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http://www.gowerpublishing.com/isbn/9780566087400

Hoshin Kanri
The Strategic Approach to Continuous Improvement

david hutchins

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Hoshin Kanri – An Overview

n the 1950s the American Management Guru, Peter Drucker, suggested that in order to be successful in business it is necessary to be better than all of your competitors for at least something that will be important to thecustomer. There must be some specific reason why they would choose to buy from you rather than buy from a competitor, even if on average the competitor can outperform you. If for example your organisation scores more points in total for Quality, Price and Delivery, but a competitor can out score you on one of them, say Quality, then that supplier will win when the customer is mostly concerned withthat issue. If another has a reputation for being better on price then he will win in a price competitive market irrespective of your abilities on the other two criteria. It is not only important to actually be the best, it is even more important to be ‘perceived’ as being the best. Perceptions and reality are often very different. Many organisations fail because they do not understand thisimportant fact. They may know what they are good and bad at doing but the customer may well see things very differently. Even if the customer is mistaken it will still be their prerogative to choose. In a fiercely competitive global market, the pressure is on to attempt to be the best across the broadest possible spectrum of customer-sensitive features. This raises several questions. What, for example,does ‘best’ mean? Again it is the customer’s perception of what is meant by by ‘best’ that is important, not the vendor’s. Their perception of our performance may be very different from our own and this difference might well cost us our business in a competitive market. For example, a large Middle Eastern steel company was perceived by its local customer, a large automobile company, to producerolls of steel strip to a lower quality of surface finish than that achieved by foreign competitors. When this perception became known to the steel producer an investigation showed that there was no discernible difference. However, because they were local and because both they and the customer were located in a dry arid desert, there was no need to protect the steel reels during transportation. On theother hand, the steel produced by the competitor was wrapped in oiled paper to protect it from the corrosive salt air during a long sea journey. The oiled paper gave the impression of superior quality when, in fact, there was no difference. Had the study not been carried out, the producer might well have engaged in an expensive improvement process which might not have changed the perceptionunless this had also included wrapping the steel in oiled paper, which was the root of the false impression. When demand exceeds supply and the vendor can sell everything they can make, it is possibly difficult to convince them of the importance of this philosophy. The customer will have to buy their product regardless of the quality of the service, the price, delivery or after-sales support. This willusually be the case in monopolistic situations where the customer has no choice. There is therefore no pressure on the supplier to achieve anything because they know that they are secure.

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Alternatively, when supply exceeds demand, the rules change completely. Suddenly the customer becomes king and collectively has the power of life or death over the hapless vendor. Since inthis situation, every competing vendor wants to be amongst the survivors, the pressure is on to be amongst those who are favoured by the customers and in the end it will only be the best who will survive. Hoshin Kanri is the only proven means by which this can be achieved when competition is at its most severe. It is a systematic approach that can be ruthlessly applied to grind down even the most...