Sunday, December 15, 2013

Why 5S does not work in the office

In this post I will explain why 5S doesn't work in the office based on my own thinking and experience with it over the years. For those of you unfamiliar with 5S it is a lean tool associated with workplace organization. In fact, 5S is an abbreviation for 5 Japanese words: seiri, seiton, seiso, seiketsu and shitsuke. These are often translated into English equivalents such as sorting (removing unnecessary items from the workplace), straightening (making sure every item remaining has a proper place), cleaning (actual cleaning, e.g. with paper towels), standardization (making the previous 3 systematic), and sustain (keeping it going). Companies spend a lot of money to implement this system in production in order to lay the groundwork for other lean tools such as TPM and SMED. They rightfully believe that an organized workplace is the foundation of further improvement. In fact, any organized workplace is better than an unorganized one, as the two causes of quality issues in manufacturing (mistakes and excessive variation) are influenced by the amount of organization present in the manufacturing area.

Due to its popularity and the fact that it does lead to more organized workplaces when implemented properly, at some point someone believed that it would be good to implement 5S in the office. And thus another misapplication of an otherwise okay lean tool commenced. Today, in many companies, you will see people who patiently explain to visitors how office 5S has led to greater organization, cost savings, and other magical effects believed by executives of companies who should know better. The reality is that when an office 5S program is implemented there is usually a training done followed by some cleaning and organizing and then someone (or a team) gets to do the 5S audits in the office. See, you can't effectively manage something unless you can measure it (I write that with tongue firmly planted in cheek as that thinking is some of the most damaging in all of business). People with clipboards walk around and harass office workers while thoughtfully examining their desks, checking that their staplers are within the taped marks, and even in some cases opening desk drawers and counting how many ink pens are inside. All in the name of improvement. For those keeping score, or whose bonus relies on the numbers, and those in upper management who don't know better, these activities are part and parcel with the magical improvements expected by simply applying an okay idea in another part of the business. For the rest of the people it is an amusing distraction at best and an absolutely boorish waste of time at worst. I know this because I've been on both sides of the 5S audit equation, as the auditee and as the auditor. I can honestly say that I don't know which side is worse.

5S as a tool for organizing a manufacturing workplace is an okay idea in that it is simply a little bit of structured "common sense". The people who work in manufacturing--the operators, technicians, and supervisors--can see the limited value such organization brings and usually don't have a problem with it. The silly audits that must accompany such initiatives (otherwise, how does management know that the lean guys are doing their jobs?) are a necessary evil to achieve a modicum of cleanliness and organization. And, here's the main point, for a repetitive operation and/or one that relies on closely following detailed work instructions having a clean and well-organized workplace can lead to reduced mistakes and variation, inevitably leading to better quality. However, such repetitive operations do not typically exist in the office, hence the lack of value of 5S there. Let me elaborate....

Imagine that you are a Production Manager in a factory with a few hundred people and around $100 million in annual sales volume. Your typical day might consist of a morning meeting with your team followed by spending several hours on the manufacturing floor to see what happened in the past day and examine the various operations. You may have a meeting with the Controller to review the month's production volume and the Safety Manager to better understand a new ordinance drafted by the local government. You grab a quick lunch, double-check your emails, talk for a few minutes with the Plant Manager then head back out to the manufacturing floor to see what is happening at the start of second shift. You may discover that a relatively important piece of equipment has broken down and you work with the Quality Manager to arrange the appropriate process deviation documentation as well as the Engineering Manager to arrange for alternate machinery. Finally you end the day with a short meeting about next year's performance rating system with the HR Manager before heading home a little bit after dark. You've put in a more than 10 hours today and gird yourself to do more of the same tomorrow.

At no time during your day did it matter at all that the stapler on your desk was within the little yellow tape lines or that you had exactly 3 ink pens in your desk drawer. Such a dynamic and fluid role is not helped at all by delineating required markings on a desk and specific locations for this book or that filing cabinet. Seeing the results of the latest office 5S audits posted on the bulletin board doesn't even register. For people with this kind of work, office 5S falls in the boorish waste of time category very quickly. They are doing the kind of work that is almost the opposite of repetitive and it is not helped one bit by some program to put little tape lines on people's desks and count how many ink pens are in their drawers. Of course the Production Manager's activities must fall within some kind of system, and that's why we have ISO 9001 and other management system standards, but applying a concept intended for the manufacturing area into such a working environment is actually damaging to these people who conduct key activities to keep the business running.

Thus ends this post, what are your thoughts about the applicability of 5S in the office?

Monday, June 24, 2013

The Three Types of Organizational Culture

I believe that the main factor that impacts product and process quality is organizational culture. I want to review the three types of organizational culture and ask you: "which culture does your company have?" and "why do you think so?".

The organization itself has no principles or values, those belong to the management of the organization and the people who work there. The top management of the organization sets the mindset and everything that is created by the organization (e.g. strategy, vision, goals, objectives, projects, products, culture) is a function of that mindset. The difference between mindset and culture is an important one: the mindset comes directly from the top management, explicitly and implicitly, and the culture is a function of the people implementing that mindset on a daily basis. The culture grows from the seed of the mindset. Unless there is a change in top management, and an explicit change in mindset, there is little chance that the culture will change on its own. Even with a change of mindset it can take years for the culture to flower into something else. Now, let's review the three types of organizational culture.

First is the "good" culture. I won't spend much time on this one, you can find and read books and articles about various organizations that have a "good" culture. Typical ones are Google, Apple, Motorola, GE, etc. One hallmark of such an organization is that people identify strongly with it, even after they stop working there. In my working experience both Toyota and BMW have such "good" cultures.

Second, the "bad" culture. These are organizations that highlight unethical and sometimes illegal activities. They focus, laser-like, on specific metrics such as share price and burn through anything else. Or they are led by management with outsized egos who exhibit an "emperor complex" believing that they are the best in the world. The managers in these companies either explicitly or implicitly direct their subordinates to fabricate data, approve falsified test reports, and "pencil whip" checksheets. The end justifies any means, and the end is what they want it to be. One quotation that I've heard from this kind of culture is "you shouldn't lose if you are the one keeping score". Meaning that you should alter data to achieve a winning result. Unfortunately, over the years, I've seen many examples of this mindset in many different companies. Sometimes it was with a supplier who moved their production location without informing my company (or outright lied on their PPAP documents). Other times it was companies who submitted inspection reports with false data, which was detected when the parts were double-checked before use. These kinds of decisions, and the eventual results, stem from a "bad" culture. Managers who order their subordinates to break the rules, and the law, deserve the results that they receive. Unfortunately, these results can involve a lot of collateral damage as those who were not involved or aware of the bad decisions also face bad results. If the managers who promote and drive this "bad" culture actually cared about others then those situations could be avoided. If you work in a company where you cannot tell the truth to upper management, where audit results are routinely ignored, or where you are directed to falsify reports or lie to people (inside or outside the company) then you are probably in this type of culture.

The third type of culture is "no culture". Every organization has a culture. The "no culture" culture could also be named the "mercenary" culture. In this culture it's every person for him/herself. Whereas managers in "bad" culture organizations commit "sins of commission" managers in "no culture" organizations commit "sins of omission". This is based on a management mindset that is conservative in the extreme. Decisions and clear directions mean commitment and the risk of failure, the safest decision and direction is none at all. No decision means no risk of failure. These types of cultures can appear as either of the other two types, particularly in specific sites or divisions with managers who do not share the "no culture" culture, so they can be hard to spot. In fact, you may work in a site or division that has a "bad" or "good" culture and not realize that you work in a "no culture" organization. There are a few signs of a "no culture" organization that you may notice if you are in one. One sign is that the organization culture varies greatly from site-to-site, region-to-region, or division-to-division. You may work in a "bad" culture site and visit another site and be surprised that things are completely different there. They shouldn't be. The site, region, or division manager should not be the one to set the culture for a particular organization. It should come from the top and be consistent from area to area. The second sign is that when a top manager leaves nobody seems to know and/or care. An unusual amount of top management turnover is another sign of this type of culture so the two signs could be seen together. Normally, when a top manager leaves a company there should be some ripples of disconcertion, a little foggy period while a new executive takes the reins. Even in "good" culture organizations there will be some ripples, they will just be very small. A "no culture" organization will have no ripples at all. Same goes for company identity: there will be almost none. Nobody identifies with the company, unless they are in some kind of internal marketing group that is paid to do so (i.e. lean/six sigma guys). The "no culture" organization will also suffer bad results eventually, maybe not as bad as the "bad" culture organization, but making no decision is actually worse than making a bad decision (according to Theodore Roosevelt). This type of organization can also mask extremely incompetent managers since someone who does not make a decision due to avoiding risk looks the same as someone who does not make a decision due to incompetence. The worst part of working in this type of organization is the lack of consistency day-to-day. Some parts of the organization might be very efficient and well-run while others are utter disasters. It will be based almost solely on the particular manager of each area. Since the good and bad parts must work together at some point this kind of culture will drive out the people who want to do good and protect (unintentionally) those who want to do bad or do nothing at all.

Now that I've outlined my thoughts on the three types of organizational culture let me know which kind of culture your company has and how you can tell.

Friday, May 31, 2013

The Future of Manufacturing Quality

Here’s a quick test for those of you who work in manufacturing. What is your current target for customer PPM (# of defects sent to the customer, out of a million pieces)? If you work in the automotive industry then your target is probably in the double-digits, maybe the low double-digits. Other industries are approaching that target as well, some faster than others.

Now, what is your internal target? Maybe something around 1% defects? That means 99% or higher good parts internally. That sounds pretty good until you consider that 1% defective is 10,000 PPM. If your external customer PPM target is 100 then this is a gap between internal and external performance of two orders of magnitude.

Your numbers may vary but I’m sure that it is something along these lines. What accounts for the gap between internal and external expectations? Good old-fashioned INSPECTION. Testing, NDT, auditing, etc. Whatever you call it INSPECTION was something that was supposed to be rooted out years ago by the miracle tools—Lean® and Six Sigma®—as one of the most hated of wastes; literally, spending money on something that gives no value to the customer. In reality, however, INSPECTION continues to live on and is even more embedded in the mindsets of many companies. I’m sure that if you review your company’s PFMEA and Control Plans you will find that they are chock-full of inspection (a typical PFMEA Detection control and a product-focused method in the Control Plan [not process-focused]). I’m not only talking about the actual Inspectors here (or Technicians, or Auditors) but also the capital that is invested in test equipment. If you consider a typical production line in your company, how much of the total cost is captured in INSPECTION of some kind (Inspectors, test equipment, etc.). I wouldn’t hazard a guess but it’s probably 5%-20% of the total cost, depending on the product that you manufacture. “Of course,” you say, “the customer pays for this inspection so it’s really not a waste—we are getting paid to do it and it helps the customer get good parts.” Maybe that’s true, but what if that changes?

Imagine a customer who gives you an aggressive external quality target and tells you that they won’t pay for inspection and testing? That they’ve done studies and they know that more investment in the PROCESS can safely eliminate inspection and testing? It’s not a cost-free change but the investment in the process is less than the investment in testing so it is an immediate impact to total cost. And the best part is that through continuous improvement any remaining inspection can be eliminated and the total cost reduced even further. How would you deal with this?

I can tell you that it’s coming. We’re at the limit of material science in many industries. We’ve also wrung out much of the variation in many basic manufacturing processes over the past decades. We are now approaching the limit of what our material science and basic process improvements can achieve in cost savings. The next step is to strengthen our processes to point of measuring internal quality targets to double-digit PPM, not percentages.

I’d like to know what you think about this issue and any experience or ideas that you have in managing it.

Thursday, May 16, 2013


Greetings readers! After an eight month hiatus I'm back to write a new post about quality. Actually, I want to take this opportunity to explain the title of my LinkedIn profile, which is also the subject of this post: "BREAK YOUR THINKING".

Breaking your thinking has to do with changing how you approach your work. It is changing your mindset (defined as: "beliefs that affect somebody's attitude: a set of beliefs or a way of thinking that determine somebody's behavior and outlook"). It is about what you believe when you are doing your work. Breaking your thinking is profoundly changing your mindset, to a new paradigm through which you conduct your work. "Breaking" is much more profound than "changing" or "modifying" your thinking. It is similar to the thinking in Zen Buddhism of using Koans or nonsensical questions to help people attain enlightenment (a famous Koan is "what is the sound of one hand clapping?"). By considering such questions Zen students are forced to abandon their rational minds and therefore move closer to the nothingness of self that is enlightenment. Yes, this is pretty profound stuff, so let's move to some examples.

I'm sure that you've heard of "stretch targets". If you haven't, I'll explain briefly (if you have, skip to the next paragraph). Most companies set targets or objectives for people to attain, these are usually tied to people's compensation or annual bonus. "Stretch" targets are another set of targets that are even more aggressive than the original targets. They may be documented in the goals and bonus structure as "125%" or "150%" targets, meaning that there is even more money to be made by reaching those targets. They also may not be documented officially. The setting of stretch targets is one way that executives and managers try to motivate their teams to do more (frankly, they may be unattainable in reality but they give the executives/managers something to say "I'm really pushing my people").

From the quality field, an example metric is customer PPM (a defect rate measured in the number of defects per million parts). A company may set a goal of 4500 customer PPM per year with a stretch goal of 3500. Maybe their previous year's performance was around 5000 so the main goal is attainable with some effort; the stretch goal is attainable with even more effort and maybe a little investment. In the end, however, maybe the current year's performance is still around 5000 or maybe they can reach the 4500 target. Such gradual improvement is commendable to a point. Considering ever increasing customer quality expectations and ever decreasing customer cost expectations such gradual improvement is simply not competitive. Not in the global market of 2013. This level of improvement simply won't cut it anymore.

To make real, substantial improvement in today's global marketplace we need to break our thinking, not only push ourselves forward bit by bit. Using the above example if we set the PPM goal at 5 then there is no way for people to do a little bit (or even a lot) of effort to reach the target. It's simply not possible with the existing mindset, and that will be the reaction of the people who hear the target: "impossible!". It's not impossible. When faced with such a target people need to step back and really ponder how they do their work, they need to BREAK THEIR THINKING. This is the way to drive real improvement. In the end, let's be realistic, such huge improvement still takes time but setting this target and driving a new mindset in the company will lead to a relatively huge improvement (some people won't like to break their thinking and may leave the company, but so be it). In such a situation maybe the final result will be 1000 or 500 PPM. THAT'S GREAT! That is still a much better result than the 4000 or 3500 that would've been attained the other way. And next year, maybe the result will be 100 or even 5 (or even 0!). Once the new mindset takes hold and people, all people in the company (including the Board, CEO, and everyone else), really approach their work in a different way then the company can make dramatic improvements and suddenly produce higher quality parts at lower prices. Their customers will be amazed and they will start to eat away at their competitors, anywhere in the world.

It's easy to write this, right? It's easy to talk about this and imagine such results and such a mindset. The key is that the CEO and Board of Directors (or owners if a private company) must agree to this direction, lead this direction, and be the first people to break their thinking. This isn't something to dump on some hapless Quality Manager and say, "Here you go, change your mindset and reach this target!". This needs to start from and be led by the TOP of the company. Otherwise, it's not easy or hard, it's impossible.

Setting such "impossible" goals and asking people to break their thinking must start at the top but it must not cascade down to the bottom. What I mean is that this request must stop at the supervisor, engineer, and manager level. It MUST NOT be requested of the operators and other direct and indirect labor at the "lowest" levels of the company. Why? Because those people can only do the best that they can with the tools that they are given by the engineers and managers of the company. The company itself, based on its current culture and mindset, can only reach a certain level of variation in processes and products. This level is determined by the top management and implemented by the middle and lower managers through their staff. The operators have no way to change this. Breaking their thinking will not lead to any improvement, and attempting it may lead to more harm. Making posters on the production floor of "Zero defects" or "5 PPM" literally means nothing to them because such improvements can only come from improving the systems and processes, not through their actions. They need to be given the more advanced tools and methods that are developed after their engineers and managers break their own thinking and then simply asked to do the work in the new way. They will see the results also, they will see them before the customers or the managers do, and they will appreciate the opportunity to do their jobs in better ways.

In conclusion, I hope that this message is very clear to those of you in the top management of companies: you need to BREAK YOUR THINKING first and push your people to do the same. Set the "impossible" goals and push your people that they MUST be met. This is the only way for you and your people to break your thinking and be more successful.