GP's Operational Excellence Practice

Since our acquisition in 1998 by General Physics Corporation (GP), we have retained our Deltapoint name because of its strong reputation as an early leader in TQM, TPM, and Toyota Production Systems in North America. In order to align more closely with GP's other performance improvement solutions, we will now be known as GP's Operational Excellence Practice.

Today, we provide consultation, knowledge transfer, and hands-on implementation in the following disciplines:

• Lean Plant Floor Systems
• Lean Six Sigma
• Reliability Excellence
• Supplier Development

When you work with us, you can expect to realize rapid return on your investment through improved quality, shortened lead time, lowered costs, and increased revenue. While many consultants offer similar words, you can expect real action from us. Using our robust approach, we energize your organization's performance with hands-on involvement from our seasoned team, and help you develop a culture of waste elimination, variability reduction, and innovation that will endure as your organization continues to grow.

We hope that this issue of QUICK, like the others that have come before, helps you keep up to date in the latest advances in operational excellence. Please take a moment to check out our new web pages at www.gpworldwide.com/operationalexcellence to learn more about our services and products. Please contact me if you are interested in having our team help you continuously improve. You can reach me at 206-484-0816 or mbresko@gpworldwide.com.

Respectfully,
Mike Bresko
Managing Director and Principal Consultant
General Physics Corporation

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"High Achievers"

Jill Jusko et al.

IndustryWeek

October 2006, pp. 26-46

This article consists of an introduction and one-page descriptions of the winners of the 2006 IndustryWeek's Best Plants awards. The winners are:

• AK Steel Corp.—Rockport Works, Rockport, IN (flat-rolled steels). They have gone four years without an accident, and they have 98.6% first-pass yield.
• Batesville Casket Co.—Batesville operations, Batesville, IN (metal burial caskets). They have achieved 73.1% reduction in returns since 2002. They also went 1 million work hours without a lost work day in 2005.
• Cordis de Mexico S.A. de C.V., Ciudada Juarez, Chihuahua, Mexico (catheter and stent medical devices). They accomplished $25.3 million in cost savings in 2005, reduced in-plant defect rate by 69.6%, and maintain 98.6% first-pass yield.
• General Cable de Latinoamerica S.A. de C.V., Tetla, Tlaxcala, Mexico (telecommunications exchange cable and service wire).Among their achievements is an increase of sales per employee productivity of 103% over the past three years.
• Lockheed Martin Missiles and Fire Control—Camden Operations, Camden, AR (military rockets, missiles and rocket launchers). Using Lean Six Sigma, this plant has saved $23 million since 2001. They have also reduced production lead times by six months.
• Magee Rieter Automotive Systems, Bloomsburg, PA (auto carpeting). This plant has 100% on time delivery and 100% customer retention rate. They have been General Motors Supplier of the Year for 14 consecutive years.
• National Gypsum Co., Wilmington, NC (gypsum wallboard). This plant had zero defective board in 2005.
• Schneider Electric, Peru Operations, Peru, IN (electrical panelboards). Implementation of 5S contributed to a 47% reduction in medical incident rate. Lean Six Sigma improvements led to 28% increase in productivity over the past three years.
• Scotsman Ice Systems, Fairfax, SC (commercial and consumer ice machines and refrigerators). Improvements are reported of 46% in reduced scrap, 53% improvement in first-pass yield, and 41% improvement in productivity.
• Siegel-Robert Automotive, Farmington, MO (automotive nameplates, interior and exterior trim, and grills). This facility boasts 108 ppm customer rejects and 99.6% on-time delivery.

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"What's Working"

David Blanchard

IndustryWeek

October 2006, pp. 49-51

The latest Census of Manufacturers, sponsored by IndustryWeek, has found that lean manufacturing continues to be the most popular primary improvement method. For manufacturers surveyed, 40.5% report it is their primary improvement method (compared to 35.7% in the 2005 Census of Manufacturers). 12.4% selected Lean and Six Sigma combined (compared to 8.0% in 2005). 9.9% selected TQM (compared to 15.9% in 2005). 3.8% selected agile manufacturing (compared to 4.4% in 2005). 3.1% selected the Toyota Production System (compared to 1.5% in 2005). 3.1% selected Six Sigma (compared to 1.5% in 2005). 3.0% selected Theory of Constraints (compared to 4.0% in 2005). The remaining 24.3% selected "none" or "other".

With a multiple-response-possible survey, 70.1% report High Quality as a focus of their market strategy, 54.3% list Service and Support, 40.3% listed Total Value, 32.3% listed Fast Delivery, 28.9% listed Customization, 27.1% listed Low Cost, 24.9% listed Innovation, and 16.2% listed Product Variety.

Among their Strategic Practices, 72.9% report a Continuous Improvement Program, 50.6% report Quality Certifications, 45.9% report Customer Satisfaction Surveys, 35.2% report Benchmarking, 32.4% report Environmental Management, 24.5% report "Total Production Maintenance", 16.1% report Energy Management, and 18.3% report Open-Book Management.

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"Labor Flexibility: Too Much of a Good Thing?"

Corinne Karuppan

Industrial Management

September/October 2006, pp. 13-17

The author defines labor flexibility as "the ability to adapt to changing needs both effectively and efficiently. For the work force, it means the capacity to perform multiple tasks." This article reports the results of a study of flexibility. Supervisors' ratings of flexibility and the number of worker training certificates were combined to form one measure of worker flexibility. Job analysis records were used to assess job complexity. Quality, productivity, and production were the outputs measured.

The results indicated that more job flexibility is not always better in terms of output:

• Transfers between simple, repetitive tasks were generally smooth in terms of maintaining output
• Workers cross-trained for complex tasks performed below expectation
• The more extensive employees' training for and tenure on the job, the more efficient they were when reassigned to the job
• The longer people were away from the job, the worse they performed on complex tasks
• Labor flexibility was more effective when machine flexibility was low

The author concludes that when task complexity is low, it is reasonable to provide extensive cross-training within and across departments. When task complexity is high, it makes most sense to cross-train for different tasks within a department or for similar tasks across departments.

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"Human Capital in the Supply Chains of Global Firms"

David Griffith

Organizational Dynamics

Vol, 35, No. 3, pp. 251-263

This article explores dimensions of Human Capital that are seen as necessary for organizational success in the Global environment. Two general dimensions are explored: analytical capital and social capital.

Analytical capital "reflects an individual's ability to conceptualize a problem, isolate its components, organize information for decision-making, establish criteria for evaluation, and draw appropriate conclusions." This dimension is further sub-divided into the needed areas of:

• Tacit knowledge—This refers to "an intellectual and cognitive process that is neither expressed nor declared openly, but rather implied or simply understood." Tacit knowledge is seen as providing the foundational point of reference from which global supply chain personnel can adapt to changing situations.
• Experiential framing—This refers to "an individual's ability to apply past experiences to different problems and their related solutions." This can be helpful in the ability to replicate successes in different environments.
• Prioritization of problems—This refers to "an individual's ability to identify and rank those issues related to the achievement of the organization's goals." Supply chain personnel must be able to quickly and effectively sort through global issues to respond well and in time.
• Learning—This refers to "the process through which supply chain personnel acquire a dominant logic upon which to operate." Learning from different situations is important to minimize future mistakes.
• Unlearning—This refers to "the process through which a manager, or organization, relinquishes dominant logic or protocols for completing a task and acquires new logic or protocols".

Social capital "reflects an individual's abilities, personality traits, character traits, interpersonal abilities, work ethic, and attitudes." The key elements here are:

• Intuition—This refers to "a sense of certainty relating to an issue, decision, or course of action without specific knowledge as to how one came to a conclusion." This is useful in the global environment, where information is often lacking and change is continuous.
• Self-confidence—This refers to "an individuals' degree of perceived probability of success at a task." Self-confidence usually is related to performance in the global environment.
• Ambiguity tolerance—This refers to "the degree to which supply chain personnel can hold back their need for complete information related to their environment." Ambiguity is obviously high in diverse global environments.
• Stress management—The ability to function under pressure is key in the global environment.
• Flexibility—This attribute "implies not only the awareness of alternative options, but also a willingness to change one's behavior based upon an assessment of the alternatives." The global environment demands flexibility.

Four steps are identified to maximize human capital in the global environment:

1. Assess the tasks facing supply chain personnel—The functions of the global supply chain should be specified, and then the firm must identify the tasks to be performed in each function.
2. Assess human capital and the mindset of managers—Psychological tests, scenario exposure, or post hoc review of past behaviors can be used.
3. Match job tasks to human capital.
4. Assess the effectiveness of the supply chain personnel and developmental planning.

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"Employee Engagement Boosts Bottom Line"

Anonymous

T & D

September 2006, p. 16

In a recent study, employee research firm ISR found a 52 percent gap in operating incomes between companies with highly engaged employees and companies with low-engagement employees. High-engagement companies improved 19.2 percent in operating income over the study period, while low-engagement companies declined 32.7 percent. Net income growth was 13.2 percent for high-engagement companies, while income declined 3.8 percent for low engagement companies.

An earlier study found that high-engagement companies experienced a 5.75 percent difference in operating margin and a 3.44 percent difference in net profit margin, as compared to low-engagement companies.

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"Characteristics of Successful Improvement Initiatives"

Clinton Longenecker, Greg Papp, and Timothy Stansfield

Industrial Management

September/October 2006, pp. 25-30

A recent survey of 181 senior-level executives in heavy manufacturing asked what the specific factors were that the executives felt were critical to the success of their improvement initiatives.

The following were the most commonly cited factors:

• Participation, teamwork, and ownership (cited by 81.9% of respondents)
• Clear focus, direction, and goals (72.3%)
• Trustworthy leadership (65.4%)
• Speed and a sense of urgency (59.1%)
• Ongoing measurement, feedback, and adjustment (54.9%)
• Clearly defined improvement process or plan (42.5%)
• Follow-up and accountability (35.9%)
• Effective training or education (31.1%)
• Accurate data and effective analysis (29.2%)
• Clearly defined roles and strong execution (26.3%)
• Rewarding progress and celebrating success (24.8%)
• The right people (23.7%)
• Real commitment to improve or change (21.9%)

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Human Behavior in Pursuit of Improvement

John McNeil, GP
 

Both the Longenecker and Griffith articles refer to the human dimensions of improving performance. Even anonymous authors are showing that engagement is critical to performance. For similar conclusions matched to actionable recommendations and specific planning aids, we often refer to Thomas Gilbert's work. His seminal books (e.g., Human Competence: Engineering Worthy Performance) are based on empirical observations and divide causes for shortfalls in performance into six areas:

• The exact expectations of conduct within a job as well as specific job feedback on performance. Access to all the information needed to align personal actions with the organization's and to perform at the highest level of personal capabilities.
• Tools and resources that assist in completing work, such as computer systems, job aids, guides, help and assistance.
• Financial and non-financial incentives/consequences for doing work including respect and freedom from harassment.
• Training to do a job that is more than adequate in quantity and quality.
• A job that meshes with personal characteristics and capacities or, failing that, development of those capacities.
• The desire to do one's best, and remain engaged with the immediate team as well as the remainder of the organization.

You will note that the first three root causes are related to organizational performance or shortfalls. The second three causes are related to individual performance or shortfalls. Surveys of individual performers place about 25% of the blame for shortfalls at their own feet and 75% at the organization's. This might be viewed as self-serving, but managers themselves change this only to 60%-40% when speaking of needed improvement in their own staff. In other words, they feel they and their organizations do a poor job of providing needed information, tools, resources and incentives to drive the correct behavior in the people who work for them. Because the Gilbert model provides such clear directions to counter specific shortcomings, it is an ideal companion for you as you improve Human Capital, employee engagement and the success of your improvement initiatives.

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