attitude, with the focus on what should be done rather than what can be done.  The entire Toyota Production System is built on a vision of constant improvement. Nothing is so good that it cannot be made better, and so we constantly look for ways to improve everything we do. Whether that means making our technologies cleaner, setting higher standards of ethics or making our production lines more efficient, it is a deep-seated philosophy, which drives absolutely everything we do. There is a Japanese word that sums up this philosophy - 'Kaizen', meaning 'continuous improvement' or 'change for the better'.

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Kaizen is more than a philosophy, it's a commitment to the highest ethics and a commitment to constant technological development. And this commitment runs through the entire Toyota production system



The term “kaizen” is simply a slogan, unless employees have been thoroughly trained to use the many tools and techniques that this philosophy of management employs. So, at this point, the philosophy of continuous improvement within Toyota simply represents just another management exhortation. As the quality guru Deming stated years ago, slogans are meaningless proclamations, unless that are backed-up with methods for achievement.

.    

Reference:

www.wikipedia.com http://www.toyota.com.au http://www.philosophyofmanagement.com

http://money.usnews.com/money/business-economy/articles/2008/05/27/5-secrets-to-toyotassuccess http://www.balancerisk.com/cim.html



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