HOSHIN KANRI — Policy Deployment Meaning & Examples in Manufacturing

Hoshin Kanri is a management process that aims at aligning a company’s functions and activities with its strategic objectives. The process involves developing specific plans which consists of precise goals, actions, timelines, responsibilities and metrics.

Hoshin Kanri usually starts with a high level organizational plan that involves setting of all the necessary goals required to achieve the plans. After the goals have been set, top and middle management as well as supervisory staff engage in a consultative review process. This consultative process is called a “Catch-ball” process because ideas are exchanged back and forth like in a game of catch-ball.

Hoshin Kanri means policy deployment. It starts with high-level objectives and then cascades these objectives down to every function in the organization. It is part of the lean kaizen approach to management, a give-and-take process of communicating between top to middle management and sometimes supervisors and team leaders

The main purpose of Hoshin planning is to clearly communicate higher level goals to all levels of the organization. This enables everyone to work together in a coordinated manner towards the realization of common objectives.

Benefits of this approach to strategic planning and implementation include:

• Clarity of the organizational goals keeps everybody on the same page and reduces the time it takes to implement projects by removing any ambiguity that may appear.
• Progress of the strategic plans is easily monitored and required changes are made quickly without the usual bureaucratic bottle-necks that normally impede meaningful progress.
• Inter-departmental coordination is enhanced because of the constant consultation between various functions within an organization which guarantees effective and sustainable results.
• Standardization of the strategic planning and implementation process enhances organizational learning as well as continuity of plans after key players have left.
• Goals are more realistic and based on a comprehensive understanding of the underlying issues and opportunities because of the constant input from all the necessary parties.

Implementing policy deployment involves a number of distinct and standard steps that must be undertaken in order to make the whole process successful. The hoshin planning steps are as follows:

• Strategic planning which is the higher level organizational direction that a company develops in order to take it from one point to another within a specified period of time. The plan should include specific metrics that are understandable and effective. These metrics should be few in number, developed with overall consensus and should include key performance indicators (KPIs) that are owned by the respective functions.
• Choosing the implementation methodology that will be used to actualize the organizational goals that have been assigned to the various functions. The implementation strategies are function-specific and are constantly reviewed as the circumstances on the ground change. This flexibility is important because plans may not have captured all the details, therefore a regular readjustment is necessary as issues on the ground become clearer. There should be constant communication between the top and middle-level management concerning what adjustments need to be made.
• Actual implementation of the plan by various sections of the organization in a synchronized and coordinated fashion. The plans that were developed by management are implemented at the operational level by supervisory staff and team leaders using the appropriate methodology. It is at this stage where actual results are supposed to be achieved because it here that the real work takes place. In lean manufacturing terms, this is the gemba where real work is done by the operational staff and monitoring of progress should be done by managers using genchi genbutsu.
• Verifying effectiveness and making necessary adjustments when the results fall below expectations. This is an interdepartmental activity that is done in an open and honest manner without blaming or passing the buck. This frankness is important because people naturally want to apportion blame when expected results are not achieved. This open atmosphere encourages people to own up to their own short-comings which results in better progress.

To better understand how the hoshin kanri process works, we will take a look at an example of how a typical firm practising lean management goes about it. There is also a template that can be used to better document the whole process at the end of this article.

A vehicle manufacturer uses hoshin kanri to set stretch goals of its Chief Operating Officer (COO) who in turn is supporting the goals of the Chief Executive Officer (CEO). The goals are set by first observing the baseline performance of the factory over a long period of time, say three years. Targets are then set and expressed as percentage improvements over the baseline performance.

The lower cadres and functions will then develop their own set of goals and metrics which support the higher level goals of the chief operating officer. Since there are many functions within an organization, each will work out how much they contribute to a particular metric and set their goals accordingly. As mentioned above, the process is consultative in nature between the functions and the management so that each team can be clear on what it has to do to attain this goals.