Ever since Toyota revolutionized the world of manufacturing with what has come to be known as the Toyota Production System, countless companies across industry segments have invested significant time, money, and organizational bandwidth to replicate Toyota’s approach and results with their own version of a production system.
Yet despite the relative prevalence of a systemic approach to continuous improvement, there is still some ambiguity about what it means to pursue a production system, how a production system is differentiated from a business system, and how the organization can know if they’ve been successful in implementing a production system. Let’s take these questions one at a time.
What is a Production System?
This is the textbook example of a simple question with a somewhat complex answer. The term “production system” (or operating system...we’re assuming these terms to be interchangeable for the purposes of this article) is closely related to other familiar terms in this space, such as continuous improvement or operational excellence, but I believe most would contend that these terms are not interchangeable. Likewise, the concept of a production system can’t be linked directly to a particular CI methodology, such as Lean, Six Sigma, TQM, TPM, etc., although some combination of those methodologies are foundational to a production system approach.
So with that as background, the best working definition that we’ve surfaced is as follows: A production system is a common approach to managing and improving operations across a distributed manufacturing footprint by strategically implementing industry standard best practices.
This definition attempts to articulate what we believe to be a few critical elements of a production system approach, including:
Focus on driving commonality in day to day operations management and improvement
Minimize or eliminate the oscillating performance curve that exists within organizations that have multiple manufacturing locations due to this lack of a common approach to operations management and improvement
Utilize the right combination of CI methodologies and best practices
While the definition above doesn’t make this point explicitly, a common objective for all companies that undertake a production system journey is that they want to make their operations process dependent, not personality dependent.
What is a Business System?
Some companies that have invested in a systemic approach to CI don’t talk in terms of a production system but instead refer to a “business system.” One company that has developed a reputation for its business system is Danaher. The Danaher Business System (DBS) is “designed to continuously improve business performance in critical areas of quality, delivery, cost, and innovation.” That definition, while illustrative, doesn’t necessarily differentiate a business system from a production system.
So exactly how is a business system different than a production system? The answer has very little to do with any difference in the approach taken or the methodologies used. Instead the difference is primarily about scope. In other words, a business system is focused on the application of a systemic approach to operations management and continuous improvement across the entire business, inclusive of manufacturing, supply chain, and other corporate functions.
The “Litmus Test” for a Production System
A common issue for organizations taking a production system approach is knowing if they’ve been successful. In other words, how do you know if you have a production system in practice or in name only? There are three characteristics that we look for to know if a company has successfully driven a production system approach:
The organization has identified and documented the best operating practices for their business (i.e., the practices that help them to grow/maintain market share)
These practices have been implemented successfully across their manufacturing fleet. Signs of a successful implementation include:
Ownership and accountability for these practices exists within the line organization (no credit is given if ownership and accountability reside with the CI group)
The implementation of these practices can be independently verified (e.g., direct observation, interviews with employees, evidentiary documentation, etc.)
There is clear line of sight between the implementation of these practices and improved performance (this isn’t an academic exercise or social experiment…the production system implementation has to generate business results)
These practices have been sustained and improved upon over time. If the production system has survived and thrived through multiple business cycles and/or leadership changes, then the likelihood is high that the approach is embedded into the organization and isn’t merely window dressing
Where Are You in Your Production System Journey?
Phase 5 Group partners with companies at all levels of maturity when it comes to CI, whether just getting started, initiating a re-launch, evolving an already proven production system approach, or expanding from production system to business system. One of our key competitive differentiators is EON. EON is the world’s first continuous improvement management platform specifically designed to drive transformational change and manage the improvement journey across the organization. EON helps companies to deploy strategy, manage their improvement project pipeline, develop an operational maturity profile for the business, and implement best practices. By consolidating and integrating the various CI work streams into a single platform, EON provides unparalleled visibility into the status of and benefits of CI for the enterprise while simultaneously creating visibility and accountability for improvement for every employee.