Hoshin Kanri Strategy Deployment

© Operational Excellence Consulting. All rights reserved.
Hoshin Kanri
Strategy Deployment

© Operational Excellence Consulting. All rights reserved. 4
Program Benefits
Focuses the entire company on a few vital goals, rather
than the trivial many
Creates alignment towards breakthrough objectives
through involvement of the whole management team in
the planning process
Communicates the key goals to all managers and staff
Integrates and encourages cross-functional
cooperation to achieve breakthroughs
A review process which holds participants accountable
for achieving their part of the plan
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Symptoms that your organization needs to
do Hoshin Kanri planning…
Too many bad projects in process
Very long lead times for improvements
Constantly missed budgets and forecasts
Senior management vision does not match
organizational activities
Annual objectives are rolled out in March instead of
January

“Strategy without tactics is the
slowest route to victory. Tactics
without strategy is the noise
before defeat.”
– Sun Tzu

Typical Company
Do
Plan
Check
Act

Limitations of Standard Strategic Planning
1. Too many priorities
2. Insufficient detail
3. Lack of active review

Other Equivalent Terms
Other terms synonymous to Hoshin Kanri
• Hoshin Planning (Hewlett-Packard)
• Policy Deployment (AT&T, Infineon Technologies)
• Management by Policy (Texas Instruments)
• Managing for Results (Xerox)
• Management by Priorities
• Goals Deployment
• “Catch-ball” Process

Purpose of Hoshin Kanri 1
Provides a step-by-step planning, implementation and
review process for managed and sustainable change
Facilitates a set of coordinated processes that
accomplish the core objectives of the business
Clarifies specific annual target policies derived from
long- and medium-term policies that encompass the long
term visions of the company

Hoshin Kanri Model
Source: Yoji Akao, 1991
Vision
Objectives
Strategy
Resources
Action
Schedule
Measures
Hoshin
Plan
Senior
Management
Implementation
Teams
Middle
ManagementThis document is a partial preview. Full document download can be found on Flevy:

Communicating & Linking Goals
Be the recognized Market Leader
in terms of Quality, Cost, Lead time
Flexibility, Customer Service & Innovation
R & D
DIRECTOR
FINANCIAL
DIRECTOR
PRODUCTION
DIRECTOR
QUALITY
DIRECTOR
MARKETING
DIRECTOR
DESIGN
MANAGER
DISTRIBUTION
MANAGER
SALES
MANAGER
PURCHASING
MANAGER
MATERIALS
MANAGER
FACTORY
MANAGER
• Reduce
Logistics
Cycle Time
• Eliminate
Receiving
Inspection
• Cut Total Order
to Delivery Cycle
• Reduce
Manufacturing
Lead time
SHOP
FLOOR
• Reduce Flow Distance
• Cut Handling Time
• Reduce Set-up Time
• Reduce Order
Handling Time
• Waste Elimination
Program
• Set-up Reduction
Program
• Reduce Planning
Cycle Time
• Reduce Supplier
Lead times
• Delivery to
Point-of-Use
• Reduce
Invoice Time
• Reduce
Development
Lead times
• Cut time to
Introduce
New Products
to Market
• Reduce
Management
Reporting
Cycle
COST
ACCOUNTANT
PRODUCTION
MANAGER
GENERAL
MANAGER
• Reduce Total
Manufacturing
Lead time
ORDER
ENTRY
• Reduce
Logistics
Cycle Time

Hoshin Kanri & LEAN Imperatives
Hoshin KanriHoshin Kanri
Customer Value
ContinuousImprovement
Management by Fact
Teamwork
Alignment Principle
Operating
Philosophy

Comparison of Hoshin Kanri & MBO
MBO Hoshin Kanri
1. Basics Behavioral theories
Scoring system
Lean or Total Quality
Control cycle
2. Organization Focused on the
individual
Focused on the
organization and
groups of individuals
3. Operating
System
Decisions on objectives
(“troubleshooting
system”)
Planning of coherence
between objectives of
the individuals
PDCA cycle
Management by
processes
Top-down / bottom-up
flows

Comparison of Hoshin Kanri & MBO
MBO Hoshin Kanri
7. Operating
methods
Based on “performance
indicators”
The management of
quality and industrial
engineering are
considered “sub-
systems”
Policy deployment
system
Based on “control
points”
The instruments of
quality control and
engineering are
fundamental

Major Strengths of Hoshin Kanri
Synergy between top-down and bottom-up processes
Continuous, systematic management of processes
Rigorous application of PDCA cycle
Emphasis on cause-and-effect relationships

Breakthrough
Impetus for breakthrough:
• To attain or maintain quality leadership
• To improve image amongst customers, suppliers and other
stakeholders
• To improve motivation and morale
• To improve revenue
• To expand market share
• To address product failures in the field
• To reduce cost

Relationship of Breakthrough & Control
In the situation of “out-of-control”, resources are diverted
to address the sporadic problems, while chronic problems
are often neglected
Control is often a pre-requisite for breakthrough to take
place
Control implies doing things right
Breakthrough implies doing the right thingsThis document is a partial preview. Full document download can be found on Flevy:

PRINCIPLES OF
HOSHIN KANRI
2

Pareto Principle (80/20 Rule)
To identify the “critical few” from
the ‘trivial many”.
The top twenty percent of the
problems account for eighty
percent of the cost of poor quality.
Also called the “80/20” rule.
Emphasize the need to focus
resources and attention on the
issues which provide the greatest
contributions.
PARETO DIAGRAM
for Cost of Quality by
Assembly Process
0
250
500
750
1000
1250
1500
Wire-bond
Trim-form
Die-attach
Molding
Lasermark
Dicing
Assembly Process
$'000
0
10
20
30
40
50
60
70
80
90
100
Cumm.
%ofCOQ

Cause & Effect
EffectCauses
Machines
Measurements Materials
Methods
Mother Nature
Manpower
(Environment)
Problem
Statement

Review of Strategic Planning Process
Shared
Values
Mission
Vision
Environmental
Assessment
Environmental
Assessment
StrategiesStrategies
Strategic ObjectivesStrategic Objectives
Action PlansAction Plans
Reason for
existence
Future
intent
Guiding
Principles
Broad statements of direction
Capabilities and risks
Things to change or improve (3-5 years)
Implementation

Hoshin Kanri Steps 1
1. Establish organizational vision
2. Develop 3-5 year strategic plan
3. Develop annual objectives
4. Deploy/roll down to departments
• Departments develop plans and means
• Focus deployment – not everyone needs to be involved in
everything
• Iterative (catch-ball) nature may take time

Hoshin Planning Process
Direction of
information flow
Catchball:
Negotiation &
Alignment between
two levels
MD/
Business Unit
GM
Dept Manager
Section
Manager
Engineer
Customer
Satisfaction
Feedback
Feedback
Feedback
Feedback
Set up & lead
Kaizen team to
reduce rejects in
Line A-1
To improve
quality
Improve
overall yield
Reduce
defects
Reduce rejects
in Line A-1
To improve
quality
Improve
overall yield
Reduce
defects
Policy Owner Objective Means

Activity 6: Goals & Objectives
1. Define your organization’s strategic goals
2. For each strategic goal, develop its annual
objective(s)
Time: 15 mins
Annual Objective 1
Annual Objective 2
Annual Objective 3
…
Strategic goal description 1
…

There are several areas to focus on when
employing a strategic planning process
Customer
Perspective
Customer
Perspective
Learning &
Growth
Perspective
Learning &
Growth
Perspective
Business
Processes
Perspective
Business
Processes
Perspective
Financial
Perspective
Financial
Perspective
Targets Set for
Key
Performance
Indicators
Targets Set for
Key
Performance
Indicators
Process
Execution &
Improvement
Process
Execution &
Improvement
Project Plans
& Resource
Allocation
Project Plans
& Resource
Allocation
Drives
Nego-
tiationInputs
Results – Reflection to Identify Continuous
Improvement Opportunities
(1) Complete full scan of the
environment including
input for targets from top
management
(2) Ensure that all business
objectives are covered by
KPIs and targets are set for
each KPI
(3) Apply common filter to list
of proposed projects
(4) Allocate resources against
portfolio of projects
(5) Top management is the
owner of the project portfolio
(6) Regular reviews based on
standard forms and templates
(7) Adopt a process view to reflect
improvement
11 22 33 44 55 66
77

Phase 2: Deployment to Department Managers
Deployment to Department
Managers
PROCESS OUTPUTINPUT
Cross-functional Resources
Request
Functional
Scope?
A
Finalized first-level
Hoshin Kanri
Deployed as
Functional Objectives
No
Yes
B

HOSHIN KANRI
TOOLS
4

Alignment & Deployment Chart – Manufacturing
Example
Hoshin Kanri 2017/18
Alignment & Deployment Chart
REVISION
POLICY NO.:
M2.1.1
OBJECTIVE: IMPROVE OUTGOING VISUAL-MECHANICAL QUALITY
FOR MQFP DEVICES
GOAL:
7000 PPM BY
JULY 2018
OWNER:
H. ALLISON
DATE INITIATED:
25-JUN-2017
NO.: DATE:
HIGHER LEVEL POLICY NO.:
-
HIGHER LEVEL OBJECTIVE: IMPROVE OUTGOING QUALITY FOR
MPFQ DEVICES
APPROVED BY:
J. SUAREZ
DATE APPROVED:
07-JUL-2017
ANALYSIS
REFLECTIONS (2016/17):
VOLUME HAS INCREASED FROM 10 MIL UNITS PER QUARTER IN MAR 2017 TO 20 MIL
UNITS PER QUARTER IN SEP 2017.
MAJOR VM YIELD LOSSES ARE SEEN TO BE COMING FROM SYMBOL DEFECTS., LEAD
DEFECTS AND VOID DEFECTS.
PLAN FOR 2017/18:
ELIMINATE SYMBOL DEFECTS BY USING RECIPE CONTROL.
IMPLEMENT NEW TRIM/FORM SYSTEM WITH BETTER LEAD FORMING CAPABILITY.
OPTIMIZE MOULDING PARAMETERS AND EVALUATE NEW MOLD COMPOUND.
OBJECTIVE MEASUREMENT
2016/17 ACTUAL 2017/18 FORECAST
COMMENTS
1Q 2Q 3Q 4Q YEAR 1Q 2Q 3Q 4Q YEAR
OUTGOING VM YIELD LOSSES 23.7 25.2 20.8 19.6 20.7 17.5 14.0 10.5 7.0
(‚000 PPM)
APPROACH
S/NO. TACTIC TARGET RESPONSIBLE WHEN
M2.1.1.1 REDUCE SYMBOL DEFECTS FOR MQFP DEVICES 4000 PPM SIMON WOO MAR 2018
M2.1.1.2 REDUCE LEAD DEFECTS FOR MQFP DEVICES 1800 PPM LIM YK JUN 2018
M2.1.1.3 REDUCE MOULDING DEFECTS FOR MQFP DEVICES 1200 PPM J. BADGLEY MAY 2018
97.9 97.9
97.1
97.3
97.5
96.8
97
97.2
97.4
97.6
97.8
98
May Jun Jul Aug Sep
VM YIELD FOR MQFP DEVICES (%)
14486
3789
2518
SYMBOL DEFECTS LEAD DEFECTS VOID DEFECTS
VM DEFECTS FOR 3Q 2016/17 (PPM)

Hoshin Kanri X-Matrix
Matrix appears complicated at first
Developed as the strategic planning document
Articulates intent of the organization’s action through
linking vision, strategic objectives and actionable
activities
Assigns high level ownership to key areas of focus
Output is the actionable improvements that are reviewed
and modified, through “catch-balling” process

X Matrix – Example 2

A3 – A Simple Tool to Tell a Persuasive Story
Are our Goals and Activities a
logical response to removing
the obstacles that prevent us
from achieving our desired
performance?
Have we truly identified the
“critical few” top focus Goals
and Activities for the Division?
Is there a SMART target, and
named owner, for each Goal
and Activity?
Performance, Reflection, Analysis Goals, Targets, Activities
Gaps Obstacles Causes Actions
Do we have a clear
understanding of our desired
future state?
Have we identified the critical
gaps between our current and
desired performance?
Have we identified the
obstacles that we need to
overcome to close our
performance gaps?
Left-hand side of A3 Right-hand side of A3

An Individual Contributor’s A3 is Simply the Action Plan
or a Gantt Chart
A M J J A S O N D J F M
Signatures: ____________________ ____________________ ____________________ ____________________ ____________________ ___ Rev/Date:_______________
Rev/Date:_________________
APAC Mother A3:
Growth /
Expansion
A3 Activity: 1a.
Activity
Owner
Task # Task Leader Status
FY'15
xxx xxxxxxxxxxxxxxxxxxxxxxx xxxx
Status Unresolved Issues and Follow-up Plan
On Schedule
Schedule at risk
Behind schedule. Needs help.
Complete
Target date replanned from original date.
Department A3

Types of Hoshin Kanri
Main Objectives vs. Support Objectives
Improvement (Breakthrough) vs. Daily Management
Cross-functional vs. Functional
Level of Deployment

Hoshin Kanri Deployment Tree
FrontlinerFrontliner
Section
Manager
Section
Manager
Department
Manager
Department
Manager
GMGM
M1
Improve Process
Quality
M1
Improve Process
Quality
M1.1
Improve Assembly
Process Quality
M1.1
Improve Assembly
Process Quality
M1.1.1
Improve Process
Capability at FOL
M1.1.1
Improve Process
Capability at FOL
M1.1.1.1
Improve Bondability
of MQFP Devices
M1.1.1.1
Improve Bondability
of MQFP Devices
……
M1.1.2
Implement Defect
Prevention at EOL
M1.1.2
Implement Defect
Prevention at EOL
M1.1.2.1
Implement Vision
System for MQFP
Trim Process
M1.1.2.1
Implement Vision
System for MQFP
Trim Process
……
M1.2
Improve Test
Process Quality
M1.2
Improve Test
Process Quality
……
……

Linkages of Objectives to Superordinate Goal
World Class
Manufacturing
World Class
Manufacturing
QualityQuality
Improve process qualityImprove process quality
Implement defect preventionImplement defect prevention
CostCost
Use cost-effective raw materialsUse cost-effective raw materials
Prevent wastage of key input materialsPrevent wastage of key input materials
DeliveryDelivery
Reduce lead time of manufacturing processesReduce lead time of manufacturing processes
Reduce cycle time for product fulfillmentReduce cycle time for product fulfillment
ProductivityProductivity
Improve equipment utilizationImprove equipment utilization
Increase machine to man ratioIncrease machine to man ratio
InnovationInnovation
Qualify new productsQualify new products
Define breakthrough process in manufacturingDefine breakthrough process in manufacturing
Superordinate
Goal
ObjectivesKey Business
Drivers

Performance Measurements - Benefits
Provide data for evaluating how well organizational goals
are being achieved
Encourage Management by Fact and Problem
Identification
Provides a clear format for communicating up and down
the management chain
Facilitates project identification
Provide a basis for recognizing good performance

Target & Plan
Target – desired level of performance
Plan – minimum acceptable level of performance

Cascading of Policy Deployment
Policy Deployment cascades down,
with the tactic and targets
at one level becoming
the objective and
goals at the
next level.
Objective Goals Tactic Targets
What HowMeasure Measure
Department Manager
Section Manager
Engineer

Daily Management
Daily management is more concerned with meeting
minimum acceptable level of performance, i.e. plan. In
contrast, improvement hoshin is concerned about
reaching new targets.
Daily management does not imply maintaining absolute
status quo. Continuous improvement should still be the
guiding principle.

Cross-Functional Management
Coordination of inter-functional activities to achieve
management goals
Management of horizontal / project organizations that cut
across different functions or departments
Incorporate the use of project management tools

MANAGEMENT REVIEWS
6

Key Points to Note for Reviews
Emphasis on corrective actions and systemic support
to address deviations from plans
Provide opportunities for recognition of achieved targets
and good efforts
Address system issues hindering the achievement of
objectives

Monthly Self-Review
Monthly self-review process
should :
• Check to see if results are being
achieved due to planned activities
• Consider how the planning
process can be improved further

Annual Review 2
Emphasis on understanding which means led to the
achievement of which targets (cause-effect relationship)
Standardize resulting improvement to other areas, where
applicable
Document and disseminate lessons learned from
Hoshin Kanri of current year

Checklist for Annual Planning Session 1
1. Are the overall measures in the hoshin and structured
business plans clear and understood?
2. Does each strategy has an owner?
3. Have the critical business issues been addressed?
4. Have the carry-over activities been picked up?
5. Have the lessons learned been picked up?This document is a partial preview. Full document download can be found on Flevy:

Guidelines for Managing Review Meetings 2
4. Travel and unplanned meetings are kept to a minimum
5. Ensure that people are given time for the preparation of
data about the background to deviations from plans (~2
weeks)
6. That business units should use same hoshin review
charts/tables to review strategies

Effective Hoshin Kanri
Factors contributing to effective Hoshin Kanri:
• Operating effectiveness
• Coherence
• Mobilization

Coherence
Three dimensions of coherence
• Horizontal (Cross-functional) Fit
Improvement objectives and actions are aligned across various
functions
• Vertical (Functional) Fit
Priority of objectives of subordinates aligns to that of functional
supervisor
• Strategic Fit
Extent of short-term actions, aimed at short-term objectives,
contributing to medium- and long-term objectives

Key Points / Summary
Hoshin Kanri is a management tool aimed at translating
management objectives to various levels of the
organization
The main purpose is to achieve Focus and Alignment of
organizational objectives
Policy deployment is based on basic principles of Lean,
i.e. customer focus, management by fact, teamwork and
continuous improvementThis document is a partial preview. Full document download can be found on Flevy:

Copyrights of all the pictures used in this presentation are held by their respective owners.

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