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A Continuous Improvement Program: 6 Simple Steps for Your Supply Chain

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Implementing a continuous improvement program at your company can seem like a daunting project, but I promise the benefits far outweigh the effort. Small, incremental changes can produce dramatic results.

Last August, at Coyote Logistics, we revamped our internal continuous improvement program. By the end of the year, we completed 260 projects, eliminated 270 weekly hours of redundant and unnecessary tasks (that’s roughly 19,000 annual hours) and increased employee engagement.

Despite the COVID-19 pandemic, your organization can still achieve improvements. In 2020 to date, we have completed 132 continuous improvement projects, saving us an estimated 120 hours per week in non-value-adding tasks.

If you are willing to commit to a consistent, structured approach, you too can implement a continuous improvement program that will make your supply chain operations more efficient.

Let’s take a look at the nature of continuous improvement and why it’s worth your time — and explore the six key phases of continuous improvement, as demonstrated through a real-life example.

What is continuous improvement?

Continuous improvement is a proactive approach to superior customer service that prioritizes the elimination of waste and relies on active employee involvement to develop solutions to challenges as they arise.

Continuous improvement involves six distinct phases that seek small improvements in processes and products, with the objective of increasing quality and reducing waste.

Additionally, an ongoing cycle of positive change and employee involvement, a metric-driven system to continually review and improve performance and a step-by-step incremental improvement strategy distinguish this process.

Some continuous improvement projects are large-scale operational overhauls, but a vast majority are small, incremental tweaks implemented by core team members within each department rather than throughout the entire organization.

A successful continuous improvement program doesn’t rely on leadership making big strategic decisions but rather enlists frontline employees and managers to implement small improvements for measurable results.

Laying the groundwork for continuous improvement

Curiosity and dedication are foundational elements of continuous improvement. The first objective of continuous improvement is to discover organizational gaps that bar you from achieving greater productivity and success. This discovery process requires commitment and curiosity.

Pose a simple question or two at the beginning of your process: Which barriers keep us from optimizing our supply chain operations? How can we eliminate our waste and inefficiencies?

Conducting an objective investigation into your current systems and processes is imperative. Develop a clear inquiry that addresses your proposed “fix.” This is paramount to the effectiveness of continuous improvement.

Hypothesis: We lack a consistent, structured approach to analyzing challenges and developing solutions.

Clearly state your goal and share it widely with everyone involved. For example: Create a culture of continuous improvement that helps deliver a best-in-class product for both internal and external customers.

We recommend utilizing PARS (Problem/Action/Results Statements) to help you clearly outline your process — what core issues did you identify, which actions did you take to attempt to solve them and how did your plan work out?

PARS provides a summary of your operations issue by clearly defining the problem, actions taken to address the problem and results achieved through your continuous improvement process.

Now that you have the basics under your belt, let’s dive into the six phases of continuous improvement by walking through a real-life example.  

Applying a mindset of continuous improvement

A food shipper was spending $98,000 annually in avoidable accessorials on USDA (United States Department of Agriculture) shipments due to poor appointment scheduling at a facility.

Here are the details:

  • A large national food distributor (one of Coyote’s managed transportation shippers) had appointment scheduling issues out of a facility on their USDA shipments.
  • These shipments required a USDA on-site inspector at the facility when the driver arrived for pick up, meaning careful coordination of scheduling. This was not happening.
  • There was a disconnect between the food distributor, facility, customer service reps and carriers. Carriers would routinely show up to the facility when no USDA inspector was on site due to incorrect pickup appointments.
  • Appointment scheduling is a common logistics issue, but this small problem cost the food distributor $98,000 annually in accessorials.

This situation was the perfect candidate for a continuous improvement project.

Phase one: Assess current state

Acknowledging the current state of your operation will make it easier to distinguish the pain points and then implement improvement strategies.

In this scenario, we observe:

  • Carriers having trouble scheduling shipping appointments
  • A procedural disconnect between the food distributor, shipping facility, Coyote operations team and carriers
  • Regular missed pickup appointments
  • Roughly $98,000 in accessorials
  • Less-than-ideal delivery appointments

Phase two: Identify problem

The problem should address the discrepancy between where you are and your aspirations. This is the first step in the PARS process.

In this scenario, the main problem is systemic miscommunication resulting in pickup appointments with no USDA inspector present.

Phase three: Establish target goals

Before mapping out a solid improvement strategy, it’s important to establish your target goals so you know what to work toward and how to measure progress.

Goals here are as follows: Eliminate avoidable accessorials, streamline communication between all parties involved on the food distributor’s USDA shipments, coordinate the schedules of all parties involved, improve operational efficiency and increase on-time pickup performance.

Phase four: Map out strategy

Including team members in the strategy mapping process is incredibly important, as it increases buy in and boosts morale.

We regularly check in on core metrics, and in this case, noticed increased accessorial spend on these shipments. To examine the cause, we utilized the Fishbone/Ishikawa Diagram internally so each team member could contribute their ideas and develop a coherent strategy and conducted weekly meetings for team members to share their observations and brainstorm solutions.

Phase five: Measure effectiveness

To gauge the effectiveness of your improvements, it’s important to analyze your actions in relation to your target goals.

You should track projects and measure improvements on a monthly, quarterly and annual basis to maximize the impact of the continuous improvement process. Analyzing actions taken is the second step in the PARS process.

In this scenario, our operations team took the following actions:

  • Coordinated a call with our contact at the food distribution company to discuss the observed patterns and issues
  • Talked to carriers and the facility and noted issues arising because they could not connect with a USDA inspector on site
  • Requested a different pickup time from the facility, which shifted our pickup slot to a more agreeable time to reduce missed pickups and accessorials

Phase six: Celebrate success

Celebrating the success of your new procedures and strategies is a significant phase of the continuous improvement process.

This is also an opportunity for strengthening your organization while fostering a team-oriented culture comprised of individuals committed to ongoing improvement.

Recording and reporting your results is the third step of the PARS process. Using this example, we saved the food distributor roughly $85,000 per year, decreased the month-over-month accessorial spend for USDA orders to roughly 85 percent and significantly decreased email volume for the Coyote operations team, the customer and the carriers.

To celebrate success, our team regularly distributes department-wide emails to recognize operations teams with the highest average number of projects per representative, gives individuals the opportunity to present their projects to senior leadership for feedback and awards the annual individual winner with an annual bonus.

“Creating a culture of continuous improvement within your organization takes commitment, but the results are worth the investment.”

Creating a culture of continuous improvement 

For us, the most important part of the continuous improvement process, from a leadership standpoint, is empowering individuals to make decisions and improve inefficiencies on their own.

Everyone in our organization has the capability to suggest and implement changes, and that impacts our entire culture. New employees learn about continuous improvement in their onboarding, and every team member is included in weekly departmental whiteboarding meetings dedicated to continuous improvement efforts.

The quantitative results of even the most basic improvements allow team members to track their success and see how their incremental improvement projects produce impactful and lasting change.

Internally, this makes it much easier to secure buy in among our team members because they are excited about the results of their ideation and implementation.

Externally, our customers see the clear value we provide them because of our commitment to savings throughout the continuous improvement process.

Creating a culture of continuous improvement within your organization takes commitment, but the results are worth the investment. A flurry of quick wins, while exciting, is not a compelling reason to abandon structure.

You can experience the same dynamic results, with minimal additional programs, services or employee headcount. It all begins with curiosity, clear goals and a commitment to growth.

Need help implementing a continuous improvement program in your supply chain? Talk to a Coyote supply chain specialist to get started.

Republished with permission, this article first appeared on the Coyote Logistics thought leadership blog.

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