In other articles, I have talked about the whole process of implementing lean in finance. The fundamentals of the continuous improvement cycle apply in any lean implementation. Lean QCD have undertaken a recent improvement project to use lean techniques to improve the Finance, Sales Order Processing and Purchasing systems of a MBO manufacturing company in the West Midlands.

Case Study – Background

- Management buy out Sept 2010 with rapid expansion plans
- Sales deflated – operating at 20% of equipment capacity
- Management already bought into lean philosophy
- Manual systems and processes
- State of the art manufacturing equipment
- Poor Finance, Sales Order and Purchase processes

Stage 1 – Stabilise

The stabilisation phase is about removing the big waste. This is defined as the ability to produce consistent results over time.

In the context of this case study it was also defined as protecting the business by conserving cash and giving management a basic level of information in order to make considered decisions.

Steps to achieve stability

1. Map the current processes
2. Map the future state processes
3. Identify big waste
4. Take action to remove big waste

What did this mean for the Finance area of the business ?

Get the basics right first

• Ensure that bank transactions are recorded on at least a weekly basis, rather than waiting for the period end – this then provided a basis for the essential need to always know the true cash position
• Ensure that sales were recorded in the correct period – i.e. when did the goods leave the company and therefore when will we get paid for them. Unsurprisingly goods would be invoiced in the last days of each period without being delivered and without a hope of being paid on time – the company was fooling itself !
• Reduce processing batch sizes – update the ledgers daily, ensure that the latest system position is the latest position.
• This linked to the most important lean lesson of all – STOP TO FIX PROBLEMS – a small company mentality with each person having several different jobs to do means that the inclination is to half-finish jobs and leave issues to one side. The failure to stop and fix problems in any area leads to contunued and repeated issues. This mentality resulted in claims against the company, on stop for essential materials and services and customers dis-satisfied.

How did I feel during the stability phase ?

In short – incredibly frustrated !
Here I was 10 years Managing Director experience running companies 10-20 the size of this company, and a further 10 years Financial Director experience, setting up accounting systems, running weekly payrolls and completing bank reconciliations.

I was desperate to add more value – but this stage was completely necessary and the improvements planned from now will succeed because the company systems are stabilised (nearly there anyway).

Where are the company systems now ?

• Cash is under control – checked daily, reported weekly, forecast accurately
• Sales are monitored daily against the latest sales forecasts
• Payroll is reported weekly
• Relationships with banks and other debt providers are improved
• Monthly accounts are on time and infinitely more accurate

Still a million miles away from the full benefits of lean accounting, but the basics in place and stability achieved. Now for adding real value ……….

If you are interested in exploring the lessons learned from this case study please feel free to contact us for a no-charge diagnostic review and improvement proposal.

Alternatively please look at some of our other articles on this topic.

The Lean Finance Department

Lean and the Accountant

Lean and the Accountant 2

Organisation profile

• Automotive fuel systems supplier: Toyota, Honda, Nissan, BMW, Jaguar, Land Rover, Lotus, Ford, GM, Aston Martin, Daimler Chrysler
• Turnover: Circa £25 million
• Employees: 240+
• Location: Leicestershire, UK

Situation

Having gained basic control of the day to day quality situation and having achieved a reasonable degree of stability, we started to consider how to move the organisation away from thinking about quality in a reactive way to thinking and acting proactively, as the most efficient problem solving of all is prevention.

Approach

We considered what business activities, in addition to obvious manufacturing and process engineering processes, carried the greatest potential risk to our quality performance. It was clear from the data that new project introduction (NPI) was the organisation wide process which carried the greatest threat both to quality but also to cost and by default our stress levels.

The data showed that the level of quality concerns relating to projects within 180 days of launch / start of production (SOP) was a major contributor to our overall quality performance.

It was also clear that the levels of manpower absorbed by ‘managing’ new products during the post SOP phase, was very high and the negative effect on the business significant.

We defined what a ‘quality project’ was:

• On Time,
• In full,
• To budget
• Make a profit now and in the future,
• Satisfy ourselves and our customer.

And that the quality performance target for any project had to be zero defects.

The decision was made to combine senior management of Quality & Projects and transfer quality engineering staff into the Projects Department. This was done in the knowledge that it weakened the skills and experience of the Quality Dept. but the potential gains greatly outweighed the risk.

Action 1 – Gain understanding of the current NPI activities and interactions

I completed a full review of all the activities undertaken by Projects staff, a task which took approximately 1 month and covered project management, project / process engineering, applications / design engineering. I also reviewed the interactions between the Projects Dept. and the supporting departments to understand how our people worked together and importantly how the projects were led, including a ‘Blocks & Consequences’ questionnaire, which enable all to voice their perceptions / conclusions as to why our NPI performance had not achieved the required levels of achievement.

It was clear to see that we were lacking leadership, structure and standardisation in all aspects of project management and our staff were ‘making the best of a bad situation’, however this led to differences in content and approach from project to project and department to department.

The decision was made to develop a bespoke NPI process tailored to the businesses specific needs and situation.

Action 2 – Develop NPI process

The process was based on the gateway approach and was designed to provide project managers with a defined framework within to operate. This would ensure that all the key activities were standardized in both content and method. We developed a complete package of documentation, again to enable standardisation but also to remove this workload from the PM’s who could then focus their attention on managing the tasks.

The project lifecycle was broken down into phases & Gateway’s, as follows;

The key to delivering projects capable of achieving zero defect is embedding quality thinking at every stage of the project.

Ensure that your ‘quality thinking’ and considerations are embedded in all proposals and quotations, focusing on the objective of zero defect, whilst bearing in mind the customers own stated quality targets. Make sure that any quoted solutions (design of product & process) are capable of delivering zero defect and meeting or exceeding your customers expectations right from the outset.

Ensuring that past problem history is analysed and considered during the commercial and design phases, asking how can we ‘design out’ the risk of defects from product and process, to including a planned series of proving trials (pre-production) with specific goals and objectives, to ensure that the process is fully ‘shaken down’ and capable before you need to start supplying the customer in any volume.

Every contributor to the project should have their own ‘quality thinking’ guided by the organisations overall quality goals, which are derived from the ‘top level’ goals of:

• Make money
• Satisfy Customer
• Satisfy yourselves

Quality plays a key part in the achievement or not of all 3.

Remember that new projects (products and or processes) are the ideal vehicle for continuous improvement, but in many cases deliver a backward step in performance. NPI is the first step in the quality process for any organisation and the successes or failures you achieve here can easily be carried through the entire life of the product or process.

Action 3 – Plan, Do, Check, Act (P.D.C.A)

We now had the basis of an NPI process with the potential to deliver high quality projects, however the single thing which enables project excellence are the people involved, from the Project Managers, through the engineers, to the support staff and the operators. We held a programme of project awareness / training sessions including every level of the organization, hosted by me, as the senior manager responsible but delivered by the NPI team (Project Managers & Engineers). An integral part of these sessions was an open Q&A were all were encouraged to voice their opinions and questions (sometimes partially stage managed), after the usual slow start, these proved to be a great way of embedding clarity and understanding of our objectives, logic and method.

The next stage was using the NPI process, clearly this was a significant change in our NPI behavior and took time to develop and embed, I spent the majority of my time supporting meetings, explaining the process and the documentation and mentoring, training and supporting individual members of the team and organisation, ensuring that the process became fully embedded and standardised.

Once up and running, we reviewed the process monthly, making adjustments and modifications as required, in reality we modified less than 10% of the initially launched process, but the changes we did make came as a result of actually using the elements and as such were critical in making the process effective and efficient.

Benefits

The headline results achieved were as follows:

In excess of 50 projects launched On Time, In Full, To budget, making a profit and satisfying our customers and ourselves.

All the projects managed to launch during this period achieved the primary project quality goal of zero launch PPM (zero defects during 90 days post SOP)

The most positive results were the significant reduction in negative ‘effort’ required from the business to deliver a project and the positive effects on teamwork generally throughout the organization.

Learning Points

• Clearly defined and understood project goals and objectives are essential
• A standardised NPI process is vital
• Keep it simple (as much as possible)
• People are what deliver excellence, so invest in the people
• Manage people not tasks   (Grip Self, Grip the team, Grip the tasks through the team)
• The 6 P’s rule is always in effect (Prior Preparation Prevents P**s Poor Performance)

For further information see the Project Management section of our website: www.LeanQCD.com

Organisation profile

• Automotive fuel systems supplier:    Toyota, Honda, Aston Martin
• Turnover:    Circa £40 million
• Employees:    800+
• Location:     South Yorkshire, UK
• Customer quality performance:    > 550ppm against the industry target of < 25ppm
• Open complaints:    > 40
• Repeat Concerns:    >50 p.a
• Customer concern responses:    < 10% accepted first time by the customer
• Internal quality performance:    > 3500ppm

Business situation

Risk of losing business as a direct result of customer dissatisfaction caused by poor quality performance, in particular the high level of repeating problems and the associated poor levels of service

• Customers had no trust in the business or in the individuals.
• Very poor reputation with customer contacts and decision makers.
• Customers applying pressure to accept external support (i.e. Supplier Development).
• Incurring high costs due to penalties and cost recovery due to poor quality performance.

Quality situation

• High costs incurred through resident engineers and external inspection activities.
• The existing Quality structure was not performing despite including significant experience.
• Quality activities were limited to reactive ‘fire fighting’.
• No standardised problem solving process.
• No ownership of quality on the shop floor.
• No focus on customer satisfaction.

Approach

The priority issue initially faced was the customer’s complete lack of trust in the organisations quality activities, honesty and integrity, not unsurprising given the history and performance both with product and service. The only effective approach was face to face and direct.

I arranged meetings with the key customer quality contacts and their management, during which I asked them to explain their issues and experiences and after explaining my position and intentions, asked for their support and a little patience. What gained their agreement was our proposed transparency and commitment to provide them with effective support. I made sure each contact had my mobile number and email address, and stated clearly that if they had any concerns they should not hesitate to contact me directly and I would personally support them. In truth, very few of them ever felt the need to take up my offer as I made sure our communication was regular and clear to all levels.

The key factor during this period was ensuring that we never broke a commitment we made, we had to be as good as our word to start earning back some trust as the foundation to rebuilding workable customer relationships. This meant being honest with them, if a request was unachievable or not the best use of our resources, we had to explain and agree a timescale or approach which satisfied both parties.

Immediate Action 1 – Gain Control (quickly)

• Concern management (content & timing).
• Establish clear concern ownership
• Standardised analysis and reporting process.
• Standardised method and content for customer feedback and responses.
• Provide basic problem solving training to key players and managers

Initially these actions required more than a little ‘direct management’ as the only robust way to ensure that I was happy with the content of our customer responses was to police and approve each one, not the most empowering approach but definitely necessary in the short term. As we progressed, this review and approval process became a great vehicle for coaching and mentoring both quality and manufacturing staff in our approach, logic and method.

The format for concern ownership was established and communicated to the entire business. The Production supervisor became the concern owner for concerns with products produced by their area of responsibility. A Quality Engineer was assigned responsibility for each concern (by customer responsibility) and their role was to provide quality engineering expertise. These two key players were jointly responsible for day to day management of their concerns.

Weekly and daily quality team reviews were introduced which were centered around a customer concerns tracking board on display on the general office wall (hand written in real time), focusing on concern due date.

We updated the document used to detail our investigation, cause and countermeasure (CCR – Concern Countermeasure Report) and sent a copy of the completed CCR with any required customer format response (QPR for Toyota / PIR for Honda) ensuring that the customers could see the method and process we were following.

A programme of basic problem solving skills was rolled out to ensure a standardised base level of knowledge and approach across the business.

Immediate Action 2: Remove the risk of poor quality to the customer

• Containment activities (separate inspection activity Vs Agreed standard)
• Inspect for known defects in process
• Review and address key historical issues

It was vitally important to clearly demonstrate the effect of the change in approach and provide a tangible change point, primarily to the customer but also to the organisation itself. We initially used a combination of key personnel and managers to get this up and running quickly and it was not without problems but nothing works as well as a step change in performance.

Immediate Action 3 – Review of quality issues and actions in the twice daily Production meeting

• Concern reporting (A.M Production Meeting)
• Action reporting (P.M Production Meeting)

Implementing a twice daily review of concerns during the production meeting served a number of purposes:

1. Ensured close to real time reporting of concerns to the whole Manufacturing & support team
2. Enabled support to be allocated as required
3. Clear communication facilitating risk management
4. Provided a stable basis for challenging actions (meeting attended by Snr Management team)
5. Vehicle for following up actions and owners

It has to be said that at least initially, the meetings were viewed, by some, with trepidation because it quickly became clear that you would be directly challenged on your information, actions and progress, not something people in the organisation were used to or comfortable with. The phrase nowhere to run nowhere to hide certainly rang true for some. However it also became clear over time, that if you followed the process and completed your tasks, you would be fully supported.

Support departments (Maintenance, Engineering, HR, Admin) were also required to attend the P.M meetings to provide support in clearing any blocks and obstacles encountered by concern owners.

Next Stage 1 – Weekly Concern Management Review

• Team review of all open concerns
• Support, coaching and mentoring of concern owners

This weekly review with Quality management was established to provide both direct support for concern owners and quality engineers, and a method of ‘policing’ the problem solving process. The meeting was at a fixed time in a fixed location and attendance was mandatory for concern owners and Quality Engineers. Support departments and managers would attend as required by Quality management, when blocks or obstacles were encountered.

Again these meetings were both tough and lengthy to begin with as it took time for our requirements and standards to embed and it’s certainly true that we experienced some significant ‘growing pains’ as we developed this effective format.

Next Stage 2 – Quality Awareness training (start the journey from reactive to proactive)

• Provide awareness of quality requirements to the entire organisation.
• Explain individual’s responsibilities and gain their ‘buy in’ to quality improvement.
• In-process quality training (process design for quality – poka yoke) for process engineers and maintenance.
• New product introduction (NPI) Quality specific activities.

With the importance of improving all round performance, we delivered a quality awareness workshop to every employee in the organisation, over a 3 month period, ensuring that all employees had received one form of quality training which served to increase awareness of how staffs activities affected our quality performance. Every individual understood their quality role and responsibilities, whether they be on the shopfloor or in a support department.

With our drive to move from reactive to proactive activities, we held problem solving workshops with all engineering staff, so every engineer whether they worked in Maintenance, Process Engineering or New Product Introduction was equipped with both the tools and the ‘thinking way’ needed to ensure that our products and processes were capable of meeting quality targets (the only target we discussed was zero defect). It was important that whilst we managed the improvements in current production we didn’t add to them by launching incapable new products, so the NPI process was developed to include a number of specific quality activities such as:

1. Review of past problem history
2. Design / drawing review focused on achieving zero defect
3. Process planning focusing on poka yoke and zero defect
4. Pre-production quality trial builds and process ‘buy off’

Solution

The organisation had lost their quality way and were engrossed in firefighting, all their quality activity was reactive. Juggling dissatisfied customers with production pressures made all the worse by high rejects and returns. They had no effective standardised process for analysing and eliminating their problems which resulted in a steady downward spiral.

The implementation of containment activities to ensure the customers were protected whilst we undertook the necessary actions, allowed us to ‘buy’ the time we needed to improve of people and our processes. Containment is not something which should be undertaken either lightly or tentatively. It can only be successful if it’s 100% robust, therefore it needs to be planned, staffed and executed thoroughly without exception. Nothing has a more negative effect than telling your customer that they’re now protected and they continue to receive defects.

It’s then vital to embed a robust and effective problem solving process and this is more about the ‘thinking way’ than the documents and formats you use. There are of course various methods and tools available, personally I don’t think you can do better than the following basic process:

1. Data and evidence are king.
2. Don’t assume, check for yourself    (Assumption is the mother of all **** up’s).
3. Use the 5 W’s and the 2 H’s as a solid starting point.
4. Use a cross functional team to investigate / analyse the evidence.
5. Cause & Effect is a simple and user friendly tool to get your thoughts in order and focus and prioritise your investigation.
6. A robust 5 Why process will enable the ROOT CAUSE to be identified.
7. Think poka yoke…. Build quality in.
8. Countermeasures only work if they’re robust, effective and embedded, prove them out before you implement.
9. Check that they’re really embedded and have become the process norm.
10. Cascade your effective solution across the organisation.

Simple but very effective!

Benefits

The headline results achieved were as follows:

• Customer PPM improved from >500ppm to <25ppm (95%) in 2 years
• Internal PPM improved from >3500ppm to <350ppm (90%) in 2 years
• Repeat concerns reduced from >50 p.a to 6 (90%) in 2 years
• Recovered and then developed customer relationships based on integrity and trust
• Organisation requested by their customer to take on a new project with 3 months notice, due to the poor quality performance of the nominated supplier.

As the organisations quality activities progressed from the majority being reactive to proactive, the atmosphere became more controlled and considered in place of the ‘mad dash’, this resulted in a significantly less pressurised environment more conducive to professional behaviours. Although capable quality departments thrive on the  ’thrill of the chase’ too much of a good thing clearly takes it’s toll on people. The working relationships between departments and personal relationships between staff developed and the knock on effect on teamwork was clearly displayed in all areas of the organisation.

Learning Points (as before)

• Gain control quickly.
• Keep control but set boundaries and empower the people
• People really are the key.
• Prioritise tasks by effect.     The Pareto rule – 80% of the effects come from 20% of the causes.
• Visualise status and keep it live.
• Communicate clearly and regularly.
• Develop and standardise an effective and robust problem solving process and structure.
• In-process quality is the only efficient option.
• Don’t ever give up…. no one said it was going to be  easy.

Organisation profile

• Automotive fuel systems supplier Toyota, Honda, Nissan, BMW, Jaguar, Land Rover, Lotus,
• Ford, GM, Aston Martin, Daimler Chrysler
• Turnover: Circa £25 million
• Employees: 240+
• Location: Leicestershire, UK
• Customer quality performance: > 10,000ppm against the industry target of < 25ppm
• Open complaints: > 120
• Internal quality performance: Very poor but details unknown as not measured
• Supplier quality performance: Very poor but details unknown as not measured

Business situation

- Significant risk of losing business as a direct result of customer dissatisfaction caused by poor quality performance (i.e. high number of problems, poor responses and service)
- Customers had no trust in the business or in the individuals
- Poor reputation with customer decision makers
- Customers applying pressure to accept external support (i.e. Toyota Supplier Development)
- Poor quality effecting delivery performance
- Incurring high costs due to penalties and cost recovery due to poor quality performance
Quality situation
- The existing Quality structure was not / could not provide the business with the required level of support
- Quality activities were not integral to the business
- The quality structure and roles were not clearly defined ̴ no goals, targets or objectives
- The Quality staff were not being led, managed or motivated and were almost at the point of surrender having been ‘beaten down’ by the situation.
- The importance of Quality within the business was stated but not emphasised, driven or owned.

Approach

The initial priorities were to get an understanding of the real situation (identify any critical issues), to get the quality staff working as a team and to ‘buy time’ from the customers to enable effective analysis and the identification of the business root causes of the poor performance. The defects alone were not responsible for the levels of customer dissatisfaction being experienced; the lack of ‘customer service’ was increasing the dissatisfaction and annoyance factor by ten fold.

Immediate Action 1: Gain control (quickly)

Quality team review undertaken to review and assess the current status.
Prioritised open concerns based on the real risk they posed.
Decided the ownership of the ‘high risk’ issues and agreed required actions and timing.
Created a core team to take control and deliver the required short term actions.
Communicate decisions and logic to key customer quality contacts.
This was quite a painful process initially, due to a combination of my direct approach, something the staff were not used to, and the staffs skills, experience and frame of mind. This was a very ‘hands on’ period in order to demonstrate that the team would not be asked to do anything I wouldn’t do myself.
In addition all customer ‘difficulties’ and meetings were led by me (i.e. the staff were protected from the dissatisfied customer) building a solid trust based relationship within the team over a short period.

Immediate Action 2: Remove the risk of poor quality to the customer

Containment activities (separate inspection activity Vs Agreed standard)
Inspect for known defects in process
Review and address key historical issues
It was vitally important to clearly demonstrate the effect of the change in approach and provide a tangible change point, primarily to the customer but also to the organisation itself. We initially used a combination of key personnel and managers to get this up and running quickly and it was not without problems but nothing works as well as a step change in performance.

Immediate Action 3: Communicate directly with the key customer quality contacts

Communicate the change in approach and the specific actions being taken
Create a personal relationship based on my ownership of the quality of product and service
Although time consuming and not without frustrations, this process was key to forming a ‘new’ face to face relationship with our dissatisfied customers. These people had been on the receiving end of our organizations poor performance and as a result were not wholly receptive. The more proactive openly offered support, while others waited for the results to convince them. The old adage about a good reputation being difficult to achieve was proven true in these circumstances.

Immediate Action 4: Visualise and manage status (Keep control)

‘Battle board’ or ‘Quality dashboard’
Daily Quality Team meetings
Weekly Concern Review
We implemented a ‘Battle board’ in the quality department to visualise the live issues, actions and ownership, replacing the concern files that existed previously. The board was for our internal department use, being updated in real time and reviewed each morning by the team. A positive side effect of this process was that it also served as a great passive communication tool both internally and when customers visited the office, any potential embarrassment caused by exposing our problems was outweighed by the effect of transparently demonstrating our control methods and management. This transparency also served as motivation to the team as any issues were openly challenged and discussed. All open concerns were reviewed, by the team, on a weekly basis, and this review was a powerful vehicle to get things done and also to remove any blocks or obstacles.
These immediate actions focused on managing the short term risks to the business and by their nature did nothing to integrate the Quality department within the organization. In fact they created a trench warfare mentality within the core quality team. The positives were clear to see in the ownership and proactive attitude of the team, but we also experienced a number of negatives, including a number of ‘teething’ problems between quality, manufacturing and projects staff

Next stage 1: Improvement Plan

Developed a programme of improvements focused on improving the quality of products produced (process based) and customer services provided (service based).
Communicate the programme across the whole organisation.
Communicate the programme to all key customer contacts.
Visualise the programme via Quality display board and staff briefings.

Once the improvement plan was underway it was vital to keep the customers fully updated with progress and ensure that the service they received was thorough and professional, whilst always fully representing the business interests. Having a poor reputation means that you are very often the first port of call when a problem occurs and conclusions are jumped to rather than investigated, with this in mind the level of support provided is critical, so we employed a very proactive approach in order to incur the minimum negative effect possible. We would offer on-site support at the customer allowing us to clarify issues and potential causes on or near the ‘coal face’ rather than just acting on the customer’s opinion. This approach is a delicate balancing act between being supportive and difficult but is a great way to build (repair) customer relationships without wasting time, money and manpower on issues not of your making.

Next Stage 2: In process quality

Poka Yoke – Fool proofing
Process improvement for zero defects
Reduce internal reject / scrap rates
Eliminate customer complaints / returns

The most efficient way to manage defects is not to make any in the first place so we focused our attention on developing our live production processes and our people to be capable of delivering zero defects.
The principles of Poka Yoke were driven into every facet of our processes (Equipment, tooling, cell layout and most importantly our staff). This phase of activity was based on a combination of simple basic engineering, making process as close to foolproof as feasible, and developing the awareness, knowledge and skills of our people.

Next stage 3: Processes & Systems Vs Actual

Complete review the organisations quality processes, systems and documentation.
What’s in the Quality Manual (Actual Vs Manual)
Understand what tools, techniques are actually in use
Understand how the organisation ‘does’ quality (What quality activities are undertaken)

It was clear from the outset that the Quality Manual bore no resemblance to reality and mainly focused on tasks relating to the administration and maintenance of QS9000 rather than tasks to enable an acceptable level of quality performance. Although QS was an important accreditation it was not supporting the daily activities and was of very little real value to the organisation.

Next Stage 4: Reactive to Proactive

Eliminate the root causes of quality problems before they occur
Products designed for manufacture and quality
Processes designed to deliver zero defects

We were dealing with the issues which already existed, but we now also focused on ensuring that we didn’t add to our workload by launching new products or processes which were not capable of zero defects. The key in achieving this was our New Product Introduction (NPI) or project management process. We implemented a number of quality specific activities into the NPI process, from design reviews focused on past problem history to quality tooling reviews and trials long before the start of production.

Solution

Delivering real quality improvement is about transparency and tenacity, bringing the problems to the surface, however painful, and dealing with them once and for all. Identifying, analysing and eliminating the root causes of the problems you experience, wherever they lie.
Our approach to dealing with our customers was based on one of ‘measured honesty’, clearly no business is totally transparent to their customers, however trust is a vital component in a successful customer supplier relationship and transparency, honesty and ownership are what trust is based on. We shared potentially professionally embarrassing issues with our customers and always proactively accepted ownership of issues, ensuring that they came to trust our input and opinion. We used logic as the arbitrator of our actions and established a strong position in all our customer relationships, leading us to become the preferred quality supplier of our chosen customers.

Benefits

The headline results achieved were as follows:
Customer PPM improved from >10,000ppm to <25ppm (99.75%) in 3 years
Recovered and then developed customer relationships based on integrity and trust
Delivered a business wide culture of quality
Became the quality supplier of choice for our chosen customers
Launched 50+ projects over 3 years with zero launch PPM

We later used the same approach at a sister plant in Yorkshire, UK, delivering an 83% improvement in customer quality performance and a 46% improvement in internal performance within 2 years.

The financial benefits are more difficult to establish, however as a guide we carried out a cost case study in an effort to understand the true cost of poor quality and determined that the average cost to the business of a single reject customer complaint was £1500 versus a component sale price of £3.50, so it’s not too difficult to visualise the ‘unseen’ cost of poor quality.

Of greater benefit was the effect on our people, environment and atmosphere, the improvements in quality performance changed the entire dynamic of the team, we went from being under constant pressure, constantly firefighting with our focus entirely on the reactive, to being able to be proactively plan and improve our business.
Our customer’s satisfaction levels improved dramatically, due in part to the obvious reduction in problems they were exposed to, but also as a result of the improved relationship.
It’s not easy to quantify the effects of a good customer supplier relationship however as a result of our quality performance we became the supplier of choice for our chosen customers, the ideal situation for any business.

Learning Points

• Gain control quickly.
• Data and evidence are king.
• People are the key.
• Prioritise tasks by effect.  The Pareto rule – 80% of the effects come from 20% of the causes.
• Visualise status and keep it live.
• Communicate clearly and regularly.
• Develop and standardise an effective and robust problem solving process and structure.
• In-process quality is the only efficient option.
• Don’t ever give up….making improvements isn’t easy.

Process Key Stages

The application of lean, leadership and a robust strategy should be applied to any type of organisation. The successful application of these elements will help you to satisfy your customer, satisfy your employees and maximise your resources.

Definition of service industry

Service is anything that has a customer and doesn’t deliver a physical product that the customer can take away, but creates something that its customer needs, desires, requires or demands, and therefore places a value on it.

Examples of service

Local Government
Health-care
Entertainment
Maintenance department in a manufacturing company
Finance departments
Sales offices
Entertainment industry

Achieving performance excellence

The achievement of performance excellence should be a goal in any type of orgnisation. applying lean in service will enable you to deliver customer value on time, every time.

Customer satisfaction combines your strategy with your customer goal

Customer satisfaction is about understanding the value of your products or service, developing a competitive edge and delivering your customer needs.

All organisations need to  define their strategy and competitive edge and deliver on time all of the time. By understanding what customer value actually is, you will be able to align your quest for operational excellence with the needs of your customer to deliver world class performance.

Employee satisfaction is employing your leadership to enable your team to satisfy your customers

We believe that grip self, grip team and grip task through the team is the enabler that will deliver employee satisfaction.

By using goal cascade you can then ensure that your whole organisation is working towards delivering your goals – satisfy customer, satisfy team and make money now and in the future (or maximising your resources).

Aligning Operational Excellence to your strategy is essential

Rest assured your competitors will be looking to improve their operational performance, so to do nothing is to go backwards.  Operational excellence can be achieved by any of your competitors or alternative service providers – therefore operational excellence is a continuous journey.

Applying Lean in service

Lean can be applied to any process, whether manufacturing or service, whether in technical,finance or any other organisation area.

The key elements of applying lean are the same regardless of the organisation or area:

1. Who are your customers ?
2. What is customer value ?
3. What is the current state of processes ?
4. How to remove waste and non-value added processes ?

In service, lead-time reduction whilst delivering world class quality are key to achieving customer satisfaction. Lean is about removing waste and adding value. Leadership is the essential ingredient, especially in more labour-intensive service areas in order to bring the whole organisation along the lean journey.

Lean QCD offer support and training and free advice, please feel free to contact us to discuss any aspect of this article.

Like any other business area Finance provides a service to others – the service provided by the Finance team is multi-faceted and for each customer distinct. The key to achieving performance excellence is customer satisfaction, whether internal or external customers.

Whilst the requirement for each customer may be distinct, the processes involved are invariably inter-connected. The key to any lean implementation is to understand the customer, their needs, and their perception of value.

What is service ?

Service is anything that has a customer and doesn’t deliver a physical product that the customer can take away, but creates something that its customer needs, desires, requires or demands, and therefore places a value on it.

Applying Lean in service

Lean can be applied to any process, whether manufacturing or service, whether in technical,finance or any other organisation area.

The key elements of applying lean are the same regardless of the organisation or area:

1. Who are your customers ?
2. What is customer value ?
3. What is the current state of processes ?
4. How to remove waste and non-value added processes ?

For more information on Lean in Service click here

Lean Finance department example case study

Identify customers

Customer satisfaction is the goal and a crucial step towards achieving performance excellence.

Finance department roles

The table below is by no means exhaustive, and there may be different roles dependent upon the organisational structure.

Identify customer value

So if we now consider just one of the finance department roles, providing management financial information.

We have already identified the customers for monthly management financial information above. We must now break down their needs and if necessary the priority of the needs.

This is done by reviewing the requirements with each customer (internal and external) and agreeing the level of service that is achievable and applicable.

Monthly management accounts information – example only – your organisation may be very different !

The challenge is to satisfy everybody. Each customer has potentially different needs in terms of timing, accuracy and presentation.

Essentially in terms of the organisation goals, what additional value from the information provided can and should be added ? In this example the accountants role should be to interpret the information and use it in reference to daily activities to directly help the organisation achieve its goals.

Map current state

• Genchi genbutsu – “go and see” the process and what is really happening
• Look at how information is pulled
• Review the whole process
• Visualise the linked chains of the process
• Identify and highlight waste
• Start to visualise the improvements for the future state

Current state example

Click on image to review larger size

Improvement actions

1. Review and counter-measure despatch process (saving 2-5 days)
2. Review and counter-measure stock update and reporting process (saving 2-5 days)
3. Review and cost justify semi-automated stock data transfer process (saving 1 day)
4. Prepare main accruals and prepayments in advance ( saving 1 day)
5. Review error problems and counter-measure to reduce errors from 20% to 10% (saving 1 day)
6. Schedule manager reviews and develop review back-up plan to cover absence (saving 1 day)

Map future state

Click on image to review in larger size

Summary

1. Finance should understand their role as a service to a variety of customers.
2. Understand customer needs and therefore the value placed on this service by each customer.
3. Map current state – consider waste affecting lead time , errors and cost
4. Consider other areas within finance and how the whole finance process can be streamlined.
5. Map future state.
6. Most lean implementations fail due to failure to deploy – ensure that actions are carried out and results checked using Plan / Do / Check / Act (PDCA).
7. Follow the cycle again – in the above example lead time was reduced from 14-23 days to 10 days, but further improvements were identified to achieve the target of 5 days (customer requirement).

Lean QCD provide training and lean finance support services, please feel free to contact us to find out more.

If problem solving is to become a mindset, yet the detailed approach whilst effective, is too resource consuming for all problems, how do you embed daily problem solving into your organisation ?

Daily problem solving

Symptoms

Symptoms are what most people treat as the problem. Addressing the symptom directly is a cause of waste. Use the symptom to gain an understanding of the scope of the problem, the area or areas concerned and as a clue, but only a clue, to assist in locating the root cause.

Think of the symptom as only the starting point and then look at the flow downstream and upstream of this point.

Is there a standard ?

In what is standardisation we found that standardisation is ” your best of today applied consistently ” or in other words what works today and gives you consistent results.

Although there should be documented standards, they may not exist. There will however be a way of working which previously did achieve results. This is your basis for reviewing and ascertaining what has changed.

What is the change-point ?

The crucial element of daily problem solving.

If it worked before, whether there is a standard in place or not and it doesn’t work now, ask the question what has changed. Normally this will lead you to the root cause.

Be aware that it may not be enough to ask the question as you may also get assumptions coming back. Apply “genchi genbutsu”, go and see the process. This will enable you to check the answer.

5 why the change point

5 why is an effective technique to enable you to find the root cause. The use of 5-why will again assist you in removing assumption out of the investigation.

The key to good 5-why especially in daily problem solving is the way questions are used, and asked.

Avoid

• Closed questions
• Leading questions

Adopt

• Open questions
• Funnel questions
• Probing questions

Overall, the art of questioning is to raise awareness in the person(s) you are addressing. This will allow them to find the root cause themselves.

Summary

1. Recognise that as a leader your team will look to you to solve their problems for them
2. By embedding daily problem solving they will be more able and willing to solve the problems for themselves
3. Your questions should be challenging but not aggressive. Remember the purpose is that you are looking to raise their awareness.
4. Daily problem solving is a potential solution to every day problems. If the root cause cannot be found or the problem has a big organisational impact the full problem solving process should be followed.
5. Think about how you can cascade a solution that works.

Lean QCD incorporate this learning as part of their Leadership, Lean implementation and Cascaded problem solving training.

Problem solving is a mindset

Problem solving is often just seen as part of the lean toolbox. This makes it all too easy to fix the problem and then move onto the next problem without fully taking the lessons on board.

Even worse if the behaviour is actually to just focus on the symptom and take a “quick fix” approach.

In any business we are faced with problems on a daily or even hourly basis. Clearly it would be unmanageable to carry out a full-scale problem solving activity for every issue that we encounter. In these circumstances a “just do it” approach based on our skills and intuition is acceptable, but it should be backed up by the structured problem solving questioning techniques.

Example

The example I often give of the dangers of not challenging assumptions when addressing problems relates to a large manufacturing company we worked in.

Constraint – primary process delivering rubber parts to a secondary molding process

Issue – primary process downtime approximately 30%

Symptom – water pump failure causing over-heating

Solution – replace the water pump

The water pump would be replaced, the process would run at an acceptable level for a period of time, and then it would breakdown again. Because there was no problem solving mentality in the organisation at that time, the response was to replace the water pump, again and again.

The water pumps were expensive, but the disruption to the output of the factory was 100-fold more expensive.

What is the main purpose of asking questions ?

The lesson learned for the management of the company when the request to spend money landed on their desk was to ask the simple questions:

• When was the last time this item failed
• What was the reason
• What was the counter-measure
• Why has it failed again in such a short space of time
• Why does this item keep failing
• Why should I authorise more expenditure

We talk about questions in “Asking the obvious questions”.

In my view the main purpose of questioning is to raise awareness in the person you are challenging. This should be done in a non-threatening way, because you want them to discover the answers for themselves. This is far more powerful than simply giving them the answer.

In true lean philosophical way – ensure that your questions add value !

In the same organisation, a standard approach to dealing with problems became embedded throughout. This was initiated by the top management, but over a relatively short period of time the approach was adopted at all levels.

The simple response to any issue raised was:

• What are the symptoms ?
• Is there a standard ?
• What is the change-point ?
• 5 why did it change ?

This generated a belief in people because they knew what they were going to be asked, and therefore were able to ask the same things of themselves and their teams.

For this to become an organisational mindset, the example must come from the senior management.

Problem solving mentality is a key to Lean QCD’s approach in our training courses and in our performance therapy support.

Developing a problem solving mindset will remove waste:

• Waste of excessive stoppages
• Waste of repeat problems
• Waste of un-necessary cost

and will ultimately enable and empower your people to become self-reliant and your organisation to become self-sustaining.

The power of error proofing in the service sector

Poka Yoke is a term most widely associated with manufacturing however the concepts are fully applicable in any business where processes exist i.e. all businesses.
The goal of Operational Excellence, is applicable across all business, and while manufacturers primarily consider errors made by the manufacturing process, service providers need to protect against errors made by both them and their customer. And they face a different set of potential issues resulting from their interfaces with their customers.

As a result there are 2 types of service Poka Yoke:
• Service Provider (SP)
• Customer

Service Provider Poka Yoke
There are 3 methods to protect the SP:
• Task
• Treatment
• Tangible

Task
Focus on SP tasks and common mistakes made while performing the task for the customer.
(i.e. automated change machine)
Treatment
Focus on the social interaction between the customer and the SP . Standardising how staff  interact with customers controls consistency
(i.e. body language, eye contact and greeting)
Tangible
Address the real, physical impression and experience for the customer as well as considering staff tasks. Standardising the environment controls the impression made on customers and simplifies staff tasks.
(i.e., dirty or untidy work area or staff)

Customer Poka Yoke
There are 3 methods to protect the customer:
• Preparation
• Encounter
• Resolution

Preparation
Are designed to fully prepare the customer before they enter the service. (i.e. appointment reminder cards)
Encounter
Protect the customer who may misunderstand, ignore, or forget the nature of the service or their role in it. (i.e. guide rails or route barriers)

Resolution
Remind customers of the value of their input to the continuous improvement of a service. The key is willing customer participation. (i.e. customer feedback form or survey)

Examples at work in the service sector:

Delivering Performance Excellence

Performance Excellence is more than just operating better, it is maximising the full potential of your organisation to achieve your business goals.

It is the sum of satisfying your customer, having a workforce that is empowered to complete their work and fully engaged in the business and delivering your product or service in the most efficient way.

Customer Satisfaction

Customer Satisfaction = Deliver customer value how they want it and when they want it every time.

Understanding the value of your product or service to your customer and delivering that value on time every time.

Lean QCD can help you to understand your customer needs,  define your strategy and deliver your customer requirements.

Awareness of the quality of your product and protecting the customer from poor quality is an essential element of what we do. This is the first stage of quality management, and we guarantee that your customer will be satisfied with the service you deliver to them.

Matching the output of your system to your customer requirements is a core philosophy of a lean implementation and whether you are in manufacturing, service or local government and NHS, we guarantee to improve your service and increase your capacity at no additional cost.

Employee Satisfaction

Employee Satisfaction = All of your team able and willing to deliver customer satisfaction.

Your employees are working together and working with you to deliver your customer needs.

Lean QCD have years of leadership training and experience and can help you to adopt goal cascade and achieve employee empowerment resulting in complete employee satisfaction.

We have a range of practical leadership training courses that will provide a balance of theory and experiential learning to enable your people to become empowering leaders. We can also work with your people as coaches and mentors to ensure that this learning is sustained and embedded throughout.

We can deliver a full training and mentoring programme at all levels to deliver true leadership to your business.

Operational Excellence

Operational Excellence = Deliver customer satisfaction with minimal cost and resource and maximum throughput.

Operational excellence is not the goal but it is still essential. Bear in mind that your competitors are also striving to achieve operational excellence, therefore to do nothing is to go backwards.

Operational excellence is the ability to achieve customer satisfaction with minimised costs. This means that waste is reduced, throughput is increased and labour is utilised.

But it doesn’t stop there, because of course your competitors will catch up. Therefore you will have to continue to improve. By adopting a culture of continuous improvement this will become a never ending journey leading to improved profitability and the ability to do more with the same resource.

Lean QCD Toolbox

Lean tools is very much a buzz word at the moment. As Lean Consultants we obviously have a toolbox of tools and techniques at our disposal, the difference is that we do not just rely on the tools, but utilise leadership and Plan-Do-Check-Act (PDCA) to ensure that the improvements are fully realised and your people can continue on the cycle of continuous improvement.

The Lean QCD Toolbox Package is a complete lean system that will become part of your company and is guaranteed to deliver results now and in the future.

Summary

Performance excellence is the ability to recognise what your customer wants, place a value on what your customer wants and be able to deliver what your customer wants and when they want it.

In other terms it is having a viable strategy and being able to deliver the viable strategy.

For more information please visit Lean QCD Performance Excellence.

Process excellence through Poka Yoke

In order to achieve Operational Excellence it is vital to have processes capable of delivering Zero defects.
Poka Yoke is the concept of eliminating process errors, ensuring the output is defect free. Eliminating errors and preventing defects not only improves quality but enables improvements in productivity and delivery and increases process capacity.

Why do we need Poka Yoke? (Errors Vs Defects)

An ERROR is any deviation from the intended process, they can be made by machines or people and can be caused by errors that occurred previously (knock on effect)

A DEFECT is a product that deviates from specification or fails to meet the customers expectation.

All DEFECTS are caused by ERRORS so ERRORS = DEFECTS

If ERRORS can be prevented / eliminated, DEFECTS will not be created

The concept of Poka Yoke was developed by the Japanese industrial engineer Shigeo Shingo, who is closely linked to the development of TPS (Toyota Production System) with Taiichi Ohno during the 1950′s onwards. Derived from the Japanese words Yokeru, meaning avoiding and Poka, meaning inadvertent errors, Poka Yoke is commonly translated as error or mistake proofing, and has become an integral part of problem solving.

Poka Yoke is based on the concepts of Prediction and Detection and clearly targets Zero Defects, Right First Time (RFT) and the reduction of waste.

There are 3 methods of Poka Yoke:
Contact
The contact method is based on detecting the shape, colour or other physical properties or features.
Fixed Value
The fixed value method is based on the completion of a preset number of actions or movements.
Motion Step
The motion step method is based on the completion of prescribed steps performed in a sequence by a single person

Requirements:
•  Prevent errors from occurring or immediately detect abnormalities in real time as they occur.
•  Stop the process from producing further errors.
•  Address the root cause of the process problem before resuming.

What makes a good Poka Yoke:
•  Robust & Reliable  (CRITICAL)
•  Inexpensive
•  Easy to implement
•  Doesn’t require continuous attention from the user
•  Specific to the need
•  Developed with the user
•  Simple basic engineering (Shapes & holes, Colour coding, Keyway, Nesting, Dowel & pin)
•  Technology (cost effective?)

The 10 Steps: Following the principle of PDCA

1. Identify the process that needs to be improved.
   (target areas where there are high numbers of errors or where even single errors are very costly).
2. Use QC Tools, Cause & Effect & 5Why analysis to get to the root cause of the problem.
3. Decide whether to use a control or warning type.
   (There may be technical or financial reasons why you have to go for the latter)
4. Decide whether a contact, fixed value or motion step method is best (this will hinge on the nature and purpose of the activities).
5. Design an appropriate Poka Yoke.
6. Test it to see if it works and will be reliable.
   (I mean really test it…try to make it fail. Don’t assume anything, make sure this thing really is ‘fool’ proof by trying anything and everything to ensure it really does what its supposed to).
7. Once you have a working method then ensure you have the right tools/checklists/software, etc for it to work robustly, consistently and correctly.
8. Train everyone to use it.
9. Monitor its effect to ensure errors have been eliminated.
10. Take whatever steps are needed to improve on what you have done.

KEY POINT:
If you are using a Warning or Attention type Poka Yoke your process is now dependent on this device or action detecting the error in real time.
How do you know it’s in place and working correctly?
Check and test it regularly
This validation forms a part of your Standard Operation, be it an hourly, shiftly, daily or weekly check depending on the process, product and potential risk to you.

The ideal solution:
Zero Defect and Right First Time are the goals of any process, the ideal is that new products and processes are designed to include the principles and thinking of Poka Yoke from the outset. The concept of Poka Yoke is that it forms an integral part of the process, not as an add on.

To see Poka Yoke in the service sector

Examples of Poka Yoke:

Problem: I used to regularly forget my mobile as I left the house

Poka Yoke:

Asking questions is the ABC of problem solving

The most effective approach in leadership, as it is in problem solving is simply the asking of questions, and it’s certainly true that ‘if you don’t ask the right questions, you don’t get the right answers’, so why don’t we ask the ‘obvious’ question?

In early 2000 I attended a fuel filler pipe design meeting at Gaydon, along with a varied cast from customer and suppliers, including our German project engineer (Dieter), whose technical knowledge I respect greatly. I was relatively new to project management and keen to make a good impression on customer, colleagues and engineers alike.
We all sat around a large table where the customers lead engineer (Ken) proceeded to ‘explain’ the fluid dynamics at work in the fuel filler pipe. He scribbled equations on a sheet of A0 paper at a great rate and I was lost within 5 minutes. I looked around the table and was horrified to see everyone nodding, pointing and smiling.
I’m the only one not following this!
After 2 long hours the meeting ended and we went back to the car, I asked Dieter to explain the key technical points of the meeting, he refused. I pushed him, saying that I didn’t understand and needed his help, still he declined. After a firmer push (it’s a long walk to Birmingham Airport) he said he couldn’t explain, he was lost after 5 minutes and the rest had been a mystery. Later that day I called a couple of the other attendees and asked if they could explain, I got the same response… “Not a clue after the first couple of minutes”.

The penny dropped… No one had followed almost 2 hours of meeting, not one of us had been brave or smart enough to ask for an explanation we could follow…. Why?

Clearly we were thinking more about how others will view us, we submitted to peer pressure, than we were about getting value from the meeting.

Following my Gaydon experience, I began to view meetings and discussions differently, they needed to have a clear purpose and objective, be of value, a learning opportunity, a chance to develop knowledge or a vehicle to make decisions or obtain approvals.
In order for this happen, I had to bite the bullet and ask when either I or others didn’t understand, initially not easy , but it becomes second nature over time, I’ve seen the looks of relief on other peoples faces when I asked the ‘obvious’ question and get an explanation I and they can understand.
I quickly realised the impact that making sure I understood had on my confidence and effectiveness and I witnessed the knock on effect, giving others the confidence to speak up.

Over the last 20 years, working with and supplying major European car makers and their suppliers, I’ve witnessed many examples of this phenomenon. Don’t rely on anyone else to ‘do the right thing’ whatever their reputation or status, think for yourself and always question anything which doesn’t look or sound right or that you don’t understand.

In our experience, asking the ‘obvious’ question is never a waste of time, but remember that an ‘obvious’ question is not the same as a ‘stupid’ question, and what’s obvious to you may not be obvious to others, so ASK!

If you’re not confident or thick skinned enough initially, develop a strategy
•  “Maybe I missed something, but…”
•  “Maybe I’m being a bit slow, but….”
•  “You must have thought about this already, but…”
which ever works for you until you’re comfortable enough to ask straight out.
You will find, like we have, that asking the right questions is powerful approach, you will save significant amounts of time and confusion, not to mention money.

For further tools, tips and information visit our website @ www.LeanQCD.com

PDCA – supporting performance excellence

Continuous improvement is a critical factor in achieving operational excellence, one of the three factors of performance excellence.

Continuous improvement is ‘making changes in a controlled way’.
PDCA (Plan, Do, Check, Act) is a process to follow when you need to make a change or have a problem to solve.

PDCA is a cycle of 4 repetitive steps originally conceived in the 1930′s by
Walter Shewart, which was adopted, developed and widely promoted by
W. Edwards Deming in the 1950′s, and is now one of the fundamentals of

Quality Management and continuous quality improvement, forming the basis for modern process thinking such as Six Sigma, TQM, SPC and TS16949.

PDCA is above all a ‘thinking way’

Plan what you want to achieve, the time you’ve allocated to achieve it and what you need to do to get there.
•  Identify, analyse and define the problem or improvement
•  Use 7 QC Tools, Cause & Effect and 5Why.
•  Set a measurable goal
•  Develop solutions and actions

Do the tasks in your plan
•  Implement, and embed the solutions

Check the results of what you did Vs What you wanted to achieve by doing it
•  Gather and analyse data
•  Evaluate the results

Act on the results you achieved
•  Plan actions to achieve your goal
•  Standardise the solution
•  Plan for further improvement

The advantages of PDCA;
Simple - It’s easy to use.
Effective - The ‘thinking way’ provides a framework for ongoing improvement.
Comprehensive - It links all the necessary stages together in a simple process.
Flexible - It’s easily adapted to a multitude of circumstances.
Engaging - By its nature it fosters and produces teamwork.
Inexpensive - It’s a team focused exercise so there are no additional costs.

How to ensure your PDCA work;

1. Use a cross functional team.
   
2. Develop a simple process to follow, and stick to it (including  common document formats)
3. Avoid assumptions
   Your PDCA is only as robust as the information it’s based on, so don’t assume anything, check everything.
4. Visualise the information and data you use (7 QC Tools)
5. Act is where we most commonly fail
   Experience shows us that we’re generally pretty good at Plan, not bad at Do and Check but poor at Act, so make sure you follow up on your results by either taking appropriate corrective actions or by cascading your solutions across your business.

PDCA provides a simple and effective basis for the majority of business and quality improvement activities and forms the ‘thinking way’ on which Lean QCD’s Cascaded Problem Solving is based.

For further tools, tips and information visit our website @ www.LeanQCD.com

Cause & Effect in problem solving

The key to effective problem solving is root cause analysis, or separating the symptoms from the cause, to identify what’s really causing the problem. You can then apply, validate and embed your countermeasures in the knowledge that it will eliminate the problem.

In order to achieve this successfully you need to think about potential causes and reasons leading to an effect or a problem, which can be analysed (eliminate or incriminate) to determine actual causes, including the root cause.

The cause & Effect (more commonly called Isikawa or Fishbone) diagram
was developed and first used during the 1960’s by Kaoru Ishikawa in the
Kawasaki shipyards and is considered as one of the 7 Quality Control Tools

The aim of the process is
•  Find the root cause (and other contributing factors)
•  Provide clarity and visualisation of the route taken
•  Identify links and interdependencies between causes and contributing factors

How to create your Cause & Effect diagram

Create the central ‘spine’ with the Effect or problem being the ‘head’

Add the main categories (in this case Man, Machine, Material & Method) as the main ‘bones’

Now start to add the potential causes as ‘bones’ branching off the relevant category main ‘bone’

Your Cause & Effect diagram is exactly that ‘yours’ so it’s as flexible as you need it to be. The categories are not fixed or limited, it’s the thinking way that’s important.
If you’re in a manufacturing industry then the 4 categories of Man, Machine, Material and Method are the right starting point; you could consider adding Environment or Management for example.
If you’re in a service industry you could select categories to suit
Product, Price, Place, Promotion, People, Process or
Surroundings, Suppliers, Systems, Skills… etc

You now have a solid starting point for your investigation, you have collected, organised and visualised a quantity of reliable leads, potential causes which now need to be investigated so they can either be eliminated or proven.

Now use 5Why analysis to determine the root causes of the causes and contributing factors you’ve identified.

The advantages of Cause & Effect diagram;
Simple - It’s easy to use.
Effective - It uses different views to gather multiple potential causes to investigate
Comprehensive - It determines links and interdependencies between causes.
Flexible - It’s created with content specific to you are your business
Engaging - By its nature it fosters and produces teamwork.
Inexpensive - It’s a team focused exercise so there are no additional costs.

How to ensure that your Cause & Effect works;
1. Use a cross functional team. Differing viewpoints add strength
2. Develop a simple process to follow, and stick to it (including a simple Cause & Effect diagram template)
3. Avoid assumptions Your Cause & Effect diagram is only as robust as the information it’s based on, so don’t assume anything, check everything.
4. Visualise the information and data you use (7 Quality Control Tools)
5. Validate the contents
Is there any proof? – something you can measure or observe
Is there any history? – evidence that this potential cause can produce this problem
Are there any other potential causes or contributing factors to consider?
6. It’s the content that counts, not how pretty it looks, so don’t get hung up on making it look nice (hand drawn is best) as long as it’s clear and legible.
Don’t agonise over which category to put a potential cause in, just make sure you include and consider everything, so you end up with a robust result.

For further tools, tips and information visit our website @ www.LeanQCD.com

5 Why analysis in problem solving

The key to effective problem solving is root cause analysis, or separating the symptoms from the cause, to identify what’s really causing the problem. You can then apply, validate and embed your countermeasures in the knowledge that it will eliminate the problem.

Ask why the problem occurred, then continue to ask why that happened
(5 times as a rule of thumb) until you separate the symptoms from the cause.

“Asking questions is the ABC of analysis”.

The method of 5Why analysis initially developed by Sakichi Toyoda in the 1930’s was later adopted by Taiichi Ohno and Shigeo Shingo and included in the Toyota Production System (TPS) they were developing, from where it has become a powerful and widely used analysis / problem solving tool.

5Why analysis is “The basis of Toyota’s scientific approach, by repeating why 5 times, the nature of the problem as well as its solution becomes clear.” Taiichi Ohno

When analysing a problem there are two root causes to be identified
1. Why the defect was made
2. Why the defect was not detected (at the point of cause)
the 5Why process, but more importantly, the ‘thinking way’ is an effective yet simple and flexible method to deliver robust results and help ensure that you resolve problems quickly and effectively.

Example: why the defect occurred

Example: why the defect wasn’t detected

Example Countermeasures
1. Specification for plug fuses developed, issued and communicated
2. Process for the replacement and verification of plug fuses developed, issued and communicated
3. Procedure for water temperature verification developed, issued and communicated

The advantages of the 5Why process;
Simple - It’s easy to use.
Effective - It quickly separates symptoms from the cause.
Comprehensive - It determines the relationships between various causes.
Flexible - It works well stand alone, but also when combined with other tools.
Engaging - By its nature it fosters and produces teamwork.
Inexpensive - It’s a team focused exercise so there are no additional costs.

How to ensure your 5Why’s work

1. Use a cross functional team.
   
2. Develop a simple process to follow, and stick to it (including a simple 5Why sheet or common format)
3. Avoid assumptions
   Your 5Why is only as robust as the information it’s based on, so don’t assume anything, check everything.
4. Visualise the information and data you use (7 Quality Control Tools)
5. Test the logic
   You’re looking for an unbroken chain of logical links, think of it like a series of stepping stones across of river, no leaps of faith allowed.
   Tip 1: Say it out loud; it will sound wrong if it’s not logical
   Tip 2: Read it backwards as a series of ‘therefore’ (i.e. from Root cause back through the symptoms to the problem)
   Tip 3: Get someone independent to read it to you
   
6. Validate the contents
   Is there any proof? – something you can measure or observe
   Is there any history? – evidence that this potential cause can produce this problem
   Is there anything underneath or behind this possible root cause?
   Are there any other causes that could create this problem?

For further tools, tips and information visit our website @ www.LeanQCD.com

Whilst there are many different and wide-ranging theories on leadership, surely the common element in all theories is effective employee communication. Therefore if it is a common link, effective employee communication should be seen as the single most important leadership factor.

Goal Deployment

The first step for good communication practice is Goal Cascade – more detail regarding effective goal deployment can be seen in our recent article addressing employee fears and Goal Deployment. In summary goal deployment is key to initially engage people and therefore bring them on-board by understanding what the business is striving for (Business Goals) and their role in achieving the goals (goal deployment).

The purpose of effective employee communication

Once you have engaged the people in your organisation you then need to keep their interest and most importantly keep them informed. The greatest threat to a successful business is inertia through fear due to poor communication.

Clearly not all your employees can or will have access to the complete business strategy and plans. It is obviously dangerous to give away too much information due to it being taken out of context. However, consider the situation where your employees see or hear something that is not explained or explainable. For example, a visitor on the shop-floor; the MD going on a visit to Head Office; unusual meeting activity – the smallest things in the eyes of top management can create the most bizarre rumours. If this happens the focus quickly changes from achieving business goals to ruminating when the business will be closing down. Once this rumour-mill gets out of hand it is difficult to stop it and the damage to the company can be long-lasting.

This is all common sense and hopefully quite obvious to most business leaders – whilst the effect of poor communication may be understood, how many organisations can truly say that their communication is world-class and their relationship with their employees is positively enhanced because of this ? This also depends where on the leadership journey your company is  and where you want to get to – if you want full employee empowerment then effective employee communication is essential.

What is effective employee communication ?

Again, there are many theories, but our belief is that good employee communication should have the following:

• It should primarily be to foster a relationship
• It should inform without overtly putting a spin on it
• It should reassure
• It can challenge but not be excessively aggressive
• It should be fully inclusive but pertinent, giving the right amount of information to be able to address the point to the right people
• It should be timely
• It should be honest and true

Effective employee communication and new technology

Company intranets have been around for sometime, but rarely have we seem them used effectively. Social networking allied to blog posting and mobile technology are ideal opportunities to reach your employees. We believe that the new technology is a new opportunity to reach your people on a regular basis. It shouldn’t replace good verbal systems – meetings, works councils, seminars, company presentations, appraisals etc -  but it can be a good tool to supplement current methods.

Intrasplash

Lean QCD and Datasplash are jointly developing an exciting new business communication product using current technology and best leadership practice to help all types of organisations to improve their employee communication.

Main features are:

• Web based company communications
• Links to and from Twitter, Facebook and other social streams (optionally)
• Real-time company updates
• Draft policy feedback system
• Employee surveys
• Employee forum
• Sales team news and postings (or any department)
• Customers can share their direct updates (optionally)
• Incorporates newsletter

We expect this product to be launched by end October 2010 – if you would like to receive more information and development updates please complete the form below.

Basic Quality Control Tools and techniques that are vital in the visualisation and understanding of a problem or situation by analysing the available data in the most effective way.

The 7 basic Quality Control tools are as follows;

1. Pareto Charts
2. Cause & Effect Diagrams
3. Graphs & Control Charts
4. Check Sheets
5. Histograms
6. Scatter Diagrams
7. Stratification

1. Pareto Charts

A bar graph displaying data by importance i.e quantity
A Pareto provides a clear visual picture of data displayed by priority or contribution, showing exactly where to dig first.

Characteristics

1. Separates the critical few from the trivial many
2. Used to decide which part of the problem to tackle first
3. Based on the Pareto principle (80 % of problems come from 20 % of causes)

2. Cause & Effect (Ishikawa or Fishbone) Diagram

A diagram showing all the factors which could potentially affect a problem or process
Brainstorming, is by definition is a fairly random process, and an Ishikawa or Fishbone diagram can provide a simple, visual and logical breakdown of the problem by grouping potential causes under one of 4 main headings;

1. Machine
2. Man
3. Method
4. Material

The diagram is built up around the central spine of the problem & the 4 main bones (headings) hence the widely used name ‘Fishbone’, clarifying and visualising the ideas into a more easily interpretable format.

Characteristics

1. A tool for visualising & categorising a ‘brainstorming’ exercise
2. Identify potential causes of a problem
3. Breaks causes down into their smallest parts
4. Shows how causes interact

3. Graphs & Control Charts

There are 4 main types of graph used to display general data;

Line or Run Chart: visualise a trend

Bar Graph: compare 2 or more values

Pie Chart: show relative magnitudes,frequencies or percentages

Radar: compare performance of different entities against common criteriaControl Charts: A continuous picture of a process and it’s variation

4. Check sheets

A simple document used for the collection of data in real time, at the point where the data is generated, by hand.

Characteristics

1. Simple, hand completed
2. In real time at the actual location

5. Histograms

A bar graph displaying a number of observations or measurements within a rangeA simple tool for showing the spread or distribution of a range of data & measuring how much variation exists. Very effective for showing what percentage of the outputs of a process are acceptable or should be rejected

Characteristics

1. A picture of the distribution
2. To look at patterns
3. Compare distribution to specifications

6. Scatter diagrams

A scatter diagram is effectively a line graph with no lineUsed to study possible relationships between two variables. The purpose being to show what happens to one variable when another is changed

Characteristics

1. The relationship between two variables
2. What effect do changes have

7. Stratification

Analysing data which has been separated by different criteria

Typically data is analysed divided by the following criteria;

1. By time (Month, day, shift, time etc)
2. By Process (Machine, tool, jig, die etc)
3. By Working Method (Temp, Pressure, speed etc)
4. By Workforce (Shift, section, experience)
5. By Product (Batch number, part number, supplier etc)

What these tools are for: Painting a picture by numbers

Data needs to be fully and clearly understood to ensure that the message it provides is clear and accurate. Ensuring that you look at the data from a number of different angles ensures you see the whole story. Think of the data as a three dimensional shape (like a rubik’s cube), which can look very different depending on where you view it from and by the criteria on which it’s judged.
The real power of charts and graphs is in the visualisation, painting an easily interpreted picture from the numbers, using the 7 Quality Control Tools will help you achieve a clear picture every time.

If a main business goal is “Satisfy the customer” then the first rule of quality management should be to protect the customer. This is clear but is often missed or not fully implemented as the business tries to extinguish the various quality fires.

Responsibility of removing risk of poor quality to the customer

The responsibility of removing the risk of defects reaching the customer should be that of the Quality Dept. This does not mean they are responsible for all of the actions, but  as the first line of defence against customer dis-satisfaction caused by poor quality, they are the ones who have most to gain by protecting the customer.

This also means that they can start to focus their attention internally on permanently fixing the problems rather than explaining why, how and promising no more to the customer. There are a number of methods and tools to protect the customer whilst working on eradicating the issues for good.

Inspect out rejects

This can be in-line inspection or a special containment area, either way it is potentially an additional cost (but not necessarily – see more about this later) and should be viewed as a short-term measure by the business.

In-line inspection

• Include as part of the standard
• Have a clear quality specification (as visual as possible)
• Include master samples and boundary samples as required
• As part of Management control check the inspection work
• Measure the results – have an exit plan based on a level of build-in quality that ensures no customer defects

Special containment area

• Same rules as for In-line inspection; plus -
• Separated from the main production area including a barrier
• Clear feedback loop and problem solving process back to production to deal with issues ensuring manufacturing take responsibility
• Ensure environment is suitable – well lit, well laid out and showing the highest standards of product handling and process

Incorporate quality checks into the process as standard

This should be part of your initial process design in the first place – but if it is not working, then now is an ideal time to review and rectify the in-line quality checks. Again, the key is that for the future you should not have to rely on these standard checks, they become a back-stop for unplanned variability in the process.

Review historical issues

Always a good starting point. reviewing past issues, especially for repeats, will help you with your temporary containment activities and also tell you where to prioritise going forward. To be able to do this successfully you need:

• Good information systems – including a database showing issues, responsibility and counter-measures.
• A support structure to be able to deal with issues raised – support from technical, quality engineering, manufacturing and IT.
• A clear link to the issues and the temporary containment measures to ensure that temporary containment can be removed at the earliest opportunity.

The cost of temporary customer protection

Clearly, putting in place temporary customer protection has cost implications. This has to be compared to the cost of completely dis-satisfying the customer and potentially losing the customer. Be aware of the cost and ensure that there is a clear exit strategy for removing the temporary measures.

However, there does not have to be severe cost implications, if the quality management activities are also an integral part of the lean implementation then the big waste removed as part of the initial stages of lean will generate the resource to be able to put in place temporary measures. The purpose of lean is to increase throughput and generate the ability to sell more with the same resource. This spare resource can then be used to implement the temporary measures.

Please feel free to read more on the purpose of lean in by clicking this link:

http://leanqcd.com/2010/08/how-lean-can-be-feared-by-the-workforce-and-how-goal-deployment-will-help/

Summary

1. Recognise that a key to customer satisfaction is to protect the customer from poor quality thereby buying you time to fix the problems for good
2. Recognise that these should be short-term measures and there should be an exit strategy
3. Communicate the issues throughout the organisation and measure the results
4. Make the customer aware that you are implementing practical but temporary measures to protect them
5. Use lean implementation as an initial means of minimising the cost of the temporary measures

In my first article on this subject (The lean-accountant – how the finance professional can add value), the assertion was that the lean-accountant is missing out on a major opportunity to play an active role in an organisation’s lean transformation. By using their unique position and business-wide sense they could become the champion for Lean as a business wide culture.

The comments that this post received highlights the age-old perceived battle between Operations and Finance – possibly a comfort-zone for all those involved. It is clear that there is an onus of responsibility on both the Operations Manager (also Technical, Engineering and General Manager) and the lean-accountant to ensure that the transformation benefits the whole business.

If the Finance professional is not actively involved in the lean transformation, or indeed bemoaning the lack of bottom-line improvement, then the Ops Manager has a responsibility to explain the improvements and how the business can and should benefit and can also point out the “low hanging fruit” that can quickly bolster the bottom line

Create Stability – or pluck the low hanging fruit

The first stage of the continuous improvement cycle is to stabilise the processes before linking and creating flow – this is where the opportunity to remove the big waste lies.

What does stability mean ?

Create a basic level of stability – “stand in the circle” and remove the big waste !

The 8 wastes are typically defined as:

1. Unnecessary movement – non value added employee motion eg. Reaching for parts, stacking, walking
2. Overproduction – producing earlier or in greater quantities than required
3. Waiting (time on hand) – workers watching an automated machine or waiting for a previous operation or waiting for machines to be fixed
4. Transportation or conveyance –excessive and unnecessary movement  of parts
5. Over-processing or incorrect processing – unneeded steps to process the parts, poorly designed process
6. Excess inventory – excess material, WIP or finished goods – causes longer lead times and hides quality problems
7. Defects – scrap means rework or replacement parts
8. Unused employee creativity – by not listening to and engaging your employees

These are the clues to look out for when creating stability. Typically this is where you will find big cost flowing out of the company and where you can find immediate benefit. In companies we have worked in big waste could be described as:

• High levels of machine downtime – created a need for excessive overtime; just to get the equipment functioning again a “sticking plaster” was applied normally at high cost; because of the need to start making product again and quickly, higher levels of scrap were tolerated – when the crisis was over the business breathed a huge sigh of relief and moved on to the next fire.
• High levels of scrap – an obvious source of waste
• A culture of overtime to fix shortfalls – eventually the employees got fed up with having to work 6 or 7 day weeks with no end in sight
• Special transport costs

These issues could be fixed by applying lean tools to the stability phase – once fixed the immediate benefit to the bottom-line was significant.

The lean accountant could see these improvements, even using traditional costing and measurement – explain this and show this and then you have the lean-accountant engaged ready to accept the improvements and look how the real essence of lean can improve the business.

Link processes to remove waste and create capacity

We all know that this is the essence of lean – being able to do more with the same cost is surely a compelling argument.

Traditional accounting costing methods, especially the valuation of inventory is a paradigm to the very essence of lean. Not a easy paradigm to get over, but at least the Operations Manager is starting to win the lean-accountant over. The next step is to get the Sales Manager to accept that he/she will need to have to go and win more business to utilise this extra capacity – a whole new battle, but when this battle is fought and won just imagine what will happen to the bottom line……

Summary

The key for the Operations Manager is to engage the lean-accountant in the lean implementation; the bribery of removing big waste is as good a starting point as any. Then once engaged, it is the responsibility of both functional areas to explore the even greater potential for lasting bottom line improvements through the full implementation of lean and the creation of a true continuous improvement cycle.

How I unmasked my leadership style

If you’d asked my colleagues about me 10 years ago, I’m sure that they’d have been quick to tell you how cold, direct and uncaring I could be and I’m sure the words grumpy, angry and disagreeable would come up pretty soon, along with some more savoury negatives.

By contrast, if asked, I would have told you that I was pretty relaxed and easy going, passionate about my work but personable, and genuinely cared about my colleagues, a view which would have been endorsed by friends and sporting team mates.
A slight difference! Almost like two different people? 
I found, with increasing regularity that at work, my reasons and intentions were misinterpreted as a direct result of my own behaviour, I thought my message, motivation and state of mind were crystal clear to see, but it I was wrong. My physical presence, tone of voice, body language, eye contact and general demeanour, were leading to translation problems on a daily basis.

By way of unbiased example; I attended a week long residential leadership course, and on the first morning before breakfast I met a guy on the stairs and he asked me a if I thought the games had already started and we’d been deliberately deprived of hot water the night before. I responded ‘cheerily’, that I thought it was very unlikely.
Later that day, I found myself in a team including the guy on the stairs (Stuart), where we were asked to share our first impressions of each other. When it came to Stuart, he turned to me and recounted the tail of our meeting on the stairs, and the totally negative effect it had on him.
Unbelievable!
As the week progressed the team worked very closely together over long and deliberately stressful hours, and these people became friends rather than colleagues. We got to appreciate each others motivation, intentions and strengths as well as areas for improvement. I saw how the others reacted to me when I behaved as I do with my friends, they were exposed to the ‘real’ me rather than the ‘work mask’.

I certainly hadn’t made a conscious decision, and I don’t really know how or why this situation developed, however on reflection I’m sure it has something to do with insecurities or a lack of confidence, perceived or real, but I had unwittingly developed a work mask.

The result of these realisations was that I wanted to change my approach, drop the ‘work mask’, and that in itself created problems. I couldn’t just turn up on Monday exhibiting different behaviour, confusing everyone, including me. I decided that with my close colleagues (senior team and direct reports) I would be honest, open and explain my situation, and encourage them to challenge me if in anyway confused by my approach. Over the coming weeks I found myself naturally checking that my meaning was fully understood, because I was calmly and clearly explaining myself and checking the message received, that despite some puzzled looks ( Oh right, we were expecting a shafting ) there was very little confusion, in general the change was recognised and welcomed.
Of course my change was viewed, by some, as only temporary, and that when the pressure was on I would revert as old habits die hard. So I had to make sure that even when provoked, the approach remained on track, not always easy when the brown stuff hits the fan.
It took time for people to get used to the ‘new’ work me  and I’d catch them watching when the pressure was on, but for me I felt more comfortable in myself, I was behaving naturally and was therefore calm and in control of myself, seeing the benefits both personally and for the team.

In business it’s vital that people can clearly read your condition, your state of mind, and they get exactly the message you intended, as a leader it’s critical that your colleagues read your signals loud and clear eliminating any potential confusion. My ‘work mask’ got in my way every day and in no way do I regret letting it slip.