In almost every project you perform in both lean and six sigma teams will bring a long list of experience, talent and solutions to the project table. But often times it can feel overwhelming when trying to decide which of the solutions to move forward on, especially if you have limited time for implementation. So how do we complete this important project task without losing all of our hair?
What is the tool used for?
The cause and effect matrix, C&E matrix or XY diagram is a great tool that can do the job quite effectively. The XY matrix takes a list of possible X's and narrows them down into a more manageable amount of inputs. Similar to the way a PPI measurement works in selecting projects the C&E/XY matrix helps us to prioritize solutions for implementation.
How do we use the tool?
First and foremost let's recall our formula that we use in six sigma projects, Y=F(X). We will use this same formula in our C&E/XY matrix. The Y's or the red cells represent process outputs and the cells above our Y's which are yellow represent our customer's voice or the level of importance the outputs are to the customer. Next we have the grey cells which shows us our input variables or our X's. The X's are what input variables you will use in your attempt to accomplish the Y or customer desire. Finally we have our blue cells which tell us the level of impact or correlation each input has on the output. So let's define a process for using the C&E and walk through an example.
1. The first thing we want to do is define the the process outputs. This is simply the end result or customer desire that we are trying to achieve. Let's say we are listing some important outputs for a hamburger we are making.
will score each of the outputs on a scale of 10 to 1. 10 being the most important and 1 being the least important. For best practice your most important Y will be your only 10, however your other Y's can and may score the same.
Inputs could be anything from initiatives to projects or other activities you will use in order to achieve the outputs. There are many different ways that you can gather suggestions for improvements like brainstorming and gemba walking. Any way is acceptable just be sure to place those inputs in the grey boxes.
5. When this data is in the cells you see a total number and percentage number automatically populate. We first want to look at the total column. In the case of our hamburgers our priority would be first creating a standard for making the burgers, then adding a special sauce to our burgers. The way we read is by looking for the highest number and placing our options in descending order going down.
Although our hamburger example was only in theory the XY/C&E matrix will be a very valuable tool for your team to use when you have multiple solutions in mind. As always using any data that may exist is the best way to get the most accurate results, however if there is no type of data qualitative information will be very helpful. Just remember that if you use the matrix based on qualitative data that the best thing you can do to get accurate results is make the team cross-functional.
How a human being can obtain so much knowledge is a miracle in itself. Our brains are quite compact in comparison to the amount of knowledge they can obtain. With literally hundreds and sometimes thousands of activities we need to take in, I've always found it fascinating that every time a memory is made our brain forms a new connection, building a set of historical events, or hard drive if you will, encompassed within our skulls. Interesting enough but Neuroscientists theorise that these new "connections" only happened in our long term memory, however short term memory is built mainly on patterns of neuron activity which take place in the prefrontal cortex (Interested in a reference?). Moving and shifting memories, creating new connections and 5Sing our minds system are a few of the ways that we can gather so much information and retain what is important.
Similar to our minds a kaizen event gathers multiple pieces of information from mapping, to issues and times, while at the same time brings people of different backgrounds, personalities and behaviors together in hopes that they will accomplish a common goal. As you may have guessed sharing every bit of a blitz might be hard to do, fortunately we have the A3 report. We have wrote about A3's before but today's focus will be focused on how the A3 format influences our thinking.
Individual unique "memories"
Although it may not seem like it the way we solve problems is directly related to the examples we saw in our developmental years. The A3 report that we hear of so often works in the same fashion. Because the name A3 is only in reference to the 11 by 17 size of paper we have complete freedom to attach any format we would like to that A3. For instance Toyota and many other lean practitioners format their A3's using PDCA while a six sigma specialist might format their A3 with the DMAIC methodology. Whichever methodology you choose to populate your A3 report is not really as important as how the use of that methodology will stick with the user. Because the A3 report helps to jog our "short term" memory initially it must be used regularly in order to create new "connectors" in our mind. This is done through repetition or continued use of the tool. Given that important fact we are at an advantage when we create A3 "memories" that we do not have when we create brain memories. The advantage is, we can control the memory being created. If we want employees to think in a plan, do check act pattern we give them a PDCA A3 and multiple experiences to learn, grow and create connectors. If we want employees to think in a define, measure, analyze, improve and control manner, we give employees DMAIC A3's and lot's of opportunities to use them. This powerful influence can also be targeted to develop very specific skills through continued "kata" or repeated patterns for the purpose of learning.
Communication in our mind works in a few different ways. One way the mind communicates is in an inward manner receiving information that comes in and storing it in our "database." The other way the mind works is in an outward fashion, using signals to trigger or start the process of actions we wish to do. After some time we learn to control what triggers are sent and filter out some information we receive.
An A3 report influences our thinking in a similar fashion, teaching us over time how to structure the report and what to share. After multiple experiences we create new connections in our mind which allow us to develop a new connector that is instantly triggered when we come across an opportunity or an issue to use that connector. Obviously the more you see, hear and do, the stronger that trigger becomes. This tells us that to develop a "problem solving people" we must strengthen their connectors. The A3 format helps us to develop a structured method by which we take in information and how we communicate that same information, which then strengthens our connectors associated with the information on the A3 report.
When we learn something new we change the physical structure of our brain, organizing and reorganizing different experiences. It sometimes takes longer for others to learn not because they don't want to, but because that part of the brain might not be ready to learn quite yet. If we want to speed learning up in any aspect of our lives we must find ways to shift information in our brain quicker. Some do this through increased reading, activity, visual means or auditory experiences. Whatever the style of learning, the more you do the quicker the mind can shift. Knowing this helps us to connect that if we want people to think in a problem solving method we must allow them to prepare, be involved and perform activities. Then we can confirm to what level they have retained learning. Users of the A3 report must do all of these activities. First preparing the report then being involved in the activities that develop the report and at some time performing the information the A3 contains, which eventually leads to A3 thinking for all types of learning styles (visual, auditory, reading/writing, Kinesthetic).
It's no real secret that the A3 problem solving method is a powerful tool, but making the connection with how that tool creates problem solving minds is often a "grey" topic. The tool itself will not transform one's mind, but just as we see in schools different vehicles of learning help us to prepare for later use of that knowledge when the appropriate time comes along. The more often these times present themselves the stronger our connector or connection becomes with the knowledge associated. So, when is the last time you, or somebody you know engaged their A3 connectors? If you would like you can download an A3 template by clicking on the button below and start today!
Like a contract between you and a car salesmen the project charter acts as an informal contract between the organization and the team, department or group of individuals who will be executing the improvement initiative. Project Charters are used in Lean, Six Sigma and many other Project Management Initiatives to provide guidance and direction for what you have been tasked to do.
What is a project charter?
Let's start by first defining what a project charter actually is. The project charter is one of the first essential steps in many different types of projects. Like we mentioned earlier the charter acts as an informal contract between the organization and the team. It sets a clear outlook on what the team's objective is and how their success factors will be measured.
We have included a business case sample format in the charter template for you to use when you download it. The next piece of information that a charter includes is a problem statement. The problem statement gives a more detailed look at the issues or the symptoms that are a result of the problem the team will be focusing on. A good problem statement will answer what is wrong, where it is occurring, how big the magnitude of the problem or opportunity is and explain why the opportunity or problem is so important.
After the problem statement the charter will typically define the goal. In summary this is a statement that describes the anticipated results of the project. The goal statement is usually connected to predefined measurements. The measurements are referred to as key performance indicators. These measurements should define the baseline or the current state so that the team knows where they are starting from. The team will also define where they think they can get to or the future state measurements. These measurements must be agreed upon. The final set of KPI's that will be collected and added to the charter afterwards are the actuals. The actuals will help establish measurements for tracking and continued improvement.
Like a contract would do we also outline the project scope. A simple way to understand the project scope is to think of your scope as boundaries for the project. They help the team understand what is acceptable and what is not. This is very important so that the Organization get's the results they want and the team is empowered enough to be able to get results.
There are two more critical aspects of a project charter that should be defined. The first is your team structure. This one is pretty self explanatory just be sure to outline each member of the team all the way up to the sponsor. The last piece of our project charter puzzle is the schedule or inch, foot or mile stones. These are critical parts of your project that show your start date, estimated completion and the total number of days for each one. Remember the charter is an informal contract between the organization and the team so whatever schedule you put on their is what the team will go by.
It's not always easy to get buy in on a project or a strategy. Fortunately many have blazed the dusty road of pitching ideas and many have succeeded. But, how did they do it?
Obtaining buy in is one of the most overlooked elements of both lean and six sigma. Especially if you are on the front lines and see the issues first hand. That frontline connection with what is going on often makes the ideas you have, something that you're passionate about. Well the solution is simple, make others passionate about that same thing too and you will obtain buy in. Okay, not so simple. But let's look at a few important elements that will help show others just what, why, how, when and where we gained this passion for a specific improvement or strategic initiative. These tips will help you gain buy in on both strategic and tactical level initiatives.
The first step towards gaining buy in is to share what it is you want to do. Believe it or not most great ideas fail at this first step. Either the improvement never gets brought up or for other reasons it gets turned down and that's the end. Before identifying what it is you want to do, understand first the direction the organization is headed. This may require you to become more familiar with either the organization or the leader's vision and mission in order to ensure that what you want to do is aligned with the direction of the organization. Another good idea when seeking buy in is to speak with others about what it is you would like to do, this gives you an opportunity to gather support and in many cases hear what others think about your pitch. Speaking with others may also give you insight pertaining to other attempts at similar projects and challenges. Historical evidence and support can give a much firmer grasp on your business case and will pay off big time when the opportunity arises for you to present your business case.
After defining what it is you want to do, be sure to keep your ears open. Sometimes after you express what you want to do others will agree and anymore explaining may frustrate or talk yourself out of the initiative. Most of the time you will need to back your business case with why you are making the suggestion. This can come from any number of evidences. The first one might be to show the current performance of what it is you are trying to improve. Highlight critical issues and try to show others why it is the issues are causing so much pain. After showing the current state performance, assessment or analysis providing a benchmark helps your audience to understand not just why you're suggesting the improvement but it helps clarify why you feel the improvement will be a success. By gathering benchmarks you can show others success and help them understand what is possible. Just be sure the benchmarks that you share are somewhat similar or that you have a very clear model of "how" you will make your why connect. The last very important thing to share with executives or managers is the ROI. Typically the ROI is the why most people are interested. For instance, "If we invest 40 hours of resource time, we can generate $200,000 dollars in savings." That statement provides a very definitive answer to why we should move forward and segways perfectly into our next topic for gaining buy in. How.
The how connects all of the dots for you. It brings context and reality to your benchmarks, interviews and every other piece of your business case. The how should lay out a very clear plan for how you will correct, improve or fix what it is you are suggesting and document how you will accomplish results related to your benchmarks and or ROI. Be sure that those you are suggesting your initiative to understand that training alone will not be enough for success. There must be buy in and continued action after training is complete. A change in culture and behavior is often the hardest how to explain, but it is a necessary explanation if you hope to gain support.
One common method of laying out the how is to first suggest or offer a "pilot project." The pilot project if a success will give executives a taste of how the how can be successful. It is a good idea to also lay out a 1 year plan that shows 2 years of results. Your one year plan can include projects, training and any other activities that might be needed to reach your objective. At each step of your plan no matter what the timeline you need to show how the plan will result in a return and accomplish the "what" that you first suggested. This makes it very easy for others to understand, they can connect the dots and see clearly how each piece forms a complete concept or initiative.
As part of your explanation of how you plan to accomplish results, you will also need to give a timeline of when you plan to execute the necessary activities. This allows the organization to plan for resources and funds that may be needed to support your initiative.
When we talk about where, we are not talking about where the projects will be conducted or where the strategy will take place. Although that may be helpful for large organizations. The where that we are talking about is where it will affect the company's bottom line. For example if a black belt completes three projects per year, where will those savings be applicable? The important thing here is to not just show where savings are applicable, but also where investments such as training, software, travel, supplies and other investments are applicable too. This gives executives or sponsors a clear understanding of what they need to put in and what they will get in return, allowing them to make a more educated decision. It is common knowledge that when all facts are laid out if buy in is accomplished you will have a much deeper level of support than if everything was not laid out.
Coordinating and connecting all these pieces of information will help you to gain buy in on suggestions and ideas. Most of the time connecting all the pieces to your proposal and making it easy to understand will get the job done. Although being able to tell a good story and supporting your story with real facts may have you leaving the room thinking, "did he just say, okay?"
With the Olympics ending just a short time ago there has been a lot of talk about Michael Phelps and his absolutely stunning performance at the Olympics. What a great swimmer Mr. Phelps is. One of the toughest challenges of being amongst the elite in sports like track, swimming and many other racing sports is just staying in your lane. But those lanes are put there to help guide athletes and allow them to perform at their very best.
As you can tell on the left hand side are the departments or process owners of the steps in their swimlanes. We then see from left to right each of the process steps laid out in the appropriate order. There are a few differences between a "process map" and a value stream map that you will want to be sure to include but in general you will follow a SIPOC format showing suppliers, inputs, process steps, outputs and customers.
Differences in process map and VSM
1. The first key difference that you will see is in the connecting lines. These lines are meant to show the information flow that you would capture in a vsm. In our example a simple textbox is added to the connectors in order to identify the information that travels along the connector.
2. Next we notice that the shapes are not the typical format of a process map. The main reason for this is because we want to include the appropriate metrics for our project. Metrics can be time based, money based or anything else that might align with the objective you are trying to achieve. Along with metrics we need to show inputs of the process and outputs of the process, those can be identified in a traditional manner breaking your sipoc into columns or showing the inputs and outputs of each process step like our example shows above.
3. It is necessary for us to identify va, nva and bva when constructing a value stream map. There are multiple ways of doing this, but our example shows red, green and orange dots to signify va, nva and bva.
Adding these three elements will help you collect metrics that you need to focus on and tell us what is va, nva and bva while still connecting the information flow of the value stream.
What to look for?
In process mapping we look for many different things such as rework loops, crossover in lanes and points that may not be needed. When we look at a value stream map using metrics and swimlanes we look for similar elements such as crossover, repetition, large gaps in metrics or excessive issues, non value and business value and any steps that may be stacked could identify a trouble area in the process. One other thing that we commonly look for is inputs that produce no output. There can on occasion be circumstances where this may happen but generally if something is going into a step something should come out too or it may fall into the category of wasteful activities.
Steps to build
1. Identify the starting point and stopping point of the your map.
2. Identify process owners, departments or individuals.
3. Establish appropriate metrics that are aligned with objectives. Examples might be if you want to reduce time collecting time based metrics.
4. Begin mapping the value stream including inputs and outputs. *Note - Suppliers and customers are identified by looking upstream or downstream.
5. Connect value stream steps with information flow.
6. Identify va, nva and bva.
7. Analyze looking for improvement opportunities
8. Create future state.
Though this type of SIPOC format may seem a bit foreign it actually is quite effective in mapping processes that are cross functional such as an order to cash request or any other process that maps the activities of multiple departments. Though the map itself may not win you gold medals in the Olympics it will certainly identify who's swimming in what lane and where resistance may be occurring.
What decision would you make if your manufacturing plant could make a product for $40.00 but the same product could be made for $15.00 in another country? Would you outsource the product or would you make it?
This is a situation that almost all supply chain professionals professionals face every single day. Depending on where you are at in the world the economy may have drastically underpaid workers, material costs could be inflated or maybe technology just doesn't meet the needs. We all face different problems within the supply chain but the issue of outsourcing or not outsourcing can only be made accurately with one measurement. Total cost of ownership.
I recently had the opportunity to attend a manufacturing summit organized by the Coalition for a Prosperous America. Many manufacturing, pharmaceutical, consulting and government organizations came together to network and brainstorm the seemingly declining state of manufacturing in California. Although I won't outline the entire conference I would like to touch on two topics that were brought up.
Total Cost of Ownership
The total cost of ownership is defined by Apics as; the total cost of ownership of the supply delivery system is the total costs associated with every activity of the supply stream. The key word in this definition is "every." Often times when a decision to outsource is made it is based on the material and labor "piece price" used in quoting and proposals. However this piece price fails to account for, logistics, possible storage, travel fees, additional packaging and any other costs you might receive as a result of outsourcing activities. Let's create an example to help us understand. If a company were making a screw they would most likely quote the material, labor associated with making the screw and any processing fees that may be associated. Let's say that total adds up to $33.00. Now, supposing you receive a quote from a supplier with a piece price of $12.00. Well that sounds like a good price $21.00 off for me and my customer to split. Sounds like a pretty sweet deal right? Well not exactly. The piece price and the total cost of ownership are two very different pricing points. When a piece price is used as the basis for a subcontract opportunity we miss out on quite a few "hidden costs" and we factor in the variability of an organization's "shop rate."
Here is one thing that you can do when making the decision to subcontract or to manufacture.
1. Map the value stream out at a high level for manufactured products or services and for subcontracted products or services.
2. After mapping the value stream out review value - added items and business necessary items such as first articles, set-up and any other charges that may be necessary to the products compliance. Be aware that business necessary items are non-value and many will not pay for these items entirely.
3. Compare the two charges in order to make your decision based on the entire value stream not just the unit price.
Suggestion - After you have made the value stream visible, standardize a template that can be repeated for other similar items or activities, allowing you to analyze the total cost of ownership with minimal modifications.
Once you begin to see quotes and proposals as a value stream and not a unit or piece price then you can truly factor in everything that should be. This type of approach allows you to really see which is the better approach; make or buy.
At one point in the conference one attendee asked what I thought to be a very important question but do to time constraints I was not able to address the topic. I'd like to do so here. The question as accurately as I can recall was: "We've been talking a lot about trade and total cost of ownership, do you think that we should focus more on automation opportunities instead of labor opportunities?"
1. Before considering any level of automation to a process a cost to benefit analysis should be performed in order to see what level of automation fits your needs. As a side note the highest level of automation (level 5) is not always the best option.
2. Before even considering a cost to benefit analysis remove every form of waste possible from the process. Dare I say but this is often the one that is most overlooked of the two. With technology at such an advanced state we have a tendency to buy a much higher level than we really need. But the first step before pouring heavy investments into expensive high maintenance machines is to remove all forms of waste and variation prior to purchase. Taking an intricate view of our organizations various value streams often reveals that we have opportunities to improve changeovers, reduce setups and streamline processes which requires much less investment than automation. Then and only after removing all possible forms of waste should we consider automation. The other important data you can gather from reviewing the value stream is how safe the process is for employees. Of course it goes without saying but if a process is necessary to produce the required product or service and proves to not be safe for an employee to perform automation is something you should consider.
In closing both concepts elude to the fact that by applying lean principles in our organizations we often times can not only create a more efficient, effective and resourceful organization but we can make decisions based on real data and information. Of course establishing a strong supply chain is a given as it will assist your organization in getting what you need, when you need it without concern. However we should also consider ways to maintain a level of manufacturing that is healthy for our organizations based on true analysis which often results in reduced logistics costs, better control of product and services and often cuts down on many other forms of waste.
Ever since the dawn of time man seeks to make woman happy and keep cave in 5S condition. Bows nice and tidy, dirt floor swept and sanitary with a place in the tunnel to scratch each internal audit. The benefits are almost immediate and the system seems to have a way of energizing the other "tribes." But even with success that dates back to prehistoric times why is it that 5S seems to have become the "beginners" project?
Truth is, there is an art to 5S that often goes unnoticed. Maybe it's the assumption of spring cleaning, possibly the intense effort it sometimes takes or maybe it's just how simple the system is but behind all the smoke and mirrors 5S brings together a set of proven techniques that when combined dramatically transform anything they are applied to.
Let's take for example sorting. Separate what is needed from what is not needed. right? Wrong! It's actually more like separate what is needed from what is not needed taking into consideration critical needs and establishing a priority system based on the items frequency of use all while gently guiding the oh so needed torn apart and rusting to pieces tool box into the garbage bin. If you weren't skilled before the project started you will certainly discover your strengths and learn to acknowledge your weaknesses in the sorting phase.
Now the junk is gone and there are a few piles of important items laying in groups according to how often they will be used. Fantastic! But alas it's only the beginning. Now we must set all items back in a designated space and then begin shining. Wrong again! Actually we would all love to think that setting things in order only requires a few core activities, but in hindsight setting things in order often times means laying out a "plate of spaghetti" and reviewing the flow of the shop floor. Then gathering labels and various sensory indicators to create a place for everything. After you have finished laying out a calculated flow for the newly sorted shop floor and gathering the necessary supplies now it's time to create the flow you laid out and clearly identify a place for everything ensuring that everything gets put in its place. Tools like shadow boards are assembled, wheels, axes and spears (see picture above) are placed in easy to reach positions and everything is placed in a carefully planned out order. The mere fact that teams coordinate these activities and make decisions based on consensus provides participants with an opportunity to become a team. One other very interesting fact related to setting items in order is that although it certainly will tidy an area up, the actual purpose of this activity is to remove any forms of waste (muda) from the area. This is one reason why we look to establish flow and place items in carefully marked boards or areas. The core principle with all the tape and shadow boards is not in fact to make the "cave" look pretty but rather to enhance the degree by which an abnormality can be identified. Here is an example, if I were to trace wrenches with a black sharpie I certainly would know where the item goes and upon further need for an item would be able to discover the abnormal condition if the tool was not their. Now if I were to cut a hole in foam in the shape of the wrench and line the bottom of that cut out with "cavewoman's" favorite color let's say bright pink, we may not even have to look to notice the tool missing. Aside from identifying abnormalities setting things in order reduce wait time (looking around), transportation (going and getting what you need), and many other forms of muda. While these experiences may sound familiar to those of you who have performed a 5S before, the system often get's set aside after our next step, shining.
game. The purpose of shining is actually much deeper rooted than just seeing your face in every item around the office or shop. The actual intention of shining is a few different things:
1. Ensure the work area is safe and sanitary.
2. Establish cleaning as a form of "inspection" and support of TPM.
3. Jumpstart the initial mindset of daily maintenance and improvement.
After the shining is complete we then move on to in my own personal opinion the bread and butter of 5S, standardizing. This is often mistaken or confused with the activities that took place in the set-in-order portion of 5S. When we standardize activities we link sustainment with the first 3S's. Think of it like you are closing the loop. Whatever is done in this stage will determine the degree of sustainment you and your team obtain. However the policies and procedures must be systematic in nature. They must be checked maintained and kept alive in order for them to work. One very common practice is to assign a "5S manager." This is not a bad practice in the early stages of 5S development, but the goal should be to have "everyone" be "5S managers."
Sustaining 5S is commonly noted as the hardest part of a 5S initiative. But really when you think about keeping a room in tip top condition it sounds easy. Maintaining 5S has more to do with what we do everyday that maintains the new condition. Because this often involves other people and culture or behavioral changes, 5S oftentimes fails to meet the condition we left the gemba in after shining. I recently experimented with a new concept at a local machine shop where we assigned accountability partners within the department structure. Using the same principles as any other accountability partners each person had a silent best friend who held one another accountable for their areas condition. The idea was to create an environment where every individual did their part ultimately resulting in everyone doing their part. The concept caught on rather quickly and turned out to be a big success. In order to avoid partners "keeping secrets" the teams still met each morning in huddle and reflected at the end of the day in hansei.
There can be no denying that a positive 5S experience often sends participants catapulting into a Lean mindset. The system provides benefits for the organization and upon completion excites team members. That momentum if used correctly often grabs many non-believers and turbo charges their lean conversion providing tangible results for everyone to see and feel. No matter what level of "lean" or skill set we are performing 5S can really hone, remind or strengthen individuals. If you train 100% of your employees in the 5S system and require each one to perform an initiative of their own, guaranteed you will see a return on the investment. In closing let's not discount the 5S system its benefits are quite powerful and often the results compound with each go around of 5S.
When I was a young boy I walked in once on my father drawing on a notepad. Focused on what he was drawing and his then knife whittled pencil I asked my father "what are you doing dad?" His response at the time seemed ingenious to me. He shared "I'm finishing this design for a project." Just as curious as ever I asked, "can I see?" Of course my father said, "sure!" Upon further review he had designed a system full of clamps, materials and the necessary tooling associated to produce a product of high quality at twice the speed. Later I recall going to my father's shop as he pieced together the kit for testing. I learned that my father's design was such that a worker could simply grab the organized kit, clamps and everything, load the tooling and they were off and running. Essentially he had improved the setup and changeover. His brilliant design eliminated waste and inefficiencies and provided a repeatable system that still operates today. Those young years would leave a profound impact on me.
Similar to the story of my father and I, recently I had the wonderful opportunity to attend a STEM (science, technology, engineering, math) award ceremony. Children from all over were given recognition for their outstanding project efforts. Many of those projects will go on to creating life changing experiences for these young accomplished children. From kindergarten to seventh grade I watched as the future leaders, designers and developers of our world received praise. Astounded at the seemingly spiritual experience I was having I could not help but think what a bright future this world has in store.
Despite the frequent political posts and state of economies around the world we in whatever capacity we stand have a fantastic opportunity right before us today. Whether that opportunity is with a curious child or an award winning stem research candidate. Everyday we have the opportunity to influence others to in some way influence the world. Given that thought who have we influenced today? What did we influence? How did we do it? A lot of questions to answer, but here is a thought. With organizations like Apics, STEM, SME and AME and a wealth of other influential networking opportunities we can share a little of what we know today in support of a better brighter tomorrow. Take Lean manufacturing for example. What once started as one strategy in a focused industry has now spread across multiple industries in the world because someone somewhere decided to share what they knew with someone else.
Let's imagine for just a second that Yokoten was applied on the world creating communication, learning and continuous improvement in margins that might not even be measurable because they are so large. That may be a brief glimpse into a beautiful future. We have this opportunity right before us to take what we know and empower another. Call it yokoten, sharing or just being good natured human. Whatever you call it those opportunities result in actions which inevitably result in a better brighter future for all of tomorrow. Sound to big to accomplish. It's not it starts with one person at a time, each individual. The underlying message here is that by developing others we can develop and shape a world of individuals who receive awards and in hindsight if those same people go to work with that same sharing principle, well then we have just set a new and improved standard. Starting first with Kaizen and resulting in Kaikaku.
Quality is absolutely one of the most important aspects of an organization. Quality can be the difference between award winning excellence and complete disaster. In 1986 The space shuttle challenger launched for its mission. Just barely over a minute into lift off the challenger blew apart. Why? One of the O-ring seals on the shuttle broke down. Speculation had it that a supplier had failed to meet requirements and the issues were never addressed ultimately contributing to the disaster that took those astronauts lives. Now I'm sure you understand the lives of human beings is a big cost of poor quality that rarely happens but it certainly sets a tone for how important quality is. Phillip Crosby said it best when he said “quality is free, it’s not a gift, but it’s free.” He went on to say, “what costs money are the unquality things.”
One might assume that the term cost of poor quality defines itself, but it often times is misunderstood. We can officially define this term by saying the cost of poor quality are the costs associated with providing poor quality products and or services at any point of the products life cycle. Now the level of cost can vary from pennies to the lives we just spoke about earlier.
What is the purpose of tracking the cost of poor quality?
Understanding the cost of poor quality helps make the costs real and shows us the extent to which poor quality is affecting our organization. By understanding and monitoring the costs of poor quality we are also better able to see how are resources are spent in our efforts to improve quality and mitigate the costs related to poor quality.
There are four main areas that we monitor with regards to COPQ. Those areas are:
1.Internal failure costs
2.External failure costs
3. Appraisal costs
4. Prevention costs.
Internal failure costs are the costs associated with errors, re-work and any other sort of defect that are found before the customer receives the product or the service.
External costs are those costs that are often found by a customer. The worst kind as you can imagine. These costs are associated with poor service or product after it has left the organization.
Appraisal costs are the costs that you incur in order to diagnose or determine the effects of defects, errors, rework or a lack of conformance to some quality requirement.
Prevention costs are the costs associated with any activities that you may pursue in order to keep appraisal costs to a minimum expense.
Before we wrap this up this introduction on the cost of poor quality we need to remind ourselves that like any other system you use COPQ measurements should be monitored and measured frequently. They need to stay alive. By having an effective in place for monitoring, measuring and improving COPQ a company can rest easy at night knowing that the resources, capital and investments associated with quality are in fact saving lives and that is good enough reason for anyone.
A while back we posted an article entitled Lean-in on Sales and Marketing. The article received quite the response via email and proved the notion that as powerful of a strategy lean is, it still is somewhat misunderstood in sales and marketing. The basic idea at hand with almost anything that we do in life or work is that if we do something and it works, we should at least try to apply it to other aspects of our life in hopes of obtaining the same results. The same concept applies with lean in sales and marketing. Lean principles are applied in operational environments, quality environments and accounting environments with great success and they can be applied with the same level of success in sales and marketing too. In this week's edition of Listen to the Gemba we will outline the ©SALES methodology that we use to help others with the application of lean to increase sales, improve marketing and free up sales and marketing resources to focus on what they need to; building relationships and closing sales.
Standardize activities - While we outlined this concept in our earlier post Lean-in on Sales and Marketing, the concept of setting standards still rings true today. There are activities that simply must happen when it comes to sales and marketing: nurturing relationships, follow up, generating quotes and letting people know you're still alive. Many of these activities can be attached to standard functions or activities that take place on a regular basis. When we use successful process benchmarks to document what should be happening we can easily see what is not happening which inevitably prompts an informative exception guiding and driving targeted actions that we don't necessarily have to search, think or worry about.
Automate activities - In today's day and age technology provides a powerful assistance for our workers. Many activities in marketing don't require manual clicking or hours and hours of labor to be put into the workflow. You can use email automation to assign specific market segments to a workflow that nurtures the relationship as they travel through the sales funnel. Workflows can also be as advanced or simple as you want sending simple content communication or tracking who opens, clicks and views and who does not. They also can be designed so that when a prospect has a question the customer service team knows it and can answer that question according to the customers needs.
Level activities - Let's suppose you get an order in hand, how do you ensure you can follow through on your commitments and make sure nothing goes astray. Having a S&OP process in place can help organizations align supply with demand. The basic premise of sales and operations planning is to ensure that your supplies can match the demand being placed on the organization with the supply of resources, materials or services you have or adjust accordingly to meet the needs.
Eliminate - Just like any other process flow eliminating muda or non - value added activities can provide opportunities for sales and marketing employees to focus on transforming leads into sales. Mapping the value streams current states will make visual all activities that take place and could reveal possible variations in the process that lead to lost sales or conversion of prospects and leads. Aside from reviewing what is actually happening designing a focused future state can actually help clarify the process to your team which better enables them to guide or pivot the funnel.
Sale - Last but not least sale! If you can successfully implement all the activities listed above your marketing and sales team will have much more time on their hands to build relationships and nurture them. This extra time allows sales and marketing to work on building long term and lasting relationships that create a win - win situation for both the customer and the supplier.
Although it is often one of the last areas that we look at in our lean journey, lean applied to sales and marketing can in fact be one of the most beneficial elements of a lean journey. Having target objectives and a vision of where you want the process to go can assist in influencing the effectiveness of the funnel.