Real Numbers

by Orest J Fiume

  Major projects. Usually spread over a significant time, major projects generally require that information be collected from many sources. A substantial time investment usually occurs up front while parameters are identified and agreed upon, but after the kick-off, the commitment is part-time only.

  A kaizen breakthrough event is familiar to the lean organization. This forum brings together eight to 15 individuals from different departments for three to five days to work full-time on improving a process. After training in lean principles, the team observes, collects data and brainstorms before implementing and testing improvements, all during the same week. Post-kaizen refinements and 30-day homework assignments ensure that improvements are fixed into the process.

  The Hot Spot, or point kaizen, is usually a one- or two-day event utilizing the full time and problem-solving attention of six to 10 people. This can be one small snarl of an issue or one that needs a team’s muscle to implement. One recent Hot Spot at Lantech addressed the question: When a machine’s design is changed, how are people notified of product improvements? The team discovered that design-change notices were indeed circulated —but so frequently that notices were perceived as an annoyance, rather than informative. Instead of distributing 500 engineering change notices per month, the team identified a more manageable 60 average monthly notices that were relevant.

  Individual daily improvements are the most common variety, practiced continually in a lean environment.

  Modern companies are most familiar with the first and last forums: large projects and individual improvements. Learning to use kaizen events and Hot Spots are very useful for businesses looking for a way to supercharge the change environment. When a large commitment of time and resources are dedicated to improvement activities, it sends a strong message that change is not only acceptable, but expected. Kaizen events and Hot Spots are also physically visible to the workforce. Hard-working teams are not just a few people in a meeting room for an hour every week, but a busy cluster of people usually working for several days in a visible location, implementing change.

  Executive commitment and the visibility of improvement work will be of central importance to any company that wishes to send a clear message for change. At Wiremold, there is an annual President’s Kaizen whereby the executives from all of its companies gather at one site to participate in a three- or four-day kaizen event. This sends a clear message: “Do as I do, not just as I say.” No matter how clear the message, however, do not expect that message to be identically received by all associates. Mostly, we find that the change message is received in one of three ways.

  Some people come naturally to change, especially when the road ahead looks clear and safe. Those people will embrace the new way and become what we call early adopters or, as we affectionately call them, zealots. No team is ever populated exclusively with change zealots. If we support the early adopters we have, however, they can be a lot of fun and help pull the foot-draggers into the change environment.

  The majority of us fall into a middle category. We carefully watch our surroundings to ascertain what is safe and acceptable behavior. Think about entering a new acquaintance’s home or a new church or restaurant. At times like this, our social radar is usually turned up high to pick up clues about any new rules or expectations, and then we play along with the behavioral norm. But on the inside, we might spend a good deal of time deciding if we want to truly embrace the new friend or church or work environment. The new way is inevitably weighed against personal values and self-interest. So if we want to be successful at work, for instance, and all the cues tell us that improvement and change are applauded, we are far more likely to eventually embrace change and improvement and use whatever innate talents we have to advance the cause.

  Other people are hierarchical. For these people, the boss needs to have complete control. Hierarchies are instantly recognizable due to the bottleneck on top, because all communication and decisions must be filtered through the boss. In the hierarchical world view, bosses are assumed smarter than all other team members by default. Naturally, the distinction of being the boss is clung to dearly. We have found that most often, these people are threatened by change and will find a thousand ways to undermine transformation. It takes strength and commitment to overcome the efforts of people who don’t want to change. Be aware of the bad influence these people can have on the team. Because these concrete heads5 can undermine the confidence of team members and usually have a very loud voice based on traditional attitudes in the company, be sure they are not making rules or setting the tone. A boss can drive some improvements, of course. In a hierarchy, the boss will plan the change and order the implementation and create an environment where associates wait to be told what to do instead of employing their own brains and creativity to create innovation.

  5 A term used within the lean world for change-resistant colleagues.

  What we advocate is an environment where leaders contribute ideas and suggestions on nearly equal footing with the team. A leader’s hands are not tied, but we must also respect the atmosphere of open communication being created. In short, be careful not to squash anyone.

  One excellent way of getting everyone involved in daily improvements, right from the beginning, is to institute a program like Q52. Jean first implemented this quality improvement initiative at a large computer maker in the 1980s in which process improvements —measurable and written down —are delivered every week of the year. What Jean asked from each of her team members was a personal commitment to look for ideas both small and large that could be implemented to reduce cost, increase quality, decrease process steps, reduce time, or increase customer satisfaction.

  The guidelines were purposefully simple. When a team member improved something, that person wrote it down in a couple of sentences or paragraphs that described what was changed and the impact it had. Those sentences and pages were then turned over to one person who kept a count and offered quick monthly reports. The person who had the idea and implemented it was the one to report it, but the names of other people involved could also be reported.

  The only real criterion was that the improvement had to be implemented. Having a good idea is not enough because, simply put, the benefit is not derived until the deed is done. On the other hand, there was no differentiation between big ideas and smaller ideas with lesser impact. It is important to count improvements, big and small, all the same to emphasize the more important concept: do it every day. It might be difficult sometimes to keep that sense of balance, but remember that if more credit is given for big ideas, people will develop a tendency to overlook the small items and wait for the big one. In this atmosphere of waiting for the big one, the true value of programs like Q52 —taking lots of small steps forward —is lost. One good idea, implemented and set in place by the worker affected, is compounded by every good idea that comes after.

  In the colonial city of Queretaro, Mexico, where Black & Decker Household Products are manufactured, urging employees to come forward with improvement ideas has become a mainstay of the operation and is called Teian. Like Q52, the parameters are simple: improvement ideas, generated by the plant’s 2,400 employees are collected, counted, implemented when appropriate, and rewarded. In this large operation, tracking Teian is also done on a grand scale.

  Driving into the employee parking lot, a huge, colorful sign reminds workers of how many good ideas were generated this month, as compared to last month. Teian metrics are included in every operations manager’s report; every area is expected to produce a minimum number of employee improvements per year. The message is firm and constant: employee involvement and ideas are crucial.

  Managers at Black & Decker Household Products, which is now owned by Applica, Inc., credit their ongoing lean initiative, kaizen breakthroughs and Teian with some great metrics. In 1995, the plant had a scrap rate of 4 percent; now it is 0.4 percent. Absenteeism was 5 to 6 percent; today it hovers at 2 to 3 percent. Output has doubled with just 20 percent more emplo
yees and they have the largest small appliances market share in every country in which they sell.

  For everyday improvements to work, it is important to avoid judgments on worthiness. When there is one judge to decide if an idea is good enough, some team members will avoid making or documenting improvements —no matter how obvious or straightforward —for fear of group ridicule. Q52 and Teian programs emphasize that every step forward is worthy of credit and adds to the overall effectiveness of the team.

  Still, we are left with the question of how to acknowledge and celebrate the great ideas being implemented. At the Black & Decker plant, managers offer small prizes for implemented ideas, from pens to shirts and hats with company logos, but they focus on discipline. At Lantech, Jean has had some successes and some failures with encouragement and enabling participation.

  Jean’s team decided early on not to count the improvements made by each person individually because they believed it could lead to dangerous territory. (Do great ideas count for double? Are small improvements only worth half?) At one time, Lantech gave each person a letter of the word QUALITY for every improvement or customer-satisfying event. Once the word quality was spelled out, the associate got a small certificate for lunch. Guess what happened? At first it worked fine. Then, one or two people who were good at spotting improvement opportunities and getting things done started getting lots of letters and earning lunches. A little competition started up between the top producers, which unintentionally left others out. Those people not competing polarized themselves and, instead of jumping in, they quit participating all together. Rushing to the opposite position, this faction asserted that any improvements were “just doing my job.” This was sometimes a false modesty; but more important, it was a passive way of putting down those who were competing. Before long, the value of a letter was low and the program fell from favor. Personal competition, it was clear, was not working.

  Having fun as a group did work, however. On the heels of those QUALITY lunches, Jean started an office pool. At the beginning of each year, everyone guesses how many Q52s they will get as a team that year and writes the number down on a slip of paper. All the slips go into an envelope that is sealed and stuck on a bulletin board for the year. On the anniversary, after all the Q52s are turned in and tallied, the envelope is opened. No one ever remembers what he or she guessed, but everyone cheers the person who came closest and the winner gets a goofy trophy. For a couple of years, the prize was one of Jean’s old athletic trophies with a piece of duct tape over the name and year. But Jean claims she wasn’t that great of an athlete, and she soon ran out of trophies. She started handing out oddball home crafts instead. One person got a stuffed fish on a piece of wood; another, an antique plate with the occasion spelled out in magic marker. The stranger the trophy, the more treasured they became. And it’s all for a lucky guess.

  Wiremold has a suggestion system that gives associates one point for making a suggestion and another point when it is implemented. Points are given for just making a suggestion in order to encourage new thinking. Like Lantech, no differentiation is made between small and large suggestions. Associates can collect their points and then cash them in for gifts from a gift catalogue, much like the old Green Stamp programs. The more points accumulated, the larger the gift received. In addition, each quarter a raffle is held and each associate has one ticket in the raffle for each suggestion made during the quarter. Wiremold, like Applica’s plant in Queretaro, also tracks the number of suggestions made by individual and by team in order to encourage 100 percent participation.

  The point is, with any properly designed suggestion system, everyone becomes a change agent. Once we acknowledge that each and every associate knows his or her own work process well enough to substantially improve the process, we begin to become a team instead of a hierarchy. When individuals know they can create change, power is rebalanced very quickly. When the message is sent that change is not just encouraged, it is expected, it becomes clear that those who do not improve will not be successful.

  Before we get to specific examples of Q52-type projects, two general types of improvement should be discussed: paper and integration.

  Paper is a barrier. Think about that piece of paper with vital information that was just distributed to 10 people. Every person can see the information, but then something changes that five of the original 10 people need to know right away, plus seven others should be informed. That piece of paper can only be in one place at a time, even though many might need the information it has, and its information is unchangeable. Get that information online —or at the very least onto large, easy-to-read posters, publicly displayed —and everyone has access to information.

  We’re not talking about a paperless office; we are moving toward a less-paper office. Pick the pieces of information that are most important and reconsider the distribution methods. If the data is made available to all, there is no sense in sitting down to figure out who needs that data and when. When information is generally available within an organization, people can pull the data when needed, instead of passively having it pushed upon them. In the end there is less filing, less paper shuffling.

  Ensuring that information is available to whoever needs it and is presented logically leads us to a less-paper office —and it leads to systems integration.

  At any one time, the average manufacturing business probably has at least four distinct and discrete systems: manufacturing, sales, accounting and engineering. In the average week, each department spends untold hours entering information into their own system, for their own understanding and use. Then, in effect, the department hoards it. Integration means spending the money, acquiring the expertise and thinking deeply about the system of information flow so that we can logically move information from one module to another without human intervention.

  Nobody should re-enter data. Sales should be able to reach through the system and pull shipping and manufacturing information, just as manufacturing needs to pull the customer service or accounting data they require to make intelligent decisions.

  With an integrated system, the processes that live downstream can proactively look up to see what’s coming at them. For example, international shipments usually require additional paperwork for shipping and invoicing. By creating an alert in the system, we can see when a shipment of that type is coming —next week, day or hour —and get the extra work performed early, avoiding delays. The key is identical information, available to everyone.

  Let’s move on to some examples of changes we made in each of our business functions. A traditional accounting textbook would organize these ideas by accounting functions: accounts payable, equity, accounts receivable and taxes. Instead, we organized these ideas based on the business process they illustrate or support because one of the key premises of this book is that accounting work is not a goal separate from the business.

  All businesses, whether manufacturing or service-oriented, consist of these processes and all are ripe for improvement. The people with accounting expertise are there to support the business through analysis and consulting, as well as transactional processing. Recognition of the accounting transaction as a part of the business process is important because it can help eliminate barriers to waste, not only in accounting but also in the business process itself. The business process has been changing in many companies and sometimes improvement has been blocked due to barriers created by accounting. This is the last thing we want. So let’s look at the work from a business process perspective and see what overall waste elimination and improvement opportunities exist.

  Waste exists in every process. Think about the entire work process: producing the work, waiting to work, moving work, correcting work and reworking the work. All activities other than doing the work are candidates for change or elimination.

  To help you think about changes that can be made, we offer the following examples of changes we have made in hopes of spurring you to action. Some might appear difficult and others remarka
bly simple —even simple-minded. But even the most elementary improvements can be both difficult and immensely valuable in an organization.

  Just remember, this is a game of singles, not home runs.

  Order, Ship, Bill & Collect

  Activities relating to accepting orders, filling the orders, invoicing the customer and collecting the money for the order.

  Order Entry: In moving from a push to a pull scheduling environment, the factory must have clear visibility to customer orders on a timely basis. Most systems are not designed for this since the factory produces to a schedule based on a forecast.

  The first kaizen done at Wiremold in 1991 was on the order entry system. This was necessary to do before any changes were made in the factory. In addition, new-order information is usually not part of the financial documents. However, the flow of new orders is the most critical information you can gather about future financial performance. Add it to your financial statements right above shipments or revenue. Or go a step further and have the integrated system post that information directly to the general ledger as orders are entered. Later, change orders can be added and the results of your reporting can be seen every day.