Productivity Myth

We hear a lot about productivity these days and it’s impact on being competitive. I believe this to be a mistaken relationship. Or better stated, an incomplete relationship. I am not saying that productivity is not important. It is just that production is only half of the equation. The other half is production control.

Production and production control are balanced against each other. The idea is to produce products and services to a production control target. For example, a business can say they need to produce 100 units per hour, or they can say they need to produce 100 units per hour that meet 100% of the targeted customer critical to quality specifications.

Case Study: Automotive Control Module Repair and Remanufacturing

When customers think of automotive control modules, what comes to mind are engine control modules, transmission control modules, and body control modules. Some people are genuinely surprised to find there can be as many as 80-120 different control modules functioning in their vehicle, controlling everything from power windows to drive train components. As everyone in the industry knows, as fuel economy, emissions and safety become more important to shoppers; control modules will become even more important to a smooth operating automobile.
At the same time, the ability of repair shops to diagnose and repair control module problems is being challenged. Many shops do not have the proper scan tools needed to see deeply enough into the vehicle’s control module network to determine what is really happening there. In these cases, the shop is forced to diagnose the vehicle with circumstantial information instead of with the actual observation of vehicle network data. This is equivalent to looking at a “boot print” of the problem instead of actually seeing the boot. This drives questions such as:
• How do I know that the module is really bad?
• If I replace the module, will the vehicle start working properly?
• What can cause the module to go bad?
This is both a challenge and an opportunity for repair shops and the replacement parts industry. Two aspects of customer satisfaction affect every business: satisfaction with the product and satisfaction with the service surrounding it. This is the premise underlying the processes we sat up for Automotive Electronic Solutions (AES) to use in its business of repairing and remanufacturing automotive control modules.
In the case of control modules, the “service surrounding the product” challenge is to understand that the shop first needs a quality diagnosis, before the subject of quality replacement parts can take place. For AES, this is a matter of determining what level of service best fits the customer’s problem. Specifically, AES will ask about trouble codes and symptoms to determine the best solution for the customer. If the trouble codes and symptoms do not clarify the level of service needed, the customer can ship the module to us for internal component evaluation. This evaluation will determine what, if anything, is wrong with the module, as well as determining whether it can be fixed. This is a low cost, overnight service. From there AES can return the module to them with diagnostic notes, repair their original module, or remanufacture a replacement module for them. This reduces a repair shop’s risk in servicing their customer and allows them to control the cost of the service.
From a product standpoint, when a remanufactured module is needed, AES works with recyclers around the country to obtain core modules to work with. These are then remanufactured. The recyclers are an integral player in this process because they know the history of the source vehicle, which avoids potential problems resulting from incorrect part numbers and security configuration. To leverage recycler domain knowledge and help recyclers become a quality supply chain player, AES developed Core Module Configuration and Quality Inspection criteria. As a result, both the recycler and AES operate with fewer mistakes. Recyclers benefit from the ability to sell control modules in a low risk venue.
When AES delivers a repaired or replacement part to the customer, service quality is in play again. Along with the part, the customer receives instructions as to what other parts might need to be replaced in order to protect the repaired or replacement module, and installation requirements to protect their investment in the part. This includes what on-board programming may be needed after installation. Getting out in front of potential problems is the best way to reduce or eliminate customer dissatisfaction issues.
ASE also hired ASE Certified Master Techs to help customers with the details of module replacement and diagnosis. The end result is that when a customer service issue arises, AES has the internal domain knowledge to deal with it. This is another aspect of the service surrounding the product.
Lastly, AES defined what they don’t do. This allows AES to work within the limits of proven service abilities. It also helped to define what R&D was needed to expand the scope of their service.
The main intellectual take away for AES is this. Whether you are a recycler, repair facility, or a remanufacturer of automotive control modules, you operate in a process based industry. To become truly customer focused, your customer must be a part of the process. From a sales perspective, customers want to know that you care about their success as much as you do your own. This is true whether the customer is an end user, shop or warehouse distributor.

Lean Six Sigma Customer Focus

We hear all the time that we must be customer focused, but what does that mean? Let me give you the short answer.  First, you have to know who your customers are.  Second, you need to know the needs and desires of your customers. And third, you need to have a plan to meet those needs and desires.

The first mistake we typically make is to worry about who is supposed to be providing a product or service to us.  It is totally counter productive to look at your job from the prospective of who you are a customer to.  To see yourself as the customer. This is a selfish perspective that will sub-optimize your performance. Believe it or not, it will make your job harder.

Designing a Business

I have been starting up a new business division in our company.  Nationwide Parts Distributors has been an inside sales business with connections dating back to 1992.  Now with the advent of Automotive Electronic Solutions, we are also a remanufacturer.

This is a completely different business model for Nationwide Parts Distributors.  We designed the work flow, defined the core competencies for each position, set up infrastructure, hired employees, and opened for business.  The ROI for the business turned out to be less than one month.

Requirements vs Delighters

Requirements are those service or product characteristics that the customer requires in order to satisfy their needs. When the business fails to meet these requirements, the customer will not be satisfied. The result is a lost business opportunity. The analysis of these requirements will eventually lead us to customer critical to quality (CTQ) issues.

On the other hand, delighters are those aspects of a product or service that delight the customer when present, but are not required. For example, hotel customers did not expect a free continental breakfast in the past. By providing customers with this service, some hotel chains were able to gain a competitive advantage.

Six Sigma and Process Analysis

There are different ways to see a process.  As we think it is, as we think it should be, and as it really is.  When we see a process as we think it is, we are disconnected from reality.  When we view a process this way, we cannot see the source of the process’s defects and waste.  This is the most common way that people see processes.

Six Sigma Process Improvement

Process improvement is the act of increasing the value of a process’s output in the eyes of its customers. 

 Putting this into a business perspective, we can view a business as a collection of processes that focus upon providing an output that its customer’s are willing to pay for. Therefore, the objective of a business process is to add value to a collection of inputs, from a customer perspective, to produce a profit to the business.  Consider the following, simplified, value equation.

 Profit = Perceived Value – Inherent Value

Voice of the Customer

Beyond the analysis of processes, a successful improvement initiative becomes a business philosophy that changes it’s culture and value system. By listening to the voice of the customer, a business can find exactly what the customer wants and design the products and services that meet their expectations. Expectations are not limited to quality. Customers also have expectations of functionality, appearance, safety, etc. You have to listen carefully to your customers to know what they are looking for. When these expectations are known, the business can partner with their customers, creating a closed loop in the relationship. A business accomplishes this by aligning its values and strategies with the expectations of its customers.