Tag Archives: quality

Productivity Myth

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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.

The result is that you may take a production line that can produce 200 units per hour if quality is not a concern, and tune it to produce 100 units per hour with no waste, rework or negative customer impact. I know what you are saying here. “My productivity is half of what it was and my costs are higher.” 

Is this really the case? Out of the 200 units originally produced, how many met customer specifications? How many of the 200 units had to be scrapped or reworked? How many inspectors, rework, and scrap removal dollars have been spent? How much market share did you lose because customer expectations were not met? The lack of quality will never save you money. It will always cost you more.

The trick to staying viable in a difficult economy is to remember that shoppers buy based upon perceived quality. Especially when their financial resources are  limited. No one wants to waste their money on a cheap, but ineffective, purchase.

The way to business success is by managing both production and production control. That is, to measure a process’s production capability by its ability to produce “at quality”. This enables a business to make capital and human investment decisions based upon a process’s true “customer” capability.

Case Study: Automotive Control Module Repair and Remanufacturing

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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

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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.

You can only improve business processes by reversing the direction of your vision. You must look instead at who your customers are.  Being customer focused is at the core of every successful business and relationship. Being inwardly focused is at the core of every business failure and personal failure.

A customer is anyone to whom you provide a product or service. Basically, customers come in two flavors. Internal and external.  We typically know who our external customers are, because that is the orientation of our thinking. At the same time, though, we typically lose site of who our internal customers are.  Internal customers are those we work with.  The person in the next cubicle or another department.

To start the process of becoming customer focused, create a list of who you think your customers are (include your family and significant others). Don’t worry about being wrong, just base it upon your opinion.  Next to each customer, list what product or service you provide them.

When ready, show your listing to your customers and ask them to rate your performance.  If they are honest, you probably won’t have too many surprises. At the same time, you will probably not like what you hear. We generally know how good or bad of job we are doing.  Don’t be defensive. Just like beauty is in the eyes of the beholder, quality is in the eyes of the customer.

Once this is done, answer the following questions.

If taking care of my customer’s needs (instead of my own), in a timely and appropriate manner, became the focus of my work, what would change about my work (what would I do differently)?

If this happened, how would you measure how successful your day was?

How would your perception of “what is a good day” and “what is a bad day” change?

The profound fact here is that if everyone were to take care of their customer’s needs (internal and external), than everyone’s needs would be met. No one would feel as if they were not given appropriate support. It becomes a seamless circle where no one gets left out.

To ensure that you get what you need, you have to first ensure that your customer’s get what they need.

Designing a Business

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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.

We did all of this in a new business format and performed well enough to maintain the highest possible rating with the Better Business Bureau. This is remarkable in that we avoided the typical start-up quality issues of a new business venture.

We are now in our third month of operation and have raised enough working capital to begin the process of purchasing the building we are operating in.  This will increase our valuation in the market place and reduces our monthly cost of operation.

It has been hard work managing  the changing design of the organization as we went through a steep growth curve. Even with a flexible, lean, organizational design, we have doubled the number of employees in the new business to accommodate the increase in throughput that our customers demand.

I am very proud of the team of professionals that work here at Nationwide Parts Distributors and Automotive Electronic Solutions. Their belief in the vision, and commitment to achieving it, has made it all possible.

Requirements vs Delighters

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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.

This practice leads to customer expectation. Once exposed to a delighter, the customer can, and usually does, come to require these delighters. In other words, the delighter becomes a requirement. In addition, as is typical with customer satisfaction issues, requirements tend to escalate. For example, where customers were once delighted with a free continental breakfast selection of donuts, juice and coffee, some are now expecting prepared foods.

Finally, customer requirements tend to increase in number and complexity. Once a requirement gets set in a customer’s mind, they do not typically to go away. For this reason, businesses need to plan the rollout of delighters and measure their impact. There is no rest for the business that wishes to gain and keep market share.

Six Sigma and Process Analysis

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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.

 When we view a process as we think it should be, we are still not seeing the process for what it really is.  Similar to above, when viewed this way we cannot see the source of the process’s defects and waste.  Viewing a process from the perspective of how we think it operates, or as we think that it should operate, we are literally working in the world of what we “think”, instead of what really is. 

 To make any progress in improving a process we must work with reality.  When we view a process as it really is, we can see its associated defects and waste. Bottlenecks and hidden factories become visible and critical to quality issues can be linked to particular steps in the process. In the Define Phase of an improvement project, knowledge of the “As Is” process is the foundation of all that follows.

 The “As Is” perspective is a perspective of truth.  We can make progress toward positive change when we are honest about how our processes really perform.  Without the truth, not only will we not improve, it is likely that things will actually get worse.

Six Sigma Process Improvement

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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

 Perceived value is customer and competitor driven.  From the customer standpoint, this involves their perception of cost, function, ease of use, absence of defects, customer service, etc.  The customer’s view of your competition, in these same categories, provides the competitor influence. 

 Inherent value comes from the cost of raw materials, infrastructure, and process. This adds up to the actual cost of production of a product, or the actual cost of provision of a service.  Businesses wish to increase the perceived value of their products and services. While at the same time, they wish to decrease their inherent costs.  The result is increased customer satisfaction and higher profits.  Process improvement becomes the vehicle to accomplish both.

Voice of the Customer

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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.