How could we use RCA in Management Principles and Lean Systems?
Many people in the management principles and lean systems use RCA (Root Cause Analysis) as a part of their daily activities. It’s an easy-to-use technique that can be integrated into any training or workshop. They are usually on how to use it as a tool that they can take away with them. I am John, and I want to talk about how they could engage in the process in their day-to-day work rather than just learning about it at a workshop. You’re not alone if you’ve ever been plagued by uncertainty when conducting root cause analysis. It’s a valuable technique that can be used in almost every aspect of everyday life, but it can be challenging.
What is RCA?
RCA is a management principle that guides you through an investigation. It allows you to quickly identify where things start going wrong in your system (a “root” cause). It is a term used to describe a wide range of tools. Approaches and techniques are used to reveal the causes of problems. The simplest definition of an RCA would be to identify the root cause. These techniques are widely used in business and management principles and lean systems to achieve continuous improvement. RCA is not new in theory, but it has been added recently by many consulting companies and authors that have updated traditional approaches. The goal is to improve processes to become utterly customer-centered by asking, “Why?” This can mean replacing an employee with automated software, revamping an entire company’s approach to sales or marketing, or even simply changing the market.
RCA Metrics
Its three metrics are output, inventory, and operating expenses. These are the key metrics that would be used to determine the value of a business. Other metrics can also be used, but these three are the driving force of how a business behaves and its profits. At its core, a company is creating products for customers, selling them for money, purchasing raw materials, and paying all the other bills (rent, employee salaries, etc.). RCA should be built on identified strengths, weaknesses, and opportunities.
Key performance indicators (KPIs) determine how well your company is doing relative to its goals (Gabčanová, 2012). Improving these three metrics benefits the three financial indicators: Cash Flow, profit, and Return on Investment (ROI). An improvement in the inventory metrics can help you reduce the cost of storage and transportation and improve your return on investment. From a “stakeholder” point of view, an improvement would be a reduction in inventory levels or a reduction in inventory holding costs.
Theory of Constraints
In lean production, it is a method used to recognize the most critical restraining factors that stand in the way of attaining a goal. What follows is a systematic improvement of that factor until it is no longer standing in the way as a limiting factor. Eliyahu M. Goldratt developed the Theory of Constraints in 1984, and the approach is applied in almost all processes (Raimona & Mohd, 2006). The original way to deal with constraints that are, usually at the same time, improve other things without focusing on them might not be what you’re looking for. To stay focused and complete the improvement of your constraint, try to identify an apparent objective that will help you focus on its progress.
In many cases, improving a system (constraint) requires changing something else in the system. The methodology follows a five-step process; The first step is identifying the constraint that limits achieving the foal. Secondly, exploit the constraint by improving the process using the existing resources. Thirdly, subordinate all resources to the constraint by reviewing all the processes to ensure that they support the needs needed by the constraint. Fourthly, elevate the constraint by breaking it with specific actions such as doubling overtime or machines. Finally, repeat the process from the first one as a continuous cycle. An example of a constraint presented in the literature is an assembly line with only three workers needed to build 12 cars in a day. The type of process constraint is based on a physical limitation. A common misconception is that the limiting aspect is the physical capability, but it’s usually not true. The constraint does not limit how many workers you can add but how many cars you can produce per unit of time. For example, if one worker works faster than others, it would be better to make him work more and give the other two less work.
Application of RCA
The methodology behind RCA is that it can be used to identify improvements in any process quickly (Reid & Smyth‐Renshaw, 2012). The RCA approach can be applied in almost any management principle and skeletal system, especially when looking for a quick win by identifying a simple improvement. Regardless of your job description, you will probably have the opportunity to conduct an RCA if you are diligent enough.
In the end, RCAs are not always easy to apply and may require some help from your managers or the consultants that work with your company. But it’s worth it and will provide huge gains in time and energy by generating huge savings on inventory costs and increasing customer satisfaction levels. The RCA approach will give you more knowledge about the system, identify “things” that can be improved, and help you to improve system performance.
The application of RCA in management principles and lean systems can be summarized as follows:
1. Identify your business model by asking “why.” Next to identifying your competitive advantages in a traditional company, you will probably ask, “Why?”. This question is because all companies want to identify inefficiencies in their business model. These are very likely to be just one thing. For example, when asking ‘why,’ we might say “we need to reduce production time” or “we need to increase our product margin.”
2. Identify your process by asking “what.” In this step, you should identify your processes to be able to improve on which you will focus your efforts. For example, if we ask “why” by saying “we need to reduce our production time,” we might decide to focus on the process of producing cars as our first action because it’s the lower value process.
3. Identify bottlenecks by asking “where.” In this step, you need to ask where the bottleneck in the process is responsible for the existence of a constraint or some limitations. For example, we can ask, “where are all our bottlenecks responsible for the production time being slower than it should be.” The place we might choose as a bottleneck is a machine that needs to be modified or repaired.
4. Identify improvements by asking “what.” In this step, you have to find out the best way to improve the process. It’s common to go through 6 types of Improvement: Physical improvements, Non-productive improvements and other improvements, improvement in processes, Improvement in products and services, and Improvement in management.
5. Create a plan by asking “how.” In this step, you have to create a plan for improvement by asking “how.” In cooperation with your managers, you might decide that you should hire new people, buy machines, or take other actions to improve the bottleneck.
References
Eby, K. (2021). Everything You Need to Know About Theory of Constraints [Image]. Retrieved 6 May 2022, from https://www.smartsheet.com/all-about-theory-of-constraints.
Gabčanová, I. (2012). Human resources key performance indicators. Journal of Competitiveness.
Raimona Zadry, H., & Mohd Yusof, S. R. (2006). Total quality management and theory of constraints implementation in Malaysian automotive suppliers: a survey result. Total Quality Management, 17(8), 1000.
Reid, I., & Smyth‐Renshaw, J. (2012). Exploring the fundamentals of root cause analysis: are we asking the right questions in defining the problem?. Quality and Reliability Engineering International, 28(5), 535–545.