Kaizen and the Supply Chain

Kaizen is a Japanese term which means "change for the better." A company that practices kaizen is making small changes for the better on an ongoing basis- this is commonly called continuous improvement. Over the past 15 to 20 years, kaizen has become synonymous with the kaizen event, a focused improvement "blitz" in which a team works to improve (i.e., kaizen) a process. These are actually quite different. While the kaizen event is a still a very useful tool for improving points in a value stream, the term "kaizen" refers to a way of thinking, not a single tool.

Practicing kaizen means eliminating waste. Toyota's Taichi Ohno identified the "seven wastes" of manufacturing as:

• Overproduction
• Waiting
• Processing
• Motion
• Inventory
• Transportation
• Defects

If a company is truly practicing kaizen, every employee from the shop floor worker to the CEO is working to eliminate waste on a daily basis.

But how do we approach kaizen for an entire supply chain? If within a single organization, we are asking each employee to think lean and to eliminate waste, then within the supply chain we must ask each organization to do the same. However, simply performing kaizen within the individual companies comprising a supply chain is not sufficient. Not only must we ask them to begin practicing kaizen within their four walls, we must work on supply chain improvement as a whole. This is because there are often wastes within a supply chain that we can only see when we consider the entire supply chain rather than simply one organization or process within it.

So, we've determined that we need to kaizen both the supply chain as a whole as well as the individual organizations and processes within it. What are the tools that help us accomplish this?

1. Value Stream Mapping. Value stream mapping helps us to see the entire picture and identify changes (kaizen) that will improve the supply chain as a whole. Through VSM, we understand the sources of waste created within material and information flows.

2. Supplier Associations. Supplier associations help improve communication and knowledge across a supply chain, thus enabling kaizen throughout the supply chain.

3. Kaizen Events. Kaizen events can help us implement improvements to particular points within the value stream.

4. Other Kaizen/Lean Tools. All of the traditional lean tools such as Standardized Work, One Piece Flow Cells, Kanban/Pull, Visual Controls, Quick Changeover/Single Minute Exchange of Die (SMED), 5S, Total Productive Maintenance, and others can help improve a supply chain.

Each of the above works together to kaizen an entire supply chain. 

Successful Procurement Process

1. Spend plenty of time planning

◆ Consider at the outset the full extent of what needs to be done, by whom, and by when. Who needs to be involved? Are they being consulted?

◆ Seek advice from others (departments, local authorities etc.). It’s always harder if you start with a blank piece of paper.

◆ Establish a complete procedure timetable with consultation periods, approval dates, invitation, receipt and evaluation of quotations, interviews, contract award etc.

◆ Ensure adequate time is allowed for the whole process.

2. Establish roles and responsibilities

◆ Establish the roles and responsibilities of all involved. For example, who is to decide/approve the short list? Who will be responsible for the quality and price evaluations?

◆ Get everyone to contribute to the planning process, including internal Lawyers and Auditors. Be clear what approvals are required from elected Members and their role in the whole process.

3. Ensure transparency of proceedings

◆ Be seen to be fair to all potential tenderers and that the process is conducted without favouritism.

◆ Engage widely with stakeholders and existing contractors in advance of formal proceedings.

◆ Get all internal players to contribute to the critical success factors and key evaluation criteria, and record these!

◆ Allow sufficient time for tenderers to ‘put their case’ during evaluation, at interviews, presentations etc

4. Observe legalities

◆ Ensure compliance with EC Procurement Directives, domestic legislation, Contract Standing Orders etc., particularly in respect of advertisements, invitations, and receipt/opening of tenders, evaluation procedure and approvals.

◆ Seek legal advice and involvement in the process at the outset. You are initiating events that will result in a contract with an outside firm! You want it to be right.

5. Accommodate innovation and secure Best Value

◆ Do not ‘handcuff’ tenderers. Do not be too prescriptive in how you want the work to be delivered. Describe the ‘outcomes’ you require.

◆ Try to find ways in which specialist suppliers and contractors can contribute their expertise; allow tenderers to innovate and offer you their best solutions.

◆ Make sure you secure Best Value by considering quality, design, and Whole Life costs, and not just lowest tender price.

6. Prepare sound and complete tender documents

◆ Specify clearly what you want and describe in detail how tenderers are to price their submissions.

◆ Give sufficient thought to various pricing mechanisms such as lump-sum or schedules of rates, and how good these will be at accommodating changes.

◆ Remember, the more information you provide, particularly on the desired outcomes, the greater your chances of success.

7. Consider monitoring and payment arrangements at the outset

◆ Be clear as to how payments to the successful tender are to be calculated once they have been awarded the contract, and make payments on time.

◆ Establish the monitoring procedures that are required to satisfy the Council that the service is being delivered in accordance with that specified.

◆ Consider ‘default’ procedures, performance incentives and profit sharing.

◆ Incorporate these processes within the tender documents, as they will provide the basis of the subsequent contract document.

8. Ensure procedures provide for probity and accountability

◆ Ensure that the whole process is adequately documented and recorded to demonstrate the decision-making processes to others.

◆ Ensure all key documents are signed, dated etc. and retained to ensure that those responsible for making decisions can be held accountable.

◆ Communicate all decisions to the whole team.

9. Think before you act

◆ Review your plans before commencing. Do not ‘rush’ things – unless it is a real emergency. Inadequate time in the planning stage will lead to problems.

◆ Think what can go wrong? What if delays occur? What contingencies do you have? (e.g. slack in the timetable)? What if a key person leaves or goes off sick?

◆ Is the price/quality model practical robust and will it deliver Best Value? Ensure you test it thoroughly

10. Learn from the Process

◆ Learn, experiment, and don’t fear mistakes. Ask yourself and the rest of the team, how would you do it better next time? How can we repeat what went well, and not what went badly?

◆ Develop your skills