Pointy-Haired Boss’ Budget Strategy

I hope everyone has a great Memorial Day.  It’s a good day to enjoy the weather and company of family and friends.

Memorial Day is a good day to lighten up the mood a bit on the blog.  This is a quick video of how Dilbert’s wonderful boss proposes to handle a situation we hate…………budget balancing.

As funny as this cartoon is, it is something too many people really experience.

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Transparency – Crucial to Engagment

If there is one question that pops up the most during a lean transformation, it is, “How to I get my employees to be more engaged?”  I finally decided to reflect on some of the comparisons of companies that have had great engagement (based on personal experience and reading) versus companies that do not have a great level of engagement (again based on experience and reading).  The one theme that seems to repeat itself over and over again is transparency.

Companies that have good employee engagement are like the old school overhead projector.  All the information is projected up through a transparency so everyone in the room can see it.  When everyone can see it, they can comment on it and add or change it.  The transparency allowed for easy changes by using a marker.  Once the change was made, everyone could see it immediately and agree upon it.  Nothing is hidden.  Everything is visual.  Not hidden in a computer.  Easy to change.

Things to look for to understand if an organization is being transparent are: future plans being shared with the entire workforce and not just the senior staff, financial information (not just cost/part) being shared with the entire staff, and open and honest dialogue about what the organization needs to do in order to improve.  There are several ways I have seen this work.  One of my favorites was the semi-annual employee update.  The plant manager had a meeting with every employee in attendance.  During this meeting he went over the financial performance of the plant, the areas the plant needed to improve upon in order to make the financial standing even stronger, and how lean would help them achieve the improved state.  I found this even more amazing because the plant did not have any employee profit sharing so showing the financial information was a risky move.  It paid off though.  Employees were so engaged they would come to the management team and suggest ideas to eliminate 2 positions in their own 3 position work cell.

Another facility created a visual area.  This area is accessible by every employee.  The area shows the metrics (where they stand and where they need to be).  It also shows the multi-year plan for the facility.  How machines and areas are planned to move, what improvement events are scheduled, and what investments are planned.  The employees know what change to expect and when to expect it.  It helps everyone deal with the change management aspect a little easier.  The employees see the changes coming and can get used to the idea before it is time to change as well as see how it is suppose to help the overall company.  The company does not need to put as much effort into change management because the employees have been better prepared.

I know being this transparent can be a major cultural shift.  Some people are afraid to give up the control they gain by keeping the information closely guarded.  The places that have been able to let go of this orthodox have experienced a great since of freedom as more and more people are able to contribute to the success of the organization.

Can I Stop Inspecting?

When educating on the types of waste, I find that most people initially have a hard time seeing inspection as a non-value added activity.  Usually, it is for one of two reasons: 1) making sure the quality is in the product is valuable to the customer or 2) it is a legal requirement.  While there is not much we can do for #2, we can change #1.  I always start with the definition of value added.  I use one that I learned from the Lean Learning Center.

(Full Disclosure: I have worked with Lean Learning Center for about 4 years now, so you will see their influence in some of my definitions.  The link is meant as a credit to my source.)

The Definition of Value Added:

1. Must be something the customer sees as value and is willing to pay for

2. Must alter the process output, the product must change

3. It must be done right the first time

All three criteria must be met in order to for the activity to be value added!

If any of the three criteria are NOT met then it is non-value added. Almost right away people see that inspection does not physically change the product.  This allows them to now see inspection as a non-value added activity and move forward with doing something about it.  Not accepting it as part of the process.

You can’t just eliminate an inspection point because it is non-value added.  Now you have to understand two things: 1) How effective is it? and 2) Why is the inspection point there?

How effective is the inspection? The first questions asked should be: How many defects are we catching at this point?  and What are the consequences of not catching it?  If it is found that the inspection sees a failure rate of under 1% (which I have seen several times), then why do the inspection?  This is where understanding the consequences of not catching a defect comes in.  If you don’t catch the defect does something catastrophic happen?  Or is there now much of an impact on the process/system?  If something catastrophic would happen then you may decide to keep the inspection until you find the root cause of the 1% failures and have confidence in your process not to create the failure.  If there is not much of an impact on the process/system then I would eliminate the inspection.

Why is the inspection point there? If you see a high failure rate at inspection or if a single failure can be catastrophic, then this would be a good place to look at doing some problem solving.  Find out what are the failures at this point and do some problem solving around these issues.  When the failure rate becomes small or zero then revisit the “how effective is the inspection” questions.

Eliminating inspection can really help reduce the waste in your process, but only if you eliminate it for the right reasons.

Zappos – Lean Like?

The lean philosophy starts and ends with the customer.  If we are not adding value for the customer then we will not be around for very long.  I have worked in several industries and every where I have been the companies talk stress being customer focused.  Unfortunately, in every case it is just lip service.  As soon as push comes to shove, the focus is on what is best for my world or silo and we quit talking about the customer.  It can get frustrating, because there are companies that are focused on the customer and drive it as their core business value.

Zappos is one company that focuses on the customer experience.  There is a great interview with their CEO Tony Hsieh (an 18 minute video of the interview too that is worth watching).  Tony Hsieh states:

“….the ultimate aim of the Zappos brand is to be the very best when it comes to customer service and consumer experience.”

Tony goes on to say:

“In the long run, customer service is just good business,” he says. “The problem, however, is that the payoff is usually two or three years down the line.”

That sounds great.  I have heard it all before, but what actions are they taking that makes this come to life and stick to the long-term thinking?  From the article:

• The company provides free shipping both ways
• Zappos has a 365 day return policy
• Only products available in the warehouse are placed on the site
• The warehouse is open 24 hours a day
• The company is contactable 24 hours a day, 7 days a week
• The 1800 contact number is prominently placed on every page of the site
• The company trusts in its reps; sales staff don’t have scripts
• If products are unavailable, sales staff direct customers to competitors

As an online consumer, I really like the things listed above because they get to the heart of some of the issues I have had purchasing online.  There were two bullet points that caught my attention the most.  The first was “The warehouse is open 24 hours a day”.  In the video, Tony Hsieh talks about this in more detail.  They understand running a warehouse 24/7 may not be the most efficient way to run a warehouse, but it drives quicker turn around of a customer order and increasing the customer experience.  Tony talks about automatically upgrading the shipping of repeat customers.  Some orders are placed at midnight and could be received 8 hrs later.  8 hrs later!  I have never received anything in less than 24 hrs and that is after paying an arm and a leg to upgrade to overnight shipping.

The second bullet point that caught my eye was “If products are unavailable, sales staff direct customers to competitors”.  If you are concentrating on delivering the best customer experience and not driving sales this makes sense.  The customer is looking for something now or maybe it is something Zappos will never carry so direct them to where they can get it.  This thought is, by doing this the customer remembers how much of a help it was for them and they come back later, building a loyal satisfied customer based.  How many of our companies would drive a customer to a competitor if we didn’t have what they wanted?

How does Zappos drive this behavior in it’s employees?

Ultimately, Hsieh believes that every company needs to determine its core values, and rather than have a vague sense of what those ideas should be, he insists it is important to select ‘committable’ core values.

So what are the values?

1. Deliver WOW Through Service

2. Embrace and Drive Change

3. Create Fun and A Little Weirdness

4. Be Adventurous, Creative, and Open-Minded

5. Pursue Growth and Learning

6. Build Open and Honest Relationships With Communication

7. Build a Positive Team and Family Spirit

8. Do More With Less

9. Be Passionate and Determined

10. Be Humble

Doesn’t a lot of this seem very lean like?  #1 is customer focus.  #4 sounds like “creativity over capital”.  #5 is continuous learning.  #6 is respect for people.  The similarities are there.  Tony Hsieh does not claim that Zappos is a lean company.  It just seems like what we look for as lean leaders though.  Zappos has taken on trying to teach their culture to others.  There is a great blog about it and how you have to relate this to your company, not just copy and paste, which is what we have seen people do over the years from 5S to andon lights and so on.

So why hasn’t everyone heard of Zappos if they have such great customer service? In the video, Tony Hsieh mentions Zappos does not advertise much if any.  They are very reliant on word of mouth based on the customer experience.

I hope to help my company be so customer focused.  What about you?

Collaboration Paradigm

I am a big fan of Fox’s TV show HOUSE.  As I was watching, I couldn’t help but think the medical team was participating in a kaizen event.  The concept that struck me was watching the doctors collaborate in the diagnosis of a patient and how this is just like breaking down the functional silos in a business environment.

Reaching across functional silos and collaborating has become more prevalent in today’s manufacturing world.  Manufacturing must collaborate with procurement and transportation in order to create a better total cost system that delivers value to the customer.  It has not been easy and it has not been the norm in the past, but there is still an abundance of examples to point to showing the benefits.

Why don’t more doctors work in collaborative teams?  The team on House all have different backgrounds and specialties.  This gives them all different perspectives on the situation (like transportation, procurement, and manufacturing) with one common goal……..save the patient (deliver a quality product to the customer when they want it).  At some point, if you put different doctors in one room and have them discuss the issue with you, it would seem that you would get to a true root cause quicker and I would suspect the cost would be lower instead of doctors working in their specialty silos.

Have you ever gone to the doctor when something is wrong and they sent you to a different doctor that is a specialist?  Then Specialist A runs all his test and claims nothing is wrong, so he sends you to Specialist B.  Specialist B runs his test and says your are fine and this goes on for what seems like an eternity.  Finally some doctor tries something and it maybe it works and maybe it doesn’t.  Is it just helping the symptom or is it the root cause?

Having doctors work in collaborative teams would seem to have the patients best interest in mind and create a stronger health care system.  I know we wouldn’t want to set up the  health care system to do this for every problem.  We could develop standardized work that would state when to call together a team of doctors and when to have doctors work individually.

We have torn down a part of the collaboration wall in manufacturing.  Can we start to tear down that wall with doctors?

Pushing to Failure

When testing a product, I was taught to test it until it failed.  When it fails, learn why it failed and make the product better.  Instead, we test the bare minimum.  What are the specs we need to pass? When we pass those minimum requirements, stop testing.  The product is consider a success at this point.  There is no need to go any further.  Then it is used in the field in a way that was not anticipated and it fails.  Whereas, if we tested the product to failure, we might have seen this and prevented it from happening.  Then the product is used in the field in the unanticipated manner but it is still successful.

Why isn’t that approach taken more often with our processes or our thinking?  Push our process or thinking until it fails.  When it does fail, use it as a learning opportunity to improve.  Looking back, the failures I had were some of the best lessons I have learned.

When I was in the auto industry, two of us were tasked with training and implementing a plant wide pull system in about 6 weeks.  Neither of us had ever implemented a pull system.  We had to develop the training, and then train 550 employees 6 at a time.  We got to check the box, but we had some big issues with the system itself.  We fixed the system as we went and it ended up working well.  That initial system failure and learning has been invaluable as I have helped implement other pull systems at other companies.

This way of thinking ties in with Toyota Principle #1: “Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.” If we are practicing this principle, then a failure now that causes significant learning for the future will help us develop processes that are more efficient, robust, or just plain better for the future.

I believe that more than ever we need to pushing our processes and thinking all the way to failure.  The ones who do this best will be big winners coming out of the economic downturn as well as receive more business that is returning from overseas.  Why?  Because the companies pushing the limits on their processes and thinking will better understand their capabilities, processes, and people more than the ones who didn’t push themselves.

Why don’t we push our processes and our thinking to the point of failure?  Are we afraid of people perceiving us failures, instead of innovators?  There is a lot of pressure put on us to succeed and succeed quickly.  But are we getting the opportunities we need to push the limits?  How do we overcome the fear of failing……….and the perception of being a failure?  How do we get our companies to embrace failure as good thing?  If and only if we use that failure to learn and improve so we can push our limits further.

EPA using Lean to go Green

I was shocked, but happy when I read the EPA is trying to educate businesses on lean principles in order to help improve efficiency resulting in a better environment.   The interview is with George Wyeth, a professor at Lawrence University who leads the innovation efforts with the EPA.

From the interview with Mr. Wyeth:

Lean manufacturing is really a business strategy, not an environmental strategy.

Mr. Wyeth recognizes lean as more than a set of tools to get a greener world, but a business strategy that can help companies reduce waste resulting in a smaller carbon footprint.  It sounds like they are trying to educate on the how (lean principles) in order to get the what (cleaner environment) that is wanted.

Lean, because it focuses on the elimination of waste, has a lot in common with what we call pollution prevention, which we’ve been preaching for 20, 25 years. As companies focused on eliminating waste, we realized they were doing pollution prevention and didn’t even know it.

It is refreshing to see someone recognize the synergies between lean and green.  How they are intertwined with each other.  When I worked in the auto industry in the early 2000’s, we knew we had to control our costs better.  One way was to use the water from our painting and electroplating lines more efficiently and what we was excess we needed to recycle back through the system.  This was before the green movement become so overwhelmingly popular.  We spent quite a bit of money to implement the system but it paid itself back in less then a year in not only water savings, but also less cost to cleanse the water before disposing it in the city drain.

From the article:

We thought that presented an opportunity for us to take the message we’ve been preaching for a long time and presenting it in a way that would be better understood and be more easily incorporated into the business, so it’s not seen as, here’s the government with a hammer forcing you to do something.

The EPA knows they are a regulatory agency.  Unfortunately, the perception is very similar to the cost versus quality perception.  You can’t have both.  It is either one or the other………..regulatory compliance or low cost.  The EPA wants to educate that you can have both and using lean principles is a way to get both.  WOW!!!  Cost, Quality, and Low carbon footprint………you can have them all?!  Who would have ever thought?

Companies must be interested in how lean can help with the environment:

We get a lot of hits on our website on lean manufacturing materials, and there’s a lot of interest from people who want to talk to us.

I am glad to see the EPA has lean materials on their website. Not only about lean and the environment but also lean and government.  Is this a way to get more people interested in lean principles and how it can help their business?  I hope the EPA continues to help companies see the benefits.  They could be another outlet to reinforce the lean message.

First Post

Over the past 10+ years I have been learning about lean while implementing and coaching others.  Along the way I have learned a lot from the many successes and failures that I have endured.  I have enjoyed every minute of it even though there are times when I want to beat my head against the wall.  Once I step back and reflect on why I am beating my head against the wall, I see it as an opportunity to change and improve.  Continuous learning is what I want to do.  Learn something new everyday and I will be growing and helping my company become more successful.

I not only learn from my implementations, but also from reading and education.  Over the years, I have become a regular reader of a few blogs like the Lean Blog, Evolving Excellence, Jamie Flinchbaugh, and All Things Workplace.  These blogs, as well as others, have helped me to grow in my understanding of lean.  You might see their influences in my blog writing.

I have multiple purposes for this blog.  One hope is to be able to spur reflection and thought in others the way other blogs have done for me.  I want others to understand lean and help dis-spell some of the myths and misunderstandings.

This blog also is meant as a way for me to continue to learn and grow.   I want others to post comments and challenge my thinking and create good dialogue.  Also, I want to grow in my written communication skills.  I’m an engineer by trade and if it isn’t numbers, then I am not the best at getting it down clearly and concisely.   Finally, I want to force deeper reflection on lean and how I see lean in the world around me.  I tried working on these by guest blogging at the Lean Blog, but I had no accountability so I did it a couple of times and then made excuses as to why I didn’t have time.  Having my own blog will hold me accountable for reflecting and working on my written communication skills.

I plan on posting a couple of blogs a week to get started.  I hope I can meet the goals and purposes that I want from the blog.  Please do not hesitate to send me feedback about the site, my writing, or anything else that is on your mind.

Let the fun begin!