Month: August 2017

Simple Solutions for Complex Problems

Have you ever heard of Derreck Kayongo?  I had not until I began reading a book published recently called “Visual Intelligence.”   According to the book, the author, Amy Herman, has taught the FBI, the State Department, Fortune 500 companies, and the military how to hone their “visual intelligence,” which is described as the ability to better see and understand details of what’s going on around you.

There’s an anecdote in the book about Derreck Kayongo.  Kyongo was born in Uganda just as Idi Amin’s dictatorship began.  As violence spread through the country and civil war erupted, Kayongo and his family became refugees in Kenya. He later immigrated to America to attend university.

On his first day in America, Derreck Kayongo was preparing to take a shower in his hotel when he discovered the many different kinds of soap in his room: hand soap, face soap, body soap, shampoo, conditioner. He had never seen so much soap for one person! After a few days, he began to wonder what happened to the partially used soap that disappeared from his room each day.   Unlike the slivers of soap used in the African refugee camps he had grown up in, the bar from his shower was fairly substantial; it seemed almost brand new after he had used it.

He asked the concierge what happened to the old bars and was shocked to hear they were thrown away.    In Kayongo’s mind this was a waste no one could afford, not when he knew more than two million people, most of them toddlers, still died every year from diarrheal disease, a condition that was easily prevented by washing one’s hands with soap.   Soap was a luxury item in Africa that many could not afford, yet in America it was simply thrown away.   Kayongo then decided to try to do something with what he found to help his old country:  he drove to local hotels and asked if he could have their used soap.

Kayongo found a recycling facility to scrape, melt and disinfect the bars of soap he collected.  He and his wife Sarah eventually created a life-changing international aid organization that collects discarded soap from hotels, reprocesses it and distributes it to vulnerable populations worldwide. This simple idea fights the #1 killers of children in many at-risk communities: hygiene-related diseases. Active in 32 countries, Global Soap has given millions of bars of soap to refugees and people affected by natural disasters like the earthquakes in Haiti and Nepal. Global Soap recently partnered with Clean the World. These organizations have contributed to an amazing 30% reduction in child deaths, globally, since 2009 and are expanding Kayongo’s original vision to include micro-loans and training for soap makers in communities around the world. In fact, the city of Atlanta designated May 5 as annual Global Soap Project Day.

What do we learn from this story?  Solutions to difficult problems can come from being able to really see and paying attention to details that you may often go unnoticed.

Posted by r.spector@comcast.net in Lean and Six Sigma

Accelerating Continuous Improvement Initiatives: Applying Lean, Six Sigma and TOC to Program and Project Management

In the last post, I provided a link to an article I wrote some time ago on how to utilize TOC to focus Lean / Six Sigma improvement efforts.   If you haven’t already, I recommend reading that article as it provides a good overview of Lean, Six Sigma, TOC and how they can best work together to maximize value.

The problem of these types of programs not being successful or not achieving their maximum potential value continues today.   In this article, I discuss principles to ensure that your program is successful.  I recognize that some of these principles, such as “Top management must be committed and actively involved” are much easier said than done.   In fact, my most recent thinking is that the issue of top management commitment is at the top of the list as to why these initiatives aren’t nearly as successful as they could be.    In my view, this area needs to be focused upon in more detail in terms of what CI practitioners can practically do to get this commitment and involvement.

In order to address this problem, we need to understand what is the root cause.   From recent discussions with Richard Schonberger, a leading lean advocate, these types of initiatives may not be viewed as “strategic” enough to warrant continued senior management attention and commitment.   From what I’ve seen, there appears to be a lack of understanding of how lean and Six Sigma can be utilized to drive strategic benefits.   One theme that I’ve consistently seen is that of these programs being short term approaches to drive cost reduction.  This is a perception that needs to change if we want to be successful.

I’m currently writing an article that covers this topic in more detail, but I’m interested in your comments.

 

Posted by r.spector@comcast.net in Lean and Six Sigma

Where to focus improvement efforts? Using TOC (Theory of Constraints) with Lean/Six Sigma

In the previous blog post, I wrote about the challenge that arises once companies have decided they need to undertake improvement efforts, they frequently take on more improvement projects than they can handle.  I have seen this over and over again in my career, especially with companies that are starting Six Sigma efforts.    One of the success measures used is the number of certified “belted” practitioners.  In order to get certified, there is usually a requirement to undertake training and achieve results with a project.   As a result, the organization can take on projects that may not drive significant value, but drain the organization’s valuable capacity.

One approach to focus improvement efforts where they drive the most value is the Theory of Constraints.  I was lucky enough to be exposed to TOC when I started my career.   I wrote an article in 2006 that described what is TOC and how it can be used to enhance lean and Six Sigma efforts.    Take a look, and leave any comments you have below.

 

Posted by r.spector@comcast.net in Lean and Six Sigma

No time for improvement!

The following story was told to me when I first started in management consulting, over 25 years ago:

Once upon a time, a very strong woodcutter asked for a job in a timber merchant and he got it. The pay was really good and so were the work conditions. For those reasons, the woodcutter was determined to do his best.

His boss gave him an axe and showed him the area where he supposed to work.

The first day, the woodcutter brought 18 trees.

“Congratulations,” the boss said. “Go on that way!”

Very motivated by the boss words, the woodcutter tried harder the next day, but he could only bring 15 trees. The third day he tried even harder, but he could only bring 10 trees. Day after day he was bringing less and less trees.

“I must be losing my strength”, the woodcutter thought. He went to the boss and apologized, saying that he could not understand what was going on.

“When was the last time you sharpened your axe?” the boss asked.

“Sharpen? I had no time to sharpen my axe. I have been too busy trying to cut trees…”

One of the most common refrains I hear from clients is that they are “too busy” to engage in improvement initiatives.   Employees are already working overtime, how can we possibly ask them to engage in an improvement initiative?

WHY are they too busy?”   Many times it’s most likely because their “axes” (i.e., processes) never get sharpened.    I like to tell this story to clients and also add, “what happens if you don’t do anything at all?  Will things ever get better?  Or will they get worse?”

Another familiar refrain is, “I understand, but now isn’t a good time to do something.”   The thing is, it’s NEVER a good time!

Once you’ve agreed that you need to improve, the key questions become WHAT to improve and HOW to improve.  This is where many companies go wrong.   They take on too many improvement initiatives and as a result never get anything done.   I talk about this in the article I wrote some years ago, ““How Constraints Management Enhances Lean and Six Sigma.”   Every organization has limited capacity – FOCUS your improvement efforts on what’s important.

More on this topic in subsequent posts.

 

Posted by r.spector@comcast.net in Lean and Six Sigma

Inventory Turns Continued – Has Lean Progress Stagnated?

In the previous blog post, I stated, “What may surprise you even more is that it has become exceedingly difficult to find examples of companies that have demonstrated sustainable progress with lean.”

Hopefully that piqued your interest.   Again, before proceeding, please review the article I listed in the previous post, The Impact of Inventory Turns on Speed, Quality, and Costs to understand why the trend of inventory turns can be used a proxy to measure a company’s level of “leanness.”

Now that that’s been established, let’s look at how some of the companies are doing that are best known for their lean efforts.   If you do a Google search on “Top Lean companies” or similar words, you typically will get names that include the following:

Hewlett Packard
Wal-Mart
Caterpillar Inc.
Intel
Illinois Tool Works
Textron
Parker Hannafin
John Deere
Ford
Toyota

These companies are usually the ones you find listed as examples of what a successful Lean program would look like.   In the article that I wrote on the state of Lean in the pharma industry, I listed HP and Wal-Mart as examples of companies that Pharma could learn from.  Let’s revisit how things were at that time in these two specific cases:

  • HP has successfully applied Lean concepts with a number of case studies you can find online.  In the time period from 2000-2009, HP displayed significant improvement in inventory trends – inventory turns improved at an average rate of 6.9%.  HP’s upward trend translated directly into growth of free cash flow at a rate of 6.9% percent, with interest on the cash compounded over the 10 year period of lessening funds tied up in inventory.
  • At Wal-Mart, from 2000 to 2009, inventory turns improved at an average rate of 2.6% which translates directly into free cash flow improvement of the same rate.    Wal-Mart was able to transform an entire industry via their Lean improvement approach and dictate the requirements to successfully compete.

Now let’s take a look at the trend of inventory turns for HP and Wal-Mart, along with the other companies in the list above, in the period from 2009-2016.   All data was taken from Morningstar.com so blame them not me for any accuracies.

Inventory Turns Inventory Turns Inventory Turns Inventory Turns Inventory Turns Inventory Turns Inventory Turns Inventory Turns
Company Name 2009 2010 2011 2012 2013 2014 2015 2016
Hewlett Packard 12.50 15.26 13.98 13.38 13.97 13.62 12.19 7.15
Wal-Mart 8.79 9.00 9.08 8.70 8.34 8.08 8.11 8.06
Caterpillar Inc. 3.16 3.81 3.61 3.13 2.89 3.20 3.08 3.09
Intel 4.66 4.52 5.16 4.57 4.76 4.80 4.38 4.33
Illinois Tool Works 6.04 7.05 7.06 6.94 6.04 7.15 6.96 7.30
Textron 3.12 3.78 3.98 3.92 3.57 3.31 2.72 2.63
Parker Hannafin 5.95 6.47 7.27 7.08 7.26 7.41 7.23 7.13
John Deere 6.11 6.50 5.93 5.26 5.11 5.45 5.06 5.14
Ford 14.22 18.38 19.18 17.45 17.00 16.21 15.63 14.70
Toyota 11.27 11.58 12.19 11.20 11.17 11.52 10.83 10.77
Average 7.58 8.64 8.74 8.16 8.01 8.08 7.62 7.03

What do you notice in the data above?   Does ANY company show an upward trend in this time period?   Not one of them does.   It’s clear that lean progress has stagnated, and sometimes even regressed at these “lean leaders.”

Why has this happened?  More on that in the next post.   In the interim, please leave comments if you think you have any insights.

 

 

Posted by r.spector@comcast.net in Lean and Six Sigma

Starting with Lean – Inventory Turns

I’m going to start this blog with a post on the topic of “lean.”  The reason why I’m starting here is that I’m currently writing an article on this topic for an upcoming issue of “Pharmaceutical Manufacturing.”  This article will be a sequel to two published articles that I wrote some years ago:

The Impact of Inventory Turns on Speed, Quality, and Costs

How Lean is Pharma?: A 10-Year Progress Report

Before going any further, I recommend reading these two articles to better understand why inventory turns are a reliable indicator to measure a company’s leanness.   The trend of inventory turns over time indicates how well a company is progressing in terms of becoming more Lean and improving its processes.

The upcoming article will be a sequel to the second article listed above, and will look at how much progress the Pharma industry in the years since the article was published in 2010.    The article will review the data and provide some insights as to what is happening and why.   A follow-up article will be published that discussed what can be done about the situation.   It may surprise you to learn that little progress has been made in the pharmaceutical industry.

What may surprise you even more is that it has become exceedingly difficult to find examples of companies that have demonstrated sustainable progress with lean.   More on that in the next post.

 

 

 

Posted by r.spector@comcast.net in Lean and Six Sigma