A well-run plant requires both.
In this plant, all eyes are on the daily output numbers. But what if those numbers fall short? Then what? It’s impossible to improve the outcome without improving the upstream processes.
Should you focus on processes or outcomes? You’re probably thinking, “What kind of question is that?” But this important question gets to the heart of how we improve performance.
Many leaders, managers, and even front-line employees get fixated on achieving outcomes. That might be OK in the short term, but it becomes a problem in the long term. Improvement does not come from getting everyone focused only on outcomes. That simply addresses today’s needs.
Did the product ship today? Did the plant meet the monthly revenue target? Are customers satisfied? If someone answers no to any of these questions, you react to rectify the situation, but it’s too late to prevent the problem. These questions deal with behaviors after they already happened. No need closing the barn door now because the horse is already out of the barn. If you’re serious about reaping the benefits from Lean, you need to focus on both process and outcome.
Defining Outcomes and Processes
When you focus on outcomes, you focus on results. Say you make a product comprising several subassemblies that goes through several departments and has a combination of mechanical, electrical, and hydraulic functions. If you just focused on the outcome, you’d see how many the shop delivered to customers or sent to finished-goods inventory (see Figure 1).
To make matters worse, if your metrics were weak and you didn’t know how many the assembly department finished until the next morning’s production meeting, and you have no insight into the upstream operations, then you are in an impossible situation. You cannot go back and fix yesterday’s production problems.
Suppose you have much simpler products and processes. Perhaps your bill of materials is only three or so levels deep—the products are straightforward weldments that you burn, bend, and weld. If you have a one-sided fascination with the outcome (all eyes on “Did it ship?”), then you will have a difficult time improving your processes. Lagging indicators do little to help you create predictability and performance to improve outcomes.
When you focus on the process, you pay attention to upstream processes that enable the outcomes (see Figure 2). If your routing consists of burning, bending, and welding, you’d focus on the process by measuring the on-time performance of the burn operation, managing the changeovers on the press brake to continually drive out the non-value-added changeover time, and verify that standard work (heats, feeds, speeds, and sequences) is being followed to reduce variation. This process focus enables you to achieve the outcomes. Conversely, focusing on outcomes in isolation without supporting process metrics usually demotivates people.
Why Outcomes Get All the Attention
Many people have a maniacal fascination with outcomes. How many times have you found yourself in a production or staff meeting only to be berated by someone higher up because a shipment was late or extra resources were expended to get the order to the customer on time? This happens over and over.
Outcomes get most of the attention. A customer calls about a product defect or late order. All hell breaks loose and it’s all hands on deck to get the order out. This will happen from time to time. But if such chaos is the normal state of affairs, you have process problems that are not getting attention, and you are doomed to repeat the chaos day after day.
Of course, focusing heavily on outcomes is easy. Whether the product shipped yesterday is easy to know. Data is readily available, though it comes when it’s too late to do anything about it. The higher the boss’s level in the organization, the larger his or her bully pulpit. When that person speaks about the information that was so easily gathered, everyone falls in line to “get it fixed.” But without actions that address the root causes, the problem is destined to be repeated. The boss gets angrier and people feel more helpless. You can’t get much more anti-Lean than this.
A plant with the right amount of focus on processes measures not just the output level, but also the performance of upstream processes that led to that level of output.
Companies often focus on outcomes because the higher-ups simply do not have an adequate understanding of the operations and their supporting processes. They defer to what they know best … the outcomes. Did it ship or not? Why not? Get it fixed! If you have a strong-headed boss who has little interest in listening, then what do you do? You probably start behaving in a very short-term manner. Get today’s order out. We’ll worry about tomorrow’s order tomorrow. Any of that process improvement stuff will have to wait. We just don’t have time to be Lean.
Focusing on Process Has Value
When you started your Lean journey, you probably did some spot Kaizen or improvement work, but it most likely was hit-or-miss—a little improvement here, a little improvement there. This might be OK when starting, but you need to be more systematic as your Lean journey evolves.
Part of the systematic approach is to understand your value streams. A value stream is made up of a series of processes. As you connect these processes, you develop a flow that enables your plant to achieve the outcomes you are looking for.
When you develop appropriate in-process metrics and create an environment where people willingly take ownership of what goes on in their work processes, you drive better performance upstream. In Figure 2 you can see how upstream work processes affect the outcomes. Instead of measuring only the daily output at the final production step, you measure relevant characteristics of the upstream work.
Imagine that your laser cutting operator has a sense of how she is connected all the way to the daily output of final assembly. She knows that the cutting operation needs to meet certain schedules or react to specific pull signals. When the laser operator and the production foreman understand the role they play, you can expect higher performance and genuine interest.
What about the press brake operator? Instead of grumbling about having to do another changeover, the operator is in tune with what needs to be produced and by when. In cases where you have great linkage up and down the value stream, when you’re using visual replenishment signals, and you’re communicating effectively in your daily standup meetings, the press brake operator knows what to make next. The process tells them. The production foreman only needs to deal with exceptions or changes to the routine. Both the operator and the production foreman are looking for ways to minimize the non-value-added changeover downtime.
Being process-focused, you know what variables affect the upstream process performance, you collect and use relevant metrics, and your employees are engaged because they know how they fit into the big picture. You have a learning, continually improving organization.
Of course, outcomes matter too. Focusing on either extreme, be it the process or the outcome, creates serious risk. If you have complete focus on outcomes and you have no process improvement, then it is just another day of “get it out the door.”
On the other hand, if you have complete focus on the process, you might lose sight of getting the job done. People might be working tirelessly toward process improvement, but because you’re ignoring outcomes, your customers see your performance suffering.
That said, focusing solely on outcomes is far more common. It’s the environment many in manufacturing have lived in for decades. If this applies to you, then bust through that outcome bias to a place that is appropriately balanced between outcomes and processes. This affects everyone from the top floor to the shop floor.
It’s all about balance. Think about that balance in your organization. Are you more focused on the outcomes or processes? Your answer will help you tune up your Lean approach. Let’s get that horse back in the barn!
Written by: Jeff Sipes, Principal, Back2Basics LLC, for thefabricator.com.