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Weekly UpdatesEXECUTIVE SUMMARY
No one ever said excellence was painless. More than anything else, keep in mind that achieving excellence is largely a human resources issue. Begin by aligning expectations (easier said than done), then allow people to make mistakes. Measurement and commitment to success are essential, of course. And finally, support continued success.
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The drive for excellence has become a ubiquitous quest in manufacturing. While there are almost as many definitions of manufacturing excellence as there are organizations trying to achieve it, standards to which all should aspire do exist. Manufacturing excellence is the process of achieving benchmark performance that includes:
* Minimum 1.33 Cpk first-time quality
* 100 percent on-time customer service
* Year-over-year process cost reduction
* A zero-harm commitment to safety
While presenting the critical few elements of manufacturing excellence, the above list also challenges the concept of continuous improvement. Organizations have been working on these four performance areas for years without achieving these levels of performance. Excellence is not a matter of getting better each year. It is about setting expectations and taking specific steps required to achieve them. Simply put, excellence is a relentless commitment to an in-control process ethos. Establishing and maintaining all processes in statistical control is the minimum first step.
To identify and personalize the need to set benchmark results as minimum standards of excellence, all one has to do is listen to the constant media reports of outsourcing and competitive job loss or, in many cases, simply visit and talk with one's unemployed neighbor. The need for excellence is without a doubt the most pressing issue facing U.S. management.
For those who are not there, achieving a 1.33 Cpk first-time quality level and 100 percent on-time customer service reduces product cost and increases profitability to unimagined and unexpected levels. In many cases, margins can and do improve to such a degree that outsourcing becomes impractical and domestic competition is dwarfed. Operations and quality experts who have achieved such performance levels have witnessed 20 percent to 30 percent overall cost reductions.
Add to this the power of year-over-year actual product cost reduction and the creation of a caring safety environment, and the odds of survival begin to shift. Excellence is about protecting jobs from foreign and domestic competition. It is about growing the business and providing balance to all stakeholders. It is about acknowledging that the past efforts of employees are the only reason current opportunities exist.
Without such performance excellence there is no way employees will ever be able to enjoy their rightful place in a balanced reward system. In today's market, manufacturing excellence is a survival mandate and a management imperative. Understanding this reality and accepting direct responsibility for its achievement are the foundation of excellence.
Like so many other seemingly complex challenges, the process of achieving excellence can be synthesized down to five easy-to-understand sequential steps.
1. Establish clearly understood and aligned needs and expectations
"Clearly understood and aligned"--simple words, yet establishing mutually agreed-to expectations is one of the most difficult of all performance elements.
"There was no doubt in my mind that we agreed that the primary emphasis this month would be on improving first-time quality. We had a long and intense meeting late last month. All the division managers were there. We all agreed that we just had to do something to reduce our reject rates. Now look, not only did we not improve, but June's performance was lower than May's. It's just plain unacceptable."
While there are few managers who would disagree that clear and unambiguous expectations are the first step on any journey, few understand and accept the concept that verbal agreement does not indicate clear and aligned expectations.
Time and time again, we face the disappointment of less than optimal performance when we were absolutely sure there was a common understanding, the skills to do the job, and a willingness to perform. Yet managers often seem to be caught off guard. The reason is simple: In most cases of performance shortfall, there never was a common understanding of expectations.
It is tough for many managers to accept the fact that verbal agreement without proven experience reflects a willingness to try, and at worst is a means of ending the conversation and moving on. A yes can mean I'll try or I don't know how to do it and you won't listen, so let's move on or I'm not going to do it since in this organization, everything is optional anyway. It might even mean Yes, we have a mutual agreement and commitment to the objective.
There are many elements required to ensure truly robust and meaningful expectation agreement, starting with a clear acceptance that the performance is both achievable and relevant and including a commitment to give the required time and resources. But above all else, to achieve expectation alignment and understanding, it is imperative that we understand that it is extremely difficult if not impossible for people to understand and agree to do something they have never done before. They might well agree with the need for the outcome--stop lost-time accidents or increase quality performance, for example--but how?
Understanding this is important in setting expectations for excellence. Excellence means many different things to different people. The base expectation for manufacturing excellence means nothing less than achieving a 1.33 Cpk first-time quality Easy to say, yet its achievement requires in-depth knowledge of the process, statistical measurement, and an ability to identify process variation. It requires experience and competence in variation reduction. It requires what quality guru W Edwards Deming would call profound process knowledge and it requires full-time people and resources, without which there is little chance of success.
2. Ensure performance capability and organizational priority
If someone has never done something before, chances are he or she will not be able to do it right the first time or maybe even the second or third time. People cannot agree to do something they have never done before. They can agree to try, but people simply don't know what they don't know.
One of the most interesting of all organizational misconceptions is the belief that good people can do anything. I once sat in utter amazement listening to a group of executives chastise a project team that had failed at its first two tries at establishing Six Sigma product quality. I can still hear the exact words: "Whole divisions at GE can do this, why can't you get even one process in Six Sigma control?"
The reality was that neither the challenging managers nor the beaten engineers had ever taken an out-of-control process to an in-control state. While the engineers knew the meaning of Cpk, neither the managers nor the process team could even imagine what a true 2.0 Cpk might look like. It is producing at a level of variation that is confined to a centered, in-control distribution that is only one-half the spread of the product or process specification. In other words, a 2.0 Cpk (Six Sigma) performance requires such profound knowledge and experience that every step of the process is fully understood, maintained in an absolute in-control state, and constantly monitored to identify the slightest variation to lead and guide sustained excellence.
So too does achieving 100 percent on-time customer service start with a need for in-depth understanding of the processes. It starts with the need for the same in-depth process knowledge as required to achieve 1.33 Cpk first-time quality To this, one must add profound knowledge of the customer's business, the customer's and one's own supply chain, and an organization ethos of excellence and customer service.
In all areas of performance, the engine of excellence is knowledge.
On reflection, it becomes only too obvious why so many initial accomplishments do not hold. Manufacturing excellence is not just an extension of what we are already doing. Manufacturing excellence is built around an organization's ability to set the highest of variation reduction goals and then dedicate the resources to both achieve and sustain those objectives.
3. Monitor alignment of performance and expectations
In our reach for excellence we are reminded of one of the most time-tested management tenets: You get what you measure. Robustly monitoring output and output variation is the only way to anticipate and maintain performance. It is what control charts were created to do--once in control, to measure performance to allow early identification of performance movement or process deviation.
Measuring both results and actions taken in a statistically defined manner is a vital key to sustainability. Process and output measurement also provide the opportunity to develop a constant discrepancy check between expectation agreement and performer capability. If each time a result falls short of expectations there is an honest, joint effort to identify what additional knowledge, resources, time, or expectation clarity is required to ensure success, result monitoring becomes the catalyst that ensures organizational focus and commitment. If the desired results are achieved, it becomes the focus of celebration and encouragement. In either case, constant variation monitoring is the only real tool managers have to encourage and support continued focus and results sustainability. Without it, over time, all things will drift off center.
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