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Hoshin Kanri

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/Hoshin-Kanri-155

Hoshin Kanri ( Hoshin Planning, Policy Deployment, Management by Policy) is a powerful, systematic Strategic Planning/Management methodology developed by Dr. Yoji Akao that uses a Plan-Do-Check-Act cycle to create goals, choose control measures and link daily control activities to the company's strategy. It involves a "catchball" as the driving force of alignment, clarification and employee involvement. The methodology continues to be used by some of the world's most successful companies such as Toyota, Hewlett-Packard and Bank of America.

With the discipline of Hoshin Kanri in place, you can expect the following benefits:

a) Focuses the entire company on a few vital goals, rather than the trivial many
b) Creates alignment towards breakthrough objectives through involvement of the whole management team in the planning process
c) Communicates the key goals to all managers and staff
d) Integrates and encourages cross-functional cooperation to achieve breakthroughs
e) A review process which holds participants accountable for achieving their part of the plan.

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/Hoshin-Kanri-155

Hoshin Kanri ( Hoshin Planning, Policy Deployment, Management by Policy) is a powerful, systematic Strategic Planning/Management methodology developed by Dr. Yoji Akao that uses a Plan-Do-Check-Act cycle to create goals, choose control measures and link daily control activities to the company's strategy. It involves a "catchball" as the driving force of alignment, clarification and employee involvement. The methodology continues to be used by some of the world's most successful companies such as Toyota, Hewlett-Packard and Bank of America.

With the discipline of Hoshin Kanri in place, you can expect the following benefits:

a) Focuses the entire company on a few vital goals, rather than the trivial many
b) Creates alignment towards breakthrough objectives through involvement of the whole management team in the planning process
c) Communicates the key goals to all managers and staff
d) Integrates and encourages cross-functional cooperation to achieve breakthroughs
e) A review process which holds participants accountable for achieving their part of the plan.

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Hoshin Kanri

  1. 1. © Operational Excellence Consulting. All rights reserved. Hoshin Kanri Your Name Your Job Title © Operational Excellence Consulting. All rights reserved.
  2. 2. 3© Operational Excellence Consulting. All rights reserved. Workshop Objectives • Gain an understanding of the principles and key concepts of Hoshin Kanri • Define the Hoshin Kanri process, tools and key elements • Describe the Hoshin Kanri step-by-step approach to planning, implementation and review process for managed change • Gain practical knowledge and skills in applying the Hoshin Kanri process and tools
  3. 3. 5© Operational Excellence Consulting. All rights reserved. Workshop Outline • Introduction to Hoshin Kanri  What is Hoshin Kanri?  Purpose of Hoshin Kanri  Linkages of Hoshin Kanri, Balanced Scorecard & MBO  Comparison of Hoshin Kanri with MBO • Underlying Principles of Hoshin Kanri  Plan-Do-Check–Act Cycle  Pareto Principle  Cause-and-Effect Relationship • Hoshin Kanri Process Using PDCA Approach  Review of Strategic Planning Process  Hoshin Kanri Steps  Hoshin Kanri Incorporating the Balanced Scorecard  Top Management Objective Setting  Deployment to Department Managers  Operationalize through Projects  Performance Review • Hoshin Kanri Tools  X Matrix  Alignment & Deployment Chart  Management Control Chart  Daily Management Matrix  A3 Report  Software for Hoshin Kanri • Elements of Hoshin Kanri  Performance Measurements  Breakthrough Hoshin  Daily Management  Cross-functional Management • Management Reviews  Types of Reviews  Checklist & Guidelines for Reviews • Critical Success Factors • Summary & Closing Comments
  4. 4. © Operational Excellence Consulting. All rights reserved. Introduction to Hoshin Kanri
  5. 5. 9© Operational Excellence Consulting. All rights reserved. “Total Quality does not guarantee the companies will produce strategies. Winning strategies must come from the minds of the leaders, augmented by inputs from the troops.” - Edwin Artzt Chairman & CEO, Procter & Gamble
  6. 6. 11© Operational Excellence Consulting. All rights reserved. “But Apple really beats to a different drummer. I used to say that Apple should be the Sony of this business, but in reality, I think Apple should be the Apple of this business.” - Steve Jobs
  7. 7. 13© Operational Excellence Consulting. All rights reserved. Typical Company Do Plan Check Act
  8. 8. 15© Operational Excellence Consulting. All rights reserved. Toyota’s Use of Time Do Plan Check Act
  9. 9. 17© Operational Excellence Consulting. All rights reserved. Hoshin Kanri • Taken together, Hoshin Kanri means a methodology to capture and concretize strategic goals as well as to develop the means to bring plans to reality • In other words, Hoshin Kanri is target-means deployment
  10. 10. 19© Operational Excellence Consulting. All rights reserved. Purpose of Hoshin Kanri 1 • Provides a step-by-step planning, implementation and review process for managed and sustainable change • Facilitates a set of coordinated processes that accomplish the core objectives of the business • Clarifies specific annual target policies derived from long- and medium-term policies that encompass the long term visions of the company
  11. 11. 21© Operational Excellence Consulting. All rights reserved. Benefits of Hoshin Kanri • Every employee is clear of their role and objectives • Leadership evident at all levels • Everyone understands the goals of the organisation • Aligns resources, objectives and metrics to all goals and at all levels of the organization • Employees are involved in setting targets, improvement schedules and reviews • There is a clear line of sight
  12. 12. 23© Operational Excellence Consulting. All rights reserved. A Hoshin Kanri System for Goal Alignment •Alignment through entire company structure using top-down goal setting •Each subsequent goal supports the previous level‟s goals Verticalalignment Organization Goals Department Objectives Individual Objectives Department Objectives Individual Objectives Individual Objectives Individual Objectives
  13. 13. 25© Operational Excellence Consulting. All rights reserved. Activity 2: Brainstorming of Management Initiatives/Projects • In groups, based on your organization‟s Vision, Mission and Values defined in Activity 1, list down all the management initiatives. Write each initiative/program/project on a Post-it note. Time: 10 mins
  14. 14. 27© Operational Excellence Consulting. All rights reserved. Comparison of Hoshin Kanri & MBO MBO Hoshin Kanri 1. Basics •Behavioral theories •Scoring system •Lean or Total Quality •Control cycle 2. Organization •Focused on the individual •Focused on the organization and groups of individuals 3. Operating System •Decisions on objectives (“troubleshooting system”) •Planning of coherence between objectives of the individuals •PDCA cycle •Management by processes •Top-down / bottom-up flows
  15. 15. 29© Operational Excellence Consulting. All rights reserved. Comparison of Hoshin Kanri & MBO MBO Hoshin Kanri 6. Evaluation of Performance •Based on results •Tied to personnel management •Based more on “how” (process) than on results •Integrated into line management - Audit by the director/ manager - Self-evaluation of results/ objectives differences - Evaluation by “internal customers” and colleagues •No direct link with personnel management
  16. 16. 31© Operational Excellence Consulting. All rights reserved. Major Weaknesses of MBO • Performance Appraisal as Principal Objective, rather than Business Results • Simple reflection of the budget • Large number of objectives, therefore dispersive
  17. 17. 33© Operational Excellence Consulting. All rights reserved. Major Strengths of Hoshin Kanri • Synergy between top-down and bottom-up processes • Continuous, systematic management of processes • Rigorous application of PDCA cycle • Emphasis on cause-and-effect relationships
  18. 18. 35© Operational Excellence Consulting. All rights reserved. Breakthrough • Breakthrough means improvement to a significantly higher level of performance • Lack of breakthrough for a business organization would place it in a position of regression in a competitive environment Think BIG: Boldly Important Goals
  19. 19. 37© Operational Excellence Consulting. All rights reserved. Control • Control implies adherence to a current standard • Reasons for maintaining control:  Improvement might be uneconomical  Few alarm signals  Hold the materials, processes and products to specification  Maintain current performance levels  Hold the gains achieved by recent breakthrough projects
  20. 20. 39© Operational Excellence Consulting. All rights reserved. Relationship of Breakthrough & Control • In the situation of “out-of-control”, resources are diverted to address the sporadic problems, while chronic problems are often neglected • Control is often a pre-requisite for breakthrough to take place • Control implies doing things right • Breakthrough implies doing the right things
  21. 21. 41© Operational Excellence Consulting. All rights reserved. Activity 4: Breakthrough & Control • In groups, based on the list generated in Activity 2, classify each initiative/program/project (“Post-it-Note”) under the heading of „Breakthrough‟ or „Control‟. Time: 15 mins Breakthrough Control
  22. 22. 43© Operational Excellence Consulting. All rights reserved. Underlying Principles of Hoshin Kanri • Plan-Do-Check-Act (PDCA) Cycle • Pareto Principle: Focus on the vital few • Cause-and-Effect Relationship
  23. 23. 45© Operational Excellence Consulting. All rights reserved. Pareto Principle (80/20 Rule) • To identify the “critical few” from the „trivial many”. • The top twenty percent of the problems account for eighty percent of the cost of poor quality. Also called the “80/20” rule. • Emphasize the need to focus resources and attention on the issues which provide the greatest contributions. P A R E T O D IA G R A M fo r C o s t o f Q u a lity b y A s s e m b ly P ro c e s s 0 2 5 0 5 0 0 7 5 0 1 0 0 0 1 2 5 0 1 5 0 0 Wire-bond Trim-form Die-attach Molding Lasermark Dicing A s s e m b ly P r o c e s s $'000 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 1 0 0 Cumm. %ofCOQ
  24. 24. 47© Operational Excellence Consulting. All rights reserved. Cause & Effect • Purpose  To identify and structure the causes of a given effect • When to use  When investigating a problem, to identify and select key problem causes to address  When effect of a problem is known, but possible causes are unclear  To find other causal relationships, such as potential risks or causes of desired effects
  25. 25. 49© Operational Excellence Consulting. All rights reserved. Activity 5: Target and Means • In groups, brainstorm as many means as possible to achieve the following targets. Identify the top two means which have the highest impact on the outcome. 1. Turnaround a loss-making bakery shop by end 2012 2. Get pre-school children to be well-behaved and disciplined at home and in public places 3. Climb to the top of Mt. Everest by end 2014 4. Give up the smoking habit within 3 months Time: 10 mins
  26. 26. 51© Operational Excellence Consulting. All rights reserved. Review of Strategic Planning Process Shared Values Mission Vision Environmental Assessment Strategies Strategic Objectives Action Plans Reason for existence Future intent Guiding Principles Broad statements of direction Capabilities and risks Things to change or improve (3-5 years) Implementation
  27. 27. 53© Operational Excellence Consulting. All rights reserved. Hoshin Kanri Steps 1 1. Establish organizational vision 2. Develop 3-5 year strategic plan 3. Develop annual objectives 4. Deploy/roll down to departments  Departments develop plans and means  Focus deployment – not everyone needs to be involved in everything  Iterative (catch-ball) nature may take time
  28. 28. 55© Operational Excellence Consulting. All rights reserved. Catch-Ball Process Group Goals & Priorities Division Objectives Department Objectives Section Objectives Frontline Objectives
  29. 29. 57© Operational Excellence Consulting. All rights reserved. Strategic Planning Incorporating Balanced Scorecard & Hoshin Kanri Customer Perspective Learning & Growth Perspective Business Processes Perspective Financial Perspective Targets Set for Key Performance Indicators Process Execution & Improvement Project Plans & Resource Allocation Drives Nego- tiationInputs Results – Reflection to Identify Continuous Improvement Opportunities
  30. 30. 59© Operational Excellence Consulting. All rights reserved. There are several areas to focus on when employing a strategic planning process Customer Perspective Learning & Growth Perspective Business Processes Perspective Financial Perspective Targets Set for Key Performance Indicators Process Execution & Improvement Project Plans & Resource Allocation Drives Nego- tiationInputs Results – Reflection to Identify Continuous Improvement Opportunities (1) Complete full scan of the environment including input for targets from top management (2) Ensure that all business objectives are covered by KPIs and targets are set for each KPI (3) Apply common filter to list of proposed projects (4) Allocate resources against portfolio of projects (5) Top management is the owner of the project portfolio (6) Regular reviews based on standard forms and templates (7) Adopt a process view to reflect improvement 1 2 3 4 5 6 7
  31. 31. 61© Operational Excellence Consulting. All rights reserved. Four Key Phases of Hoshin Kanri • Top Management Objective Setting • Deployment to Department Managers • Operationalize through Projects • Review Performance
  32. 32. 63© Operational Excellence Consulting. All rights reserved. Phase 2: Deployment to Department Managers Deployment to Department Managers PROCESS OUTPUTINPUTS Cross-functional Resources Request Functional Scope? A Finalized first-level Hoshin Kanri Deployed as Functional Objectives No Yes B
  33. 33. 65© Operational Excellence Consulting. All rights reserved. Phase 4: Review Performance Monthly Review of Results PROCESS OUTPUTINPUTS Quarterly review of Hoshin Kanri Actual vs. Planned? Updated Control chart Report of Project Status Investigate & take countermeasures to address discrepancy Yes No C Rewards & Recognition
  34. 34. 67© Operational Excellence Consulting. All rights reserved. Common Hoshin Kanri Tools Alignment & Deployment Chart For improvement hoshin Daily Management Matrix For daily management Gantt Chart For review purposes Management Control Chart For review purposes
  35. 35. 69© Operational Excellence Consulting. All rights reserved. (64%) (72%) Alignment & Deployment Chart – HR Example
  36. 36. 71© Operational Excellence Consulting. All rights reserved. Daily Management Matrix Customer Perspective Financial Perspective Internal Processes Perspective Learning & Growth Perspective
  37. 37. 73© Operational Excellence Consulting. All rights reserved. X Matrix Step 1: What? Breakthrough Thinking Step 5: Who? Resource Deployment Step 4: How Much & When? Measures Step 3: How? Which Key Processes? Step 2: How Far? This Year?
  38. 38. 75© Operational Excellence Consulting. All rights reserved. Activity 7: Alignment & Deployment Time: 60 mins • Select an Annual Objective based on Activity 6. Cascade the annual objective down to the following levels using the Alignment & Deployment Chart  Division  Department  Section
  39. 39. 77© Operational Excellence Consulting. All rights reserved. Example: A3 Storyboard
  40. 40. 79© Operational Excellence Consulting. All rights reserved. Types of Hoshin Kanri • Main Objectives vs. Support Objectives • Improvement (Breakthrough) vs. Daily Management • Cross-functional vs. Functional • Level of Deployment
  41. 41. 81© Operational Excellence Consulting. All rights reserved. Main & Support Objectives • Support objectives are objectives aimed at supporting the main objectives or improving the internal business processes • These objectives are formulated by functional managers
  42. 42. 83© Operational Excellence Consulting. All rights reserved. Hoshin Kanri Deployment Tree Frontliner Section Manager Department Manager GM M1 Improve Process Quality M1.1 Improve Assembly Process Quality M1.1.1 Improve Process Capability at FOL M1.1.1.1 Improve Bondability of MQFP Devices … M1.1.2 Implement Defect Prevention at EOL M1.1.2.1 Implement Vision System for MQFP Trim Process … M1.2 Improve Test Process Quality … …
  43. 43. 85© Operational Excellence Consulting. All rights reserved. Concept of Performance Measurements • Performance Measurements are the critical results that must be achieved at each level in order to reach overall organizational goals. • They are determined during the goal setting and alignment process
  44. 44. 87© Operational Excellence Consulting. All rights reserved. Key Business Drivers • Critical areas that determine the success for an organization in a certain strategic approach • Possible Key Business Drivers might include:  Innovation  Productivity  Quality  Cost  Delivery  Service
  45. 45. 89© Operational Excellence Consulting. All rights reserved. The Balanced Scorecard Approach FINANCIAL BUSINESS PROCESSES Vision and Strategy To succeed financially, how should we appear to our shareholders? LEARNING & GROWTH CUSTOMERS To achieve our vision, how will we sustain our ability to change and improve? To achieve our vision, how should we appear to our customers? To satisfy our shareholders and customers, what business processes must we excel at? Source: Kaplan & Norton
  46. 46. 91© Operational Excellence Consulting. All rights reserved. Performance Measurements - Benefits • Provide data for evaluating how well organizational goals are being achieved • Encourage Management by Fact and Problem Identification • Provides a clear format for communicating up and down the management chain • Facilitates project identification • Provide a basis for recognizing good performance
  47. 47. 93© Operational Excellence Consulting. All rights reserved. Improvement Hoshin • Objective deployment that relates a breakthrough improvement in key areas • Objectives and Goals for Improvement Hoshin could be determined through one or combinations of the following:  Strategic / Business Planning  Business Excellence frameworks (e.g. SQA)  Managerial grid  Benchmarking
  48. 48. 95© Operational Excellence Consulting. All rights reserved. Steps in Defining Improvement Hoshin 1. Derive target for specific objective 2. Perform analysis of past performance of the object being addressed – trend, Pareto analysis and cause-effect relationships, etc. 3. Define tactics / means to achieve objective target 4. Identify the metrics for the defined tactics / means 5. Identify the person(s) responsible and deadline for completing the tactics / means 6. Define a forecasted improvement trend for the objective being addressed 7. Set up a management control chart to plot the actual improvement trend versus that of the forecasted trend 8. Take countermeasures when the actual trend deviates from the forecasted trend
  49. 49. 97© Operational Excellence Consulting. All rights reserved. Cascading of Policy Deployment Policy Deployment cascades down, with the tactic and targets at one level becoming the objective and goals at the next level. Objective Goals Tactic Targets What HowMeasure Measure Objective Goals Tactic Targets What HowMeasure Measure Objective Goals Tactic Targets What HowMeasure Measure Department Manager Section Manager Engineer
  50. 50. 99© Operational Excellence Consulting. All rights reserved. Daily Management • Objective deployment related to maintaining and controlling the current level of performance. • Objectives measurements subjected to daily maintenance should be important performance parameters that require regular monitoring. Vital signs of how the organization is performing.
  51. 51. 101© Operational Excellence Consulting. All rights reserved. Steps in Defining Daily Management 1. Select important performance parameters to be subjected to Daily Management 2. Analyze the capability of the performance parameters over a certain time interval 3. Define minimum acceptable level of performance (plan) for the parameters 4. Set up a management control chart to plot the actual level of performance versus the minimum acceptable level of performance 5. Take countermeasures when the actual level of performance deviates from the minimum acceptable level of performance
  52. 52. 103© Operational Excellence Consulting. All rights reserved. Cross-Functional Management • Coordination of inter-functional activities to achieve management goals • Management of horizontal / project organizations that cut across different functions or departments • Incorporate the use of project management tools
  53. 53. 105© Operational Excellence Consulting. All rights reserved. Cross-Functional Integration & Project Management • Hoshin Kanri, in the form of Improvement Hoshin, are operationalized through projects • Variables affecting the success of projects include:  Cross-functional Cooperation (Teamwork)  Quality of Project Leadership  Systemic Support  Reward & Recognition System  Availability of Resources  Review & Reporting Structure
  54. 54. 107© Operational Excellence Consulting. All rights reserved. Purpose of Reviews • To monitor the Hoshin Kanri plans and results • To review the status of the projects initiated based on improvement hoshin • To monitor key performance parameters and address any anomalies • To improve on the Hoshin Kanri process
  55. 55. 109© Operational Excellence Consulting. All rights reserved. Key Points to Note for Reviews • Emphasis on corrective actions and systemic support to address deviations from plans • Provide opportunities for recognition of achieved targets and good efforts • Address system issues hindering the achievement of objectives
  56. 56. 111© Operational Excellence Consulting. All rights reserved. Monthly Self-Review • Emphasis on self-diagnosis by individuals or teams (process owners) responsible for the policy • Monthly self-review should include:  Updating the management control chart to check progress of the plan  Analysis of discrepancies from planned results  Follow-up with countermeasures to address discrepancies  Reporting the discrepancies and countermeasures
  57. 57. 113© Operational Excellence Consulting. All rights reserved. Quarterly Review • More formal review involving functional management and senior management • Quarterly formal review should include:  Review of how the results of lower level objectives are contributing to higher level objectives  Review of the trends of management control charts  Presentation of project status  Understanding of problems encountered and their causes  Evaluate the objectives and make adaptive changes to the tactics and targets
  58. 58. 115© Operational Excellence Consulting. All rights reserved. Annual Review 2 • Emphasis on understanding which means led to the achievement of which targets (cause-effect relationship) • Standardize resulting improvement to other areas, where applicable • Document and disseminate lessons learned from Hoshin Kanri of current year
  59. 59. 117© Operational Excellence Consulting. All rights reserved. Activity 10: Issues & Challenges of Management Reviews • Identify the top three issues and challenges that you have encountered in past management reviews. For each issue/challenge, define a mitigation plan. Time: 15 mins Issue No. Description of Issue/Challenge Mitigation Plan
  60. 60. 119© Operational Excellence Consulting. All rights reserved. Checklist for Annual Planning Session 2 6. Have the employee and customer satisfaction issues been picked up? 7. Are there any related strategies that it would make sense to merge into a single strategy? 8. Any measures that should have specific targets over several quarters or several years?
  61. 61. 121© Operational Excellence Consulting. All rights reserved. Guidelines for Managing Review Meetings 2 4. Travel and unplanned meetings are kept to a minimum 5. Ensure that people are given time for the preparation of data about the background to deviations from plans (~2 weeks) 6. That business units should use same hoshin review charts/tables to review strategies
  62. 62. © Operational Excellence Consulting. All rights reserved. Factors Contributing to Effective Hoshin Kanri Deployment
  63. 63. 125© Operational Excellence Consulting. All rights reserved. Operating Effectiveness • Capacity of organization to achieve major results in selected objectives • Factors contributing to operating effectiveness:  Continuous improvement as guiding principle  Selection of appropriate management levers  Performance measurement and feedback systems
  64. 64. 127© Operational Excellence Consulting. All rights reserved. Coherence • Three dimensions of coherence  Horizontal (Cross-functional) Fit  Improvement objectives and actions are aligned across various functions  Vertical (Functional) Fit  Priority of objectives of subordinates aligns to that of functional supervisor  Strategic Fit  Extent of short-term actions, aimed at short-term objectives, contributing to medium- and long-term objectives
  65. 65. 129© Operational Excellence Consulting. All rights reserved. 9 Reasons Why Hoshin Kanri Fails 1. Wrapping today‟s management process in A3 paper 2. Not knowing why 3. Setting, broad, vague, shallow objectives 4. Cheating on the “therefore” test 5. Marking it yellow or red and moving on 6. Using the down-up-down process for negotiation, not consensus 7. Happy planning 8. Writing your hoshin plan on the computer 9. Having a strategy that is too good to be changed Source: gemba panta rei
  66. 66. 131© Operational Excellence Consulting. All rights reserved. Key Points / Summary • Hoshin Kanri is a management tool aimed at translating management objectives to various levels of the organization • The main purpose is to achieve Focus and Alignment of organizational objectives • Policy deployment is based on basic principles of Lean, i.e. customer focus, management by fact, teamwork and continuous improvement
  67. 67. 133© Operational Excellence Consulting. All rights reserved. Key Points / Summary • Regular reviews are important to monitor the progress of the policy deployment • Effective Hoshin Kanri are determined by: operating effectiveness of the organization, coherence of the objectives and mobilization of individuals and teams involved in the Hoshin Kanri process
  68. 68. © Operational Excellence Consulting. All rights reserved. End of Presentation To view the full list of training presentations, please visit us at: Operational Excellence Consulting http://www.oeconsulting.com.sg

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