The Primary Drivers for Continuous Improvement: The Reduction of the Triad of Waste

Abstract

Globalization (the rise of market capitalism around the world) has been a stimulus for a transformation in regional integration through trading blocks such as the North American Free Trade Agreement (NAFTA), the Southern Common Market (MERCOSUR), and the European Union (EU). It is typified by the flow across national borders of money, technology, information, and goods. New communication and transportation systems allow for unprecedented movement of ideas, skills, data, and products. Soon there may be fewer truly national products, technologies, corporations, or industries. As many industries adjust to this changing marketplace, organizations need the capacity to change faster and more effectively. Commonplace business realities are that shareholders expect more, competition is more intense, costs and inventories are too high, purchased materials are past due, and firms struggle to ship on time. At the same time, customers are demanding customized products, smaller orders, shorter lead times, and extended services at lower prices. Moreover, the explosion of technology within sophisticated supply chains is transforming organizations from standalone hierarchies to web entities that must learn how to manage the technology and deal with things outside their control. Alliances, mergers, outsourcing, restructuring, downsizing, right-sizing, reengineering, and other related strategies describe how organizations are maneuvering to remain competitive. Pundits expound lean and agile approaches for competing in this increasingly-demanding and rapidly-changing business environment. These approaches advocate eliminating wasteful and time-consuming activities that do not add value to the product (Bessant et al., 1994; Stalk and Hour, 1990; Womack and Jones, 1996). It is the prevailing emphasis on waste elimination that guides competitive tactics, drives improvement efforts, and serves as the basis for this article on generic waste reduction. A case can be made that all organizations are in the service business as they compete to serve targeted customers. Manufacturing organizations no longer provide only physical products in their offerings, and service-oriented firms deliver products that complement their services. Just as important as product characteristics are customer requirements for convenience factors such as delivery, location, availability, unique features, credit terms, payment options, return privileges, and subsequent technical support. Purchases and future patronage are predicated on the complete package of offerings and the satisfaction attained from previous encounters with the organization. Organizational improvement strategies should focus on making these interactions more purposive to the targeted customer base. A change in circumstance or condition is frequently the impetus for improvements, and subsequent improvements create their own level of change. While all improvements result in some degree of change, to change and to improve are two different things. Every improvement is a change, but not every change is an improvement. Change is a necessary but insufficient condition for improvement. As changes likely will occur faster and with more force than ever before, the opportunities for improvement will not terminate but only intensify (Welch and Slater, 2001). Thus, a status quo orientation can be perilous for complacent incumbents. The improvement journey can be a road filled with bumps, detours, and roadblocks. With a viable vehicle and a good road map, the journey can be made less perilous. There is a tendency to look for the mystical silver bullet that will solve all organizational problems and create permanent advantage. Permanent competitive advantage is a fantasy. While there are vast differences in business processes, there are surprising similarities when pursuing improvement opportunities. If properly applied, all of the popular approaches (JIT, TQM, Six Sigma, Lean Manufacturing, Agile Production, etc. …

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