Category: Lean Metrics

Discover Toyota’s Best Practice

The new headquarters of the Toyota Motor Corpo...
The new headquarters of the Toyota Motor Corporation, opened in February 2005 in Toyota City. (Photo credit: Wikipedia)

I have always been impressed by Toyota’s inherent ability to adapt, improve, and embrace change even during the harshest times.  This innate ability is a signature trait of Toyota’s culture and has been the topic of intense study and research for many years.

How is it that Toyota continues to thrive regardless of the circumstances they encounter?  While numerous authors and lean practitioners have studied Toyota’s systems and shared best practices, all too many have missed the underlying strategy behind Toyota’s ever evolving systems and processes.  As a result, we are usually provided with ready to use solutions, countermeasures, prescriptive procedures, and forms that are quickly adopted and added to our set of lean tools.

The true discovery occurs when we realize that these forms and procedures are the product or outcome of an underlying systemic thought process.  This is where the true learning and process transformations take place.  In many respects this is similar to an artist who produces a painting.  While we can enjoy the product of the artist’s talent, we can only wonder how the original painting appears in the artist’s mind.

Of the many books that have been published about Toyota, there is one book that has finally managed to capture and succinctly convey the strategy responsible for the culture that presently defines Toyota.  Written by Mike Rother, “Toyota Kata – Managing People For Improvement, Adaptiveness, and Superior Results” reveals the methodology used to develop people at all levels of the Toyota organization.

Surprisingly, the specific techniques described in the book are not new, however, the manner in which they are used does not necessarily follow conventional wisdom or industry practice.  Throughout the book, it becomes evidently clear that the current practices at Toyota are the product of a collection of improvements, each building on the results of previous steps taken toward a seemingly elusive target.

Although we have gleaned and adopted many of Toyota’s best practices into our own operations, we do not have the benefit of the lessons learned nor do we fully understand the circumstances that led to the creation of these practices as we know them today.  As such, we are only exposed to one step of possibly many more to follow that may yield yet another radical and significantly different solution.

In simpler terms, the solutions we observe in Toyota today are only a glimpse of the current level of learning.  In the spirit of the improvement kata, it stands to reason that everything is subject to change.  The one constant throughout the entire process is the improvement kata or routine that is continually practiced to yield even greater improvements and results.

If you or your company are looking for a practical, hands on, proven strategy to sustain and improve your current operations then this book, “Toyota Kata – Managing People For Improvement, Adaptiveness, and Superior Results“, is the one for you.  The improvement kata is only part of the equation.  The coaching kata is also discussed at length and reveals Toyota’s implementation and training methods to assure the whole company mindset is engaged with the process.

Why are we just learning of this practice now?  The answer is quite simple.  The method itself is practiced by every Toyota employee at such a frequency that it has become second nature to them and trained into the culture itself.  While the tools that are used to support the practice are known and widely used in industry, the system responsible for creating them has been obscure from view – until now.

You can preview the book by simply clicking on the links in our post.  Transforming the culture in your company begins by adding this book, “Toyota Kata – Managing People For Improvement, Adaptiveness, and Superior Results”, to your lean library.  I have been practicing the improvement and coaching kata for some time and the results are impressive.  The ability to engage and sustain all employees in the company is supported by the simplicity of the kata model itself. For those who are more ambitious, you may be interested in the Toyota Kata Training offered by the University of Michigan.

Learning and practicing the Toyota improvement kata is a strategy for company leadership to embrace.  To do otherwise is simply waiting to copy the competition.  I have yet to see a company vision statement where the ultimate goal is to be second best.

Until Next Time – STAY lean!

Vergence Analytics
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Killer Metrics

Dead plant in pots
Image via Wikipedia

Managing performance on any scale requires some form of measurement.  These measurements are often summarized into a single result that is commonly referred to as a metric.  Many businesses use tools such as dashboards or scorecards to present a summary or combination of multiple metrics into a single report.

While these reports and charts can be impressive and are capable of presenting an overwhelming amount of data, we must keep in mind what we are measuring and why.  Too many businesses are focused on outcome metrics without realizing that the true opportunity for performance improvement can be found at the process level itself.

The ability to measure and manage performance at the process level against a target condition is the strategy that we use to strive for successful outcomes.  To put it simply, some metrics are too far removed from the process to be effective and as such cannot be translated into actionable terms to make a positive difference.

Overall Equipment Effectiveness or OEE is an excellent example of an outcome metric that expresses how effectively equipment is used over time as percentage.  To demonstrate the difference between outcome and process level metrics, let’s take a deeper look at OEE.  To be clear, OEE is an outcome metric.  At the plant level, OEE represents an aggregate result of how effectively all of the equipment in the plant was used to produce quality parts at rate over the effective operating time.  Breaking OEE down into the individual components of Availability, Performance, and Quality may help to improve our understanding of where improvements can be made, but still does not serve to provide a specific direction or focus.

At the process level, Overall Equipment Effectiveness is a more practical metric and can serve to improve the operation of a specific work cell where a specific part number is being manufactured.  Clearly, it is more meaningful to equate Availability, Performance, and Quality to specific process level measurements.  We can monitor and improve very specific process conditions in real time that have a direct impact on the resulting Overall Equipment Effectiveness.  A process operating below the standard rate or producing non-conforming products or can immediately be rectified to reverse a potentially negative result.

This is not to say that process level metrics supersede outcome metrics.  Rather, we need to understand the role that each of these metrics play in our quest to achieve excellence.  Outcome metrics complement process level metrics and serve to confirm that “We are making a difference.”  Indeed, it is welcome news to learn that process level improvements have translated into plant level improvements.  In fact, as is the case with OEE, the process level and outcome metrics can be synonymous with a well executed implementation strategy.

I recommend using Overall Equipment Effectiveness throughout the organization as both a process level and an outcome level metric.  The raw OEE data at the process level serves as a direct input to the higher level “outcome” metrics (shift, department, plant, company wide).  As such, the results can be directly correlated to specific products and / or processes if necessary to create specific actionable steps.

So, you may be asking, “What are Killer Metrics?”  Hint:  To Measure ALL is to Manage NONE.  Choose your metrics wisely.

Until Next Time – STAY lean!

Vergence Analytics

OEE: The Means to an End – Differentiation Where It Matters Most

A pit stop at the Autrodomo Nazionale of Monza...
Image via Wikipedia

Does your organization focus on results or the means to achieve them?  Do you know when you’re having a good day?  Are your processes improving?

The reality is that too many opportunities are missed by simply focusing on results alone.  As we have discussed in many of our posts on problem solving and continuous improvement, the actions you take now will determine the results you achieve today and in the future. Focus on the means of making the product and the results are sure to follow.

Does it not make sense to measure the progress of actions and events in real-time that will affect the end result? Would it not make more sense to monitor our processes similar to the way we use Statistical Process Control techniques to measure current quality levels?  Is it possible to establish certain “conditions” that are indicative of success or failure at prescribed intervals as opposed to waiting for the run to finish?

By way of analogy, consider a team competing in a championship race.  While the objective is to win the race, we can be certain that each lap is timed to the fraction of a second and each pit stop is scrutinized for opportunities to reduce time off the track.  We can also be sure that fine tuning of the process and other small corrections are being made as the race progresses.  If performed correctly and faster than the competition, the actions taken will ultimately lead to victory.

Similarly, does it not make sense to monitor OEE in realtime? If it is not possible or feasible to monitor OEE itself , is it possible to measure the components – Availability, Performance, and Quality – in real-time?  I would suggest that we can.

Performance metrics may include production and quality targets based on lapsed production time. If the targets are hit at the prescribed intervals, then the desired OEE should also be realized.  If certain targets are missed, an escalation process can be initiated to involve the appropriate levels of support to immediately and effectively resolve the concerns.

A higher reporting frequency or shorter time interval provides the opportunity to make smaller (minor) corrections in real-time and to capture relevant information for events that negatively affect OEE.

Improving OEE in real-time requires a skilled team that is capable of trouble shooting and solving problems in real-time. So, resolving concerns and making effective corrective actions in real-time is as important to improving OEE than the data collection process itself.

A lot of time, energy, and resources are expended to collect and analyze data. Unfortunately, when the result is finalized, the opportunity to change it is lost to history.  The absence of event-driven data collection and after the fact analysis leads to greater speculation regarding the events that “may have” occurred versus those events that actually did.

Clearly, an end of run pathology is more meaningful when the data supporting the run represents the events as they are recorded in real-time when they actually occurred.  This data affords a greater opportunity to dissect the events themselves and delve into a deeper analysis that may yield opportunities for long-term improvements.

Set yourself apart from the competition.  Focus on the process while it is running and make improvements in real-time.  The results will speak for themselves.

Your feedback matters

If you have any comments, questions, or topics you would like us to address, please feel free to leave your comment in the space below or email us at feedback@leanexecution.ca or feedback@versalytics.com.  We look forward to hearing from you and thank you for visiting.

Until Next Time – STAY lean

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Versalytics Analytics
 

How Effective is Your Problem Solving?

The re-drawn chart comparing the various gradi...
Image via Wikipedia

Background

Of the many metrics that we use to manage our businesses, one area that is seldom measured is the effectiveness of the problem solving process itself.  We often engage a variety of problem solving tools such as 5-Why, Fishbone Diagrams, Fault Trees, Design of Experiments (DOE), or other forms of Statistical Analysis in our attempts to find an effective solution and implement permanent corrective actions.

Unfortunately, it is not uncommon for problems to persist even after the “fix” has been implemented.  Clearly, if the problem is recurring, either the problem was not adequately defined, the true root cause was not identified and verified correctly, or the corrective action (fix) required to address the root cause is inadequate.  While this seems simple enough, most lean practitioners recognize that solving problems is easier said than done.

Customers demand and expect defect free products and services from their suppliers.  To put it in simple terms, the mission for manufacturing is to:  “Safely produce a quality part at rate, delivered on time, in full.”  Our ability to attain the level of performance demanded by our mission and our customers is dependent on our ability to efficiently and effectively solve problems.

Metrics commonly used to measure supplier performance include Quality Defective Parts Per Million (PPM), Incident Rates, and Delivery Performance.  Persisting negative performance trends and repeat occurrences are indicative of ineffective problem solving strategy.  Our ability to identify and solve problems efficiently and effectively increases customer confidence and minimizes product and business risks.

Predictability

One of the objectives of your problem solving activities should be to predict or quantify the expected level of improvement.   The premise for predictability introduces a nuance of accountability to the problem solving process that may otherwise be non-existent.  In order to predict the outcome, the team must learn and understand the implications of the specific improvements they are proposing and to the same extent what the present process state is lacking.

To effectively solve a problem requires a thorough understanding of the elements that comprise the ideal state required to generate the desired outcome.  From this perspective, it is our ability to discern or identify those items that do not meet the ideal state condition and address them as items for improvement.  If each of these elements could also be quantified in terms of contribution to the ideal state, then a further refinement in predictability can be achieved.

The ability to predict an outcome is predicated on the existence of a certain level of “wisdom”, knowledge, or understanding whereby a conclusion can be formulated.

Plan versus Actual

Measuring the effectiveness of the problem solving process can be achieved by comparing Planned versus Actual results. The ability to predict or plan for a specific result suggests an implicit level of prior knowledge exists to support or substantiate the outcome.

Fundamentally, the benefits of this methodology are three-fold as it measures:

  • How well we understand the process itself,
  • Our ability to adequately define the problem and effectively identify the true root cause, and
  • The effectiveness of solution.

Another benefit of this methodology is the level of inherent accountability.  Specific performance measurements demand a greater degree of integrity in the problem solving process and accountability is a self-induced attribute of most participants.

The ability for a person or team to accurately define, solve, and implement an effective solution with a high degree of success also serves as a measure of the individual’s or team’s level of understanding of that process.  From another perspective, it may serve as a measure of knowledge and learning yet to be acquired.

As you may expect, this strategy is not limited to solving quality problems and can be applied to any system or process.  This type of measurement system is used by most manufacturing facilities to measure planned versus actual parts produced and is directly correlated to overall equipment effectiveness or OEE.

Any company working in the automotive manufacturing sector recognizes that this methodology is an integral part of Toyota’s operating philosophy and for good reason.  As a learning organization, Toyota fully embraces opportunities to learn from variances to plan.

Performance expectations are methodically evaluated and calculated before engaging the resources of the company.  It is important to note that exceeding expectations is as much a cause for concern as falling short.  Failing to meet the planned target (high / low or over / under) indicates that a knowledge gap still exists.  The objective is to revisit the assumptions of the planning model and to learn where adjustments are required to generate a predictable outcome.

Steven Spear discusses these key attributes that differentiate industry leaders from the rest of the pack in his book titled The High Velocity Edge.

First Time Through Quality (FTQ)

FTQ can also be applied to problem solving efforts by measuring the number of iterations that were required before the final solution was achieved.  Just as customers have zero tolerance for repeat occurrences, we should come to expect the same level of performance and accountability from our internal resources.

Although the goal may be to achieve a 100% First Time Through Solution rate, be wary of Paralysis by Analysis while attempting to find the perfect solution.  The objective is to enhance the level of understanding of the problem and the intended solution not to bring the flow of ideas to a halt.  Too often, activity is confused with action.  To affect change, actions are required.  The goal is to implement effective, NOT JUST ANY, solutions.

Jishuken

Literally translated, Jishuken means “Self-Study”.  Prior to engaging external company resources, the person requesting a Jishuken event is expected to demonstrate that they have indeed become students of the process by learning and demonstrating their knowledge of the process or problem.  It pertains to the collaborative problem solving strategy after all internal efforts have been exhausted and external resources are deployed with ”fresh eyes” to share knowledge and attempt to achieve resolution.  While the end result does not appear to be “self study”, the prerequisite for Jishuken is “exhausting all internal efforts”.  In other words, the facility requesting outside resources must first strive to become experts themselves.

Summary

Many companies limit their formal problem solving activities to the realm of quality and traditional problem solving tools are only used when non-conforming or defective product has been reported by the customer.  Truly agile / lean companies work ahead of the curve and attempt to find a cure before a problem becomes a reality at the customer level.

With this in mind, it stands to reason that any attempt to improve Overall Equipment Effectiveness or OEE also requires some form of problem solving that, in turn, can affect a positive change to one or all of the components that comprise OEE:  Availability, Performance, and First Time Through Quality.

As a reminder, OEE is the product of Availability (A) x Performance (P) x Quality (Q) and measures how effectively the available (scheduled) time was used to produce a quality product.  To get your free OEE tutorial or any one of our OEE templates, visit our Free Downloads page or pick the files you want from our free downloads box in the side bar.  You can easily customize these templates to suit your specific process or operation.

Many years ago I read a quote that simply stated,

“The proof of wisdom is in the results.”

And so it is.

Until Next Time – STAY lean!

Vergence Analytics

Pivot Tables, OEE, and Differentiation Strategy

Automated systems are great at creating data and generating reports but they don’t always give us what we’re looking for.  Microsoft’s Excel Pivot Tables provide an amazing ability to create and generate custom reports on the fly and it’s easier than you may think.  Could this be a differentiation factor for how your company works with OEE data versus others claiming to do the same?

For some reason, Pivot Tables seem to be obscure and very few people seem to understand how much power they bring to the arena of data analytics.  We recommend reviewing a site we discovered that presents some excellent tutorials covering a number of areas of interest including an in-depth look at Pivot Tables.  If you’re overwhelmed by the volume of data that you have to contend with, I highly recommend visiting http://www.brainbell.com/tutorials/ms-office/excel/

Excel Pivot Tables can “connect” to external data sources and most systems provide the functionality required to support exporting data to Microsoft Office products and other platforms.  You can discuss the options available with your system provider or your company IT administrator.

Of course, this means we’ll have to demonstrate how Pivot Tables can be used to summarize OEE results.  Coming soon to our Free Downloads page.  In the meantime, take some time to learn how Pivot Tables can be used to help you with everyday data.  You won’t be disappointed.

We’ve also decided that to improve our spreadsheet solutions, we will start presenting spreadsheets that include the use of VBA.  The added functionality provided by custom VBA routines is decidedly worth the extra effort.

Until Next Time – STAY lean!

Vergence Analytics

Differentiation Strategies and OEE (Part II): The Heart of the Matter

An article published in Industry Week magazine comprises part of our pursuit of differentiation strategies and OEE.  This will serve as the topical element of our post for today.

Enjoy the article, OEE:  The heart of the matter, and we’ll provide our thoughts and insights as well.  If the above links do not work, you can copy and paste the following link into your browser:

http://www.industryweek.com/articles/oee_the_heart_of_the_matter_18211.aspx

Until Next Time – STAY lean!

Vergence Analytics

Differentiation Strategies and OEE (Part I)

If your competitors are using OEE to manage their processes just like you, how do you plan to establish a unique approach that helps your company to outperform them?  You may be surprised to learn that the perception of process management and control created by high technology OEE solutions can quickly be shattered by the lack of specific process level data collection and analysis.

A recent visit to a high volume production facility was typical of most operations with all the latest technology to show FTQ (First Time Quality), OA (Operational Availabillity), Plan versus Actual rates, and plasma process displays showing fault locations.  We were disappointed and surprised to learn that the collection of raw data at the process level was extremely limited and required personnel to manually record data using paper tracking sheets.  While the displays were high technology, the infrastructure required to support data collection and provide meaningful analytics in real time did not exist.

In contrast, we have also toured facilities that have highly integrated data collection and analysis to support their OEE systems in real time.  Highly evolved and integrated OEE systems actually allow personnel to use the system to help them manage their processes as opposed to the first case where personnel are wondering whether anyone is even looking at the “numbers”.

From this perspective, the level of OEE integration in your organization could be a defining attribute that differentiates your company from your competitors.  This is easily demonstrated by showing how your data is used to manage and improve your results in real time versus others who are looking at the results only to scratch their heads and wonder what is going on.  The success of your integration is also directly correlated to the training provided to your team – at all levels.

There is more to differentiation than being the same but different.

Until Next Time – STAY lean!


Vergence Analytics

The High-Velocity Edge Is Here!

Update:  Steven J. Spear has been awarded the Philip Crosby Medal for his book “The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition” according to a Press release from ASQ—the world’s largest network of quality resources and experts (Milwaukee, WI March 2, 2011).

We have raved about the book “Chasing the Rabbit” written by Steven J. Spear and have just learned that the book has been re-released under a new a title, The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition.  Recognizing that your time is a valuable commodity, we aim to provide information that is relevant to our readers and visitors.  This book provides much more information on certain topics than one could ever hope to achieve through a website or blog – hence our recommendation.

This is perhaps an unprecedented marketing strategy for what was an already very successful book.  In one respect this reflects the wisdom of Peter Drucker who suggested that there is a time to abandon the old (even if it is considered an award winning success) in lieu of the fresh and new.  The following are excerpts from the e-mail we received from Steve that explain the reasons for this change:

Dear Friends and Colleagues,

The High Velocity Edge shows the particular skills and capabilities that lead to broad-based, high-speed, non-stop improvement and innovation.  Master these and you achieve exceptional, rival-beating performance, even if facing intense competition. If you don’t, you watch as someone else wins

The book (and the website supporting it) are replete with examples of how these capabilities are developed and deployed in high tech and heavy industry, in design and production, in services like health care and in manufacturing.

There is Pratt and Whitney’s compression in time and cost of jet engine design, the Navy’s creation of nuclear propulsion  with breath taking speed, Alcoa’s achieving near perfect workplace safety, and the exceptional improvement of care in medical institutions.

Toyota features prominently as an example, both in showing how  successfully cultivating the capabilities introduced and illustrated in The High Velocity Edgeare the source of  tremendous competitive strength and also in showing how the capacity to develop such capabilities can be overburdened.

With the release of The High Velocity Edge, I’m testing new media approaches, being released on its website, to bring the book’s ideas into broader practice more quickly than traditional means alone allow.

Here’s a closer look at what is new.

New Title and Cover: Why a  new name and cover after three awards, versions in four languages, and flattering reviews?  Well, people do judge a book by its cover, and those who didn’t read the reviews or learn of the awards were too often left  wondering what was inside.  Not so with the new.

New material:  You’ll find a new preface and epilogue, drawing lessons about leadership, innovation, and operational excellence from  Toyota’s recent  struggles.

New media: I’m testing ways to  help  people master more quickly and reliably the skills that allow individuals and organizations to achieve broad-based, high-speed improvement and innovation.

On the way are an interactive web-based case study, an ‘open school’ course for those in health care professions, and a series of short tutorials to help people review what they’ve read and to help them teach what they’ve learned to their own students and colleagues. The results will be introduced on the book’s website.

Of course, there will still be postings, applying the principles of leadership, innovation, and operational excellence to current topics.

I certainly hope you find the new look, content, and format useful in pursuing perfection.

Please share your feedback, and let’s talk about how I can help you put these ideas  to use in your own organization.

Thanks!

Steve Spear

A high velocity organization is, in our opinion, a step above and beyond the traditional lean principles that are typical of most text books and seminars on this topic.  The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition will prove to be a worthwhile read and we highly recommend this to any company seriously seeking to take their organization to the next level.  We have also added this book to our recommended reading list.

Until Next Time – STAY lean!

Vergence Business Analytics

Pure Genius: Teach, Build, Model

At first I thought this approach seemed to be a little too simplistic as an execution strategy.  On second thought, however, it seemed to be very appropriate to most situations that we may encounter.  It has certainly been a very practical superview for our current project.

Teach: Teach the concepts, systems, processes, and procedures that are required to achieve a given goal or objective.

Build: Interactive training sessions should provide for feedback and further development of the elements presented.  At this stage, personnel become engaged and help to further develop the systems, processes, and procedures.

Model: Leadership, executive management, and personnel must model the behavior or activities that are required to successfully achieve the desired goal or objective.  Deviations to the planned activities must be discussed and reviewed in real-time with the team.  Revise as necessary but enact or communicate changes in real time.

How far do we go in our pursuit of better systems and data analysis? The true goal is not to build systems that collect data for later analysis, but to build systems that analyze data based on collected data in real-time.  Ideally, the analysis would lead to future projections based on past history and current performance in real-time.  How far we want to go with the analysis is driven by the vision and goals we are seeking to achieve.

For added inspiration as to what can be accomplished with data that is available, we found this video featuring Stephen Wolfram, creator of Mathematica, where he talks about his quest to make all knowledge computational — as able to be searched, processed and manipulated. His new search engine, Wolfram Alpha, has no lesser goal than to model and explain the physics underlying the universe.

This is an amazing video (unfortunately, we can’t embed the video directly into our page) and the WolframAlpha Website is equally impressive to demonstrate what can be done with the right tools and data engines. Click here to visit WolframAlpha. While you’re at the site, you may wish to subscribe to TED. There are many motivating and inspirational videos / talks that cover a diverse range of topics and areas of interest.

We are currently developing a business operating system for a client where informal, undocumented, methods exist.  Our task is to streamline these “methods” into a cohesive system to provide for real-time analysis and reporting for a variety of functional areas in the business.  Essentially, we are creating a bridge from the present day activities to a more rigorous, systems driven, process.  From this perspective, the above three (3) step process has proven to be a very practical means of strategizing the approach as new initiatives are introduced.

Until Next Time – STAY lean!

Getting the Bugs Out

We updated the link to “Chasing the Rabbit:  How Market Leaders Outsdistance the Competition and How Great Companies Can Catch Up and Win” authored by Steven J. Spear.  If you haven’t had a chance to add this book to your library, now is the time to get your copy.

Remember to visit our Lean Books page for other great selections too.  Readers are leaders and leaders are readers!

We’ve been extremely busy working on some exciting new projects.  We’ll be sharing our thoughts on these soon.

Until Next Time – STAY lean!