Glossary

Important terms to know about performance improvement

POWERS' CORE TERMS

Front-line Leadership

A crucial component of maximizing productivity and streamlining business processes. Front-line leaders are responsible for ensuring that day-to-day performance metrics are met. Front-line leadership is more than problem-solving and direct management—effective front-line leaders understand their business well enough to be proactive as well as reactive. They predict potential problems, and use their hands-on experience to communicate effectively to fellow employees. Effective front-line leaders are motivating role models and steadfast bulwarks that ensure a company operates at full capacity.

Maintenance Performance

The ability of a business to effectively maintain equipment and avoid unplanned gaps in productivity. An optimized maintenance performance strategy is necessary to avoid unplanned downtime and save money. One aspect of an effective maintenance management strategy is the implementation of a computerized maintenance management system. These systems afford efficiency and accurate maintenance monitoring to ensure work orders and maintenance schedules are streamlined and effective.

Management Operating Systems

A set of procedures and frameworks by which an organization’s employees operate. An effective management operating system (MOS) ensures that data is gathered and used to implement new strategies to prevent business issues such as production shortfalls and worker safety. An effective management operating system uses data analysis to create new policies that increase productivity and save money.

Operational Culture

The application of a company’s culture in productivity improvement. Operational culture refers to the ability of the company’s culture to be absorbed and retaught in order to maximize productivity and employee satisfaction. A successful operational culture enables employees to feel represented and meaningful in the workplace, which decreases turnover and increases productivity. A successful operational culture also guides hiring and firing decisions, so that employees share the values and personality of the company.

Shop Floor Excellence

Shop floor excellence is achieved when routine accountability habits are practiced consistently to ensure safety and productivity on the shop floor. The site leader must have a compelling vision and communicate it persistently at all levels to achieve true shop floor excellence. Holding site workers accountable is also necessary—effective communication and regular accountability meetings enable site leaders to ensure that best practices are implemented on the shop floor. When best practices are met, leaders are free to focus on problem-solving and team support. Shop floor excellence is a shop floor that operates predictably and productively, with accountable workers and proactive leaders.

GLOSSARY TERMS

Company Culture

The set of shared values, goals, beliefs, vision, habits and practices that characterize an organization. Company culture is essentially the personality of a company: how employees behave in the company and how the organization gets things done.

DMADV or DFSS (Define, Measure, Analyze, Design, Verify)

Design for Six Sigma (DFSS) is a framework used when creating a new process or product design. DMADV is the core tool used to drive Six Sigma projects, and consists of five phases: Define design goals; Measure and identify characteristics that are critical to quality, Analyze to develop and design alternatives; Design an improved alternative; Verify the design.

DMAIC (Define, Measure, Analyze, Improve and Control)

A data-driven cycle used for projects aimed at improving, optimizing and stabilizing an existing business process or design. DMAIC is the core tool used to drive Six Sigma projects, but is not exclusive to Six Sigma, and consists of five phases:

Define the system; Measure key aspects of the current process and collect relevant data; Analyze the data to investigate and verify cause-and-effect relationships; Improve or optimize the current process based upon data analysis; Control the future state process to ensure that any deviations from the target are corrected before they result in defects.

Kaizen (Continuous Improvement)

Kaizen (改善) is a philosophy derived from two Japanese words: Kai (improvement) and Zen (good), literally translating to “continuous improvement”. Kaizen is about achieving improvements by taking small steps instead of drastic, rigorous changes, and in business, refers to activities that continuously improve all functions and involve all employees – from the CEO to the assembly line workers. Kaizen originated in post-World War II Japanese quality circles, and was developed in the manufacturing sector to lower defects, eliminate waste, boost productivity, encourage worker purpose and accountability, and promote innovation.

Labor Participation Rate

A metric that measures the number of people who are currently employed or actively looking for work in the job market. It omits members of the military or those who are institutionalized in prisons, nursing homes, or mental hospitals and includes everyone 16 or older, comparing the proportion of those who are either working or actively seeking work to those who are not.

To calculate the labor force participation rate is to divide the sum of everyone who is working or seeking employment by the total number of non-institutionalized, civilian working-age population.

Lean Manufacturing

Founded on the concept of continuous and incremental improvements, lean manufacturing is a systematic approach to reduce or eliminate activities that don't add value to your processes. It emphasizes removing wasteful steps in a process and taking from it only value-added steps, to ensure high quality and customer satisfaction.

Manufacturing Overhead

Any costs incurred by a factory during the production process outside of the direct materials and direct labor needed to manufacture goods. It can be calculated using The Manufacturing Overhead Formula:

Manufacturing Overhead Rate = Overhead Costs/ Sales x 100

First, you must identify any costs that help production to run as smoothly as possible. Then you add any indirect costs to find the total manufacturing overhead.

Once you have estimated the monthly costs of overhead, you will then need to determine what the overhead rate is. This is the monthly percentage that you will need to pay for overhead. To get this number, you divide your monthly overhead costs by the number of total monthly sales. Then, you multiply this number by 100.

Operational Excellence

A workplace process and philosophy that utilizes problem-solving, teamwork, and leadership to result in ongoing improvement in an organization. The process focuses on the customers' needs, keeping the employees positive and empowered, and continually seeking improvement in the current activities in the workplace. The execution of the business strategy more consistently and reliably than the competition, with lower operational risk, lower operating costs, and increased revenues relative to its competitor. This occurs when every employee can see the flow of value to the customer and fix it when the flow is interrupted.

Key process methodologies include Lean Manufacturing, Six Sigma, Kaizen, Hoshin Planning, Balanced Scorecard.

Performance Optimization

An iterative approach of making modifications to processes to ensure a company is deploying financial, material, human, and technological resources as efficiently and effectively as possible, then moderating the modifications for optimal performance.

Six Sigma

A method that provides organizations tools to improve business process capabilities. This increase in performance and decrease in process variation helps lead to defect reduction and improvement in profits, employee morale, and quality of products or services. Its strategies seek to improve the output quality of a process by identifying and eliminating the causes of defects, and minimizing impact variability in manufacturing and business processes. It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization who are experts in these methods.

Six Sigma is synonymous with the martial-arts-based instructional belt levels—Green Belt, Black Belt and Master Black Belt, etc.—that indicate the different roles and abilities of problem solvers.

Total Productive Maintenance (TPM)

The process of using machines, equipment, employees and supporting processes to maintain and improve the integrity of production and the quality of systems . The goal of any TPM program is to eliminate losses tied to equipment maintenance by producing only good product, as quickly as possible with no unplanned downtime, in order to reduce the operating cost to an organization.

Total Quality Management (TQM)

A system of management based on the principle that every staff member must be committed to maintaining high standards of work in every aspect of a company's operations. The continual process of detecting and reducing/eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that employees are up to speed with training.

Toyota Production System (TPS)

This system, more than any other aspect of the company, is responsible for having made Toyota the recognized leader in the automotive manufacturing and production industry it is today. It is also a major precursor to Lean Manufacturing.

The purpose is to identify and reduce three primary obstacles or deviations from optimal allocation of resources within the system: Overburden (muri), Inconsistency (mura), and Waste (muda)

TPS is grounded on two main conceptual pillars:
Just-in-time – meaning “Making only what is needed, only when it is needed, and only in the amount that is needed”
Jidoka or Autonomation – meaning “Automation with a human touch”