efqm vs lean enterprise model - comparisons
DESCRIPTION
Summary of thesis (1999)TRANSCRIPT
Assessment of the interaction between the Business
Excellence Model and the Lean Enterprise Model
Introduction
In 1991, the European Foundation for Quality Management
developed the European Model for Total Quality or as it was named
later, the Business Excellence Model (BEM) as a management
framework for improving business performance. At the same time,
in the USA, the military aircraft industry was developing its own
approach to business performance improvement, the Lean
Enterprise Model (LEM)1. The LEM, or Lean model, was introduced
to the British military aircraft manufacturers in 1998 by the UK
Lean Aerospace Initiative (UK LAI), an initiative analogous to the
original US LAI.
One of the UK LAI’s concerns is to explore the role that LEM can
play for the British military aircraft industry. Since other models
have been implemented before, it is important to identify the
interaction that the Lean model could have with them. The EFQM
model is one of the models that could possibly co-exist with the
LEM in the future.
This thesis is an effort of exploring this interaction and it is focused
on the identification, assessment and analysis of the interaction if
the two models were to be implemented in parallel, within the same
management framework. The thesis objectives are focused on four
main directions:
1. To produce a comparative study of the two models’ structures
2. To produce an analytical study of the two models interaction
3. To identify the characteristics of a framework on which a
company could implement the two models in parallel
1 LEM is a copyright of the Massachusetts Institute of Technology (MIT)
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4. To suggest improvements for the parallel implementation process
The benefits for an organisation having a framework for
implementing both models in parallel are that it would acquire a
better understanding of the models’ interaction and therefore it
would be able to implement them quicker and with less conflicts or
duplications of activities. Moreover, the two models’ synergies
could produce superior results. The implementation could also be
more economical since only one team will be needed for carrying it
out.
The Lean Enterprise Model
The LEM is the systematic framework for organising the findings of
the US LAI’s research. It provides a codification of Lean principles
and practices, as well as the basis for integrating them within a
framework that makes their relationships readily apparent.
The model comprises six principles, twelve overarching practices
and a number of metrics. The basic framework for the
implementation of the model is its twelve practices:
1. Identify and optimise enterprise flow
2. Assure seamless information flow
3. Optimise capability and utilisation of people
4. Make decisions at lowest possible level
5. Implement integrated product and process development
6. Develop relationships based on mutual trust and commitment
7. Continuously focus on the customer
8. Promote Lean Leadership at all levels
9. Maintain challenge of existing processes
10. Nurture a learning environment
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11. Ensure process capability and maturation
12. Maximise stability in a changing environment
An organisation can implement the LEM by following the directions
highlighted from the above practices therefore the practices are, in
a way, the enablers of the Lean model.
The LEM has four basic functions. It can be used as:
A Manufacturing Management Tool. It provides the
directions for managing the manufacturing aspects of the
organisation
Strategic Direction Tool. It is used for identifying strategic
directions for developing the organisation’s business policies
and strategies
An Inside-Looking Management Framework. It provides a
framework to the management team for identifying the
organisation’s processes and functions
A Performance Measurement Tool. It provides the metrics
for measuring the organisational performance
The industrial paradigm: British Aerospace Plc
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The Military Aircraft & Aerostructures (MA&A) company of BAe Plc
is currently the only UK manufacturer implementing the EFQM
model and the LEM in parallel, within the same management
framework. MA&A carried out a study concerning the relationship
between the two models. The strongest connection identified was
between the LEM practices and the criteria of Processes and
Partnerships & Resources. The Lean practices having the highest
impact on the BEM were to maintain challenge of existing
processes, to promote Lean leadership, to develop relationships
base on mutual trust and commitment and to implement integrated
product and process development.
In the MA&A approach it is highlighted that the EFQM model
adopts a generic approach whereas the LEM is more manufacturing
focused. The BAe experience shows how the models can co-exist
within the same management framework with the LEM as a
manufacturing management and strategic direction tool and the
BEM as a self-assessment tool.
Method of approach
Business models, unlike the mathematical models, cannot be
compared in a precise, quantitative way. The comparison can only
be carried out through a qualitative method that inevitably is
biased by the author’s perspective. Nevertheless, this method can
still produce results that are indicative of the models’ interaction.
The implementation of the models affects the organisational
management activities therefore an estimation of how the models
change the management activities provides a basis for assessing
their interaction. The first step for identifying this interaction is to
compare the models’ structures in order to find the common areas
of activities that they affect.
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The structural comparison is followed by an interaction analysis
and an assessment that is carried out through two perspectives.
One looks at how the implementation of the LEM could affect a
management environment of business excellence. The other
perspective considers how the satisfaction of the business
excellence criteria could affect the parallel implementation of the
Lean model.
The structural differences of the models
The EFQM model has a structure that could be described as
“horizontal”, with two equal parts, the enablers and the results
having the same overall weight of 50%.
The Lean model’s structure is hierarchical, comprising different
levels of information. At the top level, the principles and level
metrics summarise the philosophy underpinning the model. At the
bottom level of the structure stand the overarching practices as the
means for implementing the LEM principles. The overarching
practices are the enablers of the LEM and their implementation
results are measured by the detailed metrics.
Table 1. Differences between the Business Excellence
Model and the Lean Enterprise Model
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Business Excellence
Model
Lean Enterprise
Model
“Horizontal”, balanced
structure
Hierarchical structure
The weight of importance is
balanced between the
enablers and the results
There is no evaluation
between the elements of the
model
Affects possibly all areas of
activities including issues
such as Environmental or
H&S Management
Affects mainly the strategic,
manufacturing and human
resources management
areas
Approach is based on five
enablers and four results
criteria and 32 sub-criteria
and gives general directions
therefore is not very detailed
Approach is based on 12
overarching practices and
64 supporting practices and
as a result is more detailed
than BEM
There is direct connection
between the business
enablers and their results
There is no direct
connection between the
practices and their results
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Common scope of the models
A parallel implementation of the two models may cause conflicts
and confrontations, therefore it is wise for the implementers first to
speculate and measure the models’ interaction and then proceed
into actions.
Figure 1. Structural comparison of the EFQM model and
the Lean model
In the above figure is illustrated the way that the two models affect
the organisation’s management activities. The models are placed in
parallel so that their similarities are visible.
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The BEM’s enablers criteria and the LEM’s principles define the
general directions that the strategic management should be aligned
with. At a lower and more detailed level, the BEM’s enablers sub-
criteria and the Lean model’s overarching practices provide a more
detailed orientation of what an organisation should do. The results
are assessed against the BEM’s results criteria whereas in the LEM
the performance is measured by the Lean metrics.
Area of comparison
The enablers sub-criteria are the part of the EFQM model that
affects the organisation’s management activities in a way similar to
the Lean overarching practices. The implementation of the Lean
model is carried out through the implementation of the Lean
practices. The BEM implementation is based on following the
directions that the enablers sub-criteria highlight. Therefore, the
activities that derive from the implementation of the Lean practices
and the satisfaction of the BEM enablers sub-criteria, define a wide
area of interaction between the BEM and the LEM.
The thesis is focused on the interaction between the LEM practices
and the BEM enablers sub-criteria because this interaction is
happening at an operational level. Other interactions between the
different levels of the models exist, as it is visible at figure 1, but do
not directly affect the parallel implementation.
The interaction analysis
The organisation, for the implementation of the two models,
undertakes some activities and actions in order to satisfy the
models’ requirements. On this basis, when the two models are
implemented in parallel they interact in four different ways and the
author assesses the interaction by allocating a grade from 0 to 3.
The assessment allocates arithmetical figures that reflect impact
estimations and not mathematical results.
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The estimations are based on the logic of how the implementation
of a LEM practice affects the implementation of the BEM sub-
criteria and to which extent it satisfies their requirements.
Moreover, the effect of how the business excellence culture affects
the implementation of the Lean practices is examined.
When the two models share the same activities then the
relationship has an “impact 3”. An example could be activities
related to an employee-training scheme where both models could
support such activities.
When they share some activities and/or activities of the one model
support the implementation of the other, the relationship has an
“impact 2”. An example is when an activity initiated from BEM, like
leaders supporting and communicating with the organisation’s
people, assists the activities (caused by the Lean practice) of
developing relationships based on trust and commitment.
When the activities caused by the one model support the activities
that satisfy the other model then the relationship has an “impact 1”.
An example would be the assurance of information flow (in the
LEM) and how this is supportive to the design of the organisational
processes as this is defined in BEM.
Types of relationship Impact
Strong direct link 3
Some direct and/or indirect link 2
Indirect link 1
No connection 0
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Interaction in Leadership
The interaction between the two models relevant to leadership
aspects is presented in table 2. The subtotals’ column is the impact
of the LEM practices on the BEM sub-criteria. The subtotals’ row is
the impact of the BEM criterion on the Lean practices.
Table 2. Interaction analysis between the leadership sub-
criteria and the Lean overarching practices
Lean Enterprise Model overarching practices
BEM
1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS
1a 2 2 1 51b 1 1 3 2 2 91c 1 1 2 41d 2 2
SUB-TOTAL
S 0 0 0 1 3 3 1 7 3 2 0 020
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The strongest interaction between the two models occurs at the
implementation of the management system and the involvement of
the leaders in its development.
The strongest impact of the BEM on the LEM is at the promotion of
the Lean leadership at all levels (practice 8).
Interaction in Policy & Strategy
The implementation of the Lean practices satisfies to a large extent
the requirements of the EFQM model of developing the policy and
strategy based on the customers needs and expectations, on
research and performance measurements and building the policy
and strategy around the organisation’s key processes.
Table 3. The interaction between the Policy & Strategy
criterion and the Lean practices
Lean Enterprise Model overarching practices
BEM
1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTAL
S2a 1 3 3 7
2b 2 1 3 2 8
2c 2 1 2 5
2d 2 3 1 3 9
2e 1 2 1 4
SUB-TOTAL
S 2 3 0 1 3 1 6 2 5 2 3 5 33
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Interaction in People
In the illustration of the models’ interaction in table 4, it is clear
that the LEM has a higher impact on the two first sub-criteria that
relate to the people’s competencies and capabilities.
Table 4. Interaction between the people sub-criteria and
the Lean practices
Lean Enterprise Model overarching practices
BEM
1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS
3a 3 1 1 2 73b 3 2 2 1 83c 3 1 43d 2 2 43e 2 2 4
SUB-TOTAL
S 0 0 0 3 4 4 0 1 0 4 0 5
27
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The Lean model does not make any reference of the relationships
between the organisation and its people. Therefore, it can cover only
part of the BEM’s requirements. Lean manufacturing is a very
demanding manufacturing system. Working with minimum
inventories, continuously striving for perfection and fixing problems
immediately as they occur are concepts that European workers are
not familiar with.
The approach of the EFQM towards the organisation’s people
comprises concerns about the people and their relationship with
the company. Therefore, it is more holistic and covers the needs of
the European business in a more complete and satisfactory way
than the LEM.
Interaction in Partnerships & Resources
The overall impact of the LEM on the EFQM criterion is high with
its peak point at the Partnerships sub-criterion.
Table 5. Interaction between the Partnerships &
Resources sub-criteria and the Lean practices
Lean Enterprise Model overarching practices
BEM
1 2 3 4 5 6 7 8 9 10 11 12 SUB-TOTALS
4a 2 2 1 3 2 1 1 12
4b 2 1 1 2 2 8
4c 3 2 2 7
4d 1 2 3 6
4e 3 2 1 1 7
SUB-TOTAL
S 7 6 1 0 4 3 0 2 2 2 7 6 40
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The implementation of the Lean practices can cover most of the
BEM’s requirements. The LEM provides more directions than BEM
on how to manage the organisation’s partnerships and emphasises
on the importance of the information management. Nevertheless,
the systematic separation of different resources (information,
finance, assets, technology and suppliers) in BEM, provides a
framework for a better understanding and planning.
Interaction in Processes
The illustration of the relationship between the BEM Processes
criterion and the Lean practices in table 6 highlights the highest
interaction between the two models.
The highest impact of the LEM on the BEM criterion is on the
designing and managing of the organisation’s processes. Also, a
high impact exists in the area of satisfying the customers needs and
expectations. The LEM practices that have the strongest
relationship with the EFQM criterion are the implementation of
IPPD and the focus on the customer.
Table 6. Interaction between the Processes sub-criteria
and the Lean practices
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Lean Enterprise Model overarching practices
BEM
1 2 3 4 5 6 7 8 9 10 11 12SUB-TOTAL
5a 2 1 2 3 1 2 3 14
5b 1 1 3 2 7
5c 1 2 3 3 9
5d 2 1 2 1 6
5e 1 3 2 6
SUB-TOTAL 3 3 1 2 7 3 7 2 3 2 5 4 42
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The Lean metrics in the Business Excellence Model
The Lean metrics is a measuring tool of the organisation’s
performance against specified business indicators such as product
development cycle time or number of organisational levels. These
indicators are directly connected with the Lean overarching
practices. For example, the number of the organisational levels
measures the company’s performance of promoting Lean leadership
at all levels. The results of the performance measurement can be
assessed against the performance targets set by the company and
against the performance of other companies through
benchmarking.
A possible disadvantage of the LEM is the insufficient connection of
the Lean metrics with the Lean principles. The performance
measurement is not linked with the organisational strategic
orientation but only with the Lean practices.
The EFQM model is developed on a different structure that links
the performance results with the enablers and therefore, provides
the scope for reviewing the results and developing the policy and
strategy according to them. The Lean metrics could be embedded
in the organisational self-assessment process as detailed measures
of specific business areas.
The Lean metrics are connected mostly with the internal
performance indicators and the customer related performance
indicators. There is a weak link with the people results and there is
no link at all with the society results.
Conclusions of the interaction between the BEM and the
LEM
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Both models aim at the same target, the business performance
improvement. Nevertheless, the BEM comprises aspects that are
not covered by the LEM like people recognition, effective
leadership or impact on society. LEM focuses its attention on the
processes, the value delivered by the company, the information
circulation and the flow of both information and value.
The EFQM model could constitute an overall management
framework, comprising all the organisational business aspects. The
LEM could define the part of this framework that emphasises on
the organisational processes and the value chain that they define.
Both models could be used as strategic direction tools. The BEM’s
advantage is that the enablers-results structure assists the process
of developing the policies and strategies based on the performance
results. Nevertheless, it does not offer any specific strategic
directions. The LEM is more specific in providing strategic
orientation to the company but its main disadvantage is that there
is no systematic connection between the model’s principles and the
organisation’s performance results. Therefore, the synergy between
the LEM and the BEM could partly cover the company’s strategic
management.
It is arguable whether models with such generic features can define
the strategic directions of a company, since these directions depend
on changing factors that a model cannot always cover.
Nevertheless, the BEM and the LEM can imply general directions
for the organisation’s policies and strategies because these
directions are the result of intense industrial information gathering
and they reflect current industrial needs.
The cumulative results of the interaction analysis are illustrated in
the following table.
Table 7. Total results of the interaction analysis
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Lean Enterprise Model Practices
BEM Criteria
1 2 3 4 5 6 7 8 9 10 11 12Total
Leadership 1 3 3 1 7 3 2 20
Policy & Strategy 2 3 1 3 1 6 2 5 2 3 5 33
People 6 3 4 4 1 4 5 27
Partnerships & Resources 7 6 1 4 3 2 2 2 7 6 40
Processes 3 3 1 2 7 3 7 2 3 2 5 4 42
Total 12 12 8 7 21 14 14 14 13 12 15 20
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By examining table 7 it is easy to observe that the LEM’s impact is
not equally distributed among the business excellence enablers.
The enabler that seems to be most affected by the implementation
of the LEM is the processes’ enabler whereas the least affected is
leadership. Nevertheless, an adjustment should be made. All the
numbers representing the impact of LEM practices on the BEM
criteria are multiplied by the overall weight of each criterion in the
BEM. This is done in order to assess the overall impact that the
LEM practices have on the EFQM model. The adjusted impact
factors would be:
Leadership:20 x 1.0
=20
Policy & Strategy:33 x 0.8
=27
People:27 x 0.9
=24
Partnerships & Resources:
40 x 0.9
=36
Processes:42 x 1.4
=59
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Lean impact on the business excellence criteria
From the results it is evident that the Lean practices’ application
has the highest impact on the Processes enabler. That result is
expected, since the LEM is a process-focused model.
The second highest impact of the Lean model on the BEM enablers
appears in the Partnerships & Resources criterion. This impact is
caused mainly by the importance that both models allocate to the
organisation’s partners.
The least impact of the LEM is on the leadership criterion, followed
by the people criterion. The Lean model does not give directions of
what the organisation’s leadership should do. Although the
implementation of the model is underpinned by the use of “middle-
low” leaders, the model itself does not describe the way that these
leaders should serve the company. The implementation of LEM
cannot cover all of the BEM requirements.
The LEM looks at the people as part of the organisation’s value
chain. The BEM’s approach to people emphasises not only on the
use of people’s abilities but also on the communication with the
people and on their satisfaction. Like in the leadership criterion,
the BEM criterion of people covers the Lean practices and enforces
the implementation of the LEM.
Business excellence impact on the Lean practices
The strongest impact that the BEM has on the LEM is on the
implementation of the integrated product and process development
and the maximisation of the operations’ stability in a changing
environment.
The least impact of the BEM on the Lean practices is in optimising
the capability and utilisation of people and in making decisions at
the lowest possible level.
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The parallel implementation: Lean excellence
The initial mixing of the BEM and the LEM could cause frustration
and confusion. Then the organisation could get into a phase where
the models are better understood and are used in a separate, not
conflicting way. Finally the organisation might start integrating
them in a holistic approach. In that case it implements the best
features of the two models while it uses elements of other models
too that suit the organisational needs, in order to serve the
company’s needs. The Lean model could offer a company the focus
that the BEM lacks, and the BEM could offer the framework for an
overall organisational view and a basis for self-assessment that it
cannot be provided by LEM.
The LEM could initiate activities that satisfy the BEM’s
requirements and therefore the Lean model could be a method of
approach for satisfying the BEM requirements.
A potential danger for a company implementing the models in
parallel is to perform activities that satisfy only the Lean model.
The implementation of LEM is a route-map for the organisation that
shows the way to improvement and perfection. The BEM is a
powerful tool that shows where the organisation stands on this
map. Nevertheless, LEM covers only part of the EFQM criteria
requirements so it cannot be a complete map towards perfection.
The BEM can highlight the weaknesses as well as the strong points
that stem from the implementation of the Lean model.
The full implementation of both models in parallel covers possibly
all the areas of activities that an organisation has. Nevertheless, in
the author’s opinion they cannot cover the link between the
strategic decision level and the performance results. The BEM is
very general and does not provide specific strategic directions
whereas the LEM structure does not clearly link the results with
the strategic planning.
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Suggestions for future developments
This thesis examined only the theoretical aspects of the two models’
interaction. A more systematic analysis would comprise
implementation data from companies. For the moment only BAe has
provided this kind of information therefore it is impossible to reach
objective conclusions about the actual parallel implementation of
the models in the UK military aircraft industry.
At this stage the UK LAI is gathering information for identifying
which are the important aspects of a European Lean model. It is a
remit of the UK LAI project (Society of British Aerospace
Companies SBAC) that the LEM be reviewed and updated. These
changes are likely to be discussed with MIT and the US LAI
program and hopefully a united, improved LEM will emerge.
The EFQM model is the codification of information collected from
many different organisations around Europe. Therefore, its criteria
highlight the most important business aspects of European
companies. The future UK LAI could benefit by these findings and
form a reference document that could be built around the US LEM
but could also encompass all these important business aspects.
From the EFQM model point of view, the implementation of the
Lean model justifies the anticipation of many management
professionals that the Lean philosophy will expand to the European
businesses sooner or later. Therefore, it is high time for estimating
the effects that the LEM will have on the European management
culture. The BEM comprises general aspects of business so it would
be possible to embed some of the Lean aspects in the future. The
EFQM model always strives for being up to date with the European
management developments and evolutions. If Lean is one of these
evolutions maybe the BEM should be adjusted.
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