How to Use the PDCA Cycle to Improve your Business Performance
We’ve heard the terms Continuous Improvement, Value, and efficiency. What links them together is the PDCA cycle. It’s an easy way to understand how we can improve the work that we do. This guide will show you exactly what it is and how it works.
How to use the PDCA Cycle? PDCA stands for plan, do, check, act. It is a continuous improvement framework to help business improve. It involves:
- Plan – Plan an action or improvement
- Do – conduct the improvement to see if it works
- Check – Observe and check the results
- Act – Did it work? If so, standardise it. If not go through PDCA again until you find the fix.
Here’s the PDCA cycle in a little more detail, complete with examples.
PDCA Cycle in Detail
Plan – Do -Check – Act (PDCA) is the base process that a business runs on.
In it’s simplest version, it allows us to see if we’ve done what we’ve thought we should have. And if we haven’t, we take action.
Here’s an example.
Sarah cuts planks of wood that must be 98 cm in length. Before she does this, she has to think about cutting them, getting the equipment and setting it up. This is the plan stage.
Next, Sarah then cuts the wood. This is the do phase.
After this, she measures the wood to see if they are the right size. This is the check stage.
And now, Sarah can see if she’s cut the wood to the right lengths, or whether she’s made a mistake and will have to rework or process some more. This is the adjust or act stage.
This simple PDCA cycle allows us to keep track of what we’re doing and then make improvements.
Does the PDCA Cycle Work In Non Manufacturing Tasks?
The quick answer, yes!
Let’s take a financial scenario. Let’s say that we plan to make 25% profit this year.
We then work to our plan that we set out when identifying our 25% profitability goal.
During the year, we regularly check our work and outputs. And while we’re checking, we find that we’re only making 20% margin. We’re 5% down on projections. Now we know that we need to act and adjust what we’re doing to recover the 5% more profit, in line with our goals.
How do we Improve Our Performance?
In this example, we then have to look at all of the relating factors that affect our profit. For example, we might look at efficiency.
We may well highlight that in order to improve our profit, we need to improve our efficiency.
So, let’s say that our plan for efficiency is that we need to be 95% efficient, in order to be at 25% profitability.
Once we’ve highlighted our action plan, it’s time to take action.
During the course of time, we regularly check how we’re getting on. Let’s suppose that when we do this, we find that we’re only 87% efficient.
We now need to act on this, because we need to be 8% more efficient.
Drill Down to Factors Affecting Efficiency
Carrying on with our example; in order to be more efficient, we have to look at the factors that are affecting this… Like how we cut our planks of wood, for example.
We can then create a plan for this, too. In this example, it may be that we need 99 planks of wood cut out of every 100 to be the right size. In order to achieve this, we’ll highlight a plan of action to to do it… and then set the plan in action.
As we go, we’ll check our performance to see if we’re hitting our target and whether our plan is working.
And when we do this, let’s suppose we find that only 80 out of 100 are cut to the right size.
In the act phase, we need to adjust what we do to ensure that we increase the number of good cuts from 80 – 99.
If we do, this we’ll fix our efficiency problem. If we can fix this efficiency problem, it will improve our financial problem.
Interlinking PDCA Cycles
This PDCA cycle is the improvement approach that runs the continuous improvement framework. To fix many things in the business, you can use many different PDCA Cycles. Each one working to improve a multitude of interconnecting processes and metrics.
Here’s a diagram of our PDCA cycles working together in our example:
The point is that PDCA works on every process, in every part of the business and at every level.
Using the PDCA in Teams
Mike Rother, a lean guru, who studied Toyota’s Production System extensively, wrote a book around the PDCA Cycle and how it can be used to drive cultural change in any business.
He found that this process is the thing that drives real lasting change… and can ensure that problems are continuously tackled and put to bed. In his book, Lean Kata, Rother identifies a clear way of using PDCA cycles across the complete business.
We Don’t Know The Future
The reality is that we don’t have crystal balls. If we could see in to the future, we’d be able to fix all our problems. We’d be able to identify exactly what’s going wrong and what will happen when we improve things… but we can’t in real life. What we need is a way to come up with an idea and to test if it works.
And to use the PDCA cycle to keep making small progress.
The Daily PDCA Method
Imagine that we have a CNC machine. The goal, in order to meet our targets, is to run at an uptime of 85%.
The problem is, it’s currently at 55% up time. When the team look at the reasons why, they find a myriad of issues, like:
- The tooling is shared and there’s lost time waiting for access to these tools
- The machine’s programming is slow and excessively manual to change jobs
- The operator is doing a lot of work for every set up, while the machine is stopped
- Quality is poor, resulting in re-running many parts
- Inspection takes too long to test the first off
And so on.
We can see that there are a number of reasons behind our low uptime results.
Let’s suppose that we have a long term goal of 85% uptime. This objective may represent something a year away. Instead of of blindly going through the year in hope of making small changes, we can do something better.
What we also need is a target condition.
A target condition is something much shorter in time and gives us an interim goal, on the path to our long term goal. It can be up to 3 weeks or so out. And if you achieve it, you’ve positively moved forward in progress, in line with your long term objectives.
Here’s what I mean:
Notice that we need to know a number of things before making improvements:
- The target condition – what we’re aiming for over the next 3 weeks or so
- Where we are now (our current condition)
- What obstacles are in the way and which ones will run PDCA on to try to overcome them
This systematic process helps us continuously drive PDCA thinking.
The thing is, you’ll have to constantly do it.
Every time you achieve the target condition, it’s a tick towards the long term goal. You then focus on creating the next target condition – around 3-4 weeks out, and use PDCA to overcome the latest obstacles to get there.
And so and and so fourth, repeating this process, continuously…hence the term continuous improvement.
Using PDCA Cycles with Employees
As a team leader or manager, it’s important to drive this PDCA method into your teams and get them to practice this technique religiously.
They own it. They come up with ideas. They make the improvements.
What the managers in the business must do is to coach this way of working. There are a number of simple questions to ask your teams, daily to ensure this systems is working:
- What is the next target condition you’re aiming for?
- What is the current condition ?
- What obstacles do you think are preventing us from achieving this?
- What obstacles are you working on now?
- When can we go and see if your ideas worked?
Interesting… None of these bullet points suggest that the managers provide the answers. They just ask the questions. The teams provide the answers and run their PDCA tests.
And by asking these structured questions regularly, it allows the team members to understand their processes, apply PDCA cycles and take ownership of improvements..with the support from management.
Completing our Example
So in our machine up time example, we may identify the following right now:
- Target Condition: Achieve 60% Up time
- Current condition: up time is currently 55%
- The main obstacles for the next 3 weeks: Tooling availability, faster change overs, improved job loading on machine
- When can we see the results:
- The tooling problem – in 3 days
- Faster changeovers – within 2 weeks
- Improved job loading – 3 weeks’ time
Now the team have a grasp of these 4 questions, they run several small PDCA cycles to make improvements, trialing ideas until they can overcome the obstacles and achieve the target condition.
Some ideas will work.
But with each PDCA cycle, the teams will learn more about their processes and how they can improve them for the longer term.
This whole approach also enables the team to buy into continuous improvement and take a giant leap forward in terms of the way things are done now, compared to the days prior to the PDCA model.
What is PDCA testing? PDCA testing is just a way of trying out ideas to overcome obstacles. We have a target condition and we need to know how to achieve it from where we are right now. PDCA testing involves picking some obstacles that are in the way and running smaller scale improvements and tests (PDCA testing), to see if the improvements worked. If it does, lock the improvement in and find the next target condition and repeat. If not, find the next obstacles and go again.
What is Plan-Do-Study-Act? It’s exactly the same as Plan-Do-Check-Act, but an alternative name. The process is the same as the above. Some also refer to it as Plan-Do-Check-Adjust…Nevertheless, it’s all the same thing. The key for PDCA to work, is to embed it into coaching cycles, as described above. So everyone is following the same approach; from operators to Chief Executives.