Setting the right process improvement goal; how hard can it be?

As a process improvement professional, I’m often asked questions such as:

Can I reduce my lead-time by 40%?
How much more output can I get out of my factory?
I would like to improve productivity by 30%; is this possible?

Something that always intrigues me is how these ambitions were arrived at in the first place. Often, they stem from senior leaders who feel a need to make bold statements. Or sometimes they are just a means of throwing the question out by shooting from the hip.

When determining goals to aim for, it pays to consider where human perception comes into play. On one hand, a high target may be regarded by the team as unrealistic, and have a demotivating effect, unless the ability to achieve it is clearly visible. On the other, a modest target may not be satisfactory to leaders, at the same time as not reaching for the real opportunity available.

The key to keeping everyone happy, and fulfilling potential, lies in setting goals which are justified by evidence-based insights. Achieving this starts with assessing what is known and putting that into context. A range of scenarios can be explored. But beware the pitfalls!

Customer requirements

Obviously, setting (and achieving) targets based on customer requirements would be the ultimate way of keeping them happy. It’s what we call Outside In^® thinking. This might, therefore, be a good approach.

However, there is also a risk that these requirements might not be realistic, which will result in a demotivated team. The customer always “wants it all” – instantaneous availability, low cost and perfect quality. Take a step back for a reality check before going all-in on this one.

“Best Day Ever” performance

Another way of setting a goal is to base it on your best ever performance. Repeatedly achieving this would obviously be pretty ambitious and the chances of sustaining such performance in the mid-term would be very slim.

There is also a risk of that “best performance” data being invalid. For example, if it includes a delayed reporting of orders which were actually produced the day before, or because of unrecorded process changes that have happened since.

What our competitor’s company can do

Internal and/or external benchmarking can be very valuable, and a good source for inspiring innovation.

It is, however, often difficult to gain full understanding of the technology and processes used elsewhere. Do you really know what’s going on, including all the downsides? Even if it is possible to attain this information, how comparable or transferrable are these processes to your situation?

Arbitrary figures

Often goals are simply stated as “I want to improve current performance by 20%.” My first question here is: how do you define “current performance”? Is it the average of the last year, or the last 2 years? Or does it refer to a single day? And why specifically 20%? Why not 40% or 10%?

As a data-driven process improvement professional, I see this approach often results in goals that are either unrealistic or not challenging enough.

Striking the right balance. Examine short-term capability

My preferred way to set a mid-term process improvement goal is to use your own historical process data and segment it to identify the various time periods (not just one day) in which good performance has been demonstrated.

This methodology ensures a realistic goal, because the aimed-for performance has already been achieved more than once. It is also achievable within a relatively short period, once you’ve identified the factors which led to those good performances.

Goal setting in this way is usually convincing to both leaders and teams, resulting in a good level of motivation and accountability for meeting the target. In addition, we typically see this can be done without CAPEX investment or additional workforce.

Want to know more?

I’m more than happy to discuss all of this in further detail. Feel free to reach out to me at frank.stieger@rnggc.com if you’d like to do that.

Frank Stieger is Operations Director at R&G Global Consultants