Continuous Improvement Strategies of Australian Hardware

You must be able to demonstrate knowledge of the principles and techniques of continuous improvement by incorporating them into a continuous improvement (CI) procedure developed and implemented by a team.

You will present a written feedback report on implementing Australian Hardware’s continuous improvement processes, following on from your collaboration workshop in Assessment Task 1 and your coaching demonstration in Assessment Task 2.

You will create a small database using Excel or Access by inputting data provided by your assessor, and will explore outputs such as spreadsheets to monitor and review performance.

You will addresses four (4) knowledge questions (in a written report) on implementing a continuous improvement procedure, with recommendations to explain how collaboration and coaching demonstrate continuous improvement principles using CI techniques, and evaluate your own performance in the CI process.

Finally, in a case study of ACME Steel, you will apply the same CI principles and answer four questions by way of evaluation and feedback.

1. Review your collaborative workshop planning (from Assessment Task 1) and your coaching/mentoring session, together with your recommendations (from Assessment Task 2) on Australian Hardware’s continuous improvement process.
2. Write answers to the four knowledge questions (in Appendix 1 below), as preparation for your continuous improvement (CI) report.
3. Prepare a written report on the outcomes of the continuous improvement process at Australian Hardware, including:
   1. discussion of feedback from workshop and coaching participants
   2. a list of typical areas of need for coaching and mentoring to support continuous improvement
   3. your recommendations (from Assessment Task 2) for further service and productivity improvements, including the procedure for recordkeeping
   4. database report or spreadsheet
   5. an explanation of how change management techniques can support continuous improvement and initiative.
4. Read the ACME Steel case study (Appendix 3 below), and write your answers to the four questions on continuous improvement at ACME Steel (Appendix 2 below).
5. Submit all documentation to your assessor in accordance with the specifications below.

You must submit:

• a written report on continuous improvement processes at Australian Hardware, including, or with attached:
  • feedback from coaching participants
  • a list of typical areas of need for coaching and mentoring in continuous improvement
  • recommendations for service and productivity improvements
  • reference to recordkeeping procedure
  • data evidence in a spreadsheet/summary report
  • explanation of how change management techniques can support improvement and initiative
• written responses to continuous improvement knowledge questions
• written responses to questions on continuous improvement at ACME Steel.

Your assessor will be looking for:

• answers which demonstrate an understanding of continuous improvement principles, systems, techniques and tools
• evidence of effective collaboration with others, including taking an active role in facilitating communication in a group and taking a lead role on occasion
• evaluation of the effectiveness of decisions in terms of how well they meet stated goals
• use of a range of digitally based technology and applications to access and filter data, extract, organise, integrate and share relevant information (e.g. Excel or Access, to produce mock-up of data)
• use of technology to monitor and review performance
• recognition of potential of new approaches to enhance work practices and outcomes.

• No changes to the assessment procedure or specification are required.
• Documentation may be submitted electronically.
• A follow-up interview may be required (at the discretion of the assessor).

Ans. A. For Australian Hardware Ltd., continuous improvement is a tool to accomplish the business objectives along with implementing them. The continuous improvement strategies have been designed in a way so that the company meet the strategic objectives which are a part of the business plan of the company. This business plan leads to business goals of Australian Hardware (Hopper, 2017). B. The four elements of continuous improvement implemented by the team at Australian Hardware Ltd. Are; 1. Knowledge sharing with the evaluation of data and analysis reports. 2. Quality Management so that quality at each and every process is pursued by the company. 3. Enhancing customer satisfaction by the use of strategies so that the quality of products is improved and setting up KPIs. 4. As the CI coaches conduct training session the environment of learning and self-improvement is established. C. Australian Hardware involved many stakeholders from all levels of operation in the process of continuous improvement. The COO, CFO, marketing managers, operation managers, human resource manager and the store managers are a part of continuous improvement system (Stillwagon, 2015). D. To successfully implement the continuous improvement we as a part of the Australian Hardware team developed many strategies according to the business plan of the company. Firstly, the current operational processes were reviewed to analyse the problems. To gather this information, different tools like questionnaire, documented data and the reports were used. In accordance to this data, observations, goals, KPIs ad action plans were developed to implement the continuous improvement system. All the stakeholders were included in the process and a total quality management methodology was implemented.

Describe how the vision and goals of Australian Hardware helped develop the culture of continuous improvement (what drives a continuous improvement culture?)

Ans. The vision and business goals which were developed by the Australian Hardware helped in many ways in developing and enhancing the culture of continuous improvement. The top level management in the stores and the team levels adopted continuous improvement. To demonstrate the vision and understand the competition many training sessions were organised. Each and every employee at every level was made to learn about the importance of the continuous improvement system. In Australian Hardware, everyone can put their ideas forward about the processes to make it better. The vision of the company is a five-year vision improvement plan which helps in the process of developing continuous improvement culture for the business. The five-year vision plan comprises of continuous improvement part of daily life, learning environment, team working, customer focused, and high performance.

 

How will achieving its KPIs help Australian Hardware improve customer satisfaction (what do customers of Australian Hardware want)?

Ans. A Key Performance Indicator (KPI) is defined as a measurable value which calculates how effectively a company is attaining its key business objectives and goals. Before the implementation of KPIs, measure at ACME was based on the tonnes of the steel rolled. The major disadvantage of this measure was that it never showed whether it met the customers’ needs or not. Australian Hardware has set KPIs which mainly focus on meeting the customers deadlines in the following ways: 1. Customers will always get their deliveries on time i.e. a zero backlog of customer orders. 2. In allocated week, meeting the targets for rolling the steel plate. With the help of KPIs, Australian Hardware continuously examines and calculates how its operations are in the steel industry as compared to the other producers and competitors. ACME continuously reviews its activities so that it can achieve maximum profits. After analysing the data of the KPIs, it sends the data within and across the organisation so that the employees can makes improvements in it. The technical knowledge and information is also escalated across the steel industry with the help of international group. A brief analysis of the KPIs shows that the the plate mill is achieving its targets for rolling steel in planned weeks and is delivering almost 100% of customers’ orders complete and on time. ACME plate team reduces the lead time by aiming to have all the orders complete on time by March 2009.

What tools did you use to undertake the analysis you carried out at Australian Hardware? Why were these tools appropriate?

Ans. The tool which was used in this case study of Australian Hardware is process mapping. The continuous improvement system is always made with a precise understanding of the process which is determined for improvement. Process mapping is basically a flow charting method which describes each and every step of a process. Australian Hardware used many visual management techniques like flow charts and wall charts. With the help of these charts, the company got a brief description of the necessary resources and the stakeholders of each step. According to me, this tool is appropriate as it helps the organization to implement continuous improvement system. It describes the starting point process from which a comparison of the improvement can be made along with the scope of each process and its interfaces with the other related processes.

1. Define continuous improvement as implemented by ACME.
2. Name four or more elements of continuous improvement ACME implemented.
3. Who was involved in the process (which stakeholders)?
4. What did ACME do to enable the continuous improvement implementation to succeed?

Ans.  A. According to the personnel of ACME Steel, continuous improvement is the consistent efforts towards upgrading the products and services. Planning helps in achieving step-by-step improvement. Evaluation is an essential component, which helps the personnel to assess the effectiveness, appropriateness and feasibility of the planned improvements. Recently, the company has developed strategic objectives for improving the focus of the business activities. The development of business plan is justified in terms of sustaining the position in the competitive ambience. B ACME Steel needs to be praised for envisioning operational excellence through the inclusion of  the following in the continuous improvement plan: · Employee accountability · Risk identification · Risk control · Knowledge sharing · Change management · Leadership  C. Employees, customers and managers were directly involved in the continuous improvement process. Access needs to be provided to each one of them so that they can provide their valuable opinions towards making improvements in the business operations. D. The personnel of AcME Steel undertook evaluation, which brought to the forefront the drawbacks in the business operations. This compelled the personnel to propose modifications for making up the drawbacks. Therefore, an implementation plan was developed, based on the proposed changes. The proposed continuous improvement plan was also evaluated. This was done in the form of meeting involving all the stakeholders and shareholders. Interactive session proved beneficial in terms of clarifying the doubts related to the assigned duties and responsibilities. This clarification enabled the personnel to carry out the business activities in an efficient and effective manner, which enhanced the productivity. All these aspects relate to the success of continuous improvement implementation plan. Continous relates to the hard work and efforts of the employees towards fulfilling the identified and the specified objectives. Improvements are the evaluations conducted by the employees for upgrading the standards and quality of current performance level.

Describe how the vision and goals of ACME helped develop the culture of continuous improvement (what drives a continuous improvement culture?)

Organizational culture is an integral aspect in the business issues. The approach of the employees towards the preservation of the culture reflects the kind of work they would deliver for enhancing the productivity. Setting goals and vision can be considered as an attempt of ACME Steel managers to regulate the performance of the employees. However, ensuring that all the employees had access to the goals and objectives was apprehensible in terms of the ACME managers. This mentality exposed the leadership attributes of the managers in terms of enhancing the professional skills and abilities of the employees. An important aspect here was the engagement of the employees into the decision-making process for the proposed improvements. Consistent efforts in seeking innovative methodology are one of the aspects, which needs to be applauded. The major drive behind this is the provision of efficient, effective and flexible technology, which enhanced the workplace diversity.   One of the typical example of the technology can be social media, which would help the personnel to reach to large number of customers. Here, culture refers to ensuring the safety and security of the customers from the cyber crimes. Privacy policies and cookies prove effective in this regards. Herein, lays the necessity of indulging in partnership with the statutory body of law.

How will achieving its KPIs help ACME improve customer satisfaction (what do ACME’s customers want)?

Ans. A Key Performance Indicator (KPI) is defined as a measurable value which calculates how effectively a company is attaining its key business objectives and goals. Before the implementation of KPIs, measure at ACME was based on the tonnes of the steel rolled. The major disadvantage of this measure was that it never showed whether it met the customers’ needs or not. This compelled the personnel to encounter severe losses in terms of customer and employee turnover, resulting in a poor revenue and profit margin. This alarming vulnerability forced the personnel to put on their thinking hats for upgrading the performance. The result of this was assessing the effectiveness of the current KPI’s. Feedbacks from the customers were the next step, which made the personnel aware of their specific tastes and preferences. An insight into the customers’ specific needs would enable the personnel to prepare plans for modifications of the KPI’s. The customers wanted timely deliveries. Therefore, zero backlog was one of the modification in the KPI. For this, meeting was planned in order to make systematic progress towards upgrading the standards and quality of performance. Evaluation would be one of an essential step in this regards towards improvement. Training can be one of the solutions, which would enrich the preconceived skills, knowledge and expertise of the employees. Taking post-training tests would help the managers of ACME to assess the skills and capabilities of the employees to make practical application of the learnt skills in carrying out the assigned duties and responsibilities. These tests would be fruitful in regulating the performance of the employees. Rationality in this regulating would act as an agent in achieving large scale customer satisfaction. For this, the managers need to appraise the performance of the employees. Prior to this, the provision of safe and comfortable workplace is needed, so that the employees can expose better performance. Herein lays the setting of key performance indicators, which would bring noticeable alterations in the performance of the employees. Setting goals would improve the focus of the employees towards the business operations. This would result in the production of quality and branded products, escalating the sales revenue and profit margin of ACME. This escalation is directly related to the achievement of customer satisfaction. In order to retain the customers, the personnel need to make consistent efforts for innovating the business products and services.

What tools were used to undertake the analysis carried out by ACME described in the case study? Why were these tools appropriate?

Ans. The tool which was used in this case study of ACME is process mapping. Mapping the process helped the personnel of ACME to become familiar with the processes for continuous improvement. As a matter of specification, the flow chart provides the personnel with a better grasp over the processes, which they are to undertake for implementing the improvements. Utilization of process maps proved helpful during the training process. This is in terms of enhancing the clarity of employees regarding the execution of the processes in an efficient and effective manner. Viewing it from the other perspective, the process maps helped the ACME personnel to establish the relationship between the processes. This was an additional assistance towards adopting the appropriate process for altering the scenario of the workplace. Strategies were also one of the tools used by ACME for improving the business. Strategies proved effective in terms of systematizing the business operations according to their priority. This systematization, in turn, was an agent in terms of achieving successful completion of the projects. Planning was one of the other aspects highlighted in the case study. Setting goals added value to the attempts of the personnel in terms of improving the focus on the business operations. Consistent evaluation was the keystone towards enhancing the brand image through the preservation of the workplace culture.   Meetings proved appropriate in terms of assessing the effectiveness, appropriateness and feasibility of the undertaken steps. Along with this, meetings proved essential in terms of providing a platform to the employees for voicing out the opinions regarding the issues, which they are facing while executing the assigned duties and responsibilities. Involving the stakeholders and shareholders in the meetings seemed beneficial in terms of gaining an insight into their needs, demands and requirements. Taking feedbacks from the stakeholders and shareholders made the personnel aware of their approaches towards the undertaken steps. Providing training to the employees regarding the basic managerial issues can be beneficial in terms of enriching their knowledge, skills and expertise. Here, the managers need to assess that the employees get full access to the training courses. Development of policy indicates a gradual progress towards the proposed improvements. This is in terms of achieving loyalty, trust and dependence from the customers. However, rationality is needed in terms of regulating the trafficking of the audience towards the brand. Continuous evaluation is needed in terms of seeking innovations towards retaining the customers and the employees.

The steel manufacturing company ACME focuses on meeting the needs of its customers and providing innovative solutions. ACME manufactures, processes and distributes steel products worldwide.

Steel is everywhere in our homes and all around us. The key markets for ACME include construction, energy and renewables, engineering and machinery, mining and earthmoving equipment, shipbuilding, fastenings and rail.

The principle manufacturing site in Australia is a plate mill site employing 5,500 people. The site consumes 3 million tonnes of iron ore and 1 million tonnes of coal each year to produce 2.1 million tonnes of steel products.

ACME products go into a range of leading-edge developments:

Rail	Main supplier to major rail networks, including train services.
Steel sections	Wide-ranging construction projects – e.g. warehousing, shopping centres, hospitals, tower blocks, bridge components, stadia, machinery.
Steel rods	Everything from paperclips and bolts, to bed springs, wire (for fencing and agriculture) and tyre cord (for strengthening vehicle tyres).
Steel plates	Construction and mining machinery, bridges, major construction projects, tanks and pressure vessels. Steel plate is also used in harnessing renewable energy such as in wind turbine towers.

Modern steel production is a large-scale operation dealing in huge quantities of materials and products. The process of steel plate production has several stages:

? receipt of pre-cut steel slabs from the steel plant ? reheating of slabs ? rolling to achieve required dimension and mechanical properties ? initial inspection for surface or quality defects

? cutting to order size ? marking with unique identities ? cold levelling to agreed flatness standard ? final inspection ? loading and despatch to customer.

Four Elements of Continuous Improvement Implemented by Australian Hardware

Producing large volumes helps to drive down the costs of running a huge and expensive steel plant. Overall, this results in steel being a relatively inexpensive product, typically around $1.50 per kilogram – about the same price as a kilogram of potatoes!

In a major building project, such as a shopping complex, the cost of the steel can be as little as 5% of the overall cost of the project. Because of these issues, ACME needs to differentiate its business from its competitors in order to continue to grow.

ACME’s business strategy is to produce quality steel to satisfy customer requirements, focusing on delivering products at the right time in order to secure profitable business. A key challenge is to meet the increasing demands for more steel, at increasing levels of quality, and to comply with more demanding delivery requirements. It would be straightforward to meet these challenges using brand-new facilities. However, a new ‘greenfield site’ steel mill could cost more than $900 million to build. ACME therefore needs to make process efficiencies and quality and delivery improvements with its existing manufacturing plant. This presents challenges when older facilities are not well structured to use modern manufacturing techniques and resources.

This case study focuses on the process of continuous improvement (CI) at the ACME steel plate manufacturing mill. It will show how ACME is finding new ways of achieving its objectives from existing resources.

Continuous improvement is often referred to by the Japanese word ‘Kaizen’. Kaizen means ‘change for the better’ and covers all processes in an organisation. These include engineering, IT, financial, commercial and customer service processes, as well as manufacturing. CI involves making continual small improvements to a process rather than big changes at irregular intervals. This requires close monitoring and control, and changes to the uses of manpower, machinery, methods, materials and money to improve business efficiency.

Continuous improvement starts with management and under their leadership works down through the organisation. The underlying theme is that everyone is responsible and has a part to play in making improvements. All employees must work together to identify the steps needed to improve working practices. Planning meetings help teams to focus on satisfying customer needs. Visual management techniques, such as flow charts and wall charts, make clear what resources are necessary and who is responsible for each part in the process.

Everyone has the opportunity to eliminate waste. Waste is any activity or process that does not add value. A key question used to define waste is ‘would a customer pay for that process?’

Stakeholders Involved in Australian Hardware’s Continuous Improvement Process

There are seven main areas of waste for any business:

1. transportation – moving materials or products about
2. inventory – keeping too much or the wrong stock
3. motion – people moving or travelling excessively
4. waiting times – allowing products to wait for processing
5. overproduction – making too much
6. over-processing – doing too many processes during manufacture
7. defects – errors or flaws in the product, causing rework or needing to be scrapped.

Production processes that minimise waste are referred to as ‘lean production’. In these processes, the aim is to use less of everything; for example, space, materials or time.

The plate mill plant is looking to reduce waste in its manufacturing process. It has adopted the concept of ‘flow’. This means that the products are ‘pulled’ through the process according to customer demand. All parts of the production process, from the supply of raw steel (slab) to the finished steel plate, are carefully planned. Scheduling for each element of the process ensures that bottlenecks are kept to a minimum. Each process is paced to control the amount of product in each stage of the process. This ensures that processes operate smoothly without overload or delay and keep the desired output and quality.

Tonnage was the traditional key measure of productivity for ACME. For employees to work to a smooth-paced process, ACME needed a significant culture change.

CI needs team work. In the plate mill plant, a CI manager coordinates the process. 40 CI coaches chosen from the workforce received training to facilitate improvements. ACME put together a ‘toolbox’ of techniques which the coaches use with managers, employees and operators. These help everyone understand where and how they can improve their work. A CI culture means that everyone can put forward ideas and have a say in how processes can change for the better. This is known as engagement.

An organisation needs to know where it is going in order to be able to put in place the resources it needs to achieve its plans. This is set out in a vision. ACME plate mill has set out a five-year vision improvement plan which will help in the process of developing a CI culture for the business. Everyone in the organisation has to understand and actively support the plan. Workshops for all employees have taken place to explain the vision and why the change is necessary if ACME is to remain competitive.

Helped by the CI coaches, workers have drawn maps of their processes. These show the links between the stages of manufacturing as well as what information flow is needed. The maps show:

? details of tonnages ? number of products ? rework cycles ? inspection points

? stocks ? delays ? costs.

The first part of this process is a ‘current state value stream map’. This shows what the systems and processes are like now. The next stage considers what the ‘future state map’ would look like. This highlights what ACME needs to do to achieve this state; for example, investing in new processes, equipment or additional staffing. ACME plate mill has 16 system maps. These link to each other to give an overview of the whole process.

Approaches to Implement Continuous Improvement System at Australian Hardware

For each of the 16 systems, a number of rules about stock levels and stock rotation have been set up.

• Stock rotation ensures that the plates for one customer do not become buried beneath others and therefore delayed.
• The required amount of slab steel (‘feedstock’) must be in front of the mill by the Tuesday of the week in which the material is to be rolled.
• By rolling plates in the planned week, the mill is properly paced and all ‘downstream’ processes (such as cutting, levelling and inspection) can be scheduled accordingly.

Using the value stream maps has helped ACME to improve process flows and the working environment. It has also reduced unnecessary motion, transport and processing. By taking these small steps and involving everyone in the vision, the delivery of product has increased from 70% of plates on time to 92% on time.

CI working requires everyone to think differently about the way they work. It was recognised that people might be resistant, and cling to old ways of working. The key was getting all workers to see change as their responsibility. The CI coaches support the teams and individuals and promote or ‘champion’ new ways of working. Over time, the team and individuals are empowered to take responsibility and make decisions for themselves.

To help workers accept the changes, the five-year plan established a timeline for the program of introducing change.

	Year
2007	2008	2009	2010	2011
Nature of attitudes towards change within the organisation	Resistant (workers resist change)	Adaptive (workers begin to adjust to new ideas)	Accepting (workers start to apply new methods)	Embracing (workers recognise the benefits of change)	Performing (new ideas are fully adopted by the workers)
Expertise and responsibility for CI	CI coaches	Champions and change managers	Manufacturing and process managers	Team leaders	The team

An important part of the continuous improvement program was the creation of key performance indicators (KPIs).

Previously, measures at ACME were largely based on tonnes of steel rolled. This did not show whether it met customers’ needs or whether the steel needed reworking because it didn’t meet customer requirements.

ACME has set new KPIs which focus on meeting customer deadlines, such as:

• a zero backlog of customer orders – this means customers always get their deliveries on time
• meeting targets for rolling steel plate in its allotted week.

ACME monitors and measures how its operations compare with other producers and competitors in the steel industry. This process of benchmarking means that ACME is continually reviewing its activities to achieve best practice. ACME shares relevant information both within and across ACME to drive improvement. It also spreads appropriate technical knowledge and information across the steel industry through international groups such as the International Iron and Steel Institute.

There are significant costs involved in setting up a continuous improvement program, including:

• allocating employee time to participate in group work
• training coaches
• setting up a manual of tools and techniques.

However, ACME is already seeing the benefits of CI with:

• reduced waste through lean production
• improved product quality
• reduced rework time
• faster response times, giving more customers their orders on time
• becoming more competitive by driving down costs
• retaining/gaining customers through innovative products and services.

KPIs show that the plate mill is achieving its targets for rolling steel in planned weeks and is delivering almost 100% of customers’ orders complete and on time. ACME plate mill aims to have all orders complete and on time by March 2009, while at the same time reducing lead time.

The principles of team working help to create a more flexible workforce. This gives ACME the capacity to increase or change production when necessary. In addition, ACME employees are more likely to be satisfied and motivated when they feel that they are making a contribution. They can see that their expertise helps to create a more effective company. By empowering its workers, ACME gains a more committed workforce, which helps to drive further improvement.

Conclusion

ACME is transforming production at its plate mill plant through continuous improvement. This way of working encourages all employees to behave as team members to identify and support work improvement opportunities. Increasingly, employees at every level are making improvement their responsibility, which provides employee job satisfaction.

Continuous improvement helps ACME to provide quality products and services for customers with on-time delivery. CI supports ACME’s aim to achieve satisfied customers and secure repeat sales and longer-term orders. It is part of a long-term strategy based on service to develop the business. It aims to improve operational demands to fulfil customer expectations and outperform competitors.