Key Points

• Hoshin Kanri has been around for decades and has been proven to yield significant successes. 
• There are dozens of strong case studies that showcase the benefits of a Hoshin Kanri rollout, regardless of an organization’s goals. 
• Many businesses have not only met their goals for Hoshin Kanri rollouts but have also exceeded them. 

In the world of different management techniques and methodologies, Hoshin Kanri stands out. A Japanese management style, Hoshin Kanri, is no doubt a game changer. For any organization, Hoshin Kanri can help it align goals at every level of the business and direct everyone in the same direction to achieve a common set of objectives. 

Drilling down to the core of Hoshin Kanri is all about how an organization manages its direction. In other words, this methodology should help a company break down the barriers between the C-Suite and the frontline, enabling everyone to row in the same direction. This approach has been successfully employed by companies such as Toyota, Nissan, Xerox, and others, yielding several excellent case studies. 

Toyota

At the very top of the list for the Hoshin Kanri case study is Toyota, a pioneer of the methodology. Among the first companies to integrate Total Quality Control in the 1960s, Toyota has since renamed it to cross-functional management. Using the Hoshin Kanri X-Matrix, Toyota has successfully aligned its global operations with its strategic objectives. The result is that the company regularly produces the most reliable vehicles, holding more value than even luxury brands. 

Perhaps most important is that the initial integration of Hoshin Kanri enabled Toyota to drop defect rates by as much as 40%. This impact was achieved in just three years, resulting in increased innovation within its manufacturing process. Toyota employees also felt more engaged as they understood how their work better aligned with Toyota’s primary goals of customer satisfaction. 

Fast forward to the 1980s, and Toyota’s reputation for vehicle quality enabled it to have a 15% market share of the North American car market. Among its practices during the 1980s, Toyota employed Hoshin Kanri’s “catchball” method, which utilized employee feedback to redesign an assembly process, resulting in a 10% reduction in production times. 

Danaher Corporation

While Toyota might be the gold standard of Hoshin Kanri, it’s certainly not the only success story. Danaher, a conglomerate that focuses on technology, healthcare, and manufacturing, incorporated Hoshin Kanri as part of its Danaher Business System. 

Focusing heavily on the X-Matrix, Danaher aimed to introduce strategic objectives from the top down to enhance operations across all its companies. As soon as Hoshin Kanri was introduced, the company saw improved operational margins by 20% in its first five years. As any good company would, Danaher established annual objectives and began tracking key performance indicators (KPIs) focused on monthly goals. 

Between 2000 and 2010, Danaher’s Hoshin Kanri implementation helped the company increase its revenue by double digits. During the same period, the company also saw its operating margins improve by 18%. Hoshin Kanri also played a critical role as Danaher incorporated new companies into its organization, ensuring that within six months, every new acquisition was aligned with the parent company’s objectives. 

At one point, Danaher introduced Hoshin Kanri into its supply chain, resulting in a 25% reduction in bottlenecks. 

Xerox UK

Another staple in the Hoshin Kanri world, Xerox has long been a case study of its success. For Xerox UK, the implementation of Hoshin Kanri was designed to work across more than 50 different locations. Using the Hoshin Kanri X-Matrix, Xerox UK achieved a 25% increase in customer satisfaction scores over a three-year period. 

Driven by various service improvements, Xerox also enhanced its operational efficiencies, resulting in a cost reduction of up to 12%. Moreover, employee engagement played a crucial role in the Hoshin Kanri integration, leading to an 8% decrease in employee turnover during the same period. 

Around 2010, Xerox UK’s Hoshin Kanri program reached another major milestone, achieving a 5% increase in new service renewal contracts. This growth was driven by factors such as digital transformation, which enabled Xerox UK to align its latest product launches with customer demands in the market. 

One Xerox UK sales manager noted that a new sales training program drove regional performance by 15%. This number undoubtedly increased the bottom line, which was shared with the entire Xerox management team, with the hope that other Xerox regions would look to adopt the same practices. 

GE Appliances

Another notable company behind a Hoshin Kanri case study, GE Appliances, has successfully utilized this methodology for years. Adopting Hoshin Kanri in the early 2010s was an immediate success, resulting in a reduction of production costs by as much as 15%. Better yet, GE Appliances was able to accelerate new product launches, resulting in a more seamless experience for customers to receive these products. 

The Hoshin Kanri X-Matrix was specifically used at GE Appliances’ headquarters in Louisville, Kentucky. Using this process resulted in a 12% reduction in production costs within 24 months. This resulted in a 20% decrease in time-to-market for new appliances. Arguably, the most significant takeaway from the Hoshin Kanri rollout is that more than 75% of GE Appliance manufacturing workers understood how their work was integral to the company’s overall strategic objectives. 

The best part is that, by 2016, all of these numerical successes had led to an 8% increase in the company’s North American market share. At this point, GE Appliances was now considered more of a leader in smart home technology, driving even more sales to the bottom line. 

Hewlett-Packard 

Jumping back in time to the 1970s, Hewlett-Packard, a rising star in the computer world, implemented Hoshin Kanri. Utilized by the company’s Yokogawa HP division in Japan, Hoshin Kanri was introduced in the “HP Way.” The goal was to align the company’s global operations with strategic initiatives, such as improving product development cycles by up to 25%. 

The good news for HP is that it was able to reduce product development cycles by 20% in just 36 months. This meant that the company could get products to market even faster, which led to increased employee morale. By the time the three years had passed, employee morale had reached an impressive 85%. 

Fast forward to the 1980s, and HP’s introduction of Hoshin Kanri saw a 10% increase in market share in the printer segment. As crucial as printers were to HP’s business during this era, especially in the enterprise world, this was a giant reputation boost. 

Ingersoll Rand

The year is 2009, and Michael Lamach is the President and CEO of Ingersoll Rand. It was during this year that he decided the company needed to build operational excellence by focusing on Lean principles. Enter a Hoshin Kanri rollout. 

The goal was to align the company’s global operations with objectives such as improving capital efficiency by up to 30% within three years. The good news is that the company hit the target and improved working capital efficiency by 20% in just two years. Wait, there’s more, as the company discovered that it could reduce its time to market for new products by 15%. Finally, the company saw a side benefit of accountability taking place by employees, with 90% of teams hitting their first-year KPIs. 

As soon as 2015 rolled out, Ingersoll Rand saw that it had gained a 10% market share in the industrial tools segment. Better yet, the company experienced a significant improvement in its performance on the S&P 500, which provided it with greater capital to enter new product categories and lower costs for its customers. 

Other Useful Tools and Concepts

Are you interested in reading more about Hoshin Kanri? Delve into the background of this promising methodology and discover how it aligns strategy and execution. Better yet, learn more about how digital transformation is becoming an integral part of Hoshin Kanri and other business processes that are increasing bottom lines across the corporate world. 

Of course, Hoshin Kanri isn’t the only process available, as Six Sigma remains a highly popular alternative. Did you know the best way to implement Six Sigma in healthcare? This is another great read to help look at the different considerations and challenges that surround this critical business vertical. 

Conclusion 

At the end of the day, Hoshin Kanri has proven time and time again to be one of the best quality management processes around today. What these case studies demonstrate is the importance of helping companies navigate uncharted territories, all while increasing their bottom line.

There is something about this process that also drives employee morale, which is no longer just a side benefit but a significant perk of trying something different. 

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