Set Annual Objectives

A3 Overview
In order to define annual objectives, which is the focus on this module, we'd like to introduce
a powerful tool known as the A3 document which gets its name from the A3 size of paper it's
printed on.

Within the A3 we first document the background and target condition. We then begin to
really turn the PDCA wheel while working with our team to identify root causes. To be sure
this could take several weeks or longer. In other words, we'll very rarely ever be able to sit
down in a room and complete an A3 in one sitting.

Once the root causes have been identified we move our focus to laying out the improvement
plan which is shown in the top right.

Finally, the lower section is used to show how we plan to document and follow-up on these
objectives.

As we just mentioned one of the key aspects of the Hoshin planning process is how reliant it
is on the PDCA process. In fact, as we see here the entire Hoshin Planning process is nothing
more than continuous PDCA cycles.

For example, developing the vision, mission, and values required close teamwork and
collaborative PDCA cooperation just like steps 2 through 7 do. Likewise, we use PDCA to

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work through the A3 process. If you'd like a thorough review of the PDCA process please
refer to our Practical Problem Solving course.

Treetop’s A3
Alright, well let's have a look at how the Treetop team went about the A3 process for their
first breakthrough objective focused on increasing the productivity of their assembly
department.

Here's what their A3 looked like after several weeks of work.

First the team noted the objective at the top of the A3. They then took some time to
describe the current state. In this example we see that Treetop has experienced tremendous
sales growth. We also learn that their assembly department has been identified as a
bottleneck which is why it was focused on during the breakthrough objective definition step.

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The next step in the A3 process saw the Treetop team provide some background and
supporting data to better define the problem. To start the team noted that their cycle time
for the assembly process was now greater than takt time.

Next, the team noted that their assemblers were not meeting standards due to poor quality.
Again, they shared a graph that shows their actual performance versus the target.

Next, while the Treetop team has worked hard to organize work cells in the assembly
department they recognize that material is not flowing as smoothly as it should.

Finally, they noted that the assembly team is frustrated due to end of the month spikes which
is even more difficult to deal with since several new associates have been brought on.

As we continue to work around the A3 we now we see how the Treetop team defined their
target condition which, in this case, is to increase the assembly productivity by 45%. And to
add even more clarity to the objective the Treetop team noted that the objective is meant to
address both the cycle time/takt time issue while also addressing the other inefficiencies
they're faced with. And to make it clear that the team is not looking to simply add more
resources or work longer they closed this section by stating their goal is to essentially
produce close to 50% more units with the same resources.

Up to this point the Treetop team has spent a few days on their A3. The next step, however,
took more than a week to complete as they worked to define root causes. To do this the
team used many of the same tools and principles we learned about in the Practical Problem
Solving course.

For example the team did several 5 Why evaluations in addition to completing a fishbone
diagram. The end result of this process resulted in several root causes being identified
including things such as the fact their computer based production planning system is creating
scheduling problems.

Additionally, during their Value Stream Mapping process the Treetop team had created work
cells in their assembly department… but after some reflection and careful analysis they
realized there's still a lack of true one piece flow. Other root causes included a poor on
boarding system, inadequate standard work, the sawing department is producing bad parts, a
new lower cost supplier is sending warped boards, no production boards displaying hourly
results, and inadequate equipment and workbenches.

At this point the team felt as if they had learned a lot and identified several root causes
worthy of attention. They did, however, keep in mind that the A3 process is dynamic and that
additional root causes could be uncovered… and if and when they are the A3 will be updated.

In other words, the A3 document is most definitely not a static, never changing document.

With the said, the next step in the process was for the Treetop team to create an action plan.

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Treetop’s 5 Initiatives
Here we see 5 major initiatives. The first initiative is called "Transition Assembly to One
Piece Flow Production." And as we see there are several sub-actions including training of
associates and conducting time studies.

Next to each action we see when they expect to complete each of these items followed by
who is responsible for the action.

Finally, the far right column will be used to monitor the status of each action. It's blank now
since this is what the A3 looked like at its initial phase. We'll see what this looks like after a
few months in future modules.

And last, but certainly not least, the Treetop team documented how they plan to check the
results which, when applicable, will result in turning the PDCA wheel again to adjust the
process.

For example, the first action of working to improve the flow and output of the assembly line
will be checked by verifying the pieces per hour and calculating the net profit per assembler.
The exact process for how this will be done is documented in their Standard Operating
Procedure 1412 document. We also see that the Supervisor will be responsible for this and
will do the check weekly.

The most important thing to remember about the A3 process is that its power comes from
the thinking involved during the creation process.

Additionally, as we mentioned earlier, the A3 process is very dynamic in nature. The

document should evolve and change as the team learns new things and completes tasks.

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Parent and Child A3s
Another important aspect of the A3 process is the parent A3 to child A3 concept. What we
just saw completed could be called the top level or parent A3. The individual actions on this
parent A3 can, and should, be broken down into what are called child A3s. These A3s follow
the same exact format and process only they drill down into more detail for that particular
objective.

For example, Treetop's action of transitioning assembly to one piece flow production will
indeed need its own A3 in order for that action to succeed.

Additionally, A3s can also be deployed from the top to bottom of the organization as we see
here. In this case the CEO's actions become the targets of senior managers and the process
continues the same way throughout the organization.

And once an organization has their parent and child A3s complete they can posted in a war
room as shown in this example providing an easy way to monitor the progress and
performance of these important initiatives.

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