As mentioned in an earlier blog Kaizens are one week process improvement blitzes. For our Kaizen training last week, we chose a project that would focus on improving our Line of Credit Review process. Lines of Credit (LOCs) are one of our most popular lending products. However LOCs are open credit and require some form of monitoring to ensure the accounts are operating as agreed. In order to utilize the time of our staff efficiently, ACU wanted to develop a more detailed and risk focused approach towards monitoring our LOCs. The objective of the one week Kaizen, was to determine clearly defined repayment parameters and criteria in which ACU would determine the accounts requiring attention.
The week long Kaizen is really about 3 to 4 months long. The process still follows the Lean Six Sigma methodology of Define, Measure, Analyse, Improve and Control (DMAIC). Two months prior to the training the Steering Committee works with the Process Excellence team to define the problem/opportunity (summarized in the previous paragraph). The project team then starts to collect the baseline data that is used during the Kaizen. It is important at this time to seek the support of the process owners and stakeholders, project participants should include staff from those areas.
During the Kaizen the team documents the critical to customer (CTC) measures and defines how the team/project will determine if the improvements are significant. The team then begins to Analyse the data, working towards determining the root cause of the issue. Many different tools can be used to determine the root cause. In our project, we used a tool called the “Causal Circle”. During the first day, the team used a flow charting exercise to identify many of the “problems” or “challenges” we were experiencing with our current process. Each of the problems was recorded on a sticky note. The complete list of issues was “affinitized” (or grouped) into nine high level themes. These themes were also recorded on sticky notes and arranged in a circle. Then starting with Issue #1 in the circle we reviewed the relationship of that issue with every other issue. If the issue influenced or is a direct cause of another issue on the circle we drew an arrow beginning from #1 and pointing to the issue that #1 impacted. This process was repeated for every other issue in the circle until all combinations had been reviewed. After completing the review of all issues we counted the number arrows coming into and out of each issue. The issues with the most out-going arrows were identified as high leverage points or root causes. CTCs associated with issues with large numbers of in-coming arrows are good indicators of process improvement. Ultimately there were 2 issues that were identified as the most significant contributors towards our LOC Review process problems.”
During the week the team engaged the stakeholders and executives supporting this project. As the project moves quickly during the week, stakeholders and executives must be kept current on the direction the team is moving. Additionally, during the week, it is also critical that these same leaders approve the recommended improvements. Once we had received this approval, the remainder of our week was spent prioritizing and assigning task ownership.
While we were not able to implement all the approved improvements, the Kaizen process provides up to 60 days to finish implementing. After the 60 days, the project should close and the improvements must be measured against the CTCs identified during the Kaizen week. The same as a full 6 to 9 month DMAIC project all changes must provide a measurable (statistically) significant improvement.