It’s Never About The Number, It’s What The Number Is Telling You

It’s Never About The Number, It’s What The Number Is Telling You

Successful Control Charts For Every Business Environment

All successful leaders know how to see around corners. What is their secret? They use Key Performance Indicators (KPIs) complete with early warning systems. Both are components of any successful Lean Six Sigma program.

If it can be measured, it can be improved. But how do you know if the process is stable, and producing predictable results? The answer is simple, use control charts.

Many people often think the use of control charts as being limited to a manufacturing environment. This is an incorrect assumption. The application is much more widespread and successful, especially in today’s economic environment. These charts, commonly used in Lean Six Sigma, are appropriate for any process that can be measured.

A control chart is useful for…

• determining the capability of the process (expected range).
• determining if the process is under statistical control (stable).
• identifying special cause variation in the process.
• determining when and if corrective actions are required to the process.

By definition, a control chart is a graphical depiction of variance about a centerline over time. The mean (often referred to as an average) is commonly the centerline used in business applications. When using a mean as the centerline, the control chart is referred to as an `X (X bar) control chart. `X is nothing more than a fancy way of referring to the mean.

It is important to note that when a process is deemed to be out of statistical control, investigation is required. The cause of the variation must be identified and correction measures implemented when necessary.

The use of control charts can be extremely valuable when managing processes. However, to be of value these charts can’t sit in dusty binders in the manager’s office. The charts belong at the work location and should be reviewed during the leader’s Gemba Walk.

Furthermore, control charts should not be viewed as the only tool necessary for continuous improvement. Control Charts are only one of many tools available in the lean enterprise’s arsenal in the war on waste.

While statistics are crucial in the measurement of business processes, it is never about the number. It is about what the number is telling the leaders about their business and what is being done differently because of the number.

Constructing a Zone Control Chart

To assemble an `X control chart, enough data must be collected to calculate the mean (average) and standard deviation (std dev). After calculating the standard deviation, you determine the mean (average) + 1, 2, and 3 standard deviations (std dev). Finally, plot the Excel line chart including the data points, mean, 1 std dev, 2 std dev, and 3 std dev. Text labels are recommended for the right side of the graph to label the mean and + 3 std dev (upper and lower control limits).

Process control charts can be broken into three zones on each side of the mean (average) for ease of analysis. Zone “C” is closest to the centerline and is bounded by the mean and + 1 times the standard deviation. Zone “B” is the area bounded by + 1 and + 2 times the standard deviation. Zone “A” is the area bounded by + 2 and + 3 times the standard deviation.

Having assembled the control chart, the next step involves understanding what the data is revealing about the business. More specifically, is the process data under statistical control? A process only has two states, in control and out of control. There is a series of rules that are used to detect abnormal conditions in which the process is said to be out of statistical control.

While there is some disagreement among experts over the rules for determining when a process is out of statistical control, these rules were defined by Dr. Douglas Montgomery in his 2005 book entitled Introduction to Statistical Quality Control.

1. One point or more points outside of the control limits (i.e. beyond Zone A)

2. Two out of three consecutive points three points > 2 std devs from the mean, on the same side of center, and within the control limits (i.e. in Zone A)

3. 4 out of 5 points > 1 std dev from the mean and on the same side of the mean (i.e. in Zone B or beyond)

4. Eight consecutive points on the same side of the center line (i.e. Zone C and beyond)

5. Six points in a row steadily increasing or decreasing

6. Fifteen points in a row on both sides of the centerline in Zone C.

7. Fourteen points in a row alternating up and down.

8. Eight points in a row on both sides of the centerline and beyond Zone C.

9. An unusual or nonrandom pattern in the data.

10. One or more points near a warning or control limit.

Learn more about the author by checking my LinkedIn profile at http://www.linkedin.com/in/roycewilliard

Reference

Montgomery, Douglas C. (2005). Introduction to statistical quality control, Fifth edition. USA: John Wiley & Sons, Inc..

Post Author: Royce Williard

Copyright 2009, The Williard Group LLC

Are You Leadership Material?

When many people hear I run a business consulting firm specializing in Lean Six Sigma, they will frequently indicate that they are familiar with these principles and have implemented them into their own organization.  Many will then go on to highlight their accomplishments using staff reductions as evidence. This attitude is a common misconception among individuals who have simply read a book or two on Lean Six Sigma and consider themselves an expert.  My reply is always the same, “Actually, it is about respecting individuals and company resources while enabling them to participate more fully in value added activities.”  Lean Six Sigma is not about the elimination of jobs.  It is about the reduction of waste and improving overall quality while respecting the individual.  A core principle of Lean Six Sigma is respect for the individual.

 

So what does respect for the individual really mean?  In cases of old processes no longer performing adequately because of planned or unplanned staff reductions, respect for the individual can be demonstrated by removing the non-value added activity so that the individuals do not feel overwhelmed. 

 

Many companies today have already cut their labor costs to the bare minimum and beyond.  Unfortunately, as the size of the staffs reduced, the amount of work requiring possessing may not have reduced proportionately. The goal in these organizations is not to eliminate more labor.  The goal is to eliminate the non-value added activity so that the existing staff can perform the work consistently, efficiently, with quality, in a timely manner, and without being overwhelmed.  In this case, respect for the individual is demonstrated by making the jobs easier to perform.    

 

Another common misconception is that respect for the individual is synonymous with employment for life.  Respect for the individual doesn’t mean employment for life.  Respect for the individual refers to how you treat and respond to people.  Treating people with respect basically means following the advice given by parents around the world, treat others, as you would like to be treated.

 

When you’re speaking with someone, you need to make eye contact and listen.  When leaders conduct a Gemba Walk, don’t simply walk around observing and writing on a checklist. Engage people in conversation. Ask questions. Communicate.  Don’t be afraid to ask for input.  The insight provided may surprise you. Communication is not simply taking turns talking and formulating a response while the other person is still speaking.  Communication involves sending and receiving information.

 

Another way to respect the individual is to show interest in their development.  However, this doesn’t mean sending people to every training program imaginable.  This could be something as simple as taking the time on a Gemba Walk to explain why certain decisions were made or why certain things are important to the organization.  Educational moments present themselves all the time, a true leader has trained to take advantage of the opportunity when it presents itself.

 

Developing people provides the individual with additional skills that can be marketed if they need or elect to search for another opportunity. Respect is not employing people forever; respect is providing people with enhanced skills that can be used in the marketplace should the need arise.  I have been fortunate enough in my career to work for several good mentors.  They were good mentors, in part, because they were excellent role models who took an interest in my professional development. 

 

Everyday a leader has the opportunity to be a role model of the Lean Six Sigma principles.  Every leader can be an exceptional role model.  The choice however, belongs to them which type of role model they will be for their staffs. Will they be a positive or negative role model?  The choice is theirs. 

 

The Lean Six Sigma principle of respect for the individual is simply treating others, as you would like to be treated. 

 

Learn more about the author by accessing my LinkedIn profile at http://www.linkedin.com/in/roycewilliard

 

 

Post Author: Royce Williard

Copyright 2009, The Williard Group

Gemba, The Library, and Breakthrough Performance

I recently had an opportunity to visit a good friend at the library where she is currently a manager.  10 years ago we worked closely together in continuous improvement and the pursuit of excellence in a service environment. She is a regular reader of this blog and I was eager to see how she had applied the information. When I first arrived, she asked if I wanted to meet in the office or discuss the improvements in the backroom.  Of course, I jumped at the opportunity to go to gemba and see first hand how their new lean journey is progressing. 

 

Like most organizations today, the library has found themselves unable to replace permanent staff that have resigned.  Furthermore, lacking the necessary capital to invest in state of the art automation, they had no choice except to pursue a lean enterprise solution. They immediately began to attack the visible waste.   To learn how to swim, you must get in the water and they proceeded to jump in with both feet.  The eagerness they displayed for learning and adopting lean concepts serves as an example for all.

 

Their first project was analyzing their check-in process and focused on removing the lean waste of motion and transportation.  In the pre-kaizen current state, the staff staged the material to be checked-in on one side of the workstation then, after check-in, moved the material to the other side of the workstation, before finally placing the material on a cart for re-shelving.  Additionally, the process included re-shelving the material when only 1 of 3 shelves on the cart was full. 

 

The problems occurring in the pre-kaizen state included …

·      the checked-in material could not be located prior to being re-shelved

·      checked-in and material waiting to be checked-in was frequently comingled

·      the staff was making excess trips to reshelf the material due to underutilized carts

 

In the post-Kaizen process, the staff moves the checked-in material directly to the cart for re-shelving.  Furthermore, the carts have been colored coded by library location and are moved only when 2 of 3 shelves on the cart are full.  The new process has reduced the number of trips to re-shelve the material by 50%.  The process has also enabled the staff to locate material waiting to be re-shelved and has greatly reduced the risk of comingling unchecked-in material with checked-in material.

 

At this point some of you may be gasping because the re-shelving is a batch process.  The beauty of lean is that it is adapted to each individual environment.  Lean is not about ensuring use of all the tools, lean is about breakthrough performance and doing what is right for the organization. 

 

Are there still improvements required? Absolutely, but kudos to my friend and her staff for realizing and addressing the need to change.

 

Post Author: Royce Williard

Copyright 2009 The Williard Group

4-Year Old Lean Practitioner Identifies Waste!

The beauty of lean enterprise is it’s simplistic.  Most waste is clearly visible if you will only take the time to see it. It has been said that the most dangerous waste that can exist in your business is one you can’t see. The good news is that some wastes are visible enough even a 4-year old can see it and counsel adults not to repeat the non-value added activity.

 

One of the lean wastes is transportation. This waste is defined as any movement that doesn’t add value to the product or service.  In lean manufacturing, this is characterized by unnecessary movement of finished goods or component inventory. In lean enterprise (a non-manufacturing environment), this waste can take the form of unnecessary movement of paper, information, or personnel.

 

Recently, my wife, grandson, and I were driving to a 5K Walk/Run and Easter egg hunt, when I inadvertently had to drive around searching for an open ramp to the highway.  During this drive and prior to discovering that my preferred ramp was closed, my wife and grandson saw a large building with a rounded dome on top. My wife explained to our 4-year old grandson that this structure was the Utah State Capitol. 

 

After driving a short distance further, I discovered that the ramp to the highway that I intended to take was closed due to construction. We had to circle back around and found ourselves driving back toward the Capitol from the opposite direction.  As we neared the highway ramp, our grandson pointed out the window and exclaimed, “Look, the Capitol!”  He then went on to lecture me on my excess transportation by blurting out, “Papa don’t drive in a circle!”

 

In this case, the transportation waste was so visible that even a 4-year old could see it and counsel me not to repeat the non-value added activity.

 

As a Lean Sigma Practitioner (LSP) dedicated to continuous improvement, you have to learn how to see waste.  Once you have seen the waste, you must be willing to raise and discuss the issue.  An organization will not achieve the next level of performance unless everyone communicates his or her thoughts.  In many respects, LSPs must take some of their behavioral cues from an inquisitive 4-year old.  LSPs should question everything and express any concerns over what they observe.

 

Most waste is visible and correctable, assuming we train ourselves to see it and not accept the non-value added activity as the norm. Just because the task has been accomplished by following a particular process for years doesn’t make it the right process for today’s environment.

 

 

Post Author: Royce Williard

Copyright 2009, The Williard Group

When are you done with Continuous Improvement?

 

Recently an individual who just witnessed several lean sigma project reviews asked, “When are you done with continuous improvement”?  The discussion that followed is worth summarizing to reinforce the idea that continuous improvement is just that, continuous.

 

My initial response was that not only must a company change; it must change faster than its competition.  Most everyone would all agree that companies are competitive and all want to be number one in their field.  Assuming that as a fact, the non-field leading companies are striving to improve to over-take the leaders.  Should the up and coming companies change and improve faster than the leaders, they will eventually over-take them. Without change, even companies that are number one in their field will eventually be surpassed. 

 

One person in the discussion likened this to a scene in the 1990 movie “Days of Thunder”, starring Tom Cruise and Robert Duvall.  The individual described one scene in which the pit crew chief (Duvall) was talking via radio to the racecar driver (Cruise).  The pit crew chief was complaining to the driver that he was going too fast and abusing the equipment.  The driver responded that he had not sped up, but everyone else had slowed down. By simply going a little faster than the competition, he finally passed all of those in front of him to become number one; winning the race.

 

Continuous improvement is a marathon and this marathon has no end, simply minor course adjustments as you continue in the race. 

 

We are in a changing and challenging time.  Many companies will be tempted to retrench and cut expenses by blindly cutting costs including eliminating their continuous improvement activities.  This is not the time to be timid, this is the time to aggressively attack waste by pursuing continuous improvement.  Less non-value added waste equals more profit.

 

For a company to be successful, they must have a strong culture that promotes continuous improvement.  They must strive to be better than they were six months ago while realizing that they are not as good as they will be six months from now.

 

I’ll close this post as I closed the discussion, with one of my favorite business quotes. “When the pace of change outside the organization is greater than the pace of change inside the organization, the end is near.”   John R. Walker

 

 

Post Author: Royce Williard

Copyright 2009, The Williard Group

A Case For Lean In Sony’s Front Office & Fulfillment Operation

Recently, I had a Sony Bravia LCD digital color TV fail a short period of time after the manufacturer’s warranty had expired.  The failure was catastrophic in that the repair would cost over 50% of the original purchase price. I called Sony to express my dissatisfaction with the now discontinued unit and Sony agreed to replace the unit with a new model for a deeply discounted price.  Had the replacement gone smoothly, that would have been the end of the story. Unfortunately, what transpired over the replacement transaction serves to highlight a lean continuous improvement opportunity in Sony’s front office and fulfillment operation.

 

In order to verify the authenticity of my claim, the Sony representative asked that I remove and submit the serial number label from the defective unit.  Information retrieved from www.usps.com on February 14, 2009 at 9:12 AM MST indicates that my package arrived and was signed for by a Sony employee at their Fort Myers, Florida location on February 4 at 11:00 AM EST.   Now the frustration begins.

 

According to a Sony call center agent, the replacement order was not placed into their system until approximately 11:30 AM EST on February 10, 2009.   Assuming a generous 30 minutes for order placement, the order request sat incurring the lean waste of “waiting” for 4 business days!  While waiting for input into the Sony systems, the letters may pile up and occupy unnecessary space.  The letters are also at risk of being lost or being input out of their arrival sequence.

 

After being entered into their system, the order waited again until February 12, 2009 before actually being shipped.  The order had now waited another 2 plus business days prior to shipping. 

 

The entire process from receipt of the information until the replacement unit was shipped was over 6 business days! By my estimate, the only value added activities during this time were receiving the information, entering the order, and the pick/pack/ship of the replacement unit. Assuming 1 hour for the value added activity and 8 hours per business day, the value added activity comprises 2% of the cycle time.  The other 98% is viewed as waste!

 

Applying various lean tools would help identify the root cause, eliminate the waste, and install management systems to have the changes become engrained in their culture.  Consider the following ……

 

• Included in Morning Market is a review of the previous day’s performance.  With the proper customer centric measures, the cycle time would be visible to the leadership.
• Value Stream Mapping would provide a visual representation of the process including queue time.
• A 5 Whys exercise would enable the organization to identify a root cause of the problem. 
• A kaizen would provide for identification of an improved process.
• Standard work would document the new and improved process.
• Gemba walks would enable leadership to reinforce the new process and adherence to standards by visiting the workplace on a regular basis.

 

Does every case at Sony take this long? I don’t know, that is for Sony leadership to determine. The purpose of this post is simply to provide a real world example of waste and how lean can be used for continuous improvement purposes in non-manufacturing processes. 

 

In these turbulent economic times, companies must maintain a high level of customer service. Compressing cycle times on orders is just one of the ways to improve customer service. Satisfied customers are repeat customers. 

 

Should someone from Sony view this post and want to verify the detail presented, they can refer to case number E39586838.

 

 

Post Author: Royce Williard

Copyright 2009, The Williard Group

Go To Gemba!

In the past few posts I have discussed several continuous improvement methodologies. However, it is human nature to return to the original, less productive process unless the new behavior is reinforced and becomes engrained in their business culture. One management system that is required to maintain the improvements that you have worked so diligently to implement is a gemba walk. 

 

Gemba is a Japanese term that means loosely, where the work is taking place. I was once told by my Sensei that the Japanese police refer to the scene of the crime as gemba.  A gemba walk is a management technique that has the leader walk a prescribed pattern that follows the flow through their area of responsibility.  It requires the leader to actually go where the work is accomplished to see and understand first hand the current state of their business.

 

The gemba route should be documented with a map on a standard work document including a listing of the items within each area that are checked.  Documenting the gemba walk is a critical component that is often over looked.  Documentation ensures consistency and allows for a transfer of knowledge when the responsible leader is not available to complete their routine. In the ideal situation the gemba walk will occur at the same time(s) every day. 

 

As the leader walks the prescribed route, they look for and make note of safety issues, compliance with standards, and disruptions to flow.  In addition, the leader should use the gemba walk as an opportunity to reinforce to the staff what is important to the business. When the leader notes an issue, they should ask questions to the staff, which, in turn helps them, discover for themselves why the issue needs to be addressed.

 

How often should a leader perform their gemba walk?  The answer is simple and varies by situation. It could be once a day, it could be twice a day, and it could be more. Leaders need to complete their gemba walk as often as is necessary to understand the current state of their business.

 

A gemba walk is the formalized equivalent of MBWA  (Management By Walking Around).  Many leaders walk the workplace daily as a matter of practice. A gemba walk simply formalizes and documents their daily walk.  It is irrelevant if you call the gemba walk by the Japanese term or some term you have created locally. The important issue is that the practice is formalized, documented, and occurs at the prescribed frequency.

 

Post Author: Royce Williard

Copyright 2009, The Williard Group