Management By Walking Around & Gemba

Driving incremental improvement in your process is not something that can be done without intimate personal engagement; not just from the owners of the process, but also from the organization’s leadership. A hands-off approach by management will doom the effort before it begins.

Management By Walking Around

Tom Peters, author of the “Excellence” series of books and one of my favorite management visionaries, coined the phrase MBWA (Management By Walking Around). This is another of those concepts that seem so obvious, but how many of us actually do this? InsearchofexcellenceThis is a rhetorical question of course, but really, how often do we go out on the shop floor and just observe what is going on? I don’t mean tracking down orders and making sure people are working, but how does the facility look? Do the workers look happy? Are we working smart or overcompensating by working hard? What would I think if I were the customer? You can’t answer these questions sitting in your office!

Gemba

Mr. Peters was on to something with his MBWA, in fact the Japanese have a similar term for this; Gemba. Roughly translated as “the real place”, gemba means getting off your butt and going to see where the work is actually being done. Like many lean buzzwords such as kaizen, gemba has transitioned from obscure to ubiquitous across our industry. I love gemba, but like anything worthwhile, you get out of it what you put into it. Gemba demands a few things from the user to be successful.

First, it requires a deep curiosity to know what is really going on in your organization. Not what you think is going on, or what you heard is going on, but what is actually going on. Gemba next demands a skill set that includes the ability to actively observe and understand the work that’s being done. While this may seem obvious, doing a “drive by” surface observation won’t accomplish anything, and may actually do some damage by providing a false sense of process well-being. The last demand is perhaps the most important; an inherent respect for the people actually doing the work. These are your process experts that have the practical experience and tribal knowledge of the process. Gemba walks needs to be approached from a place of mutual respect and overriding desire to make things better, faster, cheaper, easier, etc. Gemba means going to where the work is being done and engaging the people directly, not assuming you have solved all the problems from your office.

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U.S. Appeals Court ruled that Conflict Minerals Rule Violates 1st Amendment

Forwarded with permission SW

August 19, 2015: Barbara Jorgensen – ElectronicsPurchasingStrategies.

A U.S. appeals court ruled this week that the government cannot compel companies to report whether or not their products contain so-called “conflict minerals”—gold, tantalum, tin, and tungsten—mined from regions in Africa. The U.S. Circuit Court of Appeals for the District of Columbia ruled on Monday that the requirement that companies state whether their products are “DRC conflict free” or not conflict free violates the First Amendment, according to ECIA. The three-judge panel by a 2-1 vote stated that the Securities and Exchange Commission’s (SEC) requirement to label products as “conflict free” or not is hardly factual and non-ideological. Instead, the compelled disclosure ethically taints products and stigmatizes companies in violation of the First Amendment.

The suit was brought by the National Association of Manufacturers (NAM), the U.S. Chamber of Commerce and the Business Roundtable in 2012. The U.S. Dodd-Frank conflict minerals rule requires publicly traded U.S. companies to disclose whether their products contain certain metals and whether these metals originate from rebel-held mines which are funding armed conflict in the Democratic Republic of Congo (DRC). The measure is intended to discourage companies from sourcing these materials from regions in which human rights are routinely violated. In a statement released on Tuesday, the NAM said: “We believe it is unreasonable to require companies to continue to spend substantial resources implementing the SEC’s rule when its central feature has been invalidated on constitutional grounds. Therefore, we believe the SEC and Congress should reexamine this approach of the Dodd-Frank Act and rule in light of the court’s decision. The SEC had estimated initial compliance costs of $3 billion to $4 billion in the U.S.; electronics industry estimates were higher.

Fewer than 20 percent of issuers filed conflict minerals compliance documents in 2014 to the SEC. One of them was capacitor manufacturer Kemet Corp. which uses tantalum in its products. The ruling comes amidst the development of a similar rule in the European Union. The EU’s proposed conflict-minerals legislation is likely to cast a much wider net than Dodd-Frank. Not only may the EU requirement add elements to the list-such as cobalt-but it may encompass any country or region that is perceived to be violating human rights. “The European conflict minerals regulation is aligned in many ways with the U.S. regulation but actually extends the geographic scope to consider all areas of conflict and high risk where conflict minerals are sourced,” said Scott Wilson, content solution strategist for the Electronics & Media Group at IHS, a panelist on the IHS/iPoint webinar “Conflict Minerals Compliance: Mistakes, Lessons Learned & Best Practices.” “It no longer pays special attention just to the DRC.” That’s not the only adjustment the EU may make: instead of a voluntary self-certification program for conflict minerals disclosure, the EU may mandate measures such as third-party audits, he said.

In May members of the European Parliament requested mandatory certification for EU importers of conflict minerals to ensure they do not fuel conflict and human rights abuses. Their position includes compulsory independent and third-party audits of smelters and refiners to check due diligence. Members further proposed that the 880,000 downstream European companies that use conflict minerals in manufacturing consumer products provide information on the steps they take to identify and address conflict mineral risk in their supply chains. The Dodd-Frank Act has reverberated throughout the electronics supply chain and has prompted many companies to push data requirements on to their partners.

It’s become abundantly clear, said Jared Connors, technical sales manager for material compliance, sustainability and conflict minerals for iPoint, that the compliance process is impacting companies that don’t have to file with the SEC. “The information [regarding conflict minerals] comes from the supply chain, yet the majority of supply chain companies have no direct connection to the law and therefore have no obligation the be familiar with the requirements.” A lot of disparate data ends up with the filers, he said. “This is an annual audit you have to do each year-and you have to show improvement year after year. In 2015 you are going to have to demonstrate you know more about your sources than you did in 2014.” The distribution channel in particular is a concern for some filers. As distributors do not manufacture the components they sell, many refer OEM customers to data their suppliers have filed or have provided online. “This represents a misalignment between the physical supply chain and the information chain,” said Wilson. “The regulation really addresses suppliers, but in the case of electronics in particular, distributors are selling products on behalf of [original component manufacturers] and don’t collect [conflict minerals] information. Distributors may not have a system to address specific questions and they have to pass those on to the OCM.” The government has 90 days to appeal to the Supreme Court, or it may petition for rehearing before the entire set of judges in the D.C. Circuit.

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Internal Audit Key to Driving Improvement (Pt. 3)

Using Audit Results to Drive Improvement

Audit results are an invaluable source of process improvement opportunities and generally uncover two different categories of intelligence: 1. People not doing things they should, and 2. People doing things they shouldn’t.

People not doing things they should

This is the case where the current procedures, work instructions and other formal approved documents reflect best practices but are not being followed. There are a lot of possible causes for this common situation, but the most likely one is that the organization lacks a comprehensive training program.

People doing things they shouldn’t

This is the case where the current procedures, work instructions and other formal approved documents are being followed, but they do not reflect best practices. Again, many potential reasons, however the overwhelming cause that I find is that the department employees (the real process experts) were not actively engaged in developing the processes. The collateral benefits of this process development method are that the employee ownership of how things are done tends to lead to self-imposed compliance.

The bottom-line is that both of these situations provide low-hanging process improvement fruit that are easy to fix and directly improve efficiency, quality and profits.

auditreport

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Internal Audit Key to Driving Improvement (Pt. 2)

Audit Staff

Once the audit plan has been formulated, the audit staff can begin to be developed and trained. Cross-functional members can be drawn from the pool of managers, supervisors, and line positions within the company. The auditors need not be totally familiar with the procedures they will be assigned, and in fact the system actually works best if they are not. People tend to overlook inconsistencies when they are overly familiar with a process, the old “fresh set of eyes” maxim. One of the most critical, albeit difficult, skills to develop in an audit staff is to “see things as the customer sees them”. Mechanically going through an audit checklist provides little value-add, but the ability to represent a paying customer’s viewpoint is priceless. When assigning audit responsibility be sure to avoid conflict of interest auditing. In other words, never assign an auditor to a process that he/she has ultimate responsibility for. Under the Continuous Improvement umbrella, the purpose of a robust audit program is to discover findings and inconsistencies within the system, and to correct them. Posting superfluous audit results that never uncover any problems will throw up red flags with any customer/auditor, in addition to providing zero value to the quality system.

Collateral Benefits

One of the invaluable peripheral benefits of a robust audit program is the opportunity it presents to train the workforce to be more “auditor friendly”. In a typical shop workforce, the average employee is not comfortable interfacing directly with customers and/or auditors. Anxiety can temporarily turn even theprocessaudit most highly trained employee into a blubbering new hire while being questioned by a stranger. This can be overcome by practice, practice, & more practice via internal audits. During ISO Rallies or training sessions, “coach” employees on the proper way to respond to an auditor’s questioning, much the way a trial attorney will review testimony with a witness. This is not cheating, but simply “applied learning”. The more employees are exposed, and participate in, audits, the more comfortable they will become with the process. Interacting smoothly with a customer or auditor is a learned behavior, one that can be developed through the internal audit program. The results can be truly remarkable!

 Frequency

A complete audit cycle of all Functional and ISO System processes should be completed every six-months. This is to calibrate with the six-month registrar surveillance audits required to maintain ISO registration. While the timing of customer audits cannot be controlled, it is highly recommended by the author to complete the audit cycle prior to each ISO surveillance audit. This provides an opportunity to clean-up most inconsistencies uncovered during audits, while minimizing the potential of a customer/auditor finding. Any audit findings should be integrated into the internal corrective action system. Along with the administrative benefits of doing this (tracking, follow-up, accountability), it also feeds into the management review process as part of the quality report. Follow-up audits for finding should be completed in a timely manner, typically within a maximum 10-day time frame.

The success of an audit program hinges on the quality and personality of the process owner. Their ability to develop a trained staff that can effectively audit processes while developing employee confidence in dealing with customers will lead to operational excellence.

 

 

 

 

 

 

 

 

 

 

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Internal Audit Key to Driving Improvement (Pt. 1)

Developing a robust internal auditing system is one of the best ways to maintain a consistent, effective quality system and avoid undesirable findings during an external (customer or ISO) audit. But the greatest value to the organization is when internal audits are used as a continuous improvement tool.

Lead Auditor
The process begins with the person who has functional responsibility for the internal auditing process, typically the quality manager or ISO representative. As the leader and owner of this program, there are two imperative disciplines that this person should receive formal training in. The first is ISO Lead-Assessor training from an accredited outside third-party training firm. The second is “Train the Trainer” instruction. Frequently the owner of the auditing program will be the one training the audit staff. And, as with all training, records of this training should become a permanent part of this person’s training file.

Audit Schedule
The next step is to develop a comprehensive audit schedule. Each functional area and major business system should be included in the audit schedule. Most accrediting bodies (Registrars) have a requirement that the entire QMS must be audited at least annually, so the frequency from a high level is already defined. But when adding in all of the subordinate procedures, work instructions, etc. for all of the manufacturing functional areas and support departments, the amount of processes that need to be audited can become daunting. This is where an Audit Schedule can be invaluable. Breaking down the audits into manageable monthly or quarterly buckets spread out with a number of internal auditors minimizes the time constraint and maximizes the opportunity to stay on schedule.

Audit Plan
One of the best ways to assure consistency with your internal audits is to use a standard checklist that covers the exact QMS requirements (ISO 9001, ISO 13485, AS 9100, etc.) auditchecklistThe QMS audit process measures the level of communication, comprehension, and compliance (the 3-C’s) of the Quality Manual and overall QMS system throughout the organization. A very effective way to increase awareness of key attributes of the QMS like the Quality Policy is to incorporate this into the audit. If an employee cannot recite the Quality Policy (either from memory or from a badge, card or poster), that would constitute an audit finding. Another method for maximizing the potential of “finding free” audits is to audit the line workers, not the department supervisors. Demonstrated audit competence of the people actually doing the work validates the strength of the training program, plus generates the collateral benefits that will be discussed in Pt. 2 next week.

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Supply Chain Innovation Milestones

Supply chain management is not a recent revelation; in fact, the supply chain strategy used 5,000 years ago would give modern supply chain managers a run for their money. In ancient times, transportation technology was basic so the cost of moving goods was the primary factor, so goods were put together close to the source of raw materials.

2700 BC: The earliest example of supply chain management can be seen during the construction of the ancient Egyptian Pyramids. These early supply chain managers had to procure thousands of 2.5 ton blocks of stone, transport them across the desert and arrive at the site in time for the various stages of construction. Next time you are at the beach, try to push or pull a cooler filled with ice and beer across the sand and you will quickly appreciate how incredible this feat was.

300 BC: The invention of Roman rowing vessels (ships) revolutionized logistics and was the origin of intercontinental trade. This capability to travel across the sea allowed Alexander the Great the ability to set up a wartime supply chain moving troops, equipment and weapons into India.

700 AD – 1500: Intercontinental shipping continued to evolve with the establishment of seaports in major cities around the world. The first postal service was implemented in Europe.

1800: Development of roadways and railroad systems added another dimension to trade and supply chain logistics including the first use of the steam engine and oil powered vehicles.

1913: Henry Ford invented the moving assembly line and begins the early implementation of JIT both internally and with suppliers.

1956: The sea container was invented in the port of New Jersey, significantly impacting the evolution of world trade and globalization.

1960: Electronic Data Exchange (EDI) was first used to transfer data and documents.

1961: The first Material Requirement Planning (MRP) system was developed in Racine Wisconsin, and a year later IBM used this to develop the first Bill of Material (BOM).

1970s: The first UPC and SKU bar code was used at Marsh’s Supermarket in Troy OH.

1980: MRP was expanded to include all facets of an organization via ERP (Enterprise Resource Planning).

1984: Michael Dell developed the first make-to-order direct order fulfillment model.

1985: FedEx reinvented their express shipment model by giving their drivers hand-held computers that provide real time shipment information.

1988: Walmart implemented a Cross Docking system that allowed them to track goods across all of their distribution centers and stores.

1990s: The Internet revolutionized supply chain management and collaboration with suppliers. The Toyota Production System pioneered by Toyota’s Taiichi Ohno started to gain widespread acceptance in the US to become the foundation for today’s lean manufacturing and supply chain practices.

1998: Amazon began to fulfill orders direct from manufacturers, eliminating the need for Amazon stores and distribution centers.

2000: MIT transformed inventory management with the development of RFID (radio frequency identification) allowing a synonymous track-and-trace methodology.

Today: Supply chain management is a term that has grown enormously in the last few decades. Companies have found that SCM is a crucial element of business today and one that provides a competitive advantage to expanding in global markets.

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How Good is your Supply Chain?

When asked to discuss supply chain strategy, I am often greeted with the response “Yes of course, we have a purchasing department”. Supply Chain Management has progressed far beyond the old school purchasing mentality to become a key component of the modern business organization. We are all just pieces in the supply chain puzzle that is responsible for getting the ultimate customer’s product to market.

The fundamental concept of Supply Chain Management is based on two core principles. The first principle is that virtually every product delivered to an end customer has gone through a number of touches in a number of manufacturing and/or service organizations. These organizations are referred to collectively as that product’s supply chain. The second principle is that while supply chains have been around for thousands of years, most companies have only been concerned with what was happening “in their own sandbox. Few businesses took the time to understand, much less manage, the entire “chain” of suppliers & activities that were required to transform raw materials into finished, delivered product to the end customer. This lack of understanding often led to extremely dysfunctional supply chains, and of course, unacceptable delivery and quality performance.

A recent Chief Supply Chain Officer Survey shows just how concerned supply chain executives are about their supply chain. Respondents from 18 different market sectors participated in the survey including high tech, industrial, consumer products, automotive, aerospace & defense, and medical equipment. Interestingly, over half of the survey participants value the supply chain function as equal to sales/marketing, R&D and product development.

Figure1Survey

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It Won’t Work Here (and Other Myths)

One of the most recurring themes I run into while either teaching or speaking on best practices is the “I know that that won’t work in my company” attitude. The pessimist is always willing to passionately voice their reason(s) that this is true; we are too big, we are too small, our technology is too simple, our technology is too complicated, our employees creaturesofhabitwon’t support it, our management won’t support it, we have tried it before and it didn’t work, this is just another flavor of the month and will fade away like all the others, et cetera ad nauseam.

People are creatures of habit, and basic human nature dictates that people will typically be uncomfortable with change. Resistance to implementing any new initiative is natural and expected, however, with proper (1) Recognition, (2) Understanding, and (3) Education, resistance can be overcome and change can succeed.

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Business Lessons from Lombardi: Part 2

Lessons from Lombardi

It’s about Winning: Lombardi saw the importance of winning in any game; in life and so on. He couldn’t accept defeat as final and he had a single-minded focus when it came to winning football games.  As a leader, it is important to understand that people want to be part of a winning team; which requires a winning attitude. Lead by example, being positive while at the same time persistent. In whatever thing you want to do, there will be resistance and you need that winning attitude to breakthrough and reach your goal with your team.

What it Takes to be Number One: Lombardi famously stated “Winning is not a sometime thing; it’s an all the time thing. You don’t win once in a while; you don’t do things right once in a while; you do them right all the time.” This speaks to the culture of an organization, whether the organization is a football team or a manufacturer. A winning culture is an attitude that needs to lived and breathed by every single employee, every single day.

Outwork Everyone: Lombardi knew that the price of success was hard work, hard work, and hard work. He lived and breathed it with his teams, and this discipline helped them win their championships. You cannot bypass hard work; hard work is the shortest path to success. Show your team the value of hard work by personal example; and as you lead by hard work, your team will follow.

Teamwork is Essential: Lombardi recognized the importance of teamwork and he made sure each and every player understood that “there is no I in team”. No matter how you say it, 2 + 2 = 5; two heads are better than one, synergy, Lombardi saw that teamwork was the only way to win, whether it was in the game, or in life.

KISS: Lombardi’s Packers had only a handful of plays and none of them were overly complicated. He had no laminated cards nor did his players have flip over wristbands listing dozens of plays with multiple options. However, the few that he did have were constantly and passionately enforced and practiced until it became second nature to every single player. Simplicity all but eliminated all misunderstandings and confusion so that everyone was literally “on the same page”.

Chase Perfection: Several former Packer players have described Lombardi’s practice regime of how they would run one rather simple offensive play dozens of Lombardi2times in a single practice until every individual player executed his assignment flawlessly. Over and over and over again with not a single mistake being overlooked or tolerated. Games were exactly the same: mistakes that weren’t tolerated in a loss weren’t tolerated in a win either. Lombardi’s premise was that no team or individual has ever come even close to perfection by accident; the only chance of ever reaching perfection is to actively and constantly chase it.

Look in the Mirror: I would again challenge you to take a look at these Lessons from Lombardi and find any one of these that doesn’t, or shouldn’t, apply to your organization. BTW, ESPN recently voted Lombardi the greatest coach in NFL history.

As the great Vince Lombardi once said, “Perfection is not attainable, but if we chase perfection we can catch excellence.”

 

Previously published in The PCB Magazine – I-Connect007.com

 

 

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Business Lessons from Lombardi: Part 1

It occurred to me after reading an article in the local paper recently that solid management fundamentals are timeless and cross all industries. It is critical that an organization have a foundation based on a practical management game plan to be in the chase for excellence.Lombardi

Old School = New School

The article I am referring to was titled “Would Vince Lombardi be successful in today’s NFL?” by the sports writer Gary D’ Amato of the Milwaukee Journal Sentinel newspaper. Now, I have no fondness for this particular politically skewed publication, however, the sports reporting has always been very good. Around here in my home state of Wisconsin, the mere mention of Saint Vinny generally elicits a reverent hush, recollections of legendary Packer moments, and the occasional genuflection from the old-timers. For those of you with your football heads in the sand, Vincent Thomas Lombardi built one of the greatest dynasties in sports history in the 1960s about 90 miles north of my home. Vince would have been 104 years old this year.

The article noted the facts that NFL players today are bigger, stronger and faster, and that the offensive and defensive schemes were a magnitude more complicated than in Vince’s day.  Also discussed was just how modern players, especially “me generation” football divas like Terrell Owens, Randy Moss, Jay Cutler, and Chad Ochocinco Johnson, would react to Lombardi’s demanding, no excuses, winning is everything coaching style. The answer is that Vince Lombardi would most certainly be not only successful today, but I would bet a boatload of beer that he could lead a modern-day team to a world championship. How is this possible? Because Lombardi’s success was built on the foundation of fundamentals; hard work, discipline, flawless execution and the pursuit of excellence: building blocks that never go out of style.

Looking at the lessons of Lombardi’s success, it is clear that his philosophy is not football, or even sports, centric, but applies to any business, organization, service and industry that is willing to embrace it. I challenge you to step out of your “Lombardi is football” mentality and take a fresh look at what can be learned and applied to your business from the legend.

Stay tuned for Part 2 next week!

Previously published in The PCB Magazine – I-Connect007.com

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