Since we have passed 40% scrap level and the machine still runs at what level would you stop?

pexadmin — Wed, 11 May 2011 13:02:07 +0000

So we are walking the line and the mgmt have decided that we should focus on scrap reduction, good, a very necessary project since scrap was very high…how high we didn’t know beforehand, there was no baseline, just a few opinions that were guiding us towards this project. So we are walking, just looking to see where the opportunities might be, the baseline was assumed to be ‘high’, whatever that meant. We come to a critical process step and the plant manager is there watching intently, very focused. I stand close to observe both him and the huge mountain of scrap coming off the line, we stand for 15-20 minutes and there is silence, eventually I ask if he actually can see what is happening, he says yes, so I ask him to calculate the scrap from these past few minutes but he continues to focus on the speed, as it looks good. So I count it, 45% of what was made in the last 20 minutes was scrap. Now I am not a good judge of these products in general but here it was blatantly obvious that these pieces could never be sold. So I ask ‘at what level of scrap would you stop the line?’ to my amazement he didn’t answer he just looked at if I had two heads, ‘stop the line’ seemed to be something that wasn’t ever a consideration. So I pressed the button, all hell broke loose…I was breaking every rule in the book regarding behavior at a supplier, I was doing exactly what I thought was common sense. So the line went down and I asked the mgmt to calculate the loss of the last hours and how much it was affecting their balance sheet, profit and loss. When they got the answer they was astonished…literally 1000’s of dollars per hour were lost just because stopping the line was against some form of invisible religion, totally crazy, yes, but it has always been like this, we have always lost this, we just never counted it before, Jesus how blind could you be…once we got the financial info we went into tools like Pareto etc to work out where the main issues lay but I must say that the reaction to my question really was strange, why stop when the line its running so well…. how ‘not’ to run a company

Padraic Dempsey, The Process Excellence Academy

How to combat the “this is not our way” mentality that can affect the success of a Six Sigma Programme designed to resolve compelling business needs

pexadmin — Wed, 11 May 2011 12:53:37 +0000

If your business experiences frequent and costly customer complaints, product returns or warranty claims or if the production processes in your supply chain incur expensive scrap or rework, which can often also impact on your ability to deliver on time, then you are in a classical situation where many organisations have already successfully applied Six Sigma to alleviate these problems and make huge cost savings. Some organisations such as AlliedSignal, Dupont and GE before applying Six Sigma have reported Cost of Poor Quality to amount to 20% of their revenue and have then embarked on reducing this by 1% to 2% annually.

So there is no doubt the medicine works but why doesn’t it cure everyone? First you need to believe that the medicine will make you better. This was the case for Larry Bossidy, CEO at AlliedSignal and Jack Welsh, CEO at GE. Therefore, they were prepared to embark on corporate wide programmes and had the tenacity to push these programmes to their organisations. Many other organisations have preferred a more gentle start, wanting to create some pilot success before promoting the benefits. Again this can work but doesn’t always. For a local programme or pilot projects to be successful there is a still a requirement for a strong level of sponsorship by the local management and for local management to have sufficient awareness and understanding of the Six Sigma approach to be willing and able to “champion” projects. “Championing” means providing regular, constructive support for the project and taking on responsibility for the success of the project in meeting its objective.

This is where the challenge for a sustainable 6 Sigma programme can often fall over in some organisations. The idea that a local departmental, business unit, commercial or whatever head does not need to know or understand the formalities, protocols and governance necessary for a sustainable improvement journey is a misaligned assumption. These organisations will often articulate this in phrases such as ‘Its not our way…’ or ‘our leaders will do it because they have to…’ or ‘our people will know what they need to when the situation arises…’ This failure in recognising and accepting the governance needs of such a change programme blended with the organisational culture will always lead to short and long term problems.

We must emphasise that it is not about changing the organisational culture to a 6 Sigma culture, in what ever form this may take, but more importantly to blend the current organisational culture with the values and principles of a 6 Sigma culture. This means that these organisations adopting a stance of ‘it’s not our way…’ will always fail to liberate to true power and potential of a 6 Sigma journey.

A further example of this misaligned thinking within the context of programme governance is when a steering team is required to manage the projects and training. It is important that that the steering team has sufficient knowledge of Six Sigma to select, scope and prioritise the right projects and apply the appropriate skills and approach to these projects. Those organisations who believe that it is ‘not our way’ to prepare, train and empower the steering team will create a new source of resistance – a technical resistance. The new language, terminology, tools and questions that the participants in the programme will bring to these leaders will build immediate and often subliminal barriers if the steering team is not knowledge enabled. What we mean by ‘knowledge enabled’ is the progressive development of people through shared learning that happens when a steering team accepts the need to understand the technical tools and responsibilities in a progressive and logical process. This means, giving them the knowledge when they need it, so they can use it. Without this enabled knowledge the steering teams will falter in their ability and value to drive the programme. As such this issue cannot be ignored and cannot be hidden under the auspices of ‘it’s not our way…’

Author: Michael Holman and Dean Sexton, Process Excellence Academy May 2011.