Background
The point under discussion is the fifth principle proposed by Dr. Deming that suggests improving every process. Broadly speaking, this point implies that the key aim of effective management resides in a continual focus on the alternative solutions for improving every internal process, i.e. production, service, etc. The finite goal of such continual improvement is raising the performance quality and reducing the production costs. Unlike the first point proposed by Dr. Deming, this principle suggests putting a particular emphasis on the inputs rather than outputs. In other words, it focuses on the improvement of internal processes that, in turn, is supposed to result in the outcome and productivity improvement.
It is important to point out that Dr. Deming does not limit the scope of potential improvements. Hence, they might be minor changes in the organization of the routine activities or a global transformation of the entire operation flow. Otherwise stated, it is suggested that the company is constantly moving to the new level through the update of the managerial practices. The three main ways of accomplishing this aim that Dr. Deming proposes are innovations, continual training, and dynamic planning. Most importantly, it is essential to note that the idea of continual improvement is the core concept upon which other Dr. Deming’s principles rely.
Current Condition
It is rather problematic to evaluate to what extent the principle of continual improvement is integrated into Costco’s managerial practices. Analyzing its approach to management, it might be assumed that Costco adheres to the principle of continual improvement as long as a particular internal process needs to be improved. In other words, if the supply chain organization is reported to have some weaknesses that impede the company’s progress, the management will essentially consider its update. However, if a particular service does not exhibit any operation flaws, it will hardly be reorganized.
Therefore, it might be concluded Costco moves to a new performance level because of the performance-related problems rather than on the initiative of the managers focused on continual improvement. This tendency might be explained by the fact that the principle of continual improvement has not been appropriately integrated into the corporate strategy. Thus, neither leaders nor employees will consider the need for a change unless the quality of their performance is criticized. As a result, the company does not show significant quality enhancement – its performance is more or less stable. Such a managerial approach is safe, though, from a long-term perspective, it does not offer any prospects for a considerable increase in gains.
Target Condition
The adoption of the discussed principle will allow Costco to move to a new productivity level and improve the performance outcomes significantly. Thus, as soon as its leaders prioritize the need for continual improvement, they will encourage other employees to share this aim. As a result, the entire Costco’s workforce will be focused on improving the outcomes of their performance. Consequently, it will lead to the adoption of innovative technologies, the integration of the new forms of HR relations, and the improvement of the service quality. The company’s progress will shift from occasional to regular – it will become natural and obligatory. From a long-term perspective, the adoption of the principle of continual improvement opens a series of promising opportunities. It allows for stabilized customer loyalty, improved service quality, enhanced productivity, and reduced operating costs.