2019

STATISTICS ROUNDTABLE

Grab the Brass Ring

Financial crisis creates opportunity to contribute and shine

by Ronald D. Snee

Remember going to the amusement park or the county fair and riding the carousel or merry-go-round? During the ride, there was sometimes a brass ring you could grab from a dispenser. It took some dexterity to snatch the ring from the dispenser as the carousel rotated. And not every ring was brass. There was a large number of iron rings and just a few brass ones. Getting the brass ring usually earned the rider some sort of prize.

In today’s business world, we’re taking a ride on another merry-go-round. If you can catch the brass ring, good things can still happen to you: wealth, success or some other prize. For statisticians and other quality professionals, the brass ring is the opportunity to help their organizations create better bottom-line results through a continuing flow of successfully completed improvement projects.

The financial meltdown has created this imperative and opportunity. Statisticians and quality professionals are uniquely qualified and are arguably better positioned than any other profession to help deal with this crisis. The opportunity exists to use statistical thinking and methods and improvement processes, such as lean Six Sigma, to help your employer deal with this crisis. W. Edwards Deming admonished us that “survival is not mandatory.” We live in difficult times, which are epitomized in the fable of The Lion and Gazelle.

The Lion and Gazelle

Every morning in Africa, a gazelle wakes up. It knows it   must run faster than the fastest lion or it will be killed.

Every morning, a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.

The moral: It doesn’t matter if you are a lion or a gazelle. When the sun comes up, you better be running.

Process improvement advances

Things are different today in the field of process improvement. The profession has learned much during the 15 or so years since Six Sigma, lean and lean Six Sigma have produced millions—perhaps billions—of dollars in improvements around the world. Now is the time to rethink what we have learned and to put it to even more effective use to help our organizations respond to the financial meltdown. This could be our finest hour.

What has changed that can help us be more successful? Some important advances include:

  • IT is making higher-quality data more readily available.
  • We have powerful, more user-friendly statistical software that is well on its way to becoming ubiquitous.
  • We have a better understanding of how to identify, select and execute projects that cross functions and add significantly to the bottom line.
  • There is more awareness by management of the effectiveness of data-based approaches.
  • There is better understanding of what is needed to get organizations to adopt data-based approaches.

But how do you harness these advances and get your organization to use them? Approaches to Consider summarizes some suggestions, and other details follow. Use these for what works in your environment and think about how you can implement the rest in the future.

Approaches to Consider

Make a personal commitment to help the organization succeed.

  • Be proactive and provide leadership.
  • Get the involvement of management and form partnerships.
  • Quickly deliver bottom-line impact.
  • Identify and implement quick fixes.
  • Focus on improvement, not training, and make broad use of design, measure, analyze, improve and control.
  • Develop and deliver your message for management.
  • Re-energize lean Six Sigma.
  • Analyze long-term performance of key process metrics for core processes.
  • For the long term, prepare to expand the improvement approach to a holistic approach.

Addressing cost pressures

Begin by providing leadership to your organization. Make a commitment to help the organization and do what it takes to deliver on this commitment. Explain every opportunity in financial terms, including impact and when it will appear in the bottom line. Find those hidden factories (hidden operations in processes beyond the factory floor1), which are the big sources of wasted effort that increase costs and decrease capacity.

Be proactive. Find projects and get support from management to form a team to work the project. Don’t wait for someone to bring the project to you or invite you to join a team. Have a business focus: “This is what I believe should be done, and this is what will happen to the bottom line when we are successful.”

Be willing to take risks. High risks typically produce high rewards.

Have a sense of urgency. Remember that quick action can build credibility and enable work on the longer-term projects.

Get the support of upper management, form partnerships and find a Champion to help with the business and political issues.

Show me the money. Become a partner with the finance department folks and get them to determine what the projects are worth. Partnering with finance will not only help you determine what the project is really worth, but it will also provide an ally in defending the value of the project and help you follow the money to identify where large amounts of money are being spent. This usually turns out to be an opportunity for large financial improvements.

Remember what the prolific bank robber Willie Sutton said when he was asked why he targeted banks: “Because that’s where the money is.”

Quick wins, big impact

Focus on projects that will begin to re-turn bottom-line results quickly—often before the project is even completed. In a financial crisis, we need to find quick cost reductions. Deming taught that improving quality typically reduces cost. High priority projects in these times are those that deliver bottom-line results quickly and in large amounts.

Look for these quick wins, otherwise known as low-hanging fruit. Improvements that are easy to implement can have a big impact. Quick wins are still out there because we live in a dynamic world. Murphy’s Law and O’Toole’s commentary (O’Toole says Murphy is an optimist) are alive and well.

Look for problems with the flow of information and materials, nonvalue added work and waste of all kinds that a value stream mapping exercise can identify. Where can speeding up the process have a big benefit? The flow of information and material occurs between steps in the process. Opportunities for improvement also exist within process steps.

The goal is to understand the value-adding transformation that goes on within the process steps and the associated cause and effect relationships of the process variables (Xs) and the process outputs (Ys).2

It is also important to rethink the tools you use and recommend the organization adopt. Consider the following:

  • Use define, measure, analyze, improve and control (DMAIC) as your framework for general purpose problem solving and process improvement.3 A big benefit of DMAIC is that data collection and use is part of the framework and is expressly addressed in the measure step. DMAIC uses data-based tools (process stability, process capability, gage R&R studies, regression modeling, design of experiments [DoE] and statistical process control [SPC]), and knowledge-based tools (process maps, value stream maps, cause and effect matrix and control plans). As a result, subject matter and tribal knowledge is collected and used along with the hard data.
  • The combination of data and process knowledge produces process understanding needed for process improvement. You can’t successfully improve or control a process you don’t understand. DMAIC works in a variety of situations and cultures. It is easy to learn and easy to apply, and has a few key tools that are linked and sequenced with one another as part of an overall improvement framework. DMAIC is arguably the most effective and widely used problem solving and process-improvement framework in the world today.4
  • Focus on improvement and problem solving tied to the bottom line. Methods such as lean Six Sigma, DoE and SPC should not be the focus. Improvement methods come and go, but improvement will always be needed, and bottom-line results never go out of style.
  • It’s about improvement, not training. Training can help build the skills. As a primary organizational focus, however, training is a low-yield strategy.
     

Review and regenerate

If your organization has been doing some form of lean, Six Sigma or lean Six Sigma for a few years, it may be a good time to review the direction and success of the initiative.

It has been known for some time that improvement initiatives go stale after a while, and regeneration every two to three years will keep the initiative fresh and focused. Now might be a good time to review your organization’s project selection process and focus the initiative on cost reduction.

It is helpful to think early about your message to your management regarding what you are proposing. Each situation is different. Your Message to Management offers ideas on a place for you to start.

Your Message to Management

When your organization is in trouble with rising costs, smaller revenues and smaller credit lines, consider approaching management with these messages:

  • “A different approach is needed. Albert Einstein admonished us that ‘the significant problems we face today cannot be solved at the same level of thinking we were at when we created them.’”1
  • “A better way is to adopt scientific management and greater use of data. We have the tools. Now is the time to put them to work.”
  • “Some companies are already using data analytics to develop a competitive advantage.”2
  • “We have the software to collect and analyze the data.”
  • “We need to complete improvement projects and integrate the approach with how we run the business.”
  • “I suggest that we do the following …”
  • Be ever vigilant for ways to save money and pursue new opportunities.
  • Management commitment and involvement are needed. Training won’t do it alone.

References

  1. Quotations Book, http://quotationsbook.com/quote/32470.
  2. T.H Davenport and Jeanne G. Harris, Competing on Analytics—The New Science of Winning, Harvard Business School Press, 2007.

If all else fails, one strategy to get management’s attention that has always worked for me is to get recent data on key performance metrics for one or more key processes. Plot the data over time using a combination of time plots and control charts. Almost always, important trends, shifts or cycles will be found that lead to significant improvements.

In one instance, a plot of the data showed level changes in process performance that correlated with different operating shifts. Each shift reset the process when workers came on duty because “they knew how to run the process better than the other shifts.” Standard operating procedures (SOP) were being ignored. Process variation increased significantly.

The plant manager was very upset when he saw the excessive variation and its root cause. He ordered an immediate return to SOP. A bottom-line improvement of $300,000 was realized from this simple, but elegant strategy: collect process data, create some plots, interpret what you see in the plots and take action.

Long term, you should consider using holistic improvement and leading the implementation of an overall improvement process that works everywhere in the organization—on all types of problems and processes. Holistic improvement may be the focus of the next generation of improvement methods.5

Grab the brass ring

Statisticians and quality professionals: Now is your time. You have the necessary knowledge, skills and experience. Grab the brass ring. Commit to yourself and to your organization to make a difference and deliver bottom-line results. Re-energize your focus on data-based improvement. Move with a sense of urgency to help your organization get ahead and stay ahead.


References and Note

  1. Ronald D. Snee and Roger W. Hoerl, Six Sigma Beyond the Factory Floor: Deployment Strategies for Financial Services, Health Care and the Rest of the Real Economy, Pearson Prentice Hall, 2005.
  2. Ronald D. Snee and Roger W. Hoerl, “Integrating Lean and Six Sigma—A Holistic Approach,” Six Sigma Forum Magazine, May 2007, pp. 15-21. The article discusses how to combine both types of projects (flow of information and material and value-adding transformation) into a common improvement process.
  3. Ronald D. Snee and Roger W. Hoerl, Leading Six Sigma—A Step by Step Guide Based on the Experience With General Electric and Other Six Sigma Companies, FT Prentice Hall, 2003.
  4. Ronald D. Snee, “Adopt DMAIC: Step One to Making Improvement Part of the Way We Work,” Quality Progress, September 2007, pp. 52-53.
  5. Ronald D. Snee, “W. Edwards Deming’s Making Another New World: A Holistic Approach to Performance Improvement and the Role of Statistics,” The American Statistician, Vol. 62, No. 3, pp. 251-255.

Bibliography

Snee, Ronald D. and Roger W. Hoerl, “Statistical Leadership: As Traditional Workplace Roles Change, Learn to Transition From Consultant to Leader,” Quality Progress, October 2004, pp. 83-85.

Snee, Ronald D., Roger W. Hoerl and Angela N. Patterson, “In With The Right Crowd:  Getting Management on Board to Support Statisticians’ Roles and Initiatives,” Quality Progress, May 2008, pp. 70-73.

© RONALD D. SNEE, 2009.


Ronald D. Snee is founder and president of Snee Associates LLC in Newark, DE. He has a doctorate in applied and mathematical statistics from Rutgers University in New Brunswick, NJ. Snee has received the ASQ Shewhart and Grant medals, is an ASQ fellow and is an academician in the International Academy for Quality.


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