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Anti-corruption processes- Kanban
technique
Dr. Maher Salam DMIT, BA
Sunday, March 24, 2013

®
Kepler Consulting
2013 Dr. Maher Salam - all rights reserved

Agenda

Section
1 Introduction
2 Traditional approach -operational controls
3 Anti- corruption organization culture
4 Organization culture impact on potential corruption
5 Anti- corruption techniques

Kepler Consulting ® 2013 Dr. Maher Salam - all rights reserved 1

Introduction
 According to BusinessDictionary.com corruption is wrongdoing on the part of
an authority or powerful party through means that are illegitimate, immoral, or
incompatible with ethical standards. Corruption often results from patronage and
is associated with bribery.
 Organizations usually prevent corruption by adopting an ethical code of conduct
with a set of internal controls based on internet controls framework e.g. COSO. The
aim of COSO is to evaluate the effectiveness of the implemented internal controls.
COSO five components are 1) control environment, 2) risk assessment, 3) control
activities, 4) information and communications, and 5) ongoing monitoring. Also they
conduct a periodic audit on the controls components.
 Because of the cost associated with designing and implementing controls,
management go through risk assessment to prioritize risk and select limited number of
controls.
 In this presentation we propose a cost effective approach for corruption
prevention. This approach tackle the corruption by adopting specific organization
culture and operational and process optimization techniques.


Traditional approach- operational controls
 Operational controls are designed and implemented to ensure that the
potential wrongdoing is minimized.
 Operational Controls describe specific operations for controlling and
managing the activities, processes, products, and services associated with
specific objective
 Operational Controls should:
 Prevent wrongdoing
 Comply with legislation and regulations
 Continually improve
 Inline with objectives and targets
 Operational controls drawbacks
 Delays process activities and limits productivity
 Adds extra cost
 decrease the effectiveness of a process and limit innovation


Section 2
Corruption influencing factors

Kepler Consulting ® 4

Corruption and centralization

 Empirically it is noticed that the more decentralized the organization it gets the
less chances it will have corruption incidents (A. Matei , F. Popa. 2010)
 In such a decentralized system, there is no single centralized authority that makes
decisions on behalf of all the parties. Instead each party, also called a peer, makes
local autonomous decisions towards its individual goals which may possibly conflict
with those of other peers.
 Decentralized systems has several techniques such as Kanban , limited work in
progress (WIP), and management by results philosophy

The word "decentralization" came into usage in the 1820s."Centralization" entered written English in the first
third of the 1800s;mentions of decentralization also first appear during those years.
Decentralization (or decentralization) is the process of redistributing or dispersing functions, powers, people or
things away from a central location or authority


Corruption and organization culture

Empirically it is noticed that under competitive culture, when peer
relationships are strong, a flat organizational pyramid is less prone to
collusion and less prone to bribe extortion compared to a steep pyramid.
However, under cooperative culture, the opposite is true. When peer
relationships are strong, a steep organizational pyramid is less prone to both
collusion and bribe extortion compared to a flat pyramid E. Duggar (2004)


Corruption and the unstructured processes

 Unstructured processes, are human processes where a framework for getting
the work done exists, but actor judgment and experience is used to adjust the
process flow and outcome.
 Analysts estimate that 60-80 percent of the processes that make a business
run are unstructured
 Example of unstructured processes are negotiation and decisions processes,
for which gets managed by emails and documentations
 The unstructured process is more vulnerable and more prone to both
collusion and bribe extortion because of the lack of controls, the dependence in
process actors judgment, the uncertainty about the cycle time, and black box
where only one person knows how a certain case can be completed.


Section 2

Anti- corruption process guidelines


Cost effective anti- corruption guidelines

1. Adopt an operational excellence principles (Shingo)
2. Enforce operational excellence by 1)Establish practice, 2)develop methods,
and 3) Coach the team.
3. Run the organization by leaders not managers
4. Adopt cost effective techniques such as,
 Limited Work in Progress
 Kanban cards
 Pull instead of push system
 Apply methods, practices and coaching
5. Establish decentralized organization
6. Establish a learning and continuance improvement environment


Shingo operational excellence principles

Kepler Consulting ® Adopted from Shingo Prize 10

The cornerstones for operational excellence


Managers and Leaders


People has to do it themselves as a second nature


WIP , Kanban, and CONWIP

 Work in Process (WIP) is goods in process, or in-process inventory are a
company's partially finished goods waiting for completion and eventual sale or
the value of these items. These items are either just being fabricated or waiting
for further processing in a queue or a buffer storage. Optimal production
management aims to limit WIP.
 Kanban is a production authorization cards. They are used to control and limit
the releases of parts into each production stage.
 CONWIP system uses a single card type to control the total amount of Work In
Process (WIP) permitted in the entire production system. When a job order
arrives to a CONWIP system, a card is attached to the job, provided cards are
available at the beginning of the production system.


Kanban
 A Kanban is used in Toyota Production System (TPS) to support decentralized
"pull" production control. Kanban has a simple control mechanism, for which a
set of limits for:
 Inventory: There cannot be any more than x WIP transaction.
 Space: If each unit takes up x square foot of space, the maximum space
tied up is x * number of units sq. ft.
 Lead time: If we assume that operation section can process x unit(s) per
hour, the longest that any unit will wait in queue is x hours, and,
 Potential Defects: If we are utilizing sequential inspection techniques, if
operation 1 should slip out of control and produce defective units, the
number of defects in process will be limited to four.
 Kanban mechanism provides a simple, powerful, mechanism to force continuous
improvement.
 Think of the Kanban quantity as a buffer that allows (hides) problems to
exist.


Kanban and corruption prevention
Kanban limits the potential corruption by its nature Even though it was not
developed as a corruption prevention technique,

1. Lack of controls in the unstructured processes, Even though unstructured
processes can’t be eliminated, the Limited work in progress, decentralized
visual cards and the pull system improve the effectiveness of the processes
because of the strong peer to peer relationship.
2. The dependence in process actors judgment, process actors shares the
responsibility and decisions for the processes end to end.
3. The uncertainty about the cycle time, WIP has a better management for
average cycle time for structured and unstructured processes.
4. only certain actor knows certain activities, All process actors able to do all
activities in the process.
5. Designation of duty, duties are not fixed and applied differently on each
transaction.


Contact us

LinkedIn profile ( Dr. Maher Salam)
Kepler Consulting
Email: m.salam@Keplers.net


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