|“Without strategy, execution is aimless. Without execution, strategy is useless.” – Morris Chang|
In a company, you have three decisions’ levels: Strategy, Tactics and Operational. Those levels might be represented as a pyramid. People on the top (CEO & Directors) gives objectives via determined KPIs to their employees to satisfy shareholders. At the bottom, employees deliver results to the top. Both are linked and will play a role in term of deployment for your Lean actions.
In this article, we will speak about the three different levels and their impacts on the Lean culture.
CEO and top management are focusing on the strategy. They will fix objectives for the company or the plant and they will be evaluated in term of results and achievements versus goals defined. Those targets have to be measurable and might be:
- Sales level
- Market’s share
- Internal performance
- Customer satisfaction
Those objectives are based on data collected:
- Within the company (Strengths/Weaknesses)
- Outside the company (Opportunities/Threatens).
To do that, they will realize the SWOT Analysis as below.
When those objectives are established and validated, they have to drive the culture to reach Excellence and to achieve their targets. Without challenges, you won’t embrace your employees to the Lean culture and realize improvements in your business.
As well, to facilitate this atmosphere within your business, your goals have to be reachable and visible. For example, if you are requesting a sales increase by 15% under one year and you know that it won’t be realizable (following data that you have), you will fail because your people (who are working in the sales department for example) won’t follow due to the limit of the market.
When the strategy is set, tactics will help you to achieve your results.
Tactics are done by a dynamic and multi-department TEAM to develop around the challenge based on the strategy. It is open & fair competition to create initiatives.
As the FIRST ACTION, the team collects and analyses ALL the data on and off the plant. It will the base to determine all opportunities for improvement. The team discusses all possible solutions via BRAINSTORMING (PLAN). From the pool of solutions are picked the most interesting/effective ones to be presented to the plant management for approval.
From tactic and decisions taken, your dynamic and multi-department TEAM have to perform operational tasks by DOING the approved solution(s) on the real pace. Together, they CHECK results obtained by doing follow up with data and report the expected (or higher than expected) results. Then your team will put in place LONG-TERM ACTIONS to reach excellence, upgrade your quality and reduce your costs.
Initiatives and Actions lead improvements and results at very low costs (or no costs at all)!
Example in a fashion business:
In a fashion business, on a range of products (clothes) which are produced in-house, you have 11% of scraps (versus sales) and the CEO fix you to reduce it to 2% over one year. This is your strategy.
Your tactic with your team is to collect data (FIRST ACTION) to know where are your issues to find all root causes of them. After analysis, they discover that 75% of defaults are linked to scratch issues on a specific level of production. Their brainstorming (PLAN) issued they have to change some designs (as top priority) and review the process (as a second priority). As operational, they DID a change in term of designs the 3 following weeks. Results after several CHECK, they observed that the scraps decreased by 2 to 5.5%. Two months after first results, among LONG-TERM ACTIONS, they decided to perform an Hoshin to improve the production flow and their processes. Results were an increase in productivity by 15% and a scraps’ level closed to 2.5%.
From an analysis, they determine their priorities of actions to protect the business and their customers did and check them to reach excellence and reduce their costs.
Have you already observe that, with the Lean methodology, you will reach targets defined by the strategy? Please, feel free to contact our consultant or to give your feedback below.