THE KAIZEN PARA­DOX:

How in­cre­men­tal im­prove­ments can im­pede in­no­va­tion in au­to­ma­tion of ware­hous­ing and dis­tri­bu­tion

DEMM Engineering & Manufacturing - - INTERNET OF THINGS - BY PAU L S T R I NGL EM A N, S E N I O R C O N S U L T A N T, S W I S S L O G .

THIS IS THE KAIZEN PARA­DOX KAIZEN AND KAIKAKU

Kaizen. It is a word syn­ony­mous with im­prove­ment in or­gan­i­sa­tions around the world. While the Ja­pa­nese word lit­er­ally means ‘ im­prove­ment’, in in­dus­try and busi­ness the fo­cus is on small, con­tin­u­ous steps to bet­ter pro­cesses. It is em­bed­ded in the man­age­ment think­ing of many or­gan­i­sa­tions.

Ja­pa­nese busi­nesses de­vel­oped Kaizen prac­tices around the 1950s, most notably Toy­ota as part of their Toy­ota Pro­duc­tion Sys­tem. Af­ter study­ing why the com­pany was so suc­cess­ful at high-vol­ume pro­duc­tion of high­qual­ity ve­hi­cles in the 1960s, Masaaki Imai wrote sev­eral books on Kaizen and formed the Kaizen In­sti­tute, spread­ing the knowl­edge and prac­tice around the globe.

How­ever, there are times when Kaizen is not enough. Worse still, a small im­prove­ment can of­ten hold an or­gan­i­sa­tion back, per­haps even sti­fling sig­nif­i­cant de­vel­op­ment. In the 1980’s, author and busi­ness pro­fes­sor Oren Harari fa­mously pointed out that not ev­ery­thing that ex­ists could have been de­vel­oped by con­tin­u­ous im­prove­ment alone. This idea is cap­tured in an­other Ja­pa­nese word that is less well known but equally im­por­tant: Kaikaku.

Kaikaku means ‘rad­i­cal change’. It de­scribes the other side of im­prove­ment: the ma­jor step for­ward, or big leap. An anal­ogy is a home il­lu­mi­nated by can­dles; while Kaizen im­proves upon the can­dle, Kaikaku is the in­stal­la­tion of elec­tric light.

Kaikaku is a less fa­mous but equally im­por­tant part of the Toy­ota Pro­duc­tion Sys­tem and is of­ten over­looked by or­gan­i­sa­tions in their rush to embrace Kaizen.

THE KAIZEN PARA­DOX AND THE IS­SUES IT CRE­ATES

Small im­prove­ments com­mit re­sources that could be bet­ter spent to­ward a larger step for­ward in per­for­mance, or with more strate­gic plan­ning, could have con­tributed to a ma­jor change.

Fi­nally, when a Kaikaku op­por­tu­nity ex­ists, the Kaizen path weak­ens the Kaikaku ROI and pro­duc­tiv­ity can plateau at a lower level. This is the Kaizen Para­dox at work.

PARA­DOX IN PRAC­TICE

In a re­cent real- world ex­am­ple, a com­pany was seek­ing to iden­tify a so­lu­tion for an au­to­mated ‘goods-to- per­son’ ware­house in a bid to achieve a sig­nif­i­cantly higher level of busi­ness per­for­mance.

How­ever, a year ear­lier the com­pany had in­vested in a mech­a­nised ‘zone– to-zone or­der pick­ing’ so­lu­tion, con­sist­ing of con­vey­ers and car­ton stor­age shelv­ing.

Although the project was still in the com­mis­sion­ing phase, se­nior man­age­ment could see that the so­lu­tion wasn’t go­ing to meet their long-term re­quire­ments. For­tu­nately, the mech­a­nised so­lu­tion didn’t oc­cupy the en­tire ware­house, mak­ing it pos­si­ble to build an au­to­mated goods-to- per­son so­lu­tion on the same site.

De­vel­op­ing a busi­ness case for a good­sto- per­son au­to­mated so­lu­tion, the com­pany gath­ered quotes to ei­ther move the zone-to­zone so­lu­tion, re­design it, or scrap it al­to­gether.

It soon be­came clear that the mech­a­nised sys­tem made it much harder for them to pro­ceed with the au­to­ma­tion they re­quired, as the busi­ness had in­vested a large sum on a now largely re­dun­dant piece of equip­ment that oc­cu­pied a prime po­si­tion in the ware­house. Un­less the mech­a­nised sys­tem could be­come part of the fully au­to­mated so­lu­tion, the com­pany also faced the cost and em­bar­rass­ment of scrap­ping the new in­stal­la­tion.

While the mech­a­nised sys­tem im­proved pro­duc­tiv­ity from 50 to 150 or­der lines per hour per per­son, the au­to­mated goods-top­er­son sys­tem would de­liver 500 or­der lines per hour per per­son. As a re­sult, al­most a third of the pro­duc­tiv­ity gain that would have been re­alised in go­ing from a man­ual to an au­to­mated oper­a­tion was al­ready de­liv­ered by the mech­a­nised sys­tem. This wors­ened the busi­ness case, ex­tend­ing the ROI of the de­sired au­to­mated sys­tem by an ex­tra year. Be­cause the mech­a­nised sys­tem could not be in­cor­po­rated in the au­to­mated so­lu­tion, there was no re­duc­tion in the cost of the re­quired au­to­ma­tion.

This is just one ex­am­ple of the Kaizen Para­dox, which is a com­mon predica­ment for many busi­nesses, where in­vest­ments are made to achieve pro­duc­tiv­ity gains, but in do­ing so they di­lute the busi­ness case for a bet­ter in­vest­ment, caus­ing them to plateau at a lower level of pro­duc­tiv­ity.

TOOLS AND AP­PROACHES TO SUP­PORT BEST PRAC­TICE

Both man­ual and mech­a­nised ware­houses in­volve ‘goods to per­son’ in some form. The dif­fer­ence be­ing the way the or­der tote moves around the fa­cil­ity, trol­ley or pick­ing truck to con­veyor, and the ad­di­tion of WMS soft­ware to con­trol or­der pick­ing more ef­fi­ciently. These im­prove­ments have helped re­duce the time be­tween pick op­er­a­tions and grad­u­ally lif t pro­duc­tiv­ity from around 50 to 150 or­der lines per hour per picker.

The Kaikaku oc­curred when goods-to- per­son tech­nol­ogy was de­vel­oped that rad­i­cally trans­formed the way or­ders were picked, al­low­ing a sta­tion­ary worker or a ro­bot to pick from prod­ucts de­liv­ered to them in se­quence. This can typ­i­cally boost in­di­vid­ual picker per­for­mance to be­tween 500 and 1,000 or­der lines per hour and min­imise the labour re­quired, while at the same time sig­nif­i­cantly re­duc­ing the ware­house foot­print due to higher den­sity stor­age.

An au­to­mated goods-to- per­son ware­house can typ­i­cally achieve the same through­put as a man­ual or mech­a­nised oper­a­tion, with around half the staff and in half the build­ing size. As a re­sult, a strate­gic ap­proach to au­to­ma­tion can save sig­nif­i­cantly on the cost of ware­house ex­pan­sion or re­move the need for re­lo­ca­tion, pro­long­ing the life of the ex­ist­ing fa­cil­ity.

This more strate­gic ap­proach to Kaikaku can pro­tect an or­gan­i­sa­tion from be­ing trapped in a fo­cus on low per­for­mance op­er­a­tions. Be­ing cursed with the Kaizen Para­dox.

NEXT STEPS FOR BOARDS AND MAN­AGERS

For suc­cess­ful or­gan­i­sa­tions, ma­jor leaps for­ward in per­for­mance are of­ten ap­proached strate­gi­cally. Kaikaku in­vest­ment are made be­fore Kaizen im­prove­ment.

Ev­ery busi­ness is striv­ing to im­prove, but not all im­prove­ments are com­ple­men­tary or equal. Op­por­tu­ni­ties to stay ahead of the com­pe­ti­tion can be stalled by an or­gan­i­sa­tion’s own ef­forts. Crit­i­cal to en­dur­ing com­pet­i­tive­ness are a reg­u­larly re­viewed strate­gic ap­proach to im­prove­ment, and a long-term strat­egy to de­liver.

The Kaizen Para­dox is a com­mon predica­ment for many busi­nesses, where in­vest­ments are made to achieve pro­duc­tiv­ity gains, but in do­ing so they di­lute the busi­ness case for a bet­ter in­vest­ment, caus­ing them to plateau at a lower level of pro­duc­tiv­ity. Once or­gan­i­sa­tions are aware of the po­ten­tial for in­vest­ments that cre­ate a Kaizen Para­dox, they are bet­ter able to con­sider po­ten­tial im­prove­ments as part of a big­ger, longer-term pic­ture.

PATH­WAYS TO AU­TO­MA­TION THIS IS A GRAPH OF PRO­DUC­TIV­ITY VS. CU­MU­LA­TIVE ROI PER IN­VEST­MENT. BY FO­CUS­ING EX­CLU­SIVELY ON SMALL IM­PROVE­MENTS, AN OR­GAN­I­SA­TION MAY MISS AN OP­POR­TU­NITY TO GAIN A COM­PET­I­TIVE AD­VAN­TAGE IN COSTS AND CUS­TOMER SER­VICE. IF COM­PETI­TORS TAKE A BIG LEAP, AN OR­GAN­I­SA­TION WILL BE LEFT BE­HIND, STILL MAK­ING CAN­DLES IN A LIGHT BULB MAR­KET.

MAK­ING THE LEAP WITH IN­DUS­TRY 4.0

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