The Shingo Prize for Operational Excellence Essay Example

also Director of Consulting Services with The Facility Group and has recently worked with Harlequin, Beechnut, DariGold, Los Angeles Times, Shaw Samples, Heinz, 3M, AT&T, and US Marine Corps. J. Brian Atwater is an Associate Professor of Production/Operations Management at Utah State University. He teaches graduate courses in Systems Thinking, and Operations Management.He works as an Examiner for the Shingo Prize for Excellence in Manufacturing and he has provided training and other professional consulting services for a wide variety of businesses including Apple Computers Inc.

, Carrier Transicold Inc. , and Schuller/Manville Corporation. He has published articles in a variety of journals including: The Academy of Management Learning & Education Journal, Production & Operations Management Journal, International Journal of Production Research, and International Journal of Operations & Production Management.James I. Herbert is Professor of Management and Entrepreneurship and Director of the Urban Enterprise Initiative at the Michael J. Coles College of Business in Kennesaw State University.

Dr. Herbert is an internationally recognised Family Business Consultant with more than 25 years of experience. He teaches MBA courses in Organisational Behaviour and New Venture Creation. He is also a Family Business Advisor with Fellow Status from The Family Firm Institute (FFI, Inc).

Dr. Herbert is currently the Editor of The Family Business Bibliography, a print and electronic publication of the Cox Family Enterprise Center, in collaboration with The Family Firm Institute. 1 Introduction Shigeo Shingo’s contributions to operations excellence are well known. Widely recognised as the codeveloper of Toyota’s production system with Taiichi Ohno, he has shared his improvement strategies with businesses all over the world and authored numerous books.

Among his notable contributions are the notion of finding and eliminating

all forms of waste in an operation, mistake-proofing processes through source inspection and poka-yoke systems and the development of quick changeovers using his Single Minute Exchange of Die (SMED) system. Imai (1999b) cited Shingo as one of the most important contributors in the evolution of manufacturing in Japan: 420 S. S. Chakravorty, J. B. Atwater and J. I. Herbert “…Personally, I do believe that there are two giants who have contributed a great deal to the advancement of the manufacturing industry in Japan and who spread that victory throughout the world.And these two giants are Taiichi Ohno and Shigeo Shingo…. ”

So every time Mr. Ohno needed some special assistance, for example, Mr. Ohno would go to the plant and recognize that setup time must be dramatically reduced in order to meet the changing requirements. He would go to the shop floor [gemba], tell his people that “You should change, you should reduce the setup time. Now it’s taking two hours – that’s too long. You should reduce it down to 10 minutes. ” Then the manager would say, “But how can we do it – we don’t know? Then he would simply say, “Ask Mr. Shingo. ” While Shingo’s contributions are well known, the Shingo Prize for Operational Excellence is not.

The Prize recognises the companies that demonstrate outstanding achievements in manufacturing or service processes and productivity improvements, quality enhancements and customer service (e. g. , PR Newswire, 2008; Manufacturing Engineering, 2007). The Shingo Prize requires companies to provide evidence of world-class practices, which include but are not limited to Shingo’s improvement strategies.Celebrating its 20th anniversary this year, many companies, such as Raytheon, Delphi Corporation, The

Boeing Company, Johnson Controls and Ford Motor Company have received the Prize.

The purpose of this article is to provide a background on the Shingo Prize, clarify the important differences between it and other business recognition programmes, illustrate the value in pursuing the Shingo Prize and provide insights on the contributions the Shingo Prize has made to the field of operations management in North America. The remainder of this paper is divided into five sections.

In the next section, a brief discussion of Shingo’s major contributions to the field and world-class practices is provided. In Section 3, a description of the application and evaluation process for the Shingo Prize is given. Section 4 discusses the important differences between the Shingo Prize and the Malcolm Baldrige National Quality Award. Section 5 discusses the value in applying for the Shingo Prize and provides examples of the types of results the past recipients have reported.

Finally, a summary of the paper is presented. The Shingo system and world-class manufacturing . The Shingo system The Shingo System is a collection of improvement strategies developed by Shigeo Shingo. The details of the Shingo System are delineated in several books (Shingo, 1985; Shingo, 1986; Shingo, 1987; Shingo, 1988).

The central theme behind this system is finding and eliminating all forms of waste. Shingo (1987, pp. 18–19) notes: “Unfortunately, real waste lurks in forms that do not look like waste. Only through careful observation and goal orientation can waste be identified. We must keep in mind that the greatest waste is waste we don’t see. ”While working with Shingo during the development of the now famous Toyota Production System, Ohno (1988), identified seven categories of waste

(muda): waste of overproduction, waste of inventory, waste of defects, waste of motion, waste of processing, waste of waiting, and waste of transportation.

The elimination of these forms of waste became the focus and motivation behind the evolution of the Shingo System. The Shingo Prize for operational excellence 421 The best-known parts of the Shingo System are source inspection and mistake proofing (poka-yoke), and Single Minute Exchange of Die (SMED, a. . a. quick changeover). One of the most obvious areas of waste in manufacturing comes from scrap and rework.

In an effort to eliminate all scrap and rework Shingo (1986) developed the idea of source inspection. Shingo contrasts source inspection with the more common approach he called informative inspection. Informative inspection observes the outcome of a process to provide insights on how the process can be improved. Unfortunately, by its reactive nature informative inspection is destined to generate some scrap and rework (i. e. , waste).

Source inspection is more proactive by identifying key elements that can create bad outcomes and correcting them before the process starts. By taking action at the source, errors are prevented from turning into defects and more waste is prevented. Shingo refined the concept further by developing poka-yoke devices that are used to assist with source inspections and help overcome a common source of mistakes – human forgetfulness. Shingo’s other well-known contribution, SMED, was developed to assist in reducing the waste of overproduction.

As set-up times are reduced the size of the production run can also be reduced, and small-lot production becomes an economic reality. SMED is a systematic procedure consisting of three major steps (Shingo, 1985). The first step involves separating internal

components of a setup (i. e. , those that can only be performed when a machine is not in operation) from external components (activities that can be done while the machine is in operation).

The second step involves transforming internal set-up components into external components. The final step consists of streamlining all aspects of the setup.While these concepts are important criteria used in the evaluation of applicants for the Shingo Prize the scope of the Prize is much broader than these two concepts or even the Shingo System. The Prize was named after Shingo in recognition of his contribution to the evolution of World-Class Manufacturing.

The intent of the Prize is to continue his work by promoting the use of world-class practices and furthering their evolution. Consequently, Prize applicants are evaluated on the use of a wide range of techniques that are acknowledged as world-class practices.In addition, applicants that have developed innovative techniques that also generate impressive results are acknowledged and encouraged to share their ideas. In the next section, the concept of world-class manufacturing is examined.

World-class manufacturing Hayes and Wheelwright (1984) were the first to use the phrase ‘world class manufacturing’ to describe a set of six practices that help companies achieve outstanding performance. Since the origination of the idea, several other authors have written about the concept and the practices that lead to world-class performance (e. g. , Da Silva et al. , 2005; Schonberger, 1996).

Flynn et al. (1999) reviewed these publications and synthesised the various lists compiled by the authors into eight unique practices. The eight practices included the original six discussed by Hayes and Wheelwright plus two others. One addition to the original

six was quality management practices and the second addition was Just-in-Time (JIT) manufacturing practices. Flynn et al. (1999) analysed these practices to determine if they truly contribute to world-class performance.

The results of their analysis showed that the original list of world-class practices developed by 422 S. S. Chakravorty, J. B. Atwater and J. I. HerbertHayes and Wheelwright have stood the test of time and should still be included in any list of world-class practices. Furthermore, both of the additions significantly enhanced the base list. As a result, a strong argument can be made that today’s list of world-class practices should be comprised of the eight practices.

Those practices are: 1 continuous development of workforce skills and capabilities through ongoing training programmes and cooperative arrangements with vocational technical institutes 2 continuous development of the technical competence of managers through training, hiring managers with technical degrees and rotating managers hrough technical functions 3 competing through continuous quality improvement focused primarily on new product development and customer involvement 4 encouraging workforce participation in the improvement process through the development of a culture and policies that foster a cooperative environment 5 rebuilding manufacturing engineering through the development of new equipment and workers that can maintain and improve that equipment 6 developing an environment that strives to make incremental improvements 7 using quality management practices throughout the organisation 8 using JIT manufacturing practices on the shop floor. The Shingo Prize for operational excellence 3. 1 The Shingo Prize The Shingo Prize has three primary objectives: 1 to promote the awareness and use of world-class practices 2 to help managers understand and share successful business practices 3 to engage academics and practitioners

in further developing world-class practices. The Shingo Prize organisation is a non-profit operation headquartered at Utah State University and runs in partnership with Association of Manufacturing Excellence (AME), APICS: The Association of Operations Management, Greater Boston Manufacturing Partnership, and Society of Manufacturing Engineers (SMEs).The Shingo Prize is awarded for all industries (private and public sectors or profit and non-profit) located in the USA, Canada, or Mexico.

The process of applying for the Shingo Prize (or the Shingo Bronze Medallion or the Shingo Gold Medallion) can be broken down into several steps. First, managers submit an application and profile sheets. Next, the company must submit a detailed achievement report explaining how it is addressing each element in the evaluation criteria and showing at-least three years of data related to productivity and financial results (the specifics of these criteria are discussed in the next section).These reports are distributed to several examiners who score the reports as described in the application guidelines.

All applicants receive copies of the reports, which identify the company’s strengths and weaknesses. The Shingo Prize for operational excellence 423 Those applicants scoring high on the written reports receive a site visit. Prior to the visit, candidates are encouraged to address the weaknesses identified in the evaluation of the written report.Site visit evaluation teams are composed of five to six examiners who spend two to three days reviewing and further investigating the operation’s practices as described in their written application. After the visit, each member of the examination team submits a written evaluation of the strengths and appropriateness they observed during their visit along with a recommendation about whether the company should receive the Prize.

The Shingo Prize

Executive Committee makes the final decision regarding who reviews these reports and recommendations. All applicants receive copies of the written reports made by the site examiners.The entire process (not including preparation to apply) takes about 8–10 months. The application forms and profile sheet are usually received by July or earlier. Achievement reports are collected by late October (or earlier) and reviewed by examiners before the end of December (or earlier). Site visits are conducted over the first three months of the next year.

General Today several recognition programmes for excellence in business exist.In addition to providing recognition, most of these programmes also offer guidelines for helping managers improve their business performance. There are often benefits just from applying for an award or using its criteria to help a company improve. However, each award typically has a different focus or emphasis, which is not always well understood. Because of the different emphasis of each award, companies will receive different value from applying for one award over another.

This section explains the significant differences between the Shingo Prize and The Malcom Baldrige National Quality Award (MBNQA).It will also explain the values and insights managers can expect to receive from applying for the Shingo Prize.

Structural differences between the Shingo Prize and the Malcolm Baldrige National Quality Award The primary difference between these two awards is fairly basic. The MBNQA is a quality-focused award, and thus it concentrates on traditional quality related issues. The Shingo Prize is an operational excellence award.

Consequently, it focuses on the use of world-class practices that have been shown to contribute to operational excellence.Despite the difference in the basic focus, the two awards have some similarities and

do overlap in some areas. Because of the similarities and overlap, there can be some confusion as to the differences.

These two programmes share three major points in common. First, the primary goal of both programmes is to educate managers and help them improve their customer satisfaction and business performance. Second, both programmes recognise excellent practices, but do not endorse products. Third, both programmes expect and look for external results to validate company’s success at applying the various criteria.

In addition, there are some natural areas of overlap. The use of certain quality tools and techniques are included in the list world-class practices identified by Flynn et al. (1999). Similarly, several of the world-class practices (e. g. , empowerment, employee-training etc. ) are commonly included among the requirements of a good quality management, system. Nevertheless, despite these similarities and overlaps, these two award programmes are significantly different from one another. There are several major structural differences between these recognition programmes.

First, the Shingo Prize is available to businesses in the USA, Canada and Mexico. The MBNQA is only available to businesses in the USA. Second, the Shingo Prize has a category for research and publications. To promote the evolution of world-class practices, the Shingo Prize recognises published articles and unpublished articles, along with books and monographs that make significant contributions to the field.

The MBNQA does not have a research category. A third structural difference between the two programmes occurs in the method in which recipients are chosen.The Shingo Prize does not restrict the number of recipients; but the MBNQA does; allowing only three winners (until 1999, only two winners were allowed) in each category per year. In addition

to the structural difference, this also represents a significant philosophical difference between the two awards.

While there is a The Shingo Prize for operational excellence 427 minimum acceptable level of performance to win the MBNQA; there is no acceptable standard that will guarantee you will win the award. If there are more than four applicants for the MBNQA in a specific category, these applicants are competing with each other for the award.Consequently, an applicant may achieve excellent levels of performance and still not win the MBNQA, if in the same year there are three other applicants with better performance in that category. Because the Shingo Prize does not restrict the number of recipients, applicants are not in competition with each other.

Companies are primarily challenging the Prize criteria in an effort to achieve world-class performance. So long as an applicant can demonstrate the use of world-class practices that have generated significant trends and level of improvements in overall results; they will receive the prize. There is value in both philosophies.The Shingo Prize provides managers with a chance to gain recognition for the successful application of world-class practices.

Receiving the award provides external validation that a company or plant successfully uses world-class practices for the mutual benefit of its customers and its own performance. Both of which contribute to its bottom line performance and ultimately benefit the owners/shareholders. Receivers of the Shingo Prize can take pride in the knowledge that their processes successfully perform at a world-class level. Because of its competitive nature, the MBNQA probably offers a slightly higher level of prestige.For those competing companies, which operate at a world-class level and continue to improve, the MBNQA Award

represents an opportunity to test the level of their system performance against other high level performing companies. The winners of the MBNQA can take pride that their systems rank among the best of the best.

Differences in evaluation criteria focus In addition to these structural differences, there are several other factors that differentiate these two programmes. These differences are illustrated in their evaluation criteria. In these categories the point allocations between the two awards differ by 15 points.

However, the remaining elements all reflect significant differences. First, the MBNQA places a higher emphasis on leadership and overall strategy development and deployment allocating four items to the area, which total 205 points. In contrast, the Shingo Prize has only three elements related to this area, which combine for only 125 points. In addition, one of the elements in the Shingo Prize focuses exclusively on the use of lean ideas.

These practices integrate the marketing, design engineering, purchasing and manufacturing functions to create products, which have customer driven features and enhanced manufacturability. The second form of integration evaluated by the Shingo Prize is the use of world-class practices such as waste elimination, mistake proofing, 5S, etc. , in non-manufacturing (or administrative) processes (e. g., Accounting, Human Resources, etc. ).

For example, Jenson et al. (1996) used the work of past Shingo Prize recipients to develop a taxonomy of common waste in accounting similar to Ohno (1988)’s list of common manufacturing waste.In addition, they provide several examples of how past Shingo Prize recipients have developed their own poka-yoke devices to combat their common accounting mistakes. The MBNQA does not look for integration instead, encourages linkages to business functions with process management and

improvement and allocates only 50 points to this area.

In addition, the MBNQA does not require nor suggest the use of specific world-class practices in non-manufacturing (administrative) processes. The Shingo Prize places a much stronger emphasis on measuring output performance and using those measurements as a basis for future improvements to existing processes.The Shingo Prize allocates a little less than two times as many points to this area than the MBNQA (175 points versus 90 points).

As part of the achievement report, applicants for the Shingo Prize are required to provide at-least three years of data showing actual performance, improvement trends, performance goals for quality costs, productivity, and resource utilisation. The MBNQA does suggest companies provide evidence of positive trends, but does not require any specific amount of historic data. The largest discrepancy between the two programmes occurs in the weight each assigns to overall business results.

Here, the Shingo Prize allocates 80 points; while the MBNQA assigns 310 points. This, probably more than anywhere else, reflects the difference in philosophies behind these two awards. While the Shingo Prize expects recipients companies to provide evidence of how the application of their practices has improved overall performance; the emphasis is mainly on the internal processes. Conversely, the MBNQA considers internal process improvement to be an essential ingredient. The main emphasis clearly lies with the results achieved from them.

The Shingo Prize for operational excellence 431 Why apply for the Shingo? 5. 1 The value of pursuing the Malcolm Baldridge National Quality Award The MBNQA provides a framework that managers who have a quality management system can use to further refine and incorporate their quality system into the entire business; working

towards achieving even higher-level results. Several managers have pointed out that the process of applying for the MBNQA has helped them improve their business performance even without winning the award. For those who do win the award, the MBNQA reflects an extremely high level of performance.

The value in pursuing the Shingo Prize The Shingo Prize is ideally suited for operations wanting to evolve a strategic approach for developing and using world-class practices. While the Prize Criteria evolves, there is no doubt that the Prize provides an excellent framework to help manufacturing or service managers in this pursuit. Waurzyniak (2006, p. 70) writes that, “…the Shingo Prize [is about]… making your plant better, making it a better place for everyone to come to work. Lean is a journey, not a destination….Motto is ‘Never Stop Getting Better’, and that pretty much says it all. ” The Prize looks internally to improve all processes (value chains) for your product or service.

The MBNQA managers often claim the process of pursuing the Shingo Prize was extremely beneficial regardless of whether they receive the prize. In addition, the evaluation reports generated by the examiners also provide managers with a valuable opportunity to gain insights from other recognised experts in the field. For those that receive the Prize, it offers external validation of the success of their efforts.Examples of performance improvements of various organisations can be found in the Prize website,2 and the American Society Quality’s website.

Recently, several authors have written about the achievements of past Shingo Prize winning companies (e. g. , Baudin, 2006; Jepperson, 2005; Waurzyniak, 2004). A review of these reports provides strong evidence of the value in using

the Shingo Prize programme to guide the application of world-class practices.

Summary Research findings on the relationship of world-class practices and their impact on the overall performance of a company are mixed.Several authors report that companies that implement quality improvement (or Six Sigma) initiatives improve customer service and financial performance (e. g. , Hales and Chakravorty, 2006).

Choi and Eboch (1998) suggest that even though quality initiatives are related to improvements in customer satisfaction there is still a ‘weak link’ between the quality improvement initiatives and the operational performance. Over the years, many authors have reported that quality initiatives yield low success rate (e. g. , Atwater and Chakravorty, 1995).Recently, Hammer (2002) questioned quality improvement and its effectiveness in operational excellence. Zimmerman and Weiss (2005) reported disappointing results from quality improvement initiatives. Chakravorty and Franza (2009) uncover weaknesses in quality improvement process in a new product development experience.

In other words, while companies are able to generate superior business results and customer satisfaction, 432 S. S. Chakravorty, J. B. Atwater and J. I. Herbert they often remain internally weak. The Shingo Prize emphasises the improvement of operations and processes to become internally robust.Given this emphasis, companies should consider using the Shingo Prize programme to guide their implementation of world-class practices. A decade ago, Imai’s (1999a) remarks summarise the essence of the Shingo Prize: “…there are many such prestigious awards [referring to Deming Prize, MBNQA, Quality Foundation Award [Europe], and QS9000] being provided in the industry.

But I think there’s one very crucial point, which differentiates the Shingo Prize. Which is in the Shingo Prize, one of the major issues to be dealt with is the concept of muda, or

waste.In no other prize giving activity, do they question the muda. …For that matter alone, I think, the Shingo Prize is very unique and you should be proud of the existence of such an award in the United States and now being extended to Mexico [and Canada] I have no doubt that this Prize will continue to make great contributions to the advancement of the manufacturing [and service] industry in the United States, Mexico [and Canada], and eventually to the rest of the world…” Acknowledgement We want to express our appreciation to the reviewer(s) for their useful feedback.