Articles by John L. Ware

APPLYING LEAN & SIX SIGMA TO SMALL BUSINESS – PART TWO (OF THREE)

Tuesday, January 8th, 2013

In Part One of my series on Lean and Six Sigma, I discussed primarily why small businesses should consider utilizing them in practice, if not making them a core segment of their culture. In Part Two, I want to talk about how Lean and Six Sigma work from the perspective of a certified Master Black Belt practitioner. Prior to me earning any of my Six Sigma belts and my Lean Practitioner certification, I (like many) considered these disciplines to be nothing more than just another, albeit significant, quality assurance tool. How wrong I was.

Lean and Six Sigma are, by design, well-suited to be the core segment of any company’s culture because of the following reasons. One, anyone can learn how to use and incorporate them, irrespective of experience, rank within the company, or what department they work in. I’ve seen young people become Master Black Belts six months into their business career. I’ve seen meek accountants (with apologies to finance people) become Master Black Belts. Heck, even salespeople can get certified! Can you imagine a salesperson who can sell AS WELL AS find problems and do paperwork? SIGN THEM UP! (Just kidding, sales and marketing!) And, in my particular case, I was a Senior Director in Operations with well over 20 years’ experience with Sun Microsystems back in the late 1990’s when I got Lean certified and Master Black Belt certified. It’s not just for QA or engineer-types anymore!

Secondly, the Lean and Six Sigma disciplines are made to perpetuate. Once you think you have “solved” a problem or an issue, think again. No problem or issue is ever TOTALLY solved or resolved, essentially. But you have improved a situation that you will re-address at some time interval in the future, in order to improve it. And a few months later, yet again. This is called the “DMAIC” cycle – Define, Measure, Analyze, Improve, Control.

And here is where I want to discuss some of the techniques Lean Practitioner candidates and Green Belts should be using. The first and, ironically the most important Lean tool, is Process Value Mapping. It is brilliant in its simplicity, and I wonder why only 15% of all businesses in the U.S. have implemented it. How it works is, you pick any process within your company – one production line, or new product introduction, or the purchase order process…really, ANYTHING you do to get a job done – and you pick it apart by taking each minute step and that step’s owner and mapping it with Post-It Notes on a flow chart on a wall. In a nutshell, you break a process down to build it back up again, improving it in the process – all the while keeping the initial process going until you are ready to incorporate the changes.

Many of you have probably done this, or have been a part of a team which has utilized this method. For instance, a top-notch integrator of a new IT or enterprise software system has used this method to improve your information technology network. Running the new system in parallel with the “old” analog system is an excellent example of this. In another example, building a new production line in your company was (hopefully) accomplished by laying out the process on paper BEFOREHAND! So, really all I’m talking about here is formalizing this process to EVERY department within your company for new process introduction or improving existing processes. Because of it’s importance, I will discuss more about Process Value Mapping in a later post.

The core metric of Six Sigma is DPMO – Defects Per Million Opportunities. When you lower your defects, the change – Sigma – can be plotted utilizing Statistical Deviation mathematics, and everything that entails. Essentially, every company I’ve seen prior to incorporating Lean, Six Sigma or a combination has been somewhere around Three Sigma. What does that mean? Well, in the world of statistical deviation, probability and statistics, Three Sigma is “average.” Think of a large bell curve – using the concept of the Pareto or “80:20” Rule, most of the companies will be somewhere on the loop part of the curve. Conversely, you will have a smaller percentage “above average,” that is, with a higher sigma rating and you’ll have a few with a lower sigma rating.

Obviously, everyone understands why they should lower the errors and mistakes within their company, because these lead to lost revenue or cost overruns, correct? But many companies don’t have a system to make this happen. At best, they tend to fix something “over here,” and lose the thread of something “over there.” Not unlike the Whack-a-Mole game. With Lean and Six Sigma, a company can now have a discipline to keep all the “moles” underground.

Other very simple techniques and methods include Histograms, Scatter Plots, Fishbone Diagrams, Fault Trees, FMEA and many, many others put you on the track of reducing the number of errors in your company. I won’t go into great detail on what these techniques and methods are and how they work as they are fairly documented in many places. Just know that a good Green Belt can implement the lower third tier of these methods simply and effectively with less than 90 days’ worth of training. A Black Belt can essentially do the next third up, as well as becoming a de facto change agent within your company. And a Master Black Belt worth his or her salt can accomplish more than a well-meaning QA Director at any company.

Bottom line: data and numbers don’t lie. Incorporating a combination of Lean and Six Sigma tools will get you fast results. In Part Three, I will review how you can get a Lean and Six Sigma sustainable culture started within your company.

John L. Ware
Lean Practitioner/Master Black Belt
globalmfgops@mac.com

John has accumulated over 35 years of experience and expertise within all types of business operations management – including manufacturing, supply chain, distribution, engineering and quality/compliance operations. Companies he has worked for include U.S. Surgical Corporation, Sun Microsystems, nVidia Corporation and Domino Lasers, Inc.

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APPLYING LEAN & SIX SIGMA TO SMALL BUSINESS – PART ONE (OF THREE)

Monday, December 24th, 2012

One of the best decisions I’ve ever made in my 35-plus year Operations career was to get Lean and Six Sigma certified. In this two-part article, I want to make a case why every small business owner needs to at least investigate both the Lean and Six Sigma methodologies and disciplines for use in their business, if not get certified themselves (if not, a least a trusted key employee). Part One will consist of my reasoning why Lean and Six Sigma should be used, while Part Two will delve into more of the nuts and bolts of these disciplines, the information they generate, and how to utilize it. And finally, Part Three will go into some detail for how to get these programs started in your company.

One of the constant themes I hear all the time regarding small business owners is that they do not know how to run a business – how to start it up, secure financing, do the accounting, and so on – primarily everything other than how to produce the product or service they want to sell. I know that sounds like I am painting all small business owners with a broad brush, but I think many would agree with me that I’m not that far off the mark. At the very least, many small businesses know they need much more assistance – if not intervention! – than they thought they’d need when they started their venture.

As many of you know, Lean Principles come from the Toyota best business practices of over thirty years ago. I was lucky to have been one of the first people to learn them and bring them over to the United States from Japan, where I was taught by the best – my sensei – Taiichi Ono, the father of Lean Manufacturing. Although I became imbued with Six Sigma later in my career (mid-1990’s), I found that Lean and Six Sigma principles compliment each other – to the point that many companies have totally integrated both disciplines into one, which they call (naturally enough) Lean Six Sigma. (Note: for this series, I have chosen to keep both disciplines separate, as there are nuances between them that could confuse the novice – more on this later.)

So why do I believe so heavily in both these disciplines? I want to put forward three reasons why I believe they are so necessary to incorporate into your business – big or small, troubled, static or growing. The first reason is that EVERY business needs to incorporate some type of quality assurance management. In the old days, quality was “manufactured into” a product or service; i.e., if the product or service didn’t meet some etched-in-stone parameters, it was rejected or retooled (remember the person in the smock at the end of the production line?). This was costly to the business in terms of not only rejected materials and delivery commitments, but in machine and employee time, as well. I don’t know any business that does it that way anymore. At the very least, most businesses have some sort of process and product control built into their overall infrastructure to root out problems.

And that’s just the point I want to make with my first reason – there needs to be a universal process built into a company at every level and at every point in the business to identify, investigate, analyze and fix problems. What I call a “root cause and corrective action” program needs to be built into the core fabric, if not the entire culture, of a company. And this is not just for the departments producing the products and/or services, but for EVERY department and process, and every employee – from the CEO or President down to the janitor. And truly committed Lean and Six Sigma companies will extend these programs all through the supply chain, including suppliers, customers and other stakeholders in the bargain.

The second reason is that Lean and Six Sigma rely on empirical data collection to make decisions and improve the thing you’re working on, whether it is a manufacturing process, an accounting program, an engineering model, or how to create a succession plan within the company. In other words, Lean and Six Sigma can be incorporated into EVERY process and department within your company to make it better. A manager or an employee need not rely on “gut feel,” hearsay or concocted belief to make sound business decisions.

And thirdly, Lean and Six Sigma allow the business owner to incorporate the changes and improvements into his or her processes immediately, and reap the benefits therein immediately, as well. Cost savings, profitability enhancements, margin increases, efficiency improvements, bottom-line results – they all can take effect as soon as they are implemented (unlike many other so-called “quality improvement” programs).

As with all other subjects, I am just scratching the surface of this topic. There are many books, web sites and companies out there which talk about Lean and Six Sigma in more detail – feel free to perform a Google search. I look forward to bringing you Part Two, where I’ll delve into how Lean and Six Sigma work from the perspective of a certified Master Black Belt practitioner.

John L. Ware
globalmfgops@mac.com

John has accumulated over 35 years of experience and expertise within all types of business operations management – including manufacturing, supply chain, distribution, engineering and quality/compliance operations. Companies he has worked for include U.S. Surgical Corporation, Sun Microsystems, nVidia Corporation and Domino Lasers, Inc.

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TEN TIPS FOR START-UP ENTREPRENEURS

Friday, November 30th, 2012

Let me start by saying that I don’t like to necessarily use the term “tips” as it is an overused, trite and hackneyed term with gambling implications. And the last thing I like to do when I talk to new business owners is invoke a gambling meme. Therefore, I will break the third rule of professional writing to change my title to use the word “suggestion.” There…now I feel better.

There is one rule that I counsel with every entrepreneur: BE YOURSELF. If you suddenly become too mean, too nice, too altruistic, too extreme in anything – especially if it doesn’t relate to your own personal traits or beliefs – that is a roadmap to failure. Moreover, there are so many suggestions I cold provide a start-up entrepreneur that I would be afraid to leave some out for fear that I would unknowingly and unwittingly repress information that important to that particular entrepreneur. Moreover, there is no way any person in my position, with my experience, could or should limit the list to ten things. With those caveats out of the way, I will presuppose what would help the average entrepreneur most. Oh, and one last thing: I don’t have anything in this list relating to people – who to hire, how to train, how to treat them, and so on. This is because it takes a special breed of individual to work with an entrepreneur to help him or her achieve their vision. I find that, short of tangible abuse, people (on both sides) work through their troubles and make it work, at least in the beginning.

So, here is my list of “suggestions,” in no discernable order.

1. Try to make mistakes. Lots of them. I call this “accelerating the failure cycle.” Take a lot of shots at your goal; innovation requires deviation. Learn what works and what doesn’t. Learn from experience and experiment. Having said that, mitigate the fallout from the mistakes as soon as possible. The best way to do that is to learn from the mistake. And the best way to learn from the mistake is by brutally honest feedback. I find that brainstorming and 360 peer reviews work the best.

2. Beware the “Law of Unintended Consequences.” Time and again, doing something one has little or no experience in or with sometimes yields results – or fallout – that are not conducive or aligned with the original plan.

3. There is no such thing as “change management.” The concept of “change” must be woven through the company culture – top to bottom, with NO exceptions. Change isn’t some project or program you have your manufacturing or engineering people do in their spare time. It’s everybody’s job, all of the time. Especially in a start-up.

4. It’s YOUR money, whether it comes from outside investment or out of your own pocket. Make sure everyone else knows it, and treats it as “their money.”

5. Be a part of every major decision – either directly or indirectly. If you are too busy to do this, your priorities are misplaced.

6. Get out of your comfort zone. Put down the iPods, iPads and iPhones and approach someone – preferably a total stranger and/or someone with a different point of view (e.g., different age, gender, race, nationality, sexual orientation, whatever) – and talk to them. Engage them in conversation. Seek out diverse opinions. See what the “other guys” think. Learn all sides of the argument.

7. Be skeptical, not cynical. Contrarianism works. Don’t believe anything you hear, and only half of what you see. Question everything, anything and anyone you want. Remember: 5W’s + H (Who, What, Where, When, Why & How) = A Good Start. Look for people who can provide “constructive conflict” (as opposed to destructive). You don’t necessarily need alignment of opinion. Innovation comes from antithetical ideas – ideas that don’t agree.

8. In the final analysis, NOBODY KNOWS ANYTHING. At least, act like that is the case. No one can predict or forecast with any degree of accuracy or confidence. Beware of “experts” and “gurus.” One can ONLY be an expert with a learned and practiced skill, e.g., a surgeon or chainsaw carver. Be cognizant of the fact that people generally have a higher self-evaluation of their capabilities than they actually possess.

9. Understand the difference between good risk and bad risk. “Good” risk involves being prepared to take advantage of opportunities should they present themselves. “Bad” risk is the threshold you’re willing to step up to – and cross, if necessary – to achieve your goals. Remember that the concept of “risk vs. reward” is a zero sum game. There will ALWAYS be an outlier that has the capability of creating the “black swan” event – good or bad. And you won’t see it coming.

10. Try to eradicate the concept of waste, as well as the virtual reality of waste, in everything you do. At least at the outset, EVERYONE should be doing value-added work, i.e., work that contributes to “top line” revenues and “bottom line” profits. Lean and Six Sigma thinking and doing will help you achieve this.

John L. Ware
globalmfgops@mac.com

John has accumulated over 35 years of experience and expertise within all types of business operations management – including manufacturing, supply chain, distribution, engineering and quality/compliance operations. Companies he has worked for include U.S. Surgical Corporation, Sun Microsystems, nVidia Corporation and Domino Lasers, Inc.

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False Premise: Offshore Manufacturing Is Always Cheaper

Tuesday, November 20th, 2012

As someone who has been on the forefront of setting up manufacturing capability in foreign countries – a term we call “offshoring” – I have seen the attitude pendulum start to swing back to manufacturing goods and services right here in the United States. Creative minds that we are, we call this concept “onshoring.” Unfortunately, too many business leaders still believe it is prohibitively better to manufacture their goods in places like China, Thailand and Mexico.

I believe that it is better to manufacture here in America for many reasons; however, two very important ones prominently stand out. The first is the cost of labor. Thirty years ago, it was a no-brainer to search out cheap labor overseas. Technology was not as prevalent as it is now, and you needed “lots of hands” to put your goods together. However, the advent of technology has driven labor costs down precipitously as a percentage of the total costs of producing a product. Back in the early days when I set up plants in China, for example, labor costs approached an average of 20% of the total cost of the product manufactured (a broad brush estimate of all manufactured goods). Today, because of computerized systems and controls, analytical qualitative and quantitative analysis, robotics and many other technological marvels, that figure is closer to 8%. Therefore, even though an American worker extracts a working wage averaging four times his Chinese counterpart, the difference in labor cost as a percentage of the cost of producing the product is not as severe.

The second reason that I believe the barons of business should reconsider producing their wares offshore surrounds the concept of control. There are few of us who haven’t heard the horror stories of product counterfeiting in Asia, but it is a little known fact that the reverse engineering of manufactured goods is one of the fastest-growing industries in China. Talk about the innovative mind! Instead of warehouses full of white-coated engineers and inventors looking for the “next big thing,” there are those same warehouses and engineers (sans inventors) taking things apart and finding out how they tick, then manufacturing the “result” – under the real company’s name. Unfortunately, companies like Apple, Callaway Golf, Intel and countless others have nothing to do with these finished products, nor do they profit from their sale. And, most importantly, these intellectual property problems – and the implicit and explicit costs therein – are really the life’s blood of any company that markets and produces products.

To the contrary, these American companies spend millions of dollars on lawyers, legal exercises and in-house personnel dedicated to only these issues – money that the consumer ultimately pays for the real product that has nothing to do with its counterfeit cousin. We consumers are also paying for other control-related issues and problems companies face by manufacturing their products in places like China. Some of these control issues may be obvious, such as having to deal with the social, cultural and economic mores in these foreign lands. What is little-known, however, are the logistics and security costs for protecting your product in transit from manufacturing facility to store (or home). You think it’s as simple as a brown-shirted guy in a brown truck picking up your semiconductors in Shenzhen and putting them on the next plane out of Hong Kong? Not so fast, my friend! The paperwork, the coordination, the packaging (and, in many cases, the under-the-table graft and bribery) to get even the simplest of tasks done, that we in America take for granted, are not so well-known.

Due to the limits of time and space, I am not able to delve into detail for many other reasons that doing business in places like China is becoming too costly in terms of not only dollars, but the control of your product. But here is a listing of just a few of many:
1. The training of key workers, especially managers, in American manufacturing methods, terminology and overall communication techniques (e.g., native language, presentations, reporting, etc.)
2. Chinese business leaders are not as open-minded as their counterparts in the States. Ideas, suggestions and discussions very rarely occur with others not in their peer groups. Collaboration and cooperation are rarely utilized, especially within all the players within a particular supply chain (e.g., suppliers, distributors)
3. Business ethics are a relatively low priority in China.
4. Worker safety and worker respect and other compliance issues – again, a low priority.
5. Chinese manufacturing competition is so fierce, small “wars” have broken out over the stealing of each other’s workers, fighting the cost of improving the aforementioned quality and ethics issues, and resisting any scintilla of oversight the national and regional party apparatchiks dish out (hence, the graft).

And I haven’t scratched the surface of the added costs of customer service and satisfaction, aftermarket costs (warranties, spares, etc.), oversight, internal performance issues outside of manufacturing, quality, and so on.

Let me wrap this up by saying that the prevailing opinion and belief that we can make things more cheaply and quickly overseas is severely flawed. One may actually produce a cheaper product in a country like China, but once that product is packaged and on it’s way to its final destination, that is when the product’s “relative” cost starts to rise. And it has the propensity to rise even further when control issues preclude the parent company from having the relative control of the product’s intangibles post-manufacturing. While it may sound altruistic (not to mention jingoistic) to call for the renewed rebirth of manufacturing in the United States, the facts regarding the benefits of doing so far outweigh those of maintaining the status quo.

John L. Ware
globalmfgops@mac.com

John has accumulated over 35 years of experience and expertise within all types of business operations management – including manufacturing, supply chain, distribution, engineering and quality/compliance operations. Companies he has worked for include U.S. Surgical Corporation, Sun Microsystems, nVidia Corporation and Domino Lasers, Inc.

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