Getting Your Ducks in a Row or Hoshin Kanri
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1 Getting Your Ducks in a Row or Hoshin Kanri Derek Thomason, MIOM, Jackie Ashley and Graham Jackson MIOM, Unipart Solutions Practice INTRODUCTION Two years ago, I was standing in front of a mixed group of US and European Senior Managers from a well-known American Chemical Company. We were discussing the role of Sales and Operations Planning in business. To be honest I was getting rather frustrated by their lack of integration and alignment. Eventually I turned to them and said, Look guys if you don t get your ducks in a row you re wasting my time and your money. Their reaction was interesting, half of them wrote down the quote (presumably for future reference), a further 25% took exception to the remark, and the rest looked slightly shame-faced and wanted to know what I meant. What this, and so many other companies, lack is a structured method for developing and implementing strategy. In fact, companies pay tens of thousands of pounds to consultants to help them achieve what they can actually do themselves in a few days (given appropriate training and support). So what is the answer Hoshin Kanri or Policy Deployment. WHAT IS POLICY DEPLOYMENT Policy Deployment is a method of developing and aligning business objectives, annual operating plans, targets and goals. The principle is elegant in its simplicity but difficult in its execution because strategic and operating plans are often developed in isolation and rarely aligned across teams. Policy Deployment addresses these difficulties by identifying the annual plans and goals (Hoshins) which must be met each year to achieve the organisations aims. These plans are then cascaded (deployed) throughout the organisation, forming the basis for breakthrough projects and sustainment activities. Policy Deployment allows senior management to identify the key issues where improvement will have the greatest business impact. As this is communicated throughout the organisation, it also provides a focus for the on-going Continuous Improvement Activity. This article is divided into parts: 1. Background 2. How it works - examples of the of the many quality tools which can be used in the process. Case Study how Unipart have implemented Policy Deployment; and. A Practioner s view. 1. BACKGROUND Where did it come from Policy deployment, like many other quality tools and techniques was developed post World War II in Japan to assist in rebuilding. It was based on the teaching and training of Deming & Juran and was later championed by Drucker in the development of Strategic Quality Planning tools. One of the first descriptions of the technique was in a report, published by Bridgestone Tyres in 1965, which focused on analysing planning techniques used by Deming prize winning companies. These techniques were given the name Hoshin Kanri, derived from the following: Ho - Method or form Shin - Needle or compass (direction) Kanri - Management or control (process for managed change). Is it tried and tested The techniques have been used by some of the world s leading companies, for example, Hewlett Packard, Sony, Toyota, Xerox, Jaguar, Nissan and Unipart but have not been as widely adopted as other quality techniques. This may go some way to explain why many companies fail to realise the potential benefits of implementing quality tools and techniques. 2. HOW DOES IT WORK There are three main parts to the successful use of Policy deployment, these are: Establishing Aims Developing Deliverables and Results Monitoring Progress. In this article, we will cover the first two areas Aims, Deliverables and Results. Steps in Establishing the Aims: The process starts with the Business Goals and customers requirements. Whilst in an ideal world we would like to start with an all encompassing vision, in practice we seldom have this luxury. It is much more likely that our objectives will be shaped by a mixtures of financial targets and business aspirations. The details and implication of both of these will need refinement and definition before we can proceed. Here there are a number of tools, which we have found useful during 1
2 the initial stages of the process: Rich Pictures visioning tool based on pictorial representations Customer Value Window quick analysis tools which maps customer expectations to current services Customer Value Proposition more extensive discovery approach for understanding customer segmentation and value Trade-off matrix simple pairs comparison method to help prioritise requirements Customer Requirements Box Matrix a simple classification system based on the famous Boston Consulting Matrix. The primary focus of this part of the process is the customer. We are aiming to establish what we must do to be considered as suppliers and win their business, the resources at our disposal and our high-level business goals (Corporate Plan). One of the outputs of this analysis is the so called Snake Chart which compares customer requirements with our capabilities and those of our best competitors, an example, from a well known hard material company is shown in Figure 1. Group C Results: Stock Standard Products Steps in developing Deliverables and Results: The next stage is to establish what we must do to realise the plan. This is done through identifying how we will compete, the critical success factors and prioritisation of our business processes. In this section, we have found the following tools useful: An adaptation of Treacy and Wiersma s [1] Competitive Strategy Definition (Value Discipline) model based on a series of cards (shown here as the Balanced Business Framework) The Balanced Scorecard proposed by Kaplan and Norton [] Logistics Process Prioritisation (LPP) (pioneered by Hardaker and Ward) and adapted by the author [2]. The Value Discipline Model defines how a company competes across three dimensions. They are: Operational Excellence: compete on cost - reasonable quality at a very low price. The focus is on efficiency, streamlining operations and excellence in supply chain management. Differentiate on cost. Figure 1 Snake Chart Importance to the Customer Elements Performance Low Medium High Poor Satisfactory Good Order Cycle Time Delivery Reliability Frequency of Delivery Stock Availability Documentation Quality Order Completeness Custom Labelling Accuracy Importance to the Customer Customer Perceived Best in Class Hard Material Company Product Leadership: offering the best widgets or services in a short time-frame. The focus is on development, innovation and time-to-market. Differentiate on products and services. Customer Intimacy: understand the customer needs and values better than the competition and providing products and services accordingly. Focus is on delivering solutions. Treacy and Wiersema [1] argue that any company must choose to excel in one value discipline, where it aims to be the best - in the world preferably. This does not mean the other two dimensions should be neglected, but rather that the company should aim to be 'OK' in these other two disciplines. Whatever decision is reached a balanced set of goals and objectives are required. In this context balanced' relates to: - long and short term targets; - measures which promote efficiency, customer understanding, skills/competence development and financial goals; - leading indicators. Having established our competitive model, techniques such as LPP can be used to identify the key processes with a business. The main steps within LPP are: 1. Agree direction. 2. Identify the Critical Success Factors (CSFs), the musts, key imperatives.. Identify the Business Processes (BPs) - what do the CSFs depend on.. Determine how many CSFs each business process impacts (see Figure 2). 5. Decide how well each process performs today, ie. its quality rating. 6. Complete (CSF/BP) matrix, identifying most important processes (see Figure ). From this process the next step is obviously establishing the aims for breakthrough projects in each of the areas of primary focus. Another important benefit of this approach is 15
3 that it focuses scarce resources on where they will have the most benefit from the outset. In essence, we are focusing on the vital few, but can continue to sponsor projects until our resources are exhausted.. CASE STUDY How Unipart have Implemented Policy Deployment The Unipart Group of Companies have used Policy Deployment as part of their strategic planning processes for the past 10 years. It is one of the main-stays of the Unipart Way, a Figure 2 Example of Critical Success Factor /Business Process Comparison Quality Impact on Gap CSF s Processes Setting vision & direction Business planning and forecasting Tracking business performance Management communications Customer service Tracking individuals performance Learning and training Ideas and suggestion schemes Incentives and rewards IT systems and processes philosophy of working which has seen the company undergo major changes since the management buy-out in All Unipart senior managers receive training in the Policy Deployment toolkit and Number of Critical Success Impacted Figure Logistics (Business) Process Prioritisation E D C B A Area of primary focus Area of secondary focus Current Process Quality Rating sessions are supported by experienced facilitators. The process is cascaded through the organisation annually, in line with the Corporate Planning cycle (Figure ). The process (Figure 5, overleaf) starts with the top team whose task is to set the overall direction and agree what has to be done. This is achieved through a series of facilitated workshops that are then cascaded through the organisation to define the hows. Facilitation support and methods of cascade are important to the success of the process. Strong emphasis is placed on team involvement and constructive dialogue. It is critical that the top team are aligned to a common vision and the strategy for delivering it across the business as a whole. This reduces the chance of ambiguity further down the cascade and ensures that accountabilities are clearly defined. The cascade process is important in developing organisational buy-in and understanding potential barriers or inhibitors. The first step with a workshop is Financial Planning Policy Deployment Corporate Planning Budgeting Figure Unipart Business Planning Template Prework Function/Project PDM Department/PDM the analysis of perceived customer requirements and an estimate of the growth profile of the business by customer segment and service offer. This data deepens the management team s appreciation of potential business trends and quickly focuses attention on the types of strategy or breakthrough required to deliver the aspirational aims. This spreadsheet tool was developed in-house to share best practice analysis tools, accelerate knowledge transfer and ensure that management time is used most effectively. Tools like the -box matrix described earlier and QFD are employed. These tools are supported by in-house developed spreadsheets (Figure 6) which make it easy for management to see how business projections are broken down. Rules of thumb and the show-me test are applied to validate the plausibility of the proposals. For example, if a substantial portion of next years budget is predicted to come from the blue sector of the chart (New Service/Product, New Customer), then questions are asked regarding certainty and risk. The structured approach is also applied to customer qualifiers and winners criteria (Figure 7 overleaf). Jun Jul Aug Sep Oct Nov Dec Level 1 Team & Individual plan Business PDM Level 2 Level Level 16
4 AIMS Figure 5 Policy Deployment Process Used in Unipart Box Matrix - Customer Proposition Matrix DELIVERY Current Corporate Plan Market Finalise Corporate Plan Balanced Business Framework Operational Excellence Customer Service Mission Aims Project (Breakthrough) Deliverables Results Figure 6 Product Leadership Order Qualifiers & Winners Customer Proposition/Business Planning Visualisation to 5 years Year on Year The final Policy Deployment matrix follows the format shown in Figure 8 overleaf and the main elements of the example are: Aims: what are the strategic objectives of the plan, why is it important, what do we hope to achieve Projects: the actions and activities that the team are expected to complete within the plan period: the how and what Deliverables: the market, operational and financial deliverables that are expected to be forthcoming before the end of the planning period Results: the project deliverables and key milestones. These should be SMART. However, the use of the matrix does not stop there. This elegant tool can also be used to assess: To what extent each of the project actions and milestones contribute to the aims, ie. is a strong, weak or conflicting and are there any gaps (Area E) Links between the projects and the measures (Area F) The degree of correlation between the results and the strategic aims (Area G) How does each deliverable support the planned results (Area H) Who will do the work and the team involved (Area I) Who is accountable for the delivery (Area J). The Unipart approach is based on the belief that there should be no more that 10 breakthrough projects on the final listing any more dilutes the focus and potentially leads to resource issues. To achieve this final summary of deliverables therefore, the team will often have to go through the difficult process of project de-selection. Deciding what not to do is key.. A PRACTITIONER S VIEW Graham Jackson, MD of Unipart s NRS business says, Policy Deployment is fundamental to setting the direction of the business, getting alignment to that direction 17
5 and empowering teams to deliver the results. It is our way of getting things done and keeping our promises REFERENCES 1. Treacy, M. and Wiersema, F., The Discipline of Market Leader, Enter Description of AIM 1 here. Text will wrap and centre. PDM template is configured for rows of text Enter description of AIM 2 Figure 7 Qualifiers and Winners Spreadsheet Figure 8 Perseus Books, Cambridge, MA, Hardaker and Ward, How to Make a Team Work, HBR, Nov, Kaplan and Norton, The Balanced Scorecard Policy Deployment Matrix Used in the Unipart Group of Companies UGC POLICY DEPLOYMENT MATRIX FOR: TWELVE MONTHS ENDING 1-Dec-200 Put your Mission statement text in here. MISSION Use ALT_ENTER to create extra lines within the cell *Asterisk creates bullet points Note: Row height set for four lines of text - This can be overridden manually if necessary Enter AIM E A Enter decsription of AIM Enter description of AIM Project 1 name here. Text will format for two rows Project 2 description Project Project Project 5 Project 6 Project 7 Project 8 Project 9 B Project 10 Project 11 Project 12 Project 1 Project 1 Project 15 AIMS PROJECTS RESULTS Ref 1 Enter description of RESULT 1 here Text will wrap and centre on 2 rows Ref 2 Enter description of RESULT 2 Ref Enter description of RESULT DELIVERY Enter text here NAME OF UNIT F D OWNER OWNERSHIP I TEAM MEMBERS Team Member 1 Team Member 2 Team Member Team Member Team Member 5 Team Member 6 Team Member 7 Team Member 8 Team Member 9 Team Member 10 Ref Enter descri Ref 5 Enter descri LT 5 G C H J Ref 6 Enter descri LT LT 6 Name of Owner O = Owner of project A = Acountable for res About the authors Derek Thomason, MIOM is General Manager - Supply Chain Design with Unipart s Solution Practice, as well as having his own consulting company Sofard Limited. He trained as a Physical Chemist and has been a member of the Institute for over 25 years. For the past 8 years, Derek has worked for a range of international consultancies; his clients have included Airbus, ASDA, BUPA, Dell, Ford, Honda, Icopal, Marley, the NHS, Samsung, Sandvik and Shell. Prior to this, he was European Logistics and Supply Chain Management Director for Kodak s Health Imaging Division. Jackie Ashley is Resourcing and Change Manager with Unipart s Solution Practice. She has a degree in Economics and is a member of the IPD. Jackie has worked for Unipart for the last 18 years in a range of HR and Change Management roles and has been instrumental in Unipart's 'Lean Journey'. For the last years she has headed the Change Practice within USP, helping clients such as the Royal Mail, Boots, Halfords, Alpha Airports Group and Oxfordshire County Council to realise business benefits through the rapid implementation of sustainable major improvement initiatives. Graham Jackson, MIOM is the Managing Director of National Railway Supplies (NRS), which is part of the Unipart Rail Division. Graham has been a member of the Institute for 15 years. He has worked for Unipart since 1990 in a number of roles within the Manufacturing and Rail Divisions. Ref 7 Enterdescri LT 7 Ref 8 Enter description of RESULT 8 Ref 9 Enter description of RESULT 9 18
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