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Incremental changes and efficiency leaps in the improvement of internal effectiveness
Abstract
Purpose
This paper highlights one of the limitations of the continuous improvement (CI) philosophy and contends that CI cannot go on forever. It further suggests that in order to further improve organizations need to increase the system boundary, and proposes ways of doing so.
Design/methodology/approach
In order to highlight the limits of CI this paper describes a case study. Using a literature review, it further proposes nine ways of increasing system boundary.
Findings
The first finding is that CI is not limitless and there is a logical point where CI cannot be economically justified. At that point, the possibility of increasing the system boundary is required. This paper proposes nine possible ways of expanding this boundary.
Practical implications
The paper presents ways of bringing about radical improvements by increasing the system scope. These ways can be explored by practitioners to bring about major improvements, once incremental improvements have been exhausted.
Originality/value
This paper presents ways for companies to explore radical improvement possibilities, once the incremental improvements have reached a level where they can no longer be financially justified.
... Para Larsson et al. (2008), a primeira pergunta, O que mudar, necessita fazer um diagnóstico da real situação no intuito de encontrar o problema (a restrição), sendo o principal passo para melhorar o desempenho do sistema. Entender a relação de causa e efeito dentro do sistema para conseguir identificar as causas que levam aos efeitos indesejáveis que se procura mudar. ...
Portuguese Abstract: Este estudo teve o objetivo de averiguar a eventual presença de um processo isomórfico entre os relatórios anuais e de sustentabilidade das empresas que exploram a atividade de mineração, analisando até que ponto o volume de evidenciação de informações dessa natureza são semelhantes. Para tanto, utilizou-se do instrumento estabelecido por Sampaio et al. (2012), que contempla quatro grupos de indicadores em consonância com os procedimentos fixados pela Norma Brasileira de Contabilidade T-15 e outras recomendações dos Institutos Ethos e IBASE, além das diretrizes estabelecidas pelo Global Reporting Initiative (GRI) para elaboração dos relatórios anuais e de sustentabilidade. Foram analisados dez relatórios anuais e de sustentabilidade no período que compreendem dois distintos anos 2009 e 2012, sendo que a definição dos mencionados anos levou em consideração o estudo realizado por Sampaio et al. (2012) de forma a permitir uma análise comparativa dos achados do estudo anterior com o presente estudo. Utilizou-se a média e o desvio padrão como parâmetro para dar sustentação ao tratamento dos dados. Sendo assim, comparou-se a evolução das médias de cada grupo de indicadores e analisou-se a diferença de cada variável em relação à média. Os resultados permitiram verificar um aumento no volume de informações socioambientais nos dois períodos analisados, o que reforça o pressuposto da Teoria da Legitimidade e de processo isomórfico na evidenciação das informações socioambientais.English Abstract: This study aimed to investigate the possible presence of an isomorphic process among the environmental reports of companies of mining activity, analyzing the similarity in this information. For this purpose, the instrument established by Sampaio et al. (2012) which includes four groups of indicators in line with the procedures established by the Brazilian Accounting Standard T5 and other recommendations of the Institutes Ethos and IBASE, beyond the guidelines established by the Global Reporting Initiative (GRI) to analyze the information available in reports sustainability. These 10 reports were analyzed in the range that comprises two different years, 2009 and 2012. The statistic used to give support to the data analysis was the mean and standard deviation, trying to compare the evolution of the means of each group of indicators as well as the standard deviation which sought to analyze the difference of each variable in relation to the average. Results showed an increase in the volume of environmental information in both periods analyzed, which reinforces the assumption of Legitimacy Theory and Institutional Theory as the isomorphic process.
... This pure QM implementer would always go on their own initiative to continuously improve their performance which in turn contributes to their better performance than their corresponding counterparts. There is no other way to consistently improve an organisation, other than implementing it incrementally rather than radically (Larson et al., 2008). Therefore, the ability of managers to sustain the improvement effort is much more relevant to the betterment of their organisation, rather than their ability to initiate the improvement strategy. ...
This paper presents the cost savings performance of two quality management (QM) organisation classified groups based on the intensity of QM being implemented, namely low intensive and high intensive. Data of this study were collected from 205 local authority managers in Malaysia. The issue of cost savings is topical to the current focus of many public organisations worldwide due to the scarcity of funds available and expectation of the general public nowadays being higher than before. Although, QM has been discussed for years as an effective cost savings strategy, this strategy is not free from critics, mostly from those who are sceptical toward the potential attached to QM. Among the criticism appearing in the literature is that the implementation of QM requires a huge fund and the cost benefit of its implementation is less visible. After years of QM being introduced into the Malaysian public service, issue of its implementation deserve attention from scholars. The reported findings indicated that QM organisations achieve different cost savings performance subject to the intensity of its implementation. Therefore, the outcome of this study suggested managers of QM organisations to intensify the practice of QM, so that the cost savings objective would be attainable.
... Para Larsson et al. (2008), a primeira pergunta, O que mudar, necessita fazer um diagnóstico da real situação no intuito de encontrar o problema (a restrição), sendo o principal passo para melhorar o desempenho do sistema. Entender a relação de causa e efeito dentro do sistema para conseguir identificar as causas que levam aos efeitos indesejáveis que se procura mudar. ...
The Theory of Constraints TOC preaches that any company in search of its ultimate goal which could be to earn money comes up against constraints which affect and determine the gain. Among the various constraints that could be found, the tax burden is characterized in limiting the highest organizational profit and also for being a permanent constraint. The main objective of this study is to analyze the contribution of TOC in the reduction of tax impact, through the process of reasoning as a coordinating means of tax planning strategies. A research exploratory was adopted with procedures from secondary source, a field research quantitative in character. The results pointed out that the philosophy of TOC, usually targeted to the manufacturing process, has shown to be useful and relevant if applied to tax management.
... In order to consistently and continuously offer services that meet the expectations of customers that varies over time, local authorities in Malaysia have to seek for improvement continuously. Continuous improvement means doing improvement incrementally rather than radically [11]. This practice requires an organisation to improve all aspects of an organisation if positive results are wanted. ...
This paper reports the customer satisfaction effect of continuous improvement at different intensity levels. The intensity levels were grouped into two, namely highly extensive and less extensive. Data for this study were collected from 205 departmental heads attached to local authorities in West Malaysia by using a questionnaire. Stratified random sampling was applied to select the samples. The findings indicated that there exists a significant difference in customer satisfaction between highly extensive and less extensive implementers. The highly extensive implementers scored a higher mean of customer satisfaction than less intensive implementers. This study contributes significantly to the literature by presenting evidence that the intensity of continuous improvement being practised can contribute to higher levels of customer satisfaction.
This paper presents the effects of quality management (QM) on customer satisfaction according to intensity degrees. The intensity degrees were grouped into two, namely highly extensive and less extensive. The data were analysed based on questionnaires returned by 205 departmental heads attached to local authorities in West Malaysia. Samples under study were chosen using stratified random sampling. The results reported that there exists a significant difference in customer satisfaction between highly extensive and less extensive samples. Data analysed indicated the highly extensive samples scored a higher mean of customer satisfaction than less intensive samples. This study adds value to the literature by revealing the intensity of QM being practised as a significant predictor of higher levels of customer satisfaction. The implication of this study is that managers should intensify the practices of QM, especially benchmarking, employee empowerment, and continuous improvement, and that they have to avoid the minimalist approach when implementing these practices.
Purpose
The purpose of this paper is to systematically describe the key practical contributions of the theory of constraints (TOC) to outbound (distribution) logistics.
Design/methodology/approach
Based on theoretical research, this paper presents the main practical aspects of the approach suggested by TOC to outbound logistics and discusses the assumptions upon which it is based.
Findings
This paper corroborates the thesis defended by TOC, according to which the current ways of managing outbound logistics, based mainly on sales forecasts lead to difficulties in handling trade‐offs between logistics (stock and transportation) costs and stock‐out levels.
Research limitations/implications
The reported research is of a theoretical nature.
Practical implications
TOC offers a proposal that is complementary in many aspects and very distinguishable in others about the way some key processes and elements of supply chain management (SCM) are managed, especially outbound logistics.
Originality/value
Considering the dearth of papers dealing with the conceptual articulation and organization of this subject, the paper contributes to systematize the knowledge currently available about the contributions of the TOC to outbound logistics, highlighting the practical implications of applying TOC to outbound logistics.
History shows us that in the cost/performance ratio of any given product has decreased continuously. This may wrongly have led us to the conclusion that improvements can continue infinitely at the current pace. Our proposition is that we trust a mental picture that is not consistent with the future level of potential improvements in technology and business, which in turn has repercussions for societal change.
The economy has hit a soft patch.' - US Federal Reserve Chairman Alan Greenspan, reacting to the weak US job growth in June 2004 Mats Larsson: 'No, the economy is closing in on the limits of business development and economic growth and we are starting to see the consequences. In the next few years we will need to rethink economic policies and business strategies.' The Limits of Business Development and Economic Growth details what this means for your company, your industry or your country! There are limits to business development and economic growth. With the help of modern production and information technologies, companies are coming ever closer to the limits of what can be achieved but ultimately nothing can be done in less than no time and at less than no cost. We now need to find areas of competitive advantage that have not yet been fully exploited. This book presents both the problems and the solutions in an accessible way for experts and non-experts alike.
We humans live by stories, says David Korten, and the stories that now govern our society set us on a path to certain self-destruction. In this profound new book, Korten shares the results of his search for a story that reflects the fullness of human knowledge and understanding and provides a guide to action adequate to the needs of our time. Korten calls our current story Sacred Money and Markets. Money, it tells us, is the measure of all worth and the source of all happiness. Earth is simply a source of raw materials. Inequality and environmental destruction are unfortunate but unavoidable. Although many recognize that this story promotes bad ethics, bad science, and bad economics, it will remain our guiding story until replaced by one that aligns with our deepest understanding of the universe and our relationship to it. To guide our path to a viable human future, Korten offers a Sacred Life and Living Earth story grounded in a cosmology that affirms we are living beings born of a living Earth itself born of a living universe. Our health and well-being depend on an economy that works in partnership with the processes by which Earth's community of life maintains the conditions of its own existence - and ours. Offering a hopeful vision, Korten lays out the transformative impact adopting this story will have on every aspect of human life and society.
In this interview, international strategy guru Gary Hamel explains the thinking behind his new book, Leading the Revolution. He believes that the impetus for radical change in a business must come from the ideas and energies of the people within the company, not from consultants or external advisors. He also believes that innovation and radical change will be necessary for wealth creation in the coming years – change not only in products and processes, but change in entire business models as well. The interview includes Hamel’s guidelines for those at any level of an organization who may have ideas about new opportunities that can revolutionize the company or the industry.
Continuous improvement (CI) is increasingly being seen as an important complement to more radical, step-change forms of innovation. In essence, it involves a company-wide process of enabling a continuing stream of focused incremental innovation. It has found particular application in recent years in the area of quality improvement, but the principle can be applied to many other divisions of business performance.Although simple to define, the achievement of such CI activity and its maintenance over the long term is a major source of difficulty. This paper reports on research in this area and highlights key areas within CI which need to be addressed.
There is a growing recognition that the emerging global system of business has become a serious threat to human interests. The aim of this book is to confront the issue of modern corporate power. It argues that a convergence of ideological, political and technological forces is occurring, separating their interests from humanity at large. The harmful effects of economic globalisation are exposed and the roots of today's social, economic, environmental, and political crises are traced. A strategy is proposed for creating localised economies that empower people and communities within a system of global cooperation. The author stresses that human survival depends upon on a community-based, life-centred alternative beyond the outmoded strictures of communism and capitalism, and steps to achieve this goal are proposed. -from Publisher
Modern supply chains are expected to respond rapidly, effectively and efficiently to changes in the marketplace. Simultaneously there is the drive to achieve world-class customer service levels coupled with minimum reasonable inventory (MRI). We thus have the classic conflict of interests between marketing, production and materials management. Marketing wants the complete product range available off-the-shelf; production is still, all too often, looking to manufacture in economic batch quantities so as to achieve economies of scale; and materials management is trying to minimize storage and distribution costs which, in turn, requires that a total systems MRI policy be adopted. Time compression at all stages in the chain is seen as the way to respond to these challenges. The ground rules for effective supply chain design were coincidentally established in 1961, when Forrester showed that medium period demand amplification was a system dynamics phenomenon which could be tackled by reducing and eliminating delays and the proper design of feedback loops. In the same year, via his "five rules to avoid bankruptcy" directed at smoothing material flow, Burbidge showed that short period demand amplification was due to multi-phased, multi-period ordering policies. We confirm that, on the basis of industrial studies, collapsing cycle times drive the business into a more competitive scenario. This means that time compression strategies based on model simulation may be confidently used to predict improvements in supply chain performance.
Cutting-edge Japanese companies today are capitalizing on time as a critical source of competitive advantage: shortening the planning loop in the product development cycle and trimming process time in the factory - managing time the way most companies manage costs, quality, or inventory. In fact, as a strategic weapon, time is the equivalent of money, productivity, quality, even innovation. Managing time has enabled top Japanese companies not only to reduce their costs, but also to offer broad product lines, cover more market segments, and upgrade the technological sophistication of their products. These companies are time-based competitors.
This article compares and contrasts three types of innovations, namely, product innovation, process innovation and organisational innovation. From similarities and differences between these three types, implications for the theory and practice of innovation management are inferred. Most of these implications seem to be generic, i.e. generally applicable whatever the type of innovation and organisation involved. Surprisingly few implications are contingent in that they are linked to the characteristics of the innovation involved.
Unveils the myth that process breakthrough methodologies like
business process improvement, process re-engineering, and process
innovation, provide a greater total organizational improvement than
continuous improvement methodologies. Also shows how to combine
continuous improvement and breakthrough improvement methodologies to
maximize the improvement effort.
Modern supply chains are expected to respond rapidly, effectively and efficiently to changes in the marketplace. Simultaneously there is the drive to achieve world class customer service levels coupled with minimum reasonable inventory (MRI). We thus have the classic conflict of interests between marketing, production and materials management. Marketing wants the complete product range available off‐the‐shelf; production is still, all too often, looking to manufacture in economic batch quantities so as to achieve economies of scale; and materials management is trying to minimize storage and distribution costs which, in turn, requires that a total systems MRI policy be adopted. Time compression at all stages in the chain is seen as the way to respond to these challenges. The ground rules for effective supply chain design were co‐incidentally established in 1961, when Jay Forrester showed that medium period demand amplification was a system dynamics phenomenon which could be tackled by reducing and eliminating delays and the proper design of feedback loops. In the same year, via his “five rules to avoid bankruptcy” directed at smoothing material flow, Burbidge showed that short period demand amplification was due to multi‐phased, multi‐period ordering policies. Confirms that, on the basis of industrial studies, collapsing cycle times drive the business into a more competitive scenario. This means that time compression strategies based on model simulation may be confidently used to predict improvements in supply chain performance.
Purpose
To provide an overview of the history, evolution, and existing research on continuous improvement.
Design/methodology/approach
Extensive review of the literature.
Findings
This paper provides an overview of continuous improvement, its inception, how it evolved into sophisticated methodologies used in organizations today, and existing research in this field in the literature.
Research limitations/implications
It does not provide an exhaustive review of the existing literature, or an exhaustive list of all continuous improvement programs, only the most well known.
Originality/value
This paper traces how organizations have used various tools and techniques to address the need for improvement on various levels. The paper also presents research conducted in this field. It should be of value to practitioners of continuous improvement programs and to academics who are interested in how continuous improvement has evolved, and where it is today. To the authors’ knowledge, no recent papers have provided an historical perspective of continuous improvement. Furthermore, our paper also discusses the existing research in this field.
Our total cycle time (TCT) compression strategy encompasses the whole system in the supply chain from consumer demand to customer satisfaction. TCT has two major components that are essential to meeting customer demand: information flow and material flow. Both are necessities and together make up the total supply chain lead-time; the information activates the material pipeline. Therefore to optimise a time compression strategy TCT must include both the information and material flows. We show in the paper that a very effective way of achieving TCT is via access to EPoS data by all “players” in the supply chain. The tremendous benefits exhibited by TCT compression within the supply chain can be described as “squaring the dynamic response circle”. Not only are the stock dynamic responses improved via time compression, but the capacity dynamics are also radically improved. Therefore TCT compression avoids the dilemma frequently faced by companies when implementing change of having to trade off customer service level against capacity utilisation. Our results are verified using a simulation model of a common real-world supply chain.
Collaboration literally means working together. Collaborative improvement is an extension of continuous improvement and can be defined as a purposeful inter-company interactive process that focuses on continuous incremental innovation aimed at enhancing the collaborations overall performance. Developing collaborative improvement is a protracted and difficult process. Previous research has identified a number of factors affecting that process and suggested that it is not so much the individual factors, but rather their interplay that determines the successful development of collaborative improvement. This article reports research aimed at developing a deeper understanding of that interplay. Ten relationships between ten factors are presented and discussed. It appears that vision, approach, trust and commercial reality are the strongest factors. These factors are, however, influenced by, or affect the other factors, notably national culture, partner characteristics and competences, the use of power, individual behaviour and commitment. The way this interplay develops varies from case to case and has great influence on the development of collaborative improvement.
A substantial body of theoretical and practical knowledge has been developed on continuous improvement. However, there is still a considerable lack of empirically grounded contributions and theories on collaborative improvement, that is, continuous improvement in an inter-organizational setting. The CO-IMPROVE project investigated whether and how the concept of continuous improvement can be extended and transferred to such settings. The objective of this article is to evaluate the CO-IMPROVE research findings in view of existing theories on continuous innovation. The article investigates the similarities and differences between key components of continuous and collaborative improvement by assessing what is specific for continuous improvement, what for collaborative improvement, and where the two areas of application meet and overlap. The main conclusions are that there are many more similarities between continuous and collaborative improvement. The main differences relate to the role of hierarchy/market, trust, power and commitment to collaboration, all of which are related to differences between the settings in which continuous and collaborative improvement unfold.
Recent mergers in the banking industry have often generated disappointing shareholder returns. Delays in implementing potential operating savings and realizing benefits of scale economies may be one reason these mergers have disappointing returns. Using data envelopment analysis (DEA), we analyze a 200-branch network formed in a merger of four banks. The operating efficiency of each branch is benchmarked against “best-practice” branches in the combined merged bank as well as “best practice” branches within each pre-merger bank. This analysis identified opportunities to reduce branch operating costs by 22 percent for the entire merged bank. In contrast, the cost savings opportunity is under seven percent when analyzed within each pre-merger bank.These findings suggest benchmarking across the entire merged bank to identify the best practices bank-wide can generate added savings. However, in this bank merger, these merger benefits were not realized until four years after the merger. Interviews with key players in the merged bank indicate that the bank deferred realizing these benefits because of political pressures, personnel integration issues, system integration issues, and financial components of the merger such as restructuring reserves and the purchase price. These causes suggest areas where shareholders can and should demand more rapid improvement in performance of bank mergers and areas for future corporate merger research.
Previous studies have provided mixed evidence on the interaction effect of product and international diversification on firm performance. This study extends this stream of research by investigating the differential impacts of product diversification strategies on the relationship between international diversification and firm performance. We find that while related product diversification positively influences the performance of multinational firms, unrelated product diversification negatively moderates the international diversification–performance relationship. The evidence is robust for different models of international diversification and firm performance, and holds for firms in both the service and manufacturing industries. Our findings highlight the importance of distinguishing different product diversification strategies, and provide a potential explanation for prior mixed evidence.
Motivated by the liberalisation and harmonisation of financial systems in Europe, we investigate whether the observed shift into non-interest income activities improves performance of small European credit institutions. Using a sample of 755 small banks for the period 1997–2003, we find no direct diversification benefits within and across business lines and an inverse association between non-interest income and bank performance. Our findings are robust to a set of sensitivity analyses using alternative samples and controlling for the regulatory environment. Furthermore, the results provide circumstantial evidence for the presence of economies of scale. The absence of benefits of diversification confirms findings for other banking markets and suggests small European banks enter lines of business where they currently lack expertise and experience. These results have implications for bank supervisors, regulators and bank managers.
Competing on the Edge
- S L Brown
- K M Eisenhart
The Mystery of Capital
- H. De Soto
Marketing Essentials
- P Kotler
Proceedings CD Euromot
- M Larsson
- M. Arif
Allt mera huvud allt mindre händer, Akademeja Förlag
- L Lyttkens
Limits to incremental improvements through TOC
- M Larsson
- M Arif