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SUBJECT: Visual Management

IDENTIFIER:

DESCRIPTION: Visual Management is a low-cost, straight forwarded tool used to aid in the synchronization of individual department objectives with the overall goals and mission of an organization.

KEYWORDS: Communication, Pull, WIP, Inventory Management, Kanban

OVERVIEW:

For years, management has used technology increasingly to manage day to day operations. Advancements in computing power was seen as the requisite for managing and disseminating the haze of information generated through out the supply chain. However, within the past decade managers within the U.S. have placed great value on the simplified techniques used by their Japanese competitors over the past forty-years to eliminate waste. Visual management has been especially popular for managing communications within a firm and for managing raw material, work in process, and finish goods inventories in manufacturing operations.

Visual management is used to accomplish a variety of tasks through out industry. There are two underlying premises of visual management. First, it is believed that most people want to personally contribute to the success of an organization, and they do when they are provided with the information they need to make decisions. The second underlying premise is that it is far more effective for information to be shown than it is for it to be verbally communicated. The reason is because it is widely accepted that colorfully graphical and pictorial representations reinforce verbal communications. Therefore, visual management empowers workers at the bottom of the organizational structure, and it takes communication one step further than verbal communication because it allows its recipients to further process information every time they see the visual reminders.

From a strategic level, visual management is used to aid first line supervisors in equipping their reports with the information they need to perceive the "big picture" of the firm, to insure they understand the organizational and departmental objectives in place, and to inspire their reports to participate in continuous improvement efforts. Additionally, visual management is used to communicate the state of the business, performance requirements and accomplishments, customers supported, and the initiatives that management takes seriously. An example of the latter use is when management has decided to make safety an overriding priority of the firm – as General Motors has done. To support the seriousness of this initiative, all General Motors and Delphi facilities display past, present and future targets of the number of safety incidents that have occurred in their operations. For each incident a supervisor performs an investigation with his employees to determine the cause of an incident and potential corrective measures that would prevent it from reoccurring. This information is compiled and presented graphically on a weekly basis so employees can monitor process improvements.

On a tactical level the tools used within visual management vary from colorful signs and graphs, chalkboards, painted lines on the floor, tubs and bins, and laminated cards (Kanban), which are used to pull the exact products at the right time to the right place within operations. Kanban is probably the one visual management tool most attributed to the lean manufacturing concepts created by Japanese manufactures. Kanban is a tool used to synchronize the real-time material flow within operations. Unlike more technical planning and scheduling tools, Kanban takes into account the real capacity and status of equipment and the on-going needs of each process. For example, with more technical tools, material needs are determined for each process across finite planning horizons. As a result, when a process failure occurs, excessive levels of inventory accumulate within each process because the scheduling system is not aware of the occurrence. Subsequently, an inefficient use of working capital results, thereby attributing to unnecessary operating costs. Using Kanban eliminates this problem because the operators at each process determine the real-time needs of a downstream operation by visually seeing that a reorder level has been reached (usually represented by a Kanban card, a Kanban tub, or an empty painted square on the floor). As a result, the use of Kanban allows materials to be pulled to downstream operations only when there is a real need, thereby making more efficient use of working capital. The irony is that Kanban is much more simple to implement and much less costly than more technical planning and scheduling systems.

REFERENCES:

• "Plants adopt new systems and strategies to meet new market demands", Industry Week, September 21, 1998, pp. 48
• "Reaping the rewards of visual management", National Research Bureau Supervision, June, 1997, Vol. 58, No. 6, pp. 14
• "Visual management: at Honda; East Liberty, Ohio plant of Honda of America Manufacturing Inc.", Gardner Publications Inc., October, 1994, Vol. 106, No. 10, pp. 62

ACKNOWLEDGEMENT: This is a March 29, 1999 revision by Gene Goodson of an assignment for OM742 contributed by Donald R. Tasker, Jr.