NC State of Business

As we come into this Fourth of July weekend and celebrate our Independence, let's think about two things: first, what Independence meant in 1776 and means today; and second, whether our government of, by, and for the people is really giving us our money's worth.

Independence in 1776 meant risking everything -- the signers of the Declaration pledged their lives, fortunes, and sacred honor -- for the chance to gain freedom from what, to any observer, was a fairly benevolent government. The Crown and Parliament did exact taxes, yes, but the colonies enjoyed a great deal of autonomy and the colonial standard of living was in general higher than in London. Nevertheless, the "Sons of Liberty" distrusted the distant government and fought to go their own way. Loyalists, on the other hand, thought it was treasonous to question the authority of the King, let alone to engage in open rebellion.

What does that mean for us today? We still see flickers of the fires of dissatisfaction, and they flare up no matter whose Administration is governing at a given time. The Sons of Liberty shared many traits with some of our citizens today: a desire to succeed or fail based on their own merits and efforts, and a deep distrust that a national capital would act in their best interests. We're not to the point of open rebellion, thankfully; however, I don't like the tone of a lot of the rhetoric I hear.

The idea of government acting in the citizens' best interest is part of the question of whether our government is giving us our money's worth. What does it mean for government to act in our best interest?*

I think government acts in our best interest when it does what we need it to do (which, like a parent or employer, may not be exactly what we want it to do). But how does government take those actions efficiently and effectively?

For instance, when's the last time you got really outstanding customer service at a government office -- whether it was City Hall, or the county courthouse, or the DMV? When did they delight you by answering your question or taking care of your issue quickly, without a lot of runaround, and with unfailing politeness? To ask it another way, when was the last time you, as a taxpayer, felt as if you got your tax money's worth when you dealt with a government office?

The good news is that some government offices are trying hard to improve. We've been able to help several government offices in North Carolina to eliminate inefficiencies and improve services, and it's just as exciting as helping a manufacturer speed up their exchange-of-die or helping a hospital improve the patient flow through their Emergency Room. In some ways, helping a government office improve is even better, because ideally every dollar they save is a dollar that won't have to be collected in taxes.

Just as we're always looking for manufacturers and service industries that need our help to become more productive and more profitable, we're also looking for government offices that we can help to become more efficient and more effective. If you know of an office that could use our help, let us know! -- and let them know, too.

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*Yes, you're right, I do work for the University. Yes, that means I do work for the government. Yes, life is full of irony.

Recently I was asked whether formal Quality Management Systems like ISO 9001, and programs like Lean and Six Sigma can work together effectively. Many people think that there are conflicts between the goals of ISO 9001 and the goals of Lean and Six Sigma. In reality, the goals of the three programs are generally the same – to continually improve processes, remove waste and non-value added activities, reduce process variation and enhance customer satisfaction.

We know that a quality management system like ISO 9001 (or AS9100, TS16949, etc.) provides the basic framework for managing a company’s processes as an integrated system with the goal of enhancing customer satisfaction. The standard requires that the processes must be defined and “criteria and methods” must be determined to “ensure that the operation and control of the processes are effective.” The standard also requires that the quality management system be continuously improved and suggests potential sources of improvement will come from the corrective and preventive action (CAPA) programs. This is where Six Sigma and Lean programs can add value and be integrated into the ISO 9001 program.

Six Sigma emphasizes the Define, Measure, Analyze, Improve, and Control (DMAIC) process for continual improvement. The focus of DMAIC is to define potential process problems, measure the processes to determine the critical factors which affect process performance, analyze the data and look for root causes, improve the process by implementing actions to fix the root cause problems and implement controls to “sustain the gains”. It is not much of a stretch to see that a well managed Six Sigma process would provide potential preventive actions for the CAPA program and could be a method to solve some of the recurring Corrective Actions.

Actually, in analyzing the language of the ISO 9001 standard, you will find that it has some terms in commom with the DMAIC process. There is a section in the standard titled “Measurement, analysis and improvement” which is the middle three steps of the DMAIC process. Control is required throughout the standard, specifically addressing monitoring and measurement activities and the use of monitoring and measurement equipment to provide the “controlled conditions” necessary for the effective operation of the processes. A Define focus is implied throughout the standard in determining the processes and their interactions, defining the root causes of problems and potential problems, and in reviewing the data collected for potential process problems.

So how does lean fit in? We know that Lean is focused on eliminating waste and non-value added steps in processes. Exploring the language of the standard again, we can find where the company is required to determine the processes needed for the quality management system and their application, sequence and interaction throughout the organization. Lean tools like Value Stream Mapping could be a robust way to address this requirement. We can look at the control of non-conforming materials requirements to see the importance of eliminating the waste of rejected parts. The Corrective/Preventive action program requirements seek to further eliminate waste by identifying and correcting product or process problems. Overall ISO 9001 requirements for Customer Focus and Continual Improvement align with the Lean enterprise focus on satisfying the customer and continuous improvement.

Integrating your ISO 9001, Lean and Six Sigma programs will align all your process improvement initiatives and increase the success of your business management system. This should lead to common goals instead of conflicting goals and, in the long run, increase the effectiveness and efficiency of your organization.

What if there was a McDonalds-like sign posted outside of every automotive manufacturer worldwide that said “Global Vehicle Parc at 1 Billion Cars – AND Climbing”. I guess the term “Global Vehicle Parc” denotes the total quantity of cars on earth. And as we near 1 billion, most experts agree - to be sustainable –they can’t all be gas powered.

At the recent Electrifying Transportation Conference held at NCSU on May 27, 2009; GMs Executive Director, Research & Development, Alan Taub – professed that we cannot sustain a 1-billion Vehicle Parc without the addition of several categories of “alternatively powered vehicles". A combination of vehicles powered by Fuel Cells (H2), Electric (Plug-in), ethanol fuels and efficiency improvements in existing engines and transmissions – will be needed to be developed in order to offset limited supplies of petroleum fuels

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Mr. Taub also stated that families may have to own several types of vehicles. One for commuting/shorter trips and a second vehicle for highway/longer trips. As you could guess, the alternative vehicle would be for commuting/short trips and the old conventional gas powered vehicle for longer trips (below). It is interesting to note that the majority of drivers (78%) travel less than 40 miles daily – which is well within the range of existing electric car technology!!!

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The Chevy Volt made an appearance at the conference as well. With overall car sales down 40%, this maybe a tough time to introduce alternative vehicles, but who can resist the Volt with the new Lithium-Ion battery (charge time in approx. 3 hours @ 220 volts and a 10-year life/150,000-miles).

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The price of ~ $40,000 maybe a little hard to swallow – but energy costs per mile - for an electric vehicle is a fraction of that for conventional gas powered vehicles (below)

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For those traveling very short distances, in an urban setting, the new GM acquisition of Segway will allow sales of a 2-person vehicle – all electric (below). The Personal Urban Mobility and Accessibility or PUMA carries two people, has a canopy cover and, most importantly, can reach speeds of 35 mph. Its battery has a range of 35 miles. GM says the cost would be about one-third of a typical car purchase.

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It is reassuring that alternative vehicle travel, specifically electric cars - are being developed. Let’s hope this technology can meet our growing demands from both our transportation needs as well as being environmental sustainable.

The Merriam-Webster dictionary defines the word paradox as “a statement that is seemingly contradictory to common sense.” I have spent this week working in a very rural county in North Carolina. I watched turtles and a bear cross in front of the car while traveling the roads of a county that does not have a single stoplight. At the same time, while there, I received photo and video text messages of my dog from my daughter through my personal cell phone; obtained and transmitted key work information with the aid of a wireless card on my laptop; and kept up with breaking world events via the satellite television service offered by my small local hotel. I find this all very paradoxical. It seems counter intuitive that in a region with no fast food joints, chain hotels, “mega” supermarkets, big box stores, or interstate highways, the kind of place ideal for “getting away from it all”, I was able to maintain instantaneous contact with my family, work, and world. In the early 21st century, such high-tech tools intersect with the peaceful, beautiful setting of rural farmland, wildlife (including various waterfowl and the occasional aforementioned bear), and waterways.

Pascal Dennis and others have made the point that Lean Thinking is full of paradoxes as well. In his excellent book Lean Production Simplified, Mr. Dennis points out such lean paradoxes as: standards change all the time; making something one at a time is more efficient than making a whole batch; you must stop production so that production never has to stop; and you must seek perfection, even though you won’t be able to attain it. I have often thought about how successful lean implementers have to be incredibly disciplined and structured in following the right approach and standard methodologies such as “stop-call-wait” and “A3 thinking”, while also being very creative and out-of-the box thinkers in order to come up with improvements to systems that may be, on the surface, already very efficient and successful.

What are some other Lean paradoxes? Please feel free to share your thoughts with us!

Meanwhile, I need to keep my eyes open for more bears.

The other day I got a message from my Zumba® (cardio dancing) classes’ coordinator at one of the centers I teach, and told me to be aware that the class was SOLD OUT! That’s right, for first time in one (1) year they had to close-out the registrations before the session started because it was full.

Before the class started, one of my loyal students approached me and asked me: What did you do to get all these people to sign-up for your class?

I explained to her that my job in IES is to help companies to improve their processes, that even when they believe there is nothing else to do, there is ALWAYS room for improvement. Thinking about this, although my classes were going well, they were not full and I knew I could do better, so I decided to make some improvements on the way I plan and deliver my classes. I told her that I did a lot of things but that I believed this one was the one that helped the most.

One of the things the Baldrige Criteria talks about to achieve performance excellence is to gather and analyze comparative data, well… then I thought that it could be a good idea to do some comparison with my class that was having problems with enrollment and my other classes. However, then I thought that I shouldn’t stop there; I should compare also with other classes, other instructors, and other styles. I had to BENCHMARK. So I did.

I attended to other Zumba® classes that had similar settings and others that had completely different settings; I was determined to learn all the best practices that I could possibly learn from my “competitors”.

I asked the students of the comparative classes why they liked the classes, and what made them go back every week. I also asked the instructors how do they prepare and how they engage their customers to come back and to build-up a relationship with them. I was sure some of these instructors might be doing something better than what I was doing, and that I would like to incorporate those best practices not only on my “problem class” but even in the classes where the results were satisfactory.

Once I had significant data, I summarized my performance results up to that date, segmented the results of my benchmark by customer groups and market segments, and having it all together, I analyzed it and identified my areas of opportunity. Then I created a list of things that I had to do in order to implement the best practices learned from other instructors and after completing all the actions on the list… Voilà! Two sessions later, the class was full. But the success doesn’t end here, I also implemented some of these practices in my already successful classes and the results were outstanding, the classes’ attendance kept increasing and I have happy customers leaving the class every night.

As you can see, even when you think your business is running right, in this fragile economy and rapidly changing market, there is always room for improvement and there are some ideas out there like in the Baldrige criteria that can help you strive to be not just good at what you do, but to be the BEST.