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Lean Context Matrix
Lean Context Matrix
Mark Kaganov, Lean ISO Management Systems
Annex SL brought innovative changes to the management system standards with the concepts of “context” and “Interested Parties.” As advanced as these additions were, the absence of a requirement in the standards to document these critical issues is puzzling and questionable. Despite the lack of requirements for documenting the context and interested parties, most companies do document them. When defining the context and the interested parties, we should consider numerous elements of the standards:
– 4.1 Identify external and internal issues;
– 4.1 Establish monitoring of the issues;
– 4.2.a Identify interested parties;
– 4.2.b Determine the needs and expectations of the interested parties;
– 4.2 Monitor and review information regarding 4.2.a and 4.2.b;
– 6.1.1 Determine the risks and opportunities related to 4.1 and 4.2;
– 6.1.2 Plan actions to address those risks and opportunities;
– 6.1.2 Define how to evaluate the effectiveness of these actions;
Now, the challenge comes. I often see companies documenting these topics in stand-alone lists or procedures. The standard said, “Identify internal and external issues.” A company responds with a list of issues called External and Internal Issues.
Internal issues:
– Expected retirement of critical personnel;
– Addition of a second shift, etc.
External issues:
– Loss of key suppliers;
– Rising healthcare costs, etc.
Next comes element 4.2, with requirements for the interested parties and their needs. Thus, a company creates another list called “Interested Parties,” which may look like this.
Interested parties and needs:
– Shareholders need:
– Return on Investment;
– Continuity of the business with a specific performance, etc.
– Customers need:
– On-time delivery;
– No failures during the warranty period, etc.
– Employees need:
– Recognition;
– A supportive work environment;
– Competitive pay and other benefits, etc.
When we document responses to the context and interested parties in separate lists or procedures, we end up with three, four, five, or even more documents. The problem with this approach is not only the number of documents but the linkages between them. Often, I see such individual lists or procedures become discrepant. Let’s say one added an interested party but forgot to update the Strengths, Weaknesses, Opportunities, and Threats (SWOT) matrix. Or we identified an additional weakness but missed corresponding objectives, and so on. The solution is a single document that would address all the requirements above. Let’s call it a Context Matrix and explore its features:
The first page covers four of the requirements above:
– 4.1 External and internal issues;
– 4.2.a Interested parties;
– 4.2.b Needs and expectations of the interested parties, and
– 6.1.1 Risks and opportunities related to the above in the SWOT and FMEA (Failure Mode and Effect Analysis) sections.
The sections “Interested Parties and Issues” and “Needs and Expectations” are self-explanatory. Let’s talk a little about the SWOT and the FMEA tables. The standards obviously do not suggest the use of any specific tools. But the SWOT and the FMEA methods appear to be the perfect candidates for identifying and quantifying risks and opportunities.
We may choose which SWOT categories to apply to each issue or need depending on their status and criticality. For example:
– Line 1.1.1 refers to the owners’ need for Return on Investment (ROI). To characterize this need, we have identified all elements of the SWOT analysis: strengths, weaknesses, opportunities, and threats. Our strength was positive historical performance; our weakness was the lack of a business continuity program, and so on.
– Line 1.2.1 refers to out-of-box failures, sometimes called dead on arrival. For this issue, we considered only weaknesses and threats and documented responses in the SWOT section of the Matrix, and so on.
Identifying risks and opportunities is a good start, but which one of them is the most important? To quantify these, the Matrix shows the FMEA section to the right of the SWOT table. This section documents the Risk Priority Number (RPN) as the product of legal requirement, severity, probability, and detectability. So, on page 1, we addressed four requirements out of nine. Let’s cross them out and see what is left.
– 4.1 Establish monitoring of the issues
– 4.2 Monitor and review information regarding 4.2.a and 4.2.b
– 6.1.2 Plan actions to address those risks and opportunities
– 6.1.2 Define how to evaluate the effectiveness of these actions
We can continue using our Context Matrix to address the remaining requirements. For example, let’s pick an element, 6.1.2. Plan actions to address the risks and opportunities. Page 2 of the Matrix allows documentation of such actions for each SWOT category.
We are making progress! We just addressed yet another standard requirement: 6.1.2 Plan actions to address risks and opportunities. Let’s update our initial list of requirements to see what is left:
4.1 Establish monitoring of the issues;
4.2 Monitor and review information regarding 4.2.a and 4.2.b;
6.1.2 Define how to evaluate the effectiveness of these actions.
Next, we will talk about requirements 4.1 and 4.2. Let’s flip to the next page of the Matrix to see how it can help us to deal with these monitoring requirements.
This page includes the Key Performance Indicators (KPI) section. Our KPIs tell what we will measure to monitor our performance. For example, line 1.2.2, weakness, shows a high level of late shipments. The best way to monitor this deficiency is by the percentage of on-time shipments and customer complaints related to late deliveries, and so on. Using the KPI section of the Matrix, we have addressed requirements 4.1 and 4.2 by defining how we will monitor our issues.
The only requirement left on our initial list is 6.1.2: evaluation of the effectiveness of the actions. Our irreplaceable Context Matrix solves this problem too. Let’s go to the next and the last page of the Matrix to see how it could help us evaluate the effectiveness of our actions.
This page shows a typical scorecard where we monitor our KPIs at determined frequencies. The first column in the Scorecard section shows targets for our KPIs. For example, in line 1.2.2, we agreed to monitor late shipments through percent on-time shipments and customer complaints related to late deliveries. Our goal for on-time shipping is 100 percent. After implementing action to enhance the production planning process, we will monitor our performance.
As you can see, for January, we achieved only 85 percent, leaving us with a difference of -15 percent. Since this variance is negative, it shows in red. For the following months, the Scorecard shows continual improvement. Companies frequently use color coding in scorecards for visibility:
– Red stands for under-performance,
– Yellow for the on-target, and
– Green for exceeding the target
Following this method and using this Context Matrix, we can address numerous standard requirements in one document. The benefits of this approach are:
– One joint document, and
– When a part of the context changes, the Matrix will remind us to update its other sections.
If you liked the idea and want to explore this tool further, download a PDF copy of this Context Matrix here. If you want to save yourself a lot of time, you can order an editable MS Excel version on our Services page. (*)
This product comes with a complimentary one-hour online walk-through.
(*) From time to time, we may enhance our Context Matrix, so the Matrix you order may include updates and vary from the one shown in the article.
