Category: Quality

Strategies to improve Quality are typically founded on rework and scrap reduction. Measurement of Quality is not limited to the Quality factor for OEE. The cost of non-Quality is also a key metric to managing overall quality performance.

Lean – Burnout, Apathy, and Pareto’s Law

Example Pareto chart
Typical Application to Analyze Quality Defects

The Premise:  Pareto’s Law

The late Josheph Juran introduced the world to Pareto’s Law, aptly named after Italian economist Vilfredo Pareto.  Many business and quality professionals alike are familiar with Pareto’s law and often refer to it as the 80 / 20 rule.  In simple terms, Pareto’s Law is based on the premise that 80% of the effects stem from 20% of the causes.

As an example, consider that Pareto’s Law is often used by quality staff to determine the cause(s) responsible for the highest number of defects as depicted in the chart to the right.  From this analysis, teams will focus their efforts on the top 1 or 2 causes and resolve to eliminate or substantially reduce their effect.

In this case, the chart suggests that highest number of defects are due to shrink followed by porosity.  At this point a problem solving strategy is established using one of the many available tools (8 Discipline Report, 5 Why, A3) to resolve the root cause and eliminate the defect.  Over time and continued focus, the result is a robust process that yields 100% quality, defect free, products.

In practice, this approach seems logical and has proven to be effective in many instances.  However, we need to be cognizant of a potential side effect that may be one of the reasons why new initiatives quickly wane to become “the program of the day.”

The Side Effects:  Burnout and Apathy

Winning the team’s confidence is often one of the greatest challenges for any improvement initiative.  A common strategy is to select a project where success can be reasonably assured.  If we apply Pareto’s Law to project selection, we are inclined to select a project that is either relatively easy to solve, offers the greatest savings, or both.

In keeping with the example presented in the graphic, resolving the “shrink” concern presents the greatest opportunity.  However, we can readily see that, once resolved, the next project presents a significantly lower return and the same is true for each subsequent project thereafter.

Clearly, as each problem is resolved, the return is diminished.  To compound matters, problems with lower rates of recurrence are often more difficult to solve and the monies required to resolve them cannot be justified due to the reduced return on investment.  In other words, we approach the point where the solution is as elusive as “the needle in a haystack” and, once found, it simply isn’t feasible to fund it.

The desire to resolve the concern is significantly reduced with each subsequent challenge as the return on investment in time and money diminishes while the team continues to expend more energy.  Over extended periods of time the continued pursuit of excellence leads to apathy and may even lead to burnout.  As alluded to earlier, adding to the frustration is the inability to achieve the same level of success offered by the preceding opportunities.

The Solution

One of the problems with the approach as presented here is the focus on resolving the concern or defect that is associated with the greatest cost savings.  To be clear, Pareto Analysis is a very effective tool to identify improvement opportunities and is not restricted to just quality defects.  A similar Pareto chart could be created just as easily to analyze process down time.

Perhaps the real problem is that we’re sending the wrong message:  Improvements must have an immediate and significant financial return.  In other words, team successes are typically recognized and rewarded in terms of absolute cost savings.  Not all improvements will have a measurable or immediate return on investment.  If a condition can be improved or a problem can be circumvented, employees should be empowered to take the required actions as required regardless of where they fall on the Pareto chart.

To assure sustainability, we need to focus on the improvement opportunities that are before us with a different definition of success, one with less emphasis on cost savings alone.  Is it possible to make improvements for improvements sake?  We need to take care of the “low hanging fruit” and that likely doesn’t require a Pareto analysis  to find it.

Finally, not all improvement strategies require a formal infrastructure to assure improvements occur.  In this regard, the ability to solve problems at the employee level is one of the defining characteristics that distinguishes companies like Toyota from others that are trying to be like them.  Toyota and the principles of lean are not reliant on tools alone to identify opportunities to improve.

Until Next Time – STAY lean!

Vergence Analytics

Twitter:  @Versalytics

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OEE in an imperfect world

A selection of Normal Distribution Probability...
Image via Wikipedia

Background: This is a more general presentation of “Variation:  OEE’s Silent Partner” published on January 31, 2011.

In a perfect world we can produce quality parts at rate, on time, every time.  In reality, however, all aspects of our processes are subject to variation that affects each factor of Overall Equipment Effectiveness:  Availability, Performance, and Quality.

Our ability to effectively implement Preventive Maintenance programs and Quality Management Systems is reflected in our ability to control and improve our processes, eliminate or reduce variation, and increase throughput.

The Variance Factor

Every process and measurement is subject to variation and error.  It is only reasonable to expect metrics such as Overall Equipment Effectiveness and Labour Efficiency will also exhibit variance.  The normal distribution for four (4) different data sets are represented by the graphic that accompanies this post.  You will note that the average for 3 of the curves (Blue, Red, and Yellow) is common (u = 0) and the shapes of the curves are radically different.  The green curve shows a normal distribution that is shifted to the left, the average (u) is -2, although we can see that the standard deviation for this distribution is better than that of the yellow and red curves.

The graphic also allows us to see the relationship between the Standard Deviation and the shape of curve.  As the Standard Deviation increases, the height decreases and the width increases.  From these simple representations, we can see that our objective is to reduce to the standard deviation.  The only way to do this is to reduce or eliminate variation in our processes.

We can use a variety of statistical measurements to help us determine or describe the amount of variation we may expect to see.  Although we are not expected to become experts in statistics, most of us should already be familiar with the normal distribution or “bell curve” and terms such as Average, Range, Standard Deviation, Variance, Skewness, and Kurtosis.  In the absence of an actual graphic, these terms help us to picture what the distribution of data may look like in our mind’s eye.

Run Time Data

The simplest common denominator and readily available measurement for production is the quantity of good parts produced.  Many companies have real-time displays that show quantity produced and in some cases go so far as to display Overall Equipment Effectiveness (OEE) and it’s factors – Availability, Performance, and Quality.  While the expense of live streaming data displays can be difficult to justify, there is no reason to abandon the intent that such systems bring to the shop floor.   Equivalent means of reporting can be achieved using “whiteboards” or other forms of data collection.

I am concerned with any system that is based solely on cumulative shift or run data that does not include run time history.  As such, an often overlooked opportunity for improvement is the lack of stability in productivity or throughput over the course of the run.  Systems with run time data allow us to identify production patterns, significant swings in throughput, and to correlate this data with down time history.  This production story board allows us to analyze sources of instability, identify root causes, and implement timely and effective corrective actions.  For processes where throughput is highly unstable, I recommend a direct hands-on review on the shop floor in lieu of post production data analysis.

Overall Equipment Effectiveness

Overall Equipment Effectiveness and the factors Availability, Performance, and Quality do not adequately or fully describe the capability of the production process.  Reporting on the change in standard deviation as well as OEE provides a more meaningful understanding of the process  and its inherent capability.

Improved capability also improves our ability to predict process throughput.  Your materials / production control team will certainly appreciate any improvements to stabilize process throughput as we strive to be more responsive to customer demand and reduce inventories.

Until Next Time – STAY lean!

Vergence Analytics

Twitter:  @Versalytics

Quality is Priceless

The price tag for Toyota’s recent recall campaigns is estimated to be more than $2 Billion and the loss in share holder value is likely many times more than this.  Yet we remain optimistic and anticipate that Toyota will make it through this crisis.  We can only imagine what this kind of money could buy if wasn’t spent on repairing vehicles.

In our previous posts we differentiated between design and process failures.  Today we learned of yet another Toyota recall issued yesterday.  This time 8,000 0f the 2010 four-wheel drive Toyota Tacoma pickup trucks are being recalled for possible cracks in the front drive shaft.  In this case the supplier, Dana Corporation, discovered a problem with their manufacturing process that may also have affected parts supplied to Nissan and Ford as well.  Click here to read the full story.

We are reminded of the book titled “Quality is Free” written by the late Philip B. Crosby.  Many manufacturers around the world have learned that the cost of failure knows no bounds.  While it is possible to calculate the costs to repair defective products, the losses incurred due to lost sales, law suits, pending investigations, public relations, and reduced consumer confidence in general will never be known.

Because businesses are not charities, we can only expect that the price of future product offerings will include a portion of the company’s latest financial liabilities.  Naturally, if every product sold performed as expected or better and without flaw or incident, we could continue to focus on improving the quality of both products and processes.

It has been said that success breeds failure.  Success creates contentment, giving rise to complacency, and in turn results in lost focus.  So, what is the value of a process that yields perfect products?  In today’s global economy quality isn’t just a given – quality is priceless.

Until Next Time – STAY lean!

Contingency Plans – Crisis Management in Lean Organizations

Contingency Planning For Lean Organizations – Part IV – Crisis Management

In a previous post we eluded that lean organizations are likely to be more susceptible to disruptions or adverse conditions and may even have a greater impact on the business.  To some degree this may be true, however, in reality, Lean has positioned these organizations to be more agile and extremely responsive to crisis situations to mitigate losses.

True lean organizations have learned to manage change as normal course of operation.  A crisis only presents a disruption of larger scale.  Chapter 10 of Steven J. Spear’s book, “Chasing the Rabbit”, exemplifies how high velocity, or lean, organizations have managed to overcome significant crisis situations that would typically cripple most organizations.

Problem solving is intrinsic at all levels of a lean organization and, in the case of Toyota, problem solving skills extend beyond the walls of the organization itself.  It is clear that an infrastructure of people having well developed problem solving skills is a key component to managing the unexpected.    The events presented in this chapter demonstrate the agility that is present in a lean organization, namely Toyota in this case and it’s supplier base.

Training is a Contingency

Toyota has clearly been the leader in Lean manufacturing and even more so in developing problem solving skills at all levels of the organization company-wide.  The primary reason for this is the investment that Toyota puts into the development of people and their problem solving skills at the onset of their employment with the company.  The ability to see problems, correct them in real time, and share the results (company-wide) is a testament to the system and it’s effectiveness has been proven on many occassions.

Prevention, preparation, and training (which is also a form of prevention) are as much an integral part of  contingency planning as are the actual steps that must be executed when a crisis situation occurs.  Toyota has developed a rapid response reflex that is inherent in the organization’s infrastructure to rapidly regain it’s capabilities when a crisis strikes.

Crisis Culture

We highly recommend reading Steven J. Spear’s “Chasing the Rabbit” to learn and appreciate the four capabilities that distinguish “High Velocity” organizations.  The key to lean is creating a cultural climate that is driven by the relentless pursuit of improvement and elimination of waste.  Learning to recognize waste and correcting the condition as it occurs requires keen observation and sharp problem solving skills.

Creating a culture of this nature is an evolutionary process – not revolutionary.  In many ways the simplicity of the four capabilities is it’s greatest ally.  Instilling these principles and capabilities into the organization demands time and effort, but the results are well worth it.  Lean was not intended to be complex and the principles demonstrated and exemplified in Chasing the Rabbit confirm this to be true.  This is not to be construed as saying that the challenges are easy … but with the right team they are certainly easier.

Until Next Time – STAY Lean!

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Contingency Planning For Lean Operations – Part I

Contingency Planning For Lean Operations – Part I

Lean operations are driven by effective planning and efficient execution of core activities to ensure optimal performance is achieved and sustained.  The very nature of lean requires extreme attention to detail through all phases of planning and execution.  Upstream operations simply cannot tolerate any disruptions in product supply or process flow without the risk of incurring significant downtime costs or other related losses.

Effective risk management methods, contingency plans, and loss prevention strategy are critical components of successful operations management in a lean operation.  Risk management and preventing disruptions is the subject of contingency planning and requires the participation of all team members.

Successful contingency planning assures the establishment of an effective communication strategy and identification of core activities and actions required.  Contingency plans may require alternative methods, processes, systems, sources, or services and must be verified, validated, and tested prior to implementation.

Understanding and assessing the potential risks to your operation is the basis for contingency planning with the objective to minimize or eliminate potential losses.

Inventory represents the most basic form of contingency planning.  Safety stock or buffer inventories are typically used to minimize the effects of equipment downtime or disruptions in the supply chain. 

The levels of inventory to maintain are dependent on a number factors including Lead Time, Value, Carrying Cost, Transit Time (Distance), Shelf Life, Minimum Order Quantities, Payment Terms, and Obsolescence.

Why is this relevant?

Material and Labour represent two key resources that may be influenced by external factors that are beyond the control of any company policy or practice.  Internally controlled or managed resources such facilities, equipment, and tooling are less susceptible to unknown elements.  For the purposes of this discussion, we will examine Labour in a little more detail.

The H1N1 virus, originally known as the Swine Flu, is the latest potential health pandemic since the outbreak of SARS only a few years ago.  The government has been struggling to organize mass immunization clinics and to engage the media to aid in the cause.  In the meantime, the potential impact of the H1N1 virus on your operation remains to be an unknown. 

Experts have commented to the media that the lessons from the SARS outbreak have still not been learned.  One would expect that past practices would have already been adopted into new best practices from our experiences with other similar events in our history.

Government agencies at all levels (Federal, Provincial, and local) have mismanaged the activities required to procure and distribute the vaccine, and failed to provide an effective communication and immunization strategy to ensure the risk to public health was minimized and the at the very least understood.

The lack of coordination and accountability for the success or failure of the communication strategy, procurement and distribution of the vaccine, and other related activities are strong indicators that the planning process did not consider the infrastructure requirements and relationships needed between levels of government.

The lack of an effective communication strategy introduced confusion and speculation in the media and the general public.  Mass education only seemed to become more aggressive as incidents of severe H1N1 complications and related deaths were reported in the media.

If this really was a pandemic event, many operations today would (and may still) be adversely affected due to direct or indirect (supply chain) labour shortages.  Do you have contingency plans in place to address this concern?

It could be argued that “if we are affected to this extent, then our customers will be as well.”  This is not necessarily true unless your customers and / or suppliers are located in the same immediate area or region of your business.

People travel all the time, whether they are commuting to work from out-of-town or traveling to or arriving from a foreign country on business.  The source of exposure is beyond your immediate control. 

What other elements can directly impact labour?  We will explore some of these in our next post.  In the meantime, keep your hands washed and remember to cough into your sleeve.

Until Next Time – STAY Lean!

Unexpected and Appreciated – Uncommon Courtesy:  This morning, a person cut into the drive through lane ahead of us – not realizing the gap in the line was there for thru traffic.  Recognizing the error in drive through etiquette and to make amends, we were pleasantly surprised by the “free” coffee at the pick up window.  Thank you ladies!

How to Solve Problems with Idea Maps

FreeMind 0.9.0 RC4 - Mind Map with User Icons
Image via Wikipedia

Problem solving is a problem in itself for many companies and at times can be one of the most daunting tasks to undertake during the course of an otherwise regular work day.

For some, problems seldom occur while for others this may, unfortunately, be a daily activity.  Since problem solving is not usually part of the typical daily agenda of “routine” activities, our ability to find the time and solve them efficiently and effectively is compromised.

For many, just finding time seems to be one of the greatest challenges and perhaps a problem to be solved in itself.  Sweeping problems under the rug may be efficient but it is certainly not effective.  (So … broom is not the solution we’re proposing).

Using IDEA Mapping Techniques can help you solve problems effectively and efficiently.  IDEA Maps, Process Maps, and Mind Maps are variations on a theme.  We may use the terms interchangeably in the discussion that follows.

Background:

While there are several different approaches and “forms” that can be used to manage the overall problem solving process, the two most critical steps that will determine the effectiveness of the solution are:

  1. Define a Clear and Concise Problem Description / Statement
  2. Determine the Root Cause(s) of the problem defined by the Problem Statement.

While the first step seems relatively simple, the second step requires a little more effort.  There are at least two (2) root causes for most problems that stem from two simple questions:

  • Why Made?
  • Why Shipped?

These questions imply that defective product was made for a reason (process) and it was shipped to the customer undetected (system).  In other words, the customer is not protected from receipt of defective product.

The root cause analysis process forms the basis for all subsequent problem solving activities, including verification, interim and long term corrective actions.  A lot of time can be wasted simply because the real root causes were never identified.

Problem Solving Tools for Root Cause Analysis:

Many different tools can be deployed during the Root Cause Analysis process including Ishikawa Diagrams (Fishbone Diagrams), 5 Why (discussed in a previous post), Fault Tree Analysis, Q&A (Question Board), and Brain Storming to name just a few.

Mind Mapping or Process Mapping is a technique that provides an unconstrained approach to the thinking process for multiple input and contribution streams.  Maps can also be used to identify interactions or relationships to other elements.

Mind Mapping (Process Mapping)

The center of the map contains the problem statement.  We then surround the problem statement with potential inputs or contributors to the problem.  These statements in turn become the “center” of additional levels of inputs and contributors.  In some respects, the process map can be very similar to a Bloom Diagram and certainly supports the logic found with fishbone diagrams.

The   The draw back to “Mapping” is that most are usually developed on Whiteboards and not easily or readily translated into a software solution.

Software Solutions and Templates

While there are many spreadsheet based solutions, few provide an effective interface to support the use of mapping techniques.  Even most fishbone diagrams developed in Excel are quirky and awkward at best.

While we typically do not endorse specific software solutions, however, FREEMIND is one software that we consider to be among the best of available solutions and can be downloaded free of charge.  The download and installation process only requires a few minutes.

The developers of FREEMIND provide a clean, intuitive solution for creating and maintaining process or mind maps.  While other commercial packages are available, FreeMind is more than capable of handling most problem solving challenges and quite simply is time and money well saved.

The FreeMind homepage provides a better description of the software and it’s capabilities than we could provide here.  Our goal was to introduce “Mapping” as an effective and efficient tool that can be used in the problem solving process.

After spending some time with the software, you will quickly discover that there are many other opportunities where this software can serve you.  We have a mind map that we use to manage weekly and daily reports, another for key metrics, and yet another for our business structure.  The ability to use hyperlinks makes it an easy process to access external reports and resources .

The FreeMind main page provides an excellent overview and provides examples of their software in action.  This is definitely worth looking into and may just save some time for real problem solving.

We are presently using FreeMind version 0.9.0 RC 6.

Home: http://freemind.sourceforge.net/

Copyright 2000-2009 Joerg Mueller, Daniel Polansky, Christian Foltin, Dimitry Polivaev, and others.

Click here to see a sample process map to achieve delivery of 100% on time – in full:  Mapping with FreeMind.  We have also uploaded two documents (one of the original map and a word document showing a pictorial of the mind maps we created) into our Free Downloads box.  See the ORANGE box on the sidebar to get your copy.

If you have a copy of FreeMind, simply change the extension on our Delivery file from “.txt” to “.mm”  Of course, don’t type the quotes.  This is just a sample for example purposes only.  Feel free to edit or modify these files  in any manner you choose.

If you would like to learn more about IDEA Mapping we would encourage you to also read Idea Mapping – How to Access Your Hidden Brain Power, Learn Faster, Remember More, and Achieve Success in Business by author Jamie Nast (twitter:  @JamieNast) or you can visit the website at:  http://www.ideamappingsuccess.com/.

Click here to review or purchase your copy of Idea Mapping: How to Access Your Hidden Brain Power, Learn Faster, Remember More, and Achieve Success in Business

Until Next Time – STAY lean!

IDEA Mapping, Published by John Wiley & Sons, Inc, Hoboken, New Jersey, Published simultaneously in Canada (ISBN-13:  978-0-471-78862-1, ISBN-10:  0-471-78862-7), 268 pages.  The book includes a companion CD-ROM featuring a 21 day trial for Mindjet MindManager 6.

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All downloads mentioned in our articles and feature posts are available from the FREE Downloads page and from the orange “FREE Downloads” box on the sidebar.  You are free to use and modify these files as required for your application.  We trust that our free templates will serve their intended purpose and be of value to your operation.

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Until Next Time – STAY lean!

Vergence Analytics