Monday, December 31, 2012

What is the Ringo-sho process, and how does it fit into Lean?

I would like to wish each and everyone one of my readers a Happy New Year, I hope I can continue to bring more value-added posts to you in 2013!

So my last post of the year is shared from my contribution on hosted by Michael Balle'.

The question is in regard to the Ringo-sho process.   Some of you may be saying "what is that?"  It is a Japanese term and was used during my time at Toyota. 

The question on the website is from:
Lean Global Network: Can you clarify the role of “ringi” in lean?"What is Ringi? The Lean Edge has discussed Nemawashi, but could you clarify the practice of Ringi? How is this linked to A3? How widespread is its use within Toyota? Should that practice be adopted by lean thinkers?"                                                                  

I will have to admit when I saw the word Ringi in this question, it brought back many memories of my time at Toyota (TMMK). It’s not a word I’ve used or heard much since my time there, even though the thinking behind it could be more common if expressed differently.
As others have mentioned above Ringi or (Ringi-sho) is not necessarily a Toyota creation, it is a Japanese term which when translated (with help from John Shook) means:

A high-level formal authorization/approval process, usually for major policy matters, major projects and represents formal agreement (through nemawashi) of the authorizing parties (always including finance). It is a specific application of A3 (as a document size), used to (to repeat) garner formal authorization for those major policy matters and projects. It is finalized in a formal A3 called a ringi-sho (sho means “document”) that is signed by the authorizers, usually the top executives of the related departments or affected areas or functions of the company.
So as you can see no matter what you decide to label this process (remember its not about what we call these “tools” its the thinking behind them) the importance of it seems to reside around the “approval process” of a project described at a high level which needs financial authorization at an executive level as well buy-in.

It is often necessary to link the project to the Hoshin Kanri goals in order to measure the key performance indicator impact (i.e – Cost, Productivity, Quality, Safety, and Human Resources) otherwise known as ROI (Return on investment) this could be spread over several years. I think a common misnomer about Ringi-sho is because its linked to A3 its often label as a problem solving A3 and this is not necessarily the case. It could stem from a problem happening which a proposal or project could evolve from but a Ringi-sho is more about the financial aspect and approval process at the highest affected levels.

Once a Ringi-sho has been approved then its given a Ringi-sho account number, this number is then attached to any spending / cost around this designated project through Accounting. This project could be a few months in time to a couple of years depending upon the complexity of the project and everything it entails.

So Sammy’s example above touches on capital type expenditures as in- (equipment, buildings, expansions, company events and services). Usually a Ringi-sho is created for higher dollar projects that could be in any range. This could be an area where your specific company could set their own parameters around when you needed high level approval for finances or not.

The important aspect to remember is the relationship to Hoshin Kanri (Strategy Deployment), so once its approved financially and all signatures are completed then it begins to cascade downward to the related areas/departments who will begin to follow through with the project plan and this is where you could see the spawning of the “kanri cycle” which are micro PDCA activities that will take place in order to see the project from start to finish lead by the originator of the Ringi-sho. Each one of these Kanri-cycles could have a status report to ensure that the project stays on task, any contingencies should be reported at this point if it could effect the project plan.

Once a Ringi-sho is deemed “closed” meaning that the project is completed in regard to the financial aspect, then the account number is then closed as well. If at any point in the future some unforeseen cost arises that are related to that closed project a new Ringi-sho would have to be approved for addition funds.

So in the world of “Lean” I believe this “approval process” can be very value added to any company ensuring that funds are spent appropriately for ROI, and communication and authorization to all related parties become a standard practice.

This summarization of Ringi-sho is strictly based on my 10 yrs experience working in production at TMMK and dealing with projects related to the Plastics department and how we used this process to ensure proper approval and allocation of budgets all related to our department Hoshin as it related to the Plant Hoshin (TMMK).

Until next time,
Tracey Richardson
Last post of 2012 - Happy New Year!!!  

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