Continuous Process Improvement [NOOK Book]

Overview

During the past decade Japanese companies have derived many of their competitive advantages from streamlined work-flow processes. Desperate to replicate the Japanese systems, American managers have bought into countless theories advanced by management consultants which, lacking a methodology, have proved fruitless and frustrating. Now, from inside a world-renowned learning organization, comes that methodology.
Continuous Process Improvement (CPI) is an improvement and ...
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Continuous Process Improvement

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Overview

During the past decade Japanese companies have derived many of their competitive advantages from streamlined work-flow processes. Desperate to replicate the Japanese systems, American managers have bought into countless theories advanced by management consultants which, lacking a methodology, have proved fruitless and frustrating. Now, from inside a world-renowned learning organization, comes that methodology.
Continuous Process Improvement (CPI) is an improvement and problem-prevention system created and developed by George Robson to "empower" natural work teams in three General Electric businesses. Composed of a logical set of steps, at the heart of which is "Process Flow Diagramming," CPI focuses on and simplifies the critical elements of work flow processes and eliminates those parts that add no value.
Not only has this methodology helped these GE businesses save in excess of $35 million during the first two years of implementation, but similar techniques are now being employed by leading-edge companies throughout the world. CPI is a transportable system that not only has profoundly changed manufacturing practices, but has been applied with equal success in all areas of a business. Robson shows how the "Iceberg Phenomenon" can identify the measurable benefits of accurately accounting for direct and indirect costs by carefully tracking expenses. Planning for the true costs of customer service, marketing concessions, and retraining can turn unplanned losses into short- and long-term returns on investments. Robson focuses on activities that are critical to quality in design and production and demonstrates how non-value-added work can be eliminated. The staggering cost of re-work, calculated in "The Rule of Tens," is reduced by catching mistakes before they escape to subsequent stages of handling. The CPI system, which has been widely praised within General Electric, will be of broad interest throughout the business and university communities.
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What People Are Saying

George Stalk
World class competition today means having the lowest costs, the highest quality, and the fastest response in satisfying the needs of customers. Mr. Robson has written the manual needed by organizations striving to meet intense performance standards.
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Product Details

  • ISBN-13: 9781451602463
  • Publisher: Free Press
  • Publication date: 6/15/2010
  • Sold by: SIMON & SCHUSTER
  • Format: eBook
  • Pages: 181
  • Sales rank: 1,082,477
  • File size: 4 MB

Meet the Author


George D. Robson is Program Manager of Special Continuous Process Improvement Programs for General Electric Aircraft Engines in Cincinnati, Ohio.
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Read an Excerpt

Chapter 1
Why Bother?
During the third quarter of 1989, the service arm of a major corporation (for convenience and anonymity we'll refer to it as SERVCO) projected that they would exceed their revenue target for the year and began to address their goals for 1990. The challenge was to continue to increase revenue, hold current manpower levels relatively constant, reduce inventory, "significantly" improve cycle time across the entire operation, reduce the supplier base, keep current customers happy, and expand the number of customers for whom they were performing repairs and product overhauls. Sound familiar?
Faced with the formidable task of trying to achieve these goals, the staff began looking for a starting point. The one thing that kept appearing as their customers' highest priority was "the time to repair hardware." The perception was that it always took too long. Factoring this in with corporate expectations, they chose to approach their task in a nontraditional way by using continuous process improvement (CPI) methodology, tools, and techniques. Rather than trying to attack all things in their previous reactive, firefighting manner, they decided to focus on reduction of repair cycle time and tie all other efforts to it.
The change began by narrowing their purview to the "critical few" processes considered essential to attaining business plans and goals which included reduction of repair cycle time. The initial focus was narrowed to five processes for which natural teams were selected for CPI training.
Let's digress briefly from SERVCO's problems to determine what this thing called CPI really is. The objectives here are (1) to introduce you to the general concept of continuous process improvement and (2) to help you develop a working definition of CPI from a personal perspective and from the viewpoint of your "natural work team." If you're wondering what is meant by the term "natural work team," it's all the people who work together daily and "own" a particular process. We'll get into the process ownership concept in the section "Why does CPI work?"
CPI is fundamentally a toolbox of skills and techniques applied with a simple methodology to stimulate continuous improvement and control of processes. The processes are in turn used to satisfy customer needs and expectations, both internal and external to a business.
Take a moment to define, in your own words, the meaning of the word "process." If you are working with a team, and you should be to get the maximum benefit from this book, share your definition with all your team members. Then consider Webster's definition:
Process: A particular method of doing something, generally involving a number of steps or operations.
Compare your definition with Webster's and decide if you need to alter yours. Typically, people have found that the dictionary version reinforces what they initially recorded. Before sharing any further thoughts or definitions with your team, let's get back to the business scenario.
SERVCO opted to begin the process in a nontraditional manner with a heavy commitment to management training. They wanted to send the message through the organization, "We're serious about this."
The process began as a pilot in the fourth quarter of 1989. Doing the right thing at the right time was of supreme importance. By beginning training and implementation at a time when the traditional focus was primarily on meeting year-end shipments at all cost, the management team sent another clear message that things would be different. They were and still are.
As you might expect, along with the changes came some good news and some bad. The good news was that repair cycle times had been reduced in more than ten major business processes. Improvements ranged from 24% to 60%, and all were accomplished by the natural teams, with the support and direct involvement of the management team. Some teams involved key suppliers in the process and none required or recommended capital expenditures. After one year of training and implementation, SERVCO had 28 active process improvement projects that applied CPI methodology on a daily basis with an average reduction of 47% in repair cycle time.
The bad (but not unexpected) news was that the real world still existed. Change from the previous modus operandi was going to take time, patience, and persistence. The modified processes and implementation of the methodology were healthy albeit fragile. A few skeptics were still not buying into the process, causing opposing challenges the management team would rather not have to cope with. However, the team persisted, the process worked, and the results were well worth the effort.
Business plans for the future took on a clear focus involving customer needs and supplier partnerships. The improvement purview was expanded to include processes related to inventory while maintaining customer satisfaction and further reducing cycle time. A clear message was sent that the business would continue to integrate CPI methodology into management and daily activities.
This business grew and flourished because the management team chose to do things differently. They continue to use the simple tools and techniques of CPI to ensure customer satisfaction and improve daily operating processes. The dramatic reductions in repair cycle time not only led to improved customer satisfaction, they also translated directly into improvement of the bottom line. What more could a business want than a growing clientele, a healthy balance sheet, and a successful launch into a rapidly changing and challenging decade?
The global business world of the 1990s represents an arena where complacent businesses, managers, and others who are not receptive to change will most likely perish. To survive, let alone flourish, businesses in the '90s must meet the ever increasing and more demanding challenges of:
* Dynamic customer expectations
* Expanding worldwide competition
* Strategically implementing state-of-the-art technology
A strong, healthy business today is the direct result of meeting the challenges of the past. However, to remain strong and productive and be the natural choice of the customers, some changes will most probably be required.
If you don't believe what you've read so far, or if you don't intend to open yourself to change to meet the challenges of the 1990s and the twenty-first century, don't bother reading any further. Why? Because you and the people around you will most probably be doing something else in the very near future. If you haven't figured out the answer to "Why bother?" it's because business as usual isn't good enough!
However, if you do believe what you've read so far, the information and methodology presented in the following pages can help you improve your business. As you proceed, remember that CPI is not a panacea, nor is it a solution looking for a problem to solve. Proof exists to illustrates that it is possible for any business to experience SERVCO's success. There is nothing magical about it. Simply apply the methodology presented in the following chapters. Be aware that it takes leadership, time, patience, and persistence to make it happen and last. It's entirely up to the business team members whether they choose to change or chance ending up a casualty of the 1990s. CPI can help make that change successful.
What Is CPI?
Ground Rules
Before getting started with the logic, skills, and techniques that make up CPI, let's establish some fundamental ground rules for creating the appropriate environment. They must be treated as canonical and adhered to at all times. It is essential that these ground rules be clearly articulated, understood, and abided by within each and every team and that they are fully supported at and by all levels of management. All successful CPI teams follow these basics. As you peruse and internalize them, you will begin to understand why they are emphasized.
1. Be open. Don't be afraid to share an idea. Remember, it's yours and it represents an expression of yourself. As you listen to other people's ideas, be open, supportive, or passive. Never attack! It kills ideas and erodes trust.
2. Be supportive and noncritical. When someone expresses an idea, be supportive and you'll be surprised how it is returned. Contribute in a noncritical manner. Remember, criticism kills ideas. Open support nurtures and encourages participation and builds trust.
3. Be positive. After listening to an idea or comment, respond positively. Try forcing yourself to say something like, "I like that idea because..." Remember, around every donut hole there is a donut.
4. Be willing to share your thoughts and feelings. Express your ideas no matter how insignificant or dumb you think they might be. When you share your thoughts and feelings you make yourself vulnerable. You will discover that when you are vulnerable, most people will want to help. Open sharing is a great team-building activity.
5. No finger pointing. Never be threatening. Remember to check your hand to see how many fingers are pointing back at yourself when you point at someone else.
6. K.I.S.S. (Keep it straightforward and simple). This is a cardinal rule of CPI. If you are tempted to try to make something complex, don't. If you are attempting to solve a complex problem or address a complex process, break it down to its simplest form, then proceed.
7. Have fun. When people have fun together, the stress level goes down, defenses go down, and creativity is enhanced. Never take yourself too seriously. I still hate to hear my wife tell me to "lighten up." But it always works. Learn to laugh at yourself or a bad situation. Remember, only you can control your attitude and outlook.
Defining CPI
Recalling the earlier exercise where you defined "process," now expand your definitions to include the terms continuous and improvement. Webster defines these terms as:
Continuous: Going on or extending without interruption or break, unbroken, connected.
Improvement: An increase in value or in excellence of quality or condition.
Using your definitions and the reinforcement of Webster, your team should develop and record a definition of continuous process improvement. When your discussion has achieved a consensus, make sure it is reinforced by Webster's terminology.
Since you have now decided on a definition of CPI, let's discuss what it is not.
CPI Is Not Just Another Program
A typical program has a beginning and an end. It exists for a finite period of time and is usually created to accomplish a single specific goal before being discarded. In contrast, CPI has a beginning, but it has no end until the process it is associated with is no longer a functioning part of the business and has been eliminated or replaced by another process of greater value. And this is only where the differences begin. Later when we address the topic "Why does CPI work?" you will have an opportunity to explore further the characteristics of programs and how they differ from CPI.
From this point forward you are instructed to strike the word "program" from your vocabulary when you speak of CPI. It will not be easy, but it will help you achieve the fundamental change required to make CPI the way you think and do your job. A question that always arises is, "How much time do you expect me to spend on this? I still have my job to do, you know." My response has always been met with inquisitive looks and silence from managers and individual contributors alike:
I expect you to spend forty or more hours a week on the process because it must become the way you do your job. It can't be something extra to do. It must become the way you think and act every day. It must become such a part of what you do and how you do it that eventually you will be doing it without talking about it.
CPI is a proven prevention and improvement system built on four basic principles:
* Continuous improvement must be a way of life.
* Problems must be prevented rather than reacted to.
* Results must be measurable and directly related to business plans and goals.
* Team ownership of a process is essential.
The process helped several businesses identify and implement total savings in excess of $35 million from simple process improvements during the first two years of its use. By calculating the ratio of dollars spent on training and identified business savings, you arrive at an impressive 80 to 1 return on the training investment.
CPI consists of a logical set of simple and straightforward steps that are used by "natural work teams" to analyze and understand the processes they use in their work and to focus on the critical parts of those processes that require attention. Initially it provides a systematic way of eliminating the unnecessary, nonessential, non-value-adding parts of the process followed by continuous improvement of the simplified, streamlined process. It is a transportable process that is not only applicable to "manufacturing" type processes, but has proven applicable and powerful in a variety of business processes. You will see examples of various team activities in case studies and project summaries as you proceed through the text and begin to gain personal experience with the tools and techniques.
What Can CPI Do for Us?
Now that we've briefly explored what CPI is and how it involves the management team, let's look at the value it holds for the individual members of natural work teams. Basically, we want to answer that age-old question, "What's in it for me?" But in this case let's begin by asking the question from the team point of view: "What's in it for us?"
You don't need to be an international economist or CEO of a major corporation to understand that we are living and working in a complex world. We have seen technology shrink the world and launch us into a global economy that has forced us to think and act in a strategically different way. We find ourselves faced with more and larger problems while still dealing with the nitty-gritty things we must do just to survive. Many businesses have proven that by adopting CPI as a business strategy, they have been effective in meeting the challenges of worldwide competition by:
* Overcoming complacency
* Attacking the things they've learned to live with
* Getting rid of non-value-added work
* Preventing problems rather than reacting to them
* Continuously improving all business processes
From the individual team's perspective it does much more by simply:
* Focusing attention on detail
* Allowing people to contribute "from head to toe" rather than being used only "from the neck down"
* Understanding processes through examination and analysis
* Building focused teams
* Fostering open, honest, and supportive communication across traditional functional barriers and throughout the sometimes sacrosanct level structure
* Identifying root causes of system deficiencies rather than simply and naturally jumping to conclusions
* Instilling the improvement habit
The idea for the improvement habit was not mine. It came from a conversation I had several years ago with a product assurance manager. He said, "George, what we don't need here is another initiative. What we really need is for all our people, including the managers, to get the improvement habit." When I asked him what he meant, he explained that he believed everyone should get into the habit of constantly improving what they do and never stop.
Finally, CPI will enable and empower people to:
* "Visualize" processes
* Focus on "critical-to-quality" activities in a process
* Significantly improve process output
* Establish an evolutionary improvement system to improve their businesses and help ensure customer satisfaction
* Work together as focused teams
* Build a network of business teams focused on process improvement and customer satisfaction
I recall the reaction of a worker in a consumer electronics plant after her team had diagramed their portion of the manufacturing process. "I've been working here for twenty-two years," she said, "doing basically the same job day in and day out, and I never before knew why I did certain things. Now I can see where I fit and why my job is important. If I don't do my job right, then the next person who gets my work will suffer. Ultimately, we won't make our customers happy, and that's bad for our business."
She had found the link between herself and the customer. The job she had grown to look at as insignificant had taken on new meaning and she knew she had value.
Business Benefits
Now let's turn our attention to the broader topic of business benefits. The objectives of this section are to help you:
* Identify the measurable business benefits which result from implementing the process
* Understand why and how to select an "area opportunity" from a process
* Begin to link broad team plans and goals to business plans and goals.
We will accomplish these objectives by addressing the following subjects:
* What can CPI do for our business?
* The Iceberg Phenomenon
* The Rule of Tens
* Why was our process selected?
* What can our team do for the business?
What Can CPI Do For Our Business?
The benefits of using CPI vary from business to business and from process to process. However, from a broad perspective, CPI (1) provides a strategy focused on prevention and improvement, and (2) helps build "natural" focused teamwork.
More specifically, the process enables the "natural" focused team to logically, simply, and systematically:
* Reduce scrap and rework
* Reduce cycle time
* Reduce waste
* Reduce inventory
* Provide significant short-term return on investment
* Introduce long-term profit and productivity gains
* Identify and eliminate non-value-adding, nonessential work from processes
* Improve and polish processes worked with daily
Specific examples of team results will be introduced later in the form of case studies and team project summaries.
The Iceberg Phenomenon
Everyone is familiar with the phrase "and that's just the tip of the iceberg," but have you ever thought about what it might mean in the business sense?
The Iceberg Phenomenon is nothing more than recognizing that what you see and measure with respect to losses, scrap, rework, and customer complaint costs is usually only a small and sometimes insignificant part of the total cost impact on a business. If you can accurately account for and measure direct cost drivers and then compare those costs to the indirect costs, you will be able to define the iceberg ratio for your business. Mathematically it would look like this:
Iceberg ratio = indirect costs/direct costs
Direct costs can be measured and tracked, and are usually accounted for in management reports. The finance and manufacturing divisions are the traditional sources for such data and are the recommended starting points for your search for data in your business.
Indirect costs are those costs that may be difficult to account for, but that you know are real. Some examples are:
* Excess inventory
* Engineering buy-offs
* Material review boards (MRBs)
* Preparation of rework procedures
* Material handling/expediting
* Replanning
* Engineering changes
* Excess capacity
* Marketing concessions
* Lost future orders
Take some time to develop and expand the list for your business and calculate an Iceberg Ratio.
When you have gathered the necessary information and begin to calculate your Iceberg Ratio, you might be interested in what you can expect to find. A ratio of 6 to 1 is not at all unusual. The better you track your losses and account for the true costs associated with such things as customer service, concessions, retraining, expediting, field corrective action, and associated travel expenses, the smaller your ratio will be. Conversely, the fewer records you have and the more loosely you track your indirect costs, the larger your ratio. Some businesses use a complaint accounting system to track these costs. The most important thing to remember is that these costs are real. They are real because they are subtracted from your bottom line, and that realization will get the attention of any finance manager or CEO.
The Rule of Tens
The next subject we will address is called the Rule of Tens. This concept is credited to Dr. Ohno of Toyota. Put in my own words:
Not doing something right the first time costs ten times as much to find and fix each time it escapes to a subsequent stage of handling.
Let's create a scenario to help you fully understand the concept. Suppose you found a design error in a product after it had been delivered to a customer. The number of stages it passed through from design to delivery will indicate how many factors of ten you wasted by not finding and eliminating the problem at its root. For example, if it passed through four stages, then it would cost you approximately a thousand times as much to fix it in the field as it would have cost you in the design stage. The factor stages might look something like this.
So remember, if you are a design engineer, don't be too anxious to "throw the design over the fence" to production. If you and your design team, which should include manufacturing or production personnel, have not verified the design, it could be very, very costly. It seems that we always have the time to do something the second or third time until we get it right. But now you can see that eventually you won't be able to afford it. In fact, look at what you save by doing it right the first time, even if it takes a little longer to check and verify the design. From the point of view of a general manager, it would be cheaper, more cost effective, and would send the right signals to the business team if shipping dates were missed, as long as that delay meant that it was done right the first time. Think about it.
Why Was Our Process Selected?
This topic is sometimes better known as "Why me?" or "Was it something I said or we did?"
People tend to get paranoid when they, or their work teams, are singled out for a special project. Why? It's usually because something went haywire and the boss is looking for someone to blame. Well, rest easy folks. In the case of the natural work team there is no boss looking for someone to blame because the boss is part of the team. And if something does go wrong within the team he or she will know what went wrong and why and won't go looking for who. In this case, we want to spend some time exploring why certain processes are selected as focal points while others are scheduled to be addressed later. It all comes down to the most critical factors affecting the business and the ability to provide products and services for your customers.
All businesses are composed of a series of processes which are used to provide products and services to customers. They are all important; however, the critical focus changes from time to time based on market needs, competition, and other environmental factors such as corporate expectations and policies.
Based on the "current environmental factors," the top management team identifies the "critical areas of opportunity" for focus and improvement to better meet market needs and fulfill customer expectations, thereby attaining business goals. Just as the natural work teams use certain tools and techniques and follow a given logic to improve their processes, their business management teams use a similar logic and the same tools to select the areas of opportunity for team focus. This allows everyone to speak the same language and enables them to link team plans, goals, and efforts directly to the top-level business plans and goals.
Therefore, it will not be a mystery why management selects a particular CPI team or chooses a "natural" work area as a focus for process improvement. Furthermore, it's not threatening because management is asking what, when, how, and why rather than asking who.
When the system was first implemented in one business, one of the managers reportedly said, "This will help us stop asking the five who's and start asking the five whys."
What Can Our CPI Team Do For The Business?

Now that you're over the hurdle of answering the threatening "Why me" question, let's move on to the more pragmatic discovery of what the team can do for the business. In order to help a team understand its charter and contribution to the business, it is necessary to form a clear understanding of the mission of the business.
A clear statement of the business mission must be obtained from top management to ensure that there is no misunderstanding of the basic task. This is the point at which the work begins. Once a mission statement has been clearly formulated, published, and issued to all members of the business, the task of interpreting it begins. It is essential that all levels of management be able to articulate the mission statement in their own words and make the pragmatic link to the process areas they manage. Once that is done, then the natural work teams must take the process one step further and interpret it so that it links to the processes they work with daily. Unless this occurs, the workers will not be able to see the connection between the value of their own jobs and the mission and goals of the business.
It is vitally important that each team in the business know and understand its charter and how it links to the overall mission, plans, and goals. Once that is accomplished, the team can proceed to address simplification and improvement of its own process, knowing that the results will support and have direct impact on overall business plans and goals. That in turn makes it possible for each team member to recognize personal contributed value to the team and to the business.
How Does CPI Work?
Now it is time to share with you the implementation model that has proven to be so successful. My vision of the model may be compared to what I refer to as the "co-op" system of education. When I was in college and graduate school I was always amazed at the direction and interest the co-op students seemed to have. They seemed to have more focus than the rest of us.
As I thought about what made those students different, I discovered one basic underlying and overwhelming factor. The ordinary student simply learned and acquired knowledge, whereas the co-op student experienced the implementation and application of that knowledge. It was this practical application that helped to reinforce the "book learning" and provided guidance toward additional skills and tools required to attain personal and business goals.
Format
Implementation format follows a sequential application:
* Learn a new skill or technique.
* Try in class.
* Experience through application on the job.
* Reinforce through class discussion.
* Continue the cycle.
* Team coaching on the job through successful implementation and initial project completion.
* Congruent training of business coaches to radiate and propagate the process.
The training sequence takes several consecutive weeks using a flexible implementation model. Classes are conducted by a pair of coaches who have first experienced successful teamwork and implementation and are then trained in coaching techniques. The experiential prerequisite builds confidence in the coaches and credibility in the process.
During the initial training, a half day devoted to the use of skills is followed by on-the-job coaching. Later, training is devoted to coaching and continuous use of skills and in some cases the introduction of state-of-the-art technology and a systematic way of deciding when and how to use it. This introduction helps the teams recognize that it isn't necessary to use the latest and greatest technology just because it's there. Rather, they learn to use it when necessary to meet the needs of their customers and the challenges of a complex marketplace.
On-the-job application projects are not dictated by management. Instead, management guides the team by providing areas of opportunity directly associated with their process and linked to the mission, plans, and goals of the business. The team is totally responsible for selecting an application project because no one is more familiar with the process than those people who live with it every day. This builds confidence in the team that management trusts them to do the right thing. Because it empowers and enables the team to do their job, this decision-making capability builds the team's ownership of their process and its improvement.
During the application phase, formal meetings are held to review progress and to see that the plan is being followed. Management attendance and involvement demonstrates commitment to the process. This ensures that the teams are getting active support and not just passive lip service. Formal team presentations are included to (1) report and discuss progress and (2) develop and hone presentation skills. One entire training segment should be devoted to project organization as well as management and presentation skills.
The following cases have been included to help you understand how the process can be implemented and to exhibit the transportability of the tools and techniques into all types of business processes.
Case Study: Electronics Business
The CPI methodology was used effectively by a high-volume electronics manufacturing operation to achieve significant yield improvement in a relatively short time. The plant produced three basic sizes of TV picture tubes in a volume of approximately 7,000 tubes daily.
The techniques were first applied in the matrix room, where black lines are photo-etched onto the surface of the TV screen. The matrix room encompasses a number of sensitive processes which are highly automated. At the time of CPI implementation, the matrix area had an overall yield of approximately 89%. While month-to-month yield variation was experienced, little improvement had been made in the last nine months. Significant machine down time and sudden process aberrations were frequent contributors to the scrap generated in the area. To compound the situation, extra weekend shifts were being used to meet output requirements, while available resources were stretched and time for maintenance activities was minimized. Matrix scrap was detected during a final inspection operation prior to shipment by conveyor to the next process area. Unfortunately, this inspection operation was not 100% effective, resulting in an additional 3% to 4% of scrap in the subsequent process. Additional losses in the final tube test area resulted in significant quality cost losses virtually equal to that accounted for in the matrix room itself.
A multifunctional, multilevel team was assembled. The manager of process engineering was chosen as team sponsor because he was in a position to overcome many of the hurdles and roadblocks the team might encounter. Included on the team were a process engineer, a production supervisor, a machine attendant, and an operator from the chemical mixing room that supplied material to the matrix room. Also, a
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Table of Contents

Contents
Preface
Acknowledgments
Why Bother?

What is CPI?
What can CPI do for us?
Business benefits
How does CPI work?
Tools and techniques
Brainstorming
Storyboarding
Why does CPI work?
What makes CPI continuous?
Real time application assignment
Getting Started
How do you know where to look?
Process flow concept
Process flow diagraming (PFD)
What do we look for?
Real time application assignment
What's Critical?
Deciding what to do first
Stating the problem
Analyzing the problem
Real time application assignment
Listening to Your Process
Process performance
Process capability
Specifications vs. process capability
Variability
Variability and control
Control charts
Control limits
Practical use of control charts
Real time application assignment
The Next Step
A few reminders
Implementing corrective action
Making a presentation
Project requirements
Team meetings
The role of management
Commitment
Index
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First Chapter

Chapter 1 Why Bother?

During the third quarter of 1989, the service arm of a major corporation (for convenience and anonymity we'll refer to it as SERVCO) projected that they would exceed their revenue target for the year and began to address their goals for 1990. The challenge was to continue to increase revenue, hold current manpower levels relatively constant, reduce inventory, "significantly" improve cycle time across the entire operation, reduce the supplier base, keep current customers happy, and expand the number of customers for whom they were performing repairs and product overhauls. Sound familiar?

Faced with the formidable task of trying to achieve these goals, the staff began looking for a starting point. The one thing that kept appearing as their customers' highest priority was "the time to repair hardware." The perception was that it always took too long. Factoring this in with corporate expectations, they chose to approach their task in a nontraditional way by using continuous process improvement (CPI) methodology, tools, and techniques. Rather than trying to attack all things in their previous reactive, firefighting manner, they decided to focus on reduction of repair cycle time and tie all other efforts to it.

The change began by narrowing their purview to the "critical few" processes considered essential to attaining business plans and goals which included reduction of repair cycle time. The initial focus was narrowed to five processes for which natural teams were selected for CPI training.

Let's digress briefly from SERVCO's problems to determine what this thing called CPI really is. The objectives here are (1) to introduce you to the general concept of continuous process improvement and (2) to help you develop a working definition of CPI from a personal perspective and from the viewpoint of your "natural work team." If you're wondering what is meant by the term "natural work team," it's all the people who work together daily and "own" a particular process. We'll get into the process ownership concept in the section "Why does CPI work?"

CPI is fundamentally a toolbox of skills and techniques applied with a simple methodology to stimulate continuous improvement and control of processes. The processes are in turn used to satisfy customer needs and expectations, both internal and external to a business.

Take a moment to define, in your own words, the meaning of the word "process." If you are working with a team, and you should be to get the maximum benefit from this book, share your definition with all your team members. Then consider Webster's definition:

Process: A particular method of doing something, generally involving a number of steps or operations.

Compare your definition with Webster's and decide if you need to alter yours. Typically, people have found that the dictionary version reinforces what they initially recorded. Before sharing any further thoughts or definitions with your team, let's get back to the business scenario.

SERVCO opted to begin the process in a nontraditional manner with a heavy commitment to management training. They wanted to send the message through the organization, "We're serious about this."

The process began as a pilot in the fourth quarter of 1989. Doing the right thing at the right time was of supreme importance. By beginning training and implementation at a time when the traditional focus was primarily on meeting year-end shipments at all cost, the management team sent another clear message that things would be different. They were and still are.

As you might expect, along with the changes came some good news and some bad. The good news was that repair cycle times had been reduced in more than ten major business processes. Improvements ranged from 24% to 60%, and all were accomplished by the natural teams, with the support and direct involvement of the management team. Some teams involved key suppliers in the process and none required or recommended capital expenditures. After one year of training and implementation, SERVCO had 28 active process improvement projects that applied CPI methodology on a daily basis with an average reduction of 47% in repair cycle time.

The bad (but not unexpected) news was that the real world still existed. Change from the previous modus operandi was going to take time, patience, and persistence. The modified processes and implementation of the methodology were healthy albeit fragile. A few skeptics were still not buying into the process, causing opposing challenges the management team would rather not have to cope with. However, the team persisted, the process worked, and the results were well worth the effort.

Business plans for the future took on a clear focus involving customer needs and supplier partnerships. The improvement purview was expanded to include processes related to inventory while maintaining customer satisfaction and further reducing cycle time. A clear message was sent that the business would continue to integrate CPI methodology into management and daily activities.

This business grew and flourished because the management team chose to do things differently. They continue to use the simple tools and techniques of CPI to ensure customer satisfaction and improve daily operating processes. The dramatic reductions in repair cycle time not only led to improved customer satisfaction, they also translated directly into improvement of the bottom line. What more could a business want than a growing clientele, a healthy balance sheet, and a successful launch into a rapidly changing and challenging decade?

The global business world of the 1990s represents an arena where complacent businesses, managers, and others who are not receptive to change will most likely perish. To survive, let alone flourish, businesses in the '90s must meet the ever increasing and more demanding challenges of:

* Dynamic customer expectations
* Expanding worldwide competition
* Strategically implementing state-of-the-art technology

A strong, healthy business today is the direct result of meeting the challenges of the past. However, to remain strong and productive and be the natural choice of the customers, some changes will most probably be required.

If you don't believe what you've read so far, or if you don't intend to open yourself to change to meet the challenges of the 1990s and the twenty-first century, don't bother reading any further. Why? Because you and the people around you will most probably be doing something else in the very near future. If you haven't figured out the answer to "Why bother?" it's because business as usual isn't good enough!

However, if you do believe what you've read so far, the information and methodology presented in the following pages can help you improve your business. As you proceed, remember that CPI is not a panacea, nor is it a solution looking for a problem to solve. Proof exists to illustrates that it is possible for any business to experience SERVCO's success. There is nothing magical about it. Simply apply the methodology presented in the following chapters. Be aware that it takes leadership, time, patience, and persistence to make it happen and last. It's entirely up to the business team members whether they choose to change or chance ending up a casualty of the 1990s. CPI can help make that change successful.

What Is CPI?

Ground Rules

Before getting started with the logic, skills, and techniques that make up CPI, let's establish some fundamental ground rules for creating the appropriate environment. They must be treated as canonical and adhered to at all times. It is essential that these ground rules be clearly articulated, understood, and abided by within each and every team and that they are fully supported at and by all levels of management. All successful CPI teams follow these basics. As you peruse and internalize them, you will begin to understand why they are emphasized.

1. Be open. Don't be afraid to share an idea. Remember, it's yours and it represents an expression of yourself. As you listen to other people's ideas, be open, supportive, or passive. Never attack! It kills ideas and erodes trust.

2. Be supportive and noncritical. When someone expresses an idea, be supportive and you'll be surprised how it is returned. Contribute in a noncritical manner. Remember, criticism kills ideas. Open support nurtures and encourages participation and builds trust.

3. Be positive. After listening to an idea or comment, respond positively. Try forcing yourself to say something like, "I like that idea because..." Remember, around every donut hole there is a donut.

4. Be willing to share your thoughts and feelings. Express your ideas no matter how insignificant or dumb you think they might be. When you share your thoughts and feelings you make yourself vulnerable. You will discover that when you are vulnerable, most people will want to help. Open sharing is a great team-building activity.

5. No finger pointing. Never be threatening. Remember to check your hand to see how many fingers are pointing back at yourself when you point at someone else.

6. K.I.S.S. (Keep it straightforward and simple). This is a cardinal rule of CPI. If you are tempted to try to make something complex, don't. If you are attempting to solve a complex problem or address a complex process, break it down to its simplest form, then proceed.

7. Have fun. When people have fun together, the stress level goes down, defenses go down, and creativity is enhanced. Never take yourself too seriously. I still hate to hear my wife tell me to "lighten up." But it always works. Learn to laugh at yourself or a bad situation. Remember, only you can control your attitude and outlook.

Defining CPI

Recalling the earlier exercise where you defined "process," now expand your definitions to include the terms continuous and improvement. Webster defines these terms as:

Continuous: Going on or extending without interruption or break, unbroken, connected.

Improvement: An increase in value or in excellence of quality or condition.

Using your definitions and the reinforcement of Webster, your team should develop and record a definition of continuous process improvement. When your discussion has achieved a consensus, make sure it is reinforced by Webster's terminology.

Since you have now decided on a definition of CPI, let's discuss what it is not.

CPI Is Not Just Another Program

A typical program has a beginning and an end. It exists for a finite period of time and is usually created to accomplish a single specific goal before being discarded. In contrast, CPI has a beginning, but it has no end until the process it is associated with is no longer a functioning part of the business and has been eliminated or replaced by another process of greater value. And this is only where the differences begin. Later when we address the topic "Why does CPI work?" you will have an opportunity to explore further the characteristics of programs and how they differ from CPI.

From this point forward you are instructed to strike the word "program" from your vocabulary when you speak of CPI. It will not be easy, but it will help you achieve the fundamental change required to make CPI the way you think and do your job. A question that always arises is, "How much time do you expect me to spend on this? I still have my job to do, you know." My response has always been met with inquisitive looks and silence from managers and individual contributors alike:

I expect you to spend forty or more hours a week on the process because it must become the way you do your job. It can't be something extra to do. It must become the way you think and act every day. It must become such a part of what you do and how you do it that eventually you will be doing it without talking about it.

CPI is a proven prevention and improvement system built on four basic principles:

* Continuous improvement must be a way of life.
* Problems must be prevented rather than reacted to.
* Results must be measurable and directly related to business plans and goals.
* Team ownership of a process is essential.

The process helped several businesses identify and implement total savings in excess of $35 million from simple process improvements during the first two years of its use. By calculating the ratio of dollars spent on training and identified business savings, you arrive at an impressive 80 to 1 return on the training investment.

CPI consists of a logical set of simple and straightforward steps that are used by "natural work teams" to analyze and understand the processes they use in their work and to focus on the critical parts of those processes that require attention. Initially it provides a systematic way of eliminating the unnecessary, nonessential, non-value-adding parts of the process followed by continuous improvement of the simplified, streamlined process. It is a transportable process that is not only applicable to "manufacturing" type processes, but has proven applicable and powerful in a variety of business processes. You will see examples of various team activities in case studies and project summaries as you proceed through the text and begin to gain personal experience with the tools and techniques.

What Can CPI Do for Us?

Now that we've briefly explored what CPI is and how it involves the management team, let's look at the value it holds for the individual members of natural work teams. Basically, we want to answer that age-old question, "What's in it for me?" But in this case let's begin by asking the question from the team point of view: "What's in it for us?"

You don't need to be an international economist or CEO of a major corporation to understand that we are living and working in a complex world. We have seen technology shrink the world and launch us into a global economy that has forced us to think and act in a strategically different way. We find ourselves faced with more and larger problems while still dealing with the nitty-gritty things we must do just to survive. Many businesses have proven that by adopting CPI as a business strategy, they have been effective in meeting the challenges of worldwide competition by:

* Overcoming complacency
* Attacking the things they've learned to live with
* Getting rid of non-value-added work
* Preventing problems rather than reacting to them
* Continuously improving all business processes

From the individual team's perspective it does much more by simply:

* Focusing attention on detail
* Allowing people to contribute "from head to toe" rather than being used only "from the neck down"
* Understanding processes through examination and analysis
* Building focused teams
* Fostering open, honest, and supportive communication across traditional functional barriers and throughout the sometimes sacrosanct level structure
* Identifying root causes of system deficiencies rather than simply and naturally jumping to conclusions
* Instilling the improvement habit

The idea for the improvement habit was not mine. It came from a conversation I had several years ago with a product assurance manager. He said, "George, what we don't need here is another initiative. What we really need is for all our people, including the managers, to get the improvement habit." When I asked him what he meant, he explained that he believed everyone should get into the habit of constantly improving what they do and never stop.

Finally, CPI will enable and empower people to:

* "Visualize" processes
* Focus on "critical-to-quality" activities in a process
* Significantly improve process output
* Establish an evolutionary improvement system to improve their businesses and help ensure customer satisfaction
* Work together as focused teams
* Build a network of business teams focused on process improvement and customer satisfaction

I recall the reaction of a worker in a consumer electronics plant after her team had diagramed their portion of the manufacturing process. "I've been working here for twenty-two years," she said, "doing basically the same job day in and day out, and I never before knew why I did certain things. Now I can see where I fit and why my job is important. If I don't do my job right, then the next person who gets my work will suffer. Ultimately, we won't make our customers happy, and that's bad for our business."

She had found the link between herself and the customer. The job she had grown to look at as insignificant had taken on new meaning and she knew she had value.

Business Benefits

Now let's turn our attention to the broader topic of business benefits. The objectives of this section are to help you:

* Identify the measurable business benefits which result from implementing the process
* Understand why and how to select an "area opportunity" from a process
* Begin to link broad team plans and goals to business plans and goals.

We will accomplish these objectives by addressing the following subjects:

* What can CPI do for our business?
* The Iceberg Phenomenon
* The Rule of Tens
* Why was our process selected?
* What can our team do for the business?

What Can CPI Do For Our Business?

The benefits of using CPI vary from business to business and from process to process. However, from a broad perspective, CPI (1) provides a strategy focused on prevention and improvement, and (2) helps build "natural" focused teamwork.

More specifically, the process enables the "natural" focused team to logically, simply, and systematically:

* Reduce scrap and rework
* Reduce cycle time
* Reduce waste
* Reduce inventory
* Provide significant short-term return on investment
* Introduce long-term profit and productivity gains
* Identify and eliminate non-value-adding, nonessential work from processes
* Improve and polish processes worked with daily

Specific examples of team results will be introduced later in the form of case studies and team project summaries.

The Iceberg Phenomenon

Everyone is familiar with the phrase "and that's just the tip of the iceberg," but have you ever thought about what it might mean in the business sense?

The Iceberg Phenomenon is nothing more than recognizing that what you see and measure with respect to losses, scrap, rework, and customer complaint costs is usually only a small and sometimes insignificant part of the total cost impact on a business. If you can accurately account for and measure direct cost drivers and then compare those costs to the indirect costs, you will be able to define the iceberg ratio for your business. Mathematically it would look like this:

Iceberg ratio = indirect costs/direct costs

Direct costs can be measured and tracked, and are usually accounted for in management reports. The finance and manufacturing divisions are the traditional sources for such data and are the recommended starting points for your search for data in your business.

Indirect costs are those costs that may be difficult to account for, but that you know are real. Some examples are:

* Excess inventory
* Engineering buy-offs
* Material review boards (MRBs)
* Preparation of rework procedures
* Material handling/expediting
* Replanning
* Engineering changes
* Excess capacity
* Marketing concessions
* Lost future orders

Take some time to develop and expand the list for your business and calculate an Iceberg Ratio.

When you have gathered the necessary information and begin to calculate your Iceberg Ratio, you might be interested in what you can expect to find. A ratio of 6 to 1 is not at all unusual. The better you track your losses and account for the true costs associated with such things as customer service, concessions, retraining, expediting, field corrective action, and associated travel expenses, the smaller your ratio will be. Conversely, the fewer records you have and the more loosely you track your indirect costs, the larger your ratio. Some businesses use a complaint accounting system to track these costs. The most important thing to remember is that these costs are real. They are real because they are subtracted from your bottom line, and that realization will get the attention of any finance manager or CEO.

The Rule of Tens

The next subject we will address is called the Rule of Tens. This concept is credited to Dr. Ohno of Toyota. Put in my own words:

Not doing something right the first time costs ten times as much to find and fix each time it escapes to a subsequent stage of handling.

Let's create a scenario to help you fully understand the concept. Suppose you found a design error in a product after it had been delivered to a customer. The number of stages it passed through from design to delivery will indicate how many factors of ten you wasted by not finding and eliminating the problem at its root. For example, if it passed through four stages, then it would cost you approximately a thousand times as much to fix it in the field as it would have cost you in the design stage. The factor stages might look something like this.

So remember, if you are a design engineer, don't be too anxious to "throw the design over the fence" to production. If you and your design team, which should include manufacturing or production personnel, have not verified the design, it could be very, very costly. It seems that we always have the time to do something the second or third time until we get it right. But now you can see that eventually you won't be able to afford it. In fact, look at what you save by doing it right the first time, even if it takes a little longer to check and verify the design. From the point of view of a general manager, it would be cheaper, more cost effective, and would send the right signals to the business team if shipping dates were missed, as long as that delay meant that it was done right the first time. Think about it.

Why Was Our Process Selected?

This topic is sometimes better known as "Why me?" or "Was it something I said or we did?"

People tend to get paranoid when they, or their work teams, are singled out for a special project. Why? It's usually because something went haywire and the boss is looking for someone to blame. Well, rest easy folks. In the case of the natural work team there is no boss looking for someone to blame because the boss is part of the team. And if something does go wrong within the team he or she will know what went wrong and why and won't go looking for who. In this case, we want to spend some time exploring why certain processes are selected as focal points while others are scheduled to be addressed later. It all comes down to the most critical factors affecting the business and the ability to provide products and services for your customers.

All businesses are composed of a series of processes which are used to provide products and services to customers. They are all important; however, the critical focus changes from time to time based on market needs, competition, and other environmental factors such as corporate expectations and policies.

Based on the "current environmental factors," the top management team identifies the "critical areas of opportunity" for focus and improvement to better meet market needs and fulfill customer expectations, thereby attaining business goals. Just as the natural work teams use certain tools and techniques and follow a given logic to improve their processes, their business management teams use a similar logic and the same tools to select the areas of opportunity for team focus. This allows everyone to speak the same language and enables them to link team plans, goals, and efforts directly to the top-level business plans and goals.

Therefore, it will not be a mystery why management selects a particular CPI team or chooses a "natural" work area as a focus for process improvement. Furthermore, it's not threatening because management is asking what, when, how, and why rather than asking who.

When the system was first implemented in one business, one of the managers reportedly said, "This will help us stop asking the five who's and start asking the five whys."

What Can Our CPI Team Do For The Business?

Now that you're over the hurdle of answering the threatening "Why me" question, let's move on to the more pragmatic discovery of what the team can do for the business. In order to help a team understand its charter and contribution to the business, it is necessary to form a clear understanding of the mission of the business.

A clear statement of the business mission must be obtained from top management to ensure that there is no misunderstanding of the basic task. This is the point at which the work begins. Once a mission statement has been clearly formulated, published, and issued to all members of the business, the task of interpreting it begins. It is essential that all levels of management be able to articulate the mission statement in their own words and make the pragmatic link to the process areas they manage. Once that is done, then the natural work teams must take the process one step further and interpret it so that it links to the processes they work with daily. Unless this occurs, the workers will not be able to see the connection between the value of their own jobs and the mission and goals of the business.

It is vitally important that each team in the business know and understand its charter and how it links to the overall mission, plans, and goals. Once that is accomplished, the team can proceed to address simplification and improvement of its own process, knowing that the results will support and have direct impact on overall business plans and goals. That in turn makes it possible for each team member to recognize personal contributed value to the team and to the business.

How Does CPI Work?

Now it is time to share with you the implementation model that has proven to be so successful. My vision of the model may be compared to what I refer to as the "co-op" system of education. When I was in college and graduate school I was always amazed at the direction and interest the co-op students seemed to have. They seemed to have more focus than the rest of us.

As I thought about what made those students different, I discovered one basic underlying and overwhelming factor. The ordinary student simply learned and acquired knowledge, whereas the co-op student experienced the implementation and application of that knowledge. It was this practical application that helped to reinforce the "book learning" and provided guidance toward additional skills and tools required to attain personal and business goals.

Format

Implementation format follows a sequential application:

* Learn a new skill or technique.
* Try in class.
* Experience through application on the job.
* Reinforce through class discussion.
* Continue the cycle.
* Team coaching on the job through successful implementation and initial project completion.
* Congruent training of business coaches to radiate and propagate the process.

The training sequence takes several consecutive weeks using a flexible implementation model. Classes are conducted by a pair of coaches who have first experienced successful teamwork and implementation and are then trained in coaching techniques. The experiential prerequisite builds confidence in the coaches and credibility in the process.

During the initial training, a half day devoted to the use of skills is followed by on-the-job coaching. Later, training is devoted to coaching and continuous use of skills and in some cases the introduction of state-of-the-art technology and a systematic way of deciding when and how to use it. This introduction helps the teams recognize that it isn't necessary to use the latest and greatest technology just because it's there. Rather, they learn to use it when necessary to meet the needs of their customers and the challenges of a complex marketplace.

On-the-job application projects are not dictated by management. Instead, management guides the team by providing areas of opportunity directly associated with their process and linked to the mission, plans, and goals of the business. The team is totally responsible for selecting an application project because no one is more familiar with the process than those people who live with it every day. This builds confidence in the team that management trusts them to do the right thing. Because it empowers and enables the team to do their job, this decision-making capability builds the team's ownership of their process and its improvement.

During the application phase, formal meetings are held to review progress and to see that the plan is being followed. Management attendance and involvement demonstrates commitment to the process. This ensures that the teams are getting active support and not just passive lip service. Formal team presentations are included to (1) report and discuss progress and (2) develop and hone presentation skills. One entire training segment should be devoted to project organization as well as management and presentation skills.

The following cases have been included to help you understand how the process can be implemented and to exhibit the transportability of the tools and techniques into all types of business processes.

Case Study: Electronics Business

The CPI methodology was used effectively by a high-volume electronics manufacturing operation to achieve significant yield improvement in a relatively short time. The plant produced three basic sizes of TV picture tubes in a volume of approximately 7,000 tubes daily.

The techniques were first applied in the matrix room, where black lines are photo-etched onto the surface of the TV screen. The matrix room encompasses a number of sensitive processes which are highly automated. At the time of CPI implementation, the matrix area had an overall yield of approximately 89%. While month-to-month yield variation was experienced, little improvement had been made in the last nine months. Significant machine down time and sudden process aberrations were frequent contributors to the scrap generated in the area. To compound the situation, extra weekend shifts were being used to meet output requirements, while available resources were stretched and time for maintenance activities was minimized. Matrix scrap was detected during a final inspection operation prior to shipment by conveyor to the next process area. Unfortunately, this inspection operation was not 100% effective, resulting in an additional 3% to 4% of scrap in the subsequent process. Additional losses in the final tube test area resulted in significant quality cost losses virtually equal to that accounted for in the matrix room itself.

A multifunctional, multilevel team was assembled. The manager of process engineering was chosen as team sponsor because he was in a position to overcome many of the hurdles and roadblocks the team might encounter. Included on the team were a process engineer, a production supervisor, a machine attendant, and an operator from the chemical mixing room that supplied material to the matrix room. Also, a mechanical technician and a design engineer were chosen as part-time team members. Given the expertise and experience of the group, an excellent source of knowledge concerning both the processes and machines had been assembled.

Team meetings were held once or twice each week. The first meeting dealt with overcoming complacency and switching to an attitude of preventing problems rather than reacting to them. The team established two goals: a 91% yield in matrix and 1.5% scrap in screening. They began their efforts using:

* Process flow diagraming
* Pareto analysis
* Cause and effect relationship analysis
* Storyboarding
* Analytical data charting
* Control charting

Process flow diagraming (see Chapter 2) was used to visualize the matrix room process so the areas critical to quality output could be easily identified and efforts could be properly focused.

As the team built the diagram, their individual opinions and views dissolved and a set of common, refocused team objectives emerged.

An analysis of scrap data showed that machine stoppage was the principal contributor to area scrap, although several process-related defects also contributed. Pareto techniques (see Chapter 3) were used to analyze the significant contributors to machine stoppage. During this exercise, it was discovered that conflicting measurements were being used. While yield was greatly dependent on the number of incidents of stoppage (a measurement the machine attendants and technicians watched closely), the process engineer and production supervisor relied heavily on the accumulated down time data (minutes and hours). This measurement impacted both production load efficiency and line output. By detailing the specific machine operations that contributed to low yield, not load efficiency, a completely different picture of the causes of stoppage was obtained. Control charts were used to track the number of stoppages per machine operation to help set maintenance priority and monitor repair effectiveness.

Additional control charts were established for key process variables. In the past, the data had been collected and recorded in log books by quality control (QC) auditors, machine attendants, and process engineering personnel. Because control charts were posted in a centrally located area, the status of process-focused parameters could be seen by everyone. Communication between people and shifts was dramatically improved. Displaying data on control charts also discouraged tinkering with the process and provided hard data which served as the basis for specific action across the three shifts.

During the first month of operation, scrap resulting from machine stoppage dropped almost 1%. Process scrap did not show any dramatic change. However, improvement in some categories was experienced toward the end of the month. By the end of the second month, the overall yield had increased from 89% to almost 91%. Machine stoppage and two types of process scrap were identified as the principal contributors. Screening room scrap was reduced which demonstrated that the improvement was being seen by the matrix room's customer.

The team continued to search for improvement ideas. A project list was established and specific projects were assigned among team members. In addition, a plan for improved machine preventive maintenance was developed and implemented. This system effectively identified equipment needing weekend maintenance and included a sign-off system for work completion or delay. By the third month, yields improved to record levels, exceeding 92%. Screen room scrap dropped to less than 2.5% and final tube yields improved.

The team celebrated by establishing a new goal. They improved upon the process control plans that they had designed to maintain the progress. Further, they continued to investigate their process for other areas of opportunity. However, even though a new strategy had been adopted, the team was still encumbered by some current ways of doing things, including:

* Management decisions by decree
* Inspection as a sort mechanism
* Shooting-from-the-hip reactions
* Complaining, rather than initiating action

The improvements continued despite these encumbrances and the team learned. Problems that had continually plagued the operation were solved more quickly. The team was even successful in planning for a new design introduction and despite extremely limited resources, equipment modification projects were completed which continued to improve product quality and yield.

Case Study -- Procurement Process

CPI START-UP

In mid 1988, a defense-focused business, which we will refer to as DEFCON, began implementation of CPI in the manufacturing and quality areas. The managers of manufacturing and quality assurance jointly sponsored the pilot teams. With the insight and support of their general manager, the process was firmly implanted in the business and became part of the business infrastructure. New operating procedures were created and existing ones changed to reflect the systematic methodology of improvement.

As the initial two teams reported their successes, the message that something different was happening was being transmitted both by the teams and by top management. The process began to spread rapidly to other areas as well. The idea of looking at the work area from a "process" perspective was catching on in an epidemic fashion. Those who protested "We're already doing these things; why do we need something else?" and "Sure it works in manufacturing, but it won't work here" were slowly, but very surely, beginning to understand the power of the simple, structured methodology and were signing up to participate on a team.

IDENTIFYING THE OPPORTUNITIES

As the teams implemented the techniques of CPI, they began to identify other areas of opportunity that occurred "upstream" of their process. They quickly came to the conclusion that if the suppliers to their process did not provide products and services that met or exceeded their requirements, a critical part of their own operations would fail (i.e., they couldn't do their job)! As virtually all the teams made this discovery, it became evident that a procurement process team needed to be selected and trained.

SELECTING THE TEAM

The general "area of opportunity" was identified as procurement. Since procurement covered a broad spectrum, the natural team that was formed contained a mix of people both with acquisition experience and without. The manager of compliance and administration was designated team sponsor, based on his experience and expertise. Ad hoc members were also invited, to give the team full ownership of the process. Once the team was formed, formal training began, combined with coaching to implement the tools and techniques on the job.

GETTING STARTED

During the first two training and coaching sessions, the team discovered why the procurement process was critical to the business. As the sponsoring manager explained, "In our business approximately 50% of the goods and services required for production flow through purchasing. We can make a major and direct impact because every dollar saved in the purchasing process goes directly to the bottom line. With the internal pressure on dealing with low-cost suppliers, it was the obvious place to start.

"Besides, it is a well known and common perception that everyone is frustrated with the amount of time it takes to process material requests."

He reported that the team initially got off to a false start. The procurement process was too broad and all-inclusive, the team did not stringently follow the process steps, and they got wrapped up in some nonessentials. They got back on track, however, by starting to work on something they could "get their arms around." Instead of tackling the entire process, they broke it down into four pieces which they referred to as cycles:

1. Material request cycle
2. Purchase order cycle
3. Supplier manufacturing cycle
4. Delivery cycle

ANALYZING THE PROCESS

Recognizing that the material request (MR) cycle was perceived to be a major roadblock by most people who relied on the purchasing operation, the team decided this would be their starting point. The MR cycle also happened to be the first part of the procurement process that anyone had to contend with.

As part of their training, the team learned how to display the MR process visually through process flow diagraming (PFD). This technique allowed them to synthesize their thoughts and identify the "hot points." According to the sponsoring manager, "Many of the team members thought they understood the process but they were unable to put it into words. When we put it into pictures, however, it was transformed into a common language that we could all understand. It drove common thinking. Once the process was diagramed, the team comments went from 'Boy, I don't know what we're going to do, this looks impossible!' to 'Hey, if we fix this one little thing and then fix another little thing, the sum of the parts will exceed the whole!'"

At this point the team really began to function as a unit. Ad hoc team members from the information technology, finance, and quality assurance organizations, contributed an internal customer or supplier perspective and the team began to believe that they could solve their problems.

During the brainstorming and problem-solving sessions, one team member was overheard to say: "You know, I thought of this ten years ago but no one listened to me. Now we can do something about it." And another concluded, "This is great! We should have done it years ago!"

FOCUSING ON CRITICAL PROCESS ELEMENTS

The next training session helped the team decide what was critical. Tools and techniques were included to help prioritize information gathered from the process and decide what to work on first, and to maintain focus on the "what" and the "why" and avoid looking for the "who." To begin, the team performed a "re's" analysis. This led them through the rigor of defining all the parts of the MR process that began with the prefix "re." They concluded that the most wasteful part of their process was probably anything that had to be done more than once. Having performed the analysis, the team narrowed their list to the top three:

* Reject
* Re-approve
* Re-input

Using all the, information gathered, they were able to prepare a clear problem statement which would become the basis for process analysis:

The material request cycle time appears to be excessive.

The wording was chosen based on internal "customer" perception. The next task was to isolate the principal causes of the problem. To do this, they constructed a structure tree. This tool brought focus to: (1) the single system for processing all MRs and (2) the abundance of redundant approvals.

LISTENING TO THE PROCESS

During the next meeting, the team was coached in the technique of "listening" to their process. This helped them identify and analyze available data to (1) quantify the length of the MR cycle, and (2) identify the place to begin improving the process.

When they performed a statistical analysis of the available data, it was clear that the cycle was taking too long. By plotting the total number of MRs as a function of the number of days in the cycle, the team found that the average time to process an MR was ten days. They got similar results when they sampled the data. The sponsoring manager reported: "It was fascinating how accurate the data was. I'm not talking about thousands of samples. We took samples from fifty to one hundred lot sizes and they proved to be very accurate. For example, we picked purchase orders that were under $150 as a subset of the entire purchasing process. Then we looked at the cycle time from the time when the initiating signature was placed on the MR to the time the buyer received it."

During the next training session, the team was introduced to "interpretation and control." They discovered how to apply appropriate charts to any process. They were able to select the proper control chart to display and interpret process data. During the coaching session, data from the MR process was plotted on this chart.

By using the information from the structure tree and the PFD, they were able to analyze the process to determine which steps did not add value and which steps were taking the longest time to execute. As you will see, the. PFD and available data led to some surprising results.

IMPROVING THE PROCESS

The team turned to customer requirements and expectations as standards of measurement to determine which steps added the least value. One member explained: "One thing that everyone in our business has on his or her mind is something called compliance. [Compliance in this sense means strict adherence to government regulations and guidelines.] When we looked at the controlling steps of the MR process, we found one of them was an approval from Finance on any overhead MR.

"We looked at that step in light of what people are allowed to spend on their expense reports, with petty cash, and with other daily transactions, and we realized we were overcontrolling the process. When we asked 'Why are we controlling this to this level?' no one was really quite sure."

It became obvious from the detailed analysis that the control was costing more than it was adding value. Furthermore, the control was being levied by DEFCON's finance operation. So the team decided to visit the finance manager.

When he reviewed the process flow diagram and the control chart, the manager quickly recognized that the logical thing to do was to eliminate the approval step. In fact, he was pleased that the team had found a way to reduce the amount of work his people had to do that was not adding value to the business.

RESULTS

The following specific results were seen nine weeks after beginning training and application.

* MR cycle time was reduced from ten days to three days.
* The purchasing function was no longer seen as a roadblock.
* The finance department reduced its work load.
* Finance also eliminated a non-value-added approval step.

When asked for his perspective on the improvement process, the sponsoring manager shared the following:

When we began, the MR process was taking ten days; that cycle is now three days for a material request against overhead under $150. We have not only reduced the cycle time, but also have precipitated a change in attitude toward the purchasing function. It was seen as very much a roadblock [or no good reason. We're demonstrating that we are really trying to change that image.

A big spin-off from this effort was that other people came forward with other changes. They began to think that, golly, someone had a good idea and they actually implemented it. If I have a good idea, I'm going to see if they will do it for me.

The benefit from CPI is not merely the CPI "process." It is very important to understand that there is a CPI attitude. It is the attitude change at this point that is probably producing the greatest results.

People are beginning to question why they do things. I have several clerks that work for me. They asked why they have to distribute 8,000 pages of weekly reports. We decided there is really no reason and cut the volume to 3,500 sheets of paper almost overnight.

I believe the finance operations agreement to eliminate the non-value-adding approvals sent the right signal that we are supporting CPI and that many other things can be done.

BUSINESS RESULTS

DEFCON's manufacturing and quality assurance managers were asked to comment on the broader business benefits of using the CPI process after the first year of training and implementation.

The quality manager's response was captured from an interview printed in the local works newspaper:

Last July we were not meeting the scheduled production rate for a major customer. Once the CPI teams got rolling, however, we were not only able to get our heads above water by January but we were also able to stay there. We got the rate up because CPI helped point out how to do things faster and better. Even with the increased production rate, we were able to significantly reduce the defect rate. We would not have managed that without CPI.

The manager of manufacturing had these comments:

One of the greatest concerns a manufacturing manager has is a significant production rate increase. Over the past year we increased our production from seven to eight units per month to a high of seventy to eighty units per month. I do not believe we would have been able to accomplish that without CPI.

Furthermore, without the process we probably would not have made the rate in the time allotted. That could have severely jeopardized our position with our customer, possibly resulting in the loss of the contract.

Institutionalization of CPI

Changes and improvements made by the procurement process team were institutionalized in the business by (1) changing the computer system, and (2) rewriting departmental procedures to reflect the changes.

Proof that institutionalization of the process is indeed taking place and is growing was provided by the team sponsoring manager:

We have rewritten departmental procedures and it is fascinating how change and new and faster ways are being accepted by top management. They are thrilled. Feedback from top management that says, "That was a good thing to do. Thank you. Keep it up!" is worth more than many other things that could be done.

In the past we frequently let a process operate just because it always had, without really understanding what the process consisted of. It was just the mysterious "system," like the word "they." Now, we are rewriting overall procedures, using much of the same mindset, in eliminating non-value-adding tasks by understanding the process first and then the actual requirement of the process.

As a result of team efforts and the message sent by management that things are indeed different, teams have continued to identify new areas of opportunity for themselves as well as for new teams. Perpetuation has been rooted in team ownership of the business processes. DEFCON provides an excellent model for others to follow.

CPI Implementation Flow Chart

Remembering your definition of a process: it is a series of steps which, when executed in some logical order, deliver an output. Like any other process, there is a certain logic to be used to implement CPI. Some general steps have been captured for your use and reference in Figure 1-1.

By using this flow chart as a guideline and reminder you and your team will be able to:

* Visualize your process
* Identify and eliminate root causes of problems
* Identify and eliminate non-value-adding work from your process
* Test process capabilities against customer requirements
* Establish and maintain process control
* Prepare and document operating procedures for the in-control process
* Continuously improve the process
* Manage your work area by being process focused and aware of the bottom line

Teams find this logic chart very useful to track progress through the implementation steps. Posting the chart in the work area will help keep your team on track and able to follow all the sequential steps to ensure that they don't jump to conclusions. C-T-Q on the flow chart refers to critical-to-quality, i.e., those factors critical to meeting customer needs and expectations.

Tools and Techniques

To move from the philosophical into practical application we need tools and techniques. The objectives of this section will be to define two distinct problem-solving techniques and then introduce you to, or reaquaint you with, several simple tools. Before going any further, however, I want to warn you not to expect any dramatic revelation, because you probably won't find anything new. However, you may well discover a lot of the things that you have used from time to time to solve problems. As we proceed you will find out how these tools are systematically linked together.

When CPI was first introduced to the manager of manufacturing referred to in the previous case study, he said, "This is the first time I've seen all the things I've ever used to solve problems that actually worked all gathered together in one spot. Here they are linked so you can logically follow from one step to the next. This is great!"

Problem-solving Techniques

Two basic types of techniques are used to solve problems, judgmental and analytical. The judgmental technique is used when detailed data is not available; analytical techniques are used when quantifiable information and data are available. Judgmental techniques are used to get the process started by helping the team exercise their thought process and come to consensus on where to begin and what to do. The analytical techniques are introduced to enable the team to dialogue with the process and help verify initial judgments. By linking the two, you will see the process come to life. One team member referred to CPI as "a living organism" that became part of their business.

* Brainstorming is a judgmental tool used to generate ideas to support the storyboarding process.

* Storyboarding in turn is used to:
* Stimulate creativity
* Organize judgmental problem solving
* Visually display individual ideas
* Develop team consensus
* Create and organize a plan

* Process flow diagraming (PFD) is a very powerful analytical technique used to visualize the steps, events, and operations that constitute a process. Most team members and coaches say this is truly the heart of CPI. It makes the process come to life, develops consensus, and builds teamwork. I have referred to it as the spinal cord or skeletal structure.

* Analytical data charting is a graphical tool used to display data to:

* Identify problem areas
* Interpret information
* Pinpoint and isolate activity
* Use data rather than storing it until it's too late or you've forgotten where you put it.
* Control charting is a simple, but very powerful tool used to:
* Let you dialogue with your process
* Recognize trends
* Avoid producing bad products or services
* Prevent problems rather than react to them after it's too late

Each of these tools and techniques will be introduced sequentially so you will see how they work individually and how they fit together to simplify and improve the way you and your team perform your daily tasks.

Brainstorming

Now let's look into brainstorming in detail. The objectives of this exploration are:

* To introduce you to or reacquaint you with the technique of brainstorming
* To provide you with some basic questions used in the technique
* To enable you to experience the effectiveness and power of brainstorming

Definitions

Webster offers the following definitions for your consideration:

Brain: The center of thought.
Storm: An outburst of emotion.
Brainstorming: The unrestrained offering of ideas or suggestions by all members of a conference to seek solutions to problems.

When used in the total process context, brainstorming stimulates the thought process and is a critical part of storyboarding. Discussion or dialogue is discouraged in a brainstorming session because it gets people off track or kills ideas. It is essential that an open, supportive environment be maintained to ensure the success of a session. This is done by observing and enforcing all the basic CPI ground rules presented at the beginning of the chapter.

When brainstorming is properly done, people find they can "piggyback" off the ideas of others and develop team synergy and spontaneity that they would not normally experience.

Questions used to stimulate brainstorming

To ensure the success of a brainstorming session there are four basic questions you want to remember and two you want to avoid. To finish this thought on a positive note, let's begin with the two you must avoid at all cost: Why? and Who? They should not be used because they are probing and threatening. "Why?" should be reserved until you are analyzing a problem to find the root cause. At that point you will be encouraged to use it relentlessly. But for now, forget that it exists. As for the big "Who," I suggest you avoid that unless you are interrogating your kids. And, from the lessons learned by parenting three children, I'm not too sure what value it has in that environment, either.

The questions that have real value in this process are:

* What?
* Where?
* When?
* How much?

Storyboarding

The objectives of this section are to:

* Familiarize or reintroduce you to the technique of storyboarding
* Illustrate the power of this tool
* Provide you with easy-to-follow steps to run your own successful storyboarding sessions
* Allow you to experience the process through an exercise
* Recognize the links between brainstorming and this unique tool

To accomplish these objectives we will be addressing the following topics:

* What is storyboarding?
* What is needed to run a storyboarding session?
* Who is involved?
* How does a session really work?
* Possible storyboard layout
* Storyboarding steps

What Is Storyboarding?

Storyboarding has been around for a long time. According to an Italian friend of mine Michelangelo was the first to use the process in the Sistine Chapel. More recently its origin has been credited to the late Walt Disney as the process he used to put the words and music together for his cartoons.

No matter who really began the process or how it spread, it has become a very powerful technique when properly linked with a few other problem-solving tools.

I have chosen to define storyboarding as follows:

A technique used to organize logically and display visually a plan to solve a problem.

As you use the technique and begin to experience its unexpected advantages, you will find more opportunities to put it to work. In fact, you will wonder how you ever got along without it.

What Is Needed to Run a Storyboard Session?

The essential elements required to run a storyboarding session are austere, but focused. The list that follows will give you an opportunity to examine the elements necessary for a successful session. You are invited and encouraged to find and modify those pieces you find necessary to fit your requirements.

1. First, you need five to seven people to realize the controlled spontaneity.

2. You need a comfortable meeting room.

3. Be sure you have no interruptions. Put "Do Not Disturb" sign on the door.

4. You must have clear walls to display ideas. (Corkboard or the equivalent is preferred.) A portable board is a good idea if you will need to change your meeting place, and because you can transport it to your work area to display your process.

5. You will need cards in multiple sizes and different colors. Self-adhering note pads have been creatively used.

6. Pins or adhesive are required to attach the cards to the wall, unless they are self-adhering.

7. Dark marking pens will be needed to write on the cards. The large style generally used for flip chart work is recommended. Avoid using the type that emits a strong odor because you will be working in a closed area for an extended period of time.

Who Is Involved?

There are three roles to be filled to make the process work.

* Facilitator: This individual asks questions to generate ideas, keeps the session on track, maintains the proper environment, and breaks ties.

* Pinner: This person transfers the completed cards to the wall. This role should be rotated among the team members.

* Writers: These people generate and call out ideas. As the ideas are called out, they are recorded on cards and then handed to the pinner for display.

You should be cautioned that even though storyboarding is fun and stimulating, it can be very draining. Therefore, it is recommended that you schedule appropriate breaks and have refreshments readily available.

How Does a Session Really Work?

The session begins with a clear statement of the problem to be addressed and the objectives to be accomplished. Unless you have clear, concise objectives, the session will lack direction and will become an exercise in futility.

Once the objectives are clearly stated, it is important to identify why the problem must be solved. This step involves compiling a list of benefits that would be expected as a result of resolving the situation at hand. It is suggested that benefits be clearly identified for:

* Customers, both internal and external
* The business
* The team

As ideas are generated and displayed, logical groupings will appear. When this happens, you should categorize them accordingly and develop appropriate headings. It is very important that you do not force topic headings. Experience shows that ideas from the brainstorming process often create more effective topic headings than you might otherwise consider. Besides, predetermined topics may curtail ideas and stifle spontaneity.

Possible Storyboard Layout

A storyboard can take on just about any shape imaginable. The free form and flexibility of the process make it fun and creative. Figure 1-2 shows just one possibility for a layout.

Well-formulated and active storyboards are sometimes creatively color coded so project status can be quickly and easily reviewed. For example, some teams have chosen to use red cards to signify overdue items and green to illustrate completion. Creating your own system is fun and helps build team ownership of the process.

Storyboarding Steps

Let's list the storyboarding events in chronological order for future reference. You may find it helpful to post a copy of the list to help keep your team on track.

1. State the problem.
2. Develop the purpose.
3. List the benefits of solving the problem.
4. Identify headers if appropriate. Otherwise, let the brainstorming results generate the topics.
5. Brainstorm and post all ideas.

Once the board is filled or ideas begin to dry up, take time to clean up the board by eliminating redundancies and by grouping cards as naturally as possible. Remember not to force anything.

6. Review each card to ensure the team agrees on its meaning.
7. Clarify and rewrite the cards if necessary.
8. Eliminate irrelevant or redundant cards. Cards may be removed only with team consensus.
9. Identify your top three or four ideas.

If team consensus can be reached on the list, then step 9 is complete. However, if consensus can not be reached, then you should use the multivoting process as explained in step 10.

10. Multivote for consensus. Each team member selects ideas from the list and votes as follows:

* 4 votes for first choice
* 3 votes for second choice
* 2 votes for third choice
* 1 vote for fourth choice

If a tie exists for any choice, vote again using only the top four ideas, including those causing the tie. Continue the process until prioritization is complete and no ties exist.

11. Examine each topic or header card and if necessary restate it as an action item. In other words replace the noun with a verb. If the topic is too broad, break it down into "bite-size" pieces you can work with. Remember the K.I.S.S. rule.

12. If subtier actions are necessary, post them under the header card. If there isn't enough room, use an adjacent space and make the link with color coded cards, string, yarn, or numbers on the cards. Use your imagination and whatever tools you have on hand.

13. Assign a completion date to each appropriate item. It's important that the person responsible for the item agrees with the date.

14. Post dates and the name of the responsible person on either side of the action card. Should responsibilities or dates change, the cards should be adjusted accordingly to maintain the accuracy of the board.

15. Sequence action items by date. This step is optional. It does require additional effort to move cards around on the board, but ordering events chronologically helps manage the implementation and completion of the projects.

16. As items are completed or become overdue, it is recommended that a color coding system be used to indicate project status, such as green for complete and red for overdue.

Why Does CPI Work?

I suppose you're still wondering what makes this overall process different from other initiatives, why it works? With that question in mind, the objectives of this section are:

* To help you understand why CPI is not "business as usual"
* To distinguish clearly the differences between a "program" and a "process"
* To display the power and synergy of organized, skilled, and trained teamwork

To fulfill these objectives, we will address the following topics:

* Why programs fail
* Teamwork
* Ownership
* Team goals
* Real time application
* What do we absorb or retain?

Why Programs Fail

It seems we can always remember the names of programs that got started with some good idea in mind, but fizzled out after a while. Understanding why they failed and recognizing some common attributes can help you avoid similar pitfalls.

"Programs" usually are associated with kick-offs, hype, slogans, bells and whistles, and have little direct tie to business plans and goals. Sometimes they form a weak tie-in with the business mission if a well articulated mission statement exists. In general, programs usually leave you feeling that "All I have to do is wait this one out. When it dies, we'll be back to business as usual until another bright idea comes along." Sound familiar?

Teamwork

Webster's New World Dictionary defines teamwork as follows:

Joint action by a group of people, in which individual interests are subordinated to group unity and efficiency; coordinated effort, as of an athletic team.

One of the biggest problems I have run into when addressing this topic is that people really have trouble grasping the concept of teamwork. They seem to think they know what it is and they also seem to know the value of it. And people often think that they are operating as a team because they consider themselves good team players. However, there is more to it than that.

WHO ARE THE REAL TEAM MEMBERS?

The real working team consists of all those people from a product-related and/or process-related work area who are focused on attaining common goals. The most effective teams are composed of four to six basic members with ad hoc members added and changed as indicated by the process or dictated by the goals.

A typical generic team may look something like this:

* Sponsoring manager
* Coach-in-training
* Natural team member
* Natural team member
* Natural team member
* Ad hoc member
* Ad hoc member

Once the natural team is identified, it remains intact, functional, and permanent. However, individuals and focus may change over time. Some cross-functional teams have been put together for a specific purpose and then disbanded after they attained their goals. But since part of their cross-functional activity was to identify opportunities for natural teams, after the team was disbanded, its members helped spawn new teams, so the process lived on.

THE ROLE OF EACH TEAM MEMBER

Each team member is expected to:

* Be supportive
* Contribute
* Be creative
* Add value

Additionally, the sponsoring manager has some responsibilities the others do not. He or she must:

* Build bridges
* Remove obstacles
* Obtain and allocate resources
* Know when to lead
* Know when to follow
* Know when to get out of the way and allow team members to do their job
* Recognize and reward team accomplishments
* Turn mundane, unproductive staff meetings into productive and proactive team meetings.

The ad hoc team members have the added responsibility to:

* Provide outside resources that are otherwise missing from the "natural" team
* Give the team a view of their activity from the eyes of a customer or supplier
* Help ensure the team has complete ownership of the process

Coaches-in-training are unique because they are not only operating team members but they have also been singled out to continue the training and radiation of the process. Therefore, they should be able to:

* Transfer expertise and ownership from other coaches and the written materials to your business
* Support growth and radiation of the process
* Help groom new coaches
* Act as change agents to make CPI a part of the daily work life

Ownership

The word ownership has been used freely and without explanation thus far. For this reason, and because you and your team cannot accomplish anything without having ownership, it's necessary that I share with you how to perform the test tor it.

The ownership test was devised after many years of experiencing success and failure and recognizing some simple, but very key elements associated with those successes and failures. The test will help ensure that you have all resources and requirements necessary to be successful in meeting your goals.

There are five criteria:

* Responsibility to do the job
* Authority to make decisions
* Skills to meet the challenge
* Accountability to complete the task according to plan and schedule
* Recognition of what the team has and plans to do

Once the process you will be focusing on has been identified, the ownership test can be used to make sure your team has the necessary resources to truly own the process. The test must be applied continuously to determine validity of current team composition and the requirements for ad hoc members.

Team Goals

Team goals are a natural outgrowth of the goals of the individuals on the team. As individuals, each person has an opinion of what is important and what should be done. We are all different, so of course personal goals differ. As a team it is most important to identify a set of congruent goals that can be embraced as a team. The importance of this cannot be stressed enough, because unless a team pulls together toward a common goal, the team will be pulled apart by the individuals trying to attain their own pet goals.

Webster defines a goal as:

An object or end that one strives to attain.

I like to think about a goal as:

A vision of what you want to happen.

If you can see it, you can accomplish it, and I've found that if you can turn a common team goal into a vision of what the team wants to accomplish, then it will happen.

Following my definition of a personal goal, I like to think of a team goal as:

A common vision held by a group of individuals.

Real Time Application

As I mentioned earlier, the co-op technique of learning led me to believe that it had far-reaching value extending beyond the educational world. Believing that, the co-op philosophy was used to translate classroom education into experiential real time application.

Experience with the technique has proven that immediate meaningful application of skills increases retention. It also illustrates the benefits of using the skills in the work place.

I recall my wife recounting her experiences in training to be a registered nurse. The students were first introduced to a new patient care technique in the classroom, but this was immediately followed by practice under the guidance of an experienced nurse or doctor. Students were advised of the benefits of administering the technique as illustrated and practiced, and were warned about the consequences of applying an unauthorized or unproven technique. In the medical field there is no room for error and the results are often irreversible. If we were to act with similar care and forethought in the business world, we could avoid many of the errors we carelessly make and reap more of the rewards our customers can provide in the form of repeat and new business.

What Do We Absorb or Retain?

We learn by reinforcing what we have been taught or through self-discovery. The degree of retention is a function of our involvement. I borrowed the following information from a General Electric training brochure developed in 1986. I searched for the origin of the information but was unable to locate it to give proper recognition. In any event, the results of the many teams seem to indicate that we absorb or retain:

* 10% of what we read
* 20% of what we hear
* 30% of what we see
* 50% of what we hear and see
* 70% of what we say ourselves
* 90% of what we do ourselves

Without statistical data to support my conclusion, but after watching teams work together through learning and implementation of the process, I would expect that the retention and absorption spectrum is stretched above the 90% level. A graphical illustration of this discussion is shown in Figure 1-3. Teams have found it helpful to post this diagram in an obvious location as a reminder and reinforcement. Our three children have found the concept quite useful in high school and college. They were able to devise their own form of team learning. They found that by teaching each other the concepts they knew individually, they could transfer their knowledge, thereby both helping each other and also reinforcing their own understanding and application of a new concept or technique.

What Makes CPI Continuous?

Before you get to your first Real Time Application Assignment, there is one last item to address. That is the topic of what makes CPI continuous.

The objectives of this discussion are fourfold:

* To identify the key ingredients required to make CPI continuous
* To help you better understand your role and the role of the other team members
* To introduce the improvement habit
* To begin formulation of team meetings and development of productive meeting habits

To accomplish these objectives we will address:

* Commitment
* "Natural" teamwork
* Team planning
* Linking your process to business plans and goals
* Making meetings productive
* The improvement habit
* Proof that it works
* Team identification

Commitment

CPI will work only when each and every individual makes a personal commitment to:

* Personally seek improvement
* Support team goals
* Support and embrace the ground rules
* Fulfill customer expectations
* Make the methodology a way of life

Each person must want to make it work. It seems there is always "one in every crowd" who tries to make life difficult for those around them. I've found that these people take the longest time to buy in but they end up being some of the staunchest supporters. These are the "doubting Thomases" who must be led, shown, and convinced every step of the way. Experience has shown that they always come around. One of my colleagues, Paula Wright, loves to tell the story about a middle-level manager who dominated one initial training session. He loudly complained that the training was too slow, too fundamental, and an obvious waste of time. After being involved in the initial part of the process, he openly confessed that he had grossly misinterpreted the power of the simplicity and logic he initially saw. He became, and still remains, one of the pillars of CPI in that business.

I had a similar experience early on with a quality assurance manager. He had always questioned and, to my chagrin, constantly tested the contributed value of training and education. Once he convinced himself beyond any shadow of doubt that the process had value, he became a sponsor for the initial business implementation. After each semester of training, a meeting was held to give all teams the opportunity to present their initial results and their plans for continuing their improvement activity. At the meeting following the third semester of training, he publicly announced his support and commitment to the process in front of an audience of approximately 120 people which included the customer. The following was printed in the local newspaper:

"CPI," says the manager of Quality Assurance and Test, "is by far the best and most useful tool I've ever seen. Almost everyone who has worked with it will say the same thing."

"The first two rounds had us initially using it on new processes," he explained. "Now we're digging into processes as old as the Department. Now, when you want to try something new, it's like making a revision to the Bible."

It takes commitment like this from all levels of management and from the team members alike to make CPI truly a continuous process. As you progress through the text, you will be introduced to additional examples to help reinforce in your own mind that CPI works and to show you what it takes to make it happen.

"Natural" Teamwork

You will recall when we discussed who the real team members were, we identified generic titles and described the roles and activities associated with each. Those people who work together each day are best suited to identify, assess, and address the processes they use to deliver products and services to their customers. The innate power of "natural teamwork" is generated when these individuals join together in a common work area and with a set of common objectives linked to easily articulated and well-understood business goals. This power far surpasses the results of individual efforts or the reactive efforts of unfocused teams. Your personal experience will help reinforce this possibly unexpected result.

Team Planning

Planning is almost a sacred event to a team. If you don't plan your strategy effectively, you cannot execute with any anticipation or expectation of positive results.

Any of you who do woodworking will understand the phrase, "measure twice and cut once." Proper planning helps avoid errors and provides attainable and trackable events in your problem-solving process.

Team planning is a fundamental requirement for attainment of team goals. It takes a lot of effort to ensure plans are congruent and you have team buy-in. Execution of a well-organized team plan which continuously focuses attention on streamlining and improving areas critical to your business will help assure continuation of CPI. In short, if continuation is part of the planning process, then CPI will be continuous.

Linking Your Process to Business Plans and Goals

Each team member and each team must be able to see the natural link between process team plans and goals and the top-level plans and goals of the business. If they are properly linked and aligned, then the focus will be common and the contribution of the team to the business can be articulated. It is at this juncture that this methodology can become part of the business infrastructure. Your earlier experience with articulating the mission statement of your business and understanding the plans and goals of your management team are the links I refer to. As you procede with the implementation process, the importance of this activity will gain more clarity and will be reinforced.

Making Meetings Productive

I'm sure you will agree that a tremendous amount of time is wasted in meetings. You would also agree that from time to time you have attended meetings that yielded positive results. It is the objective of this subsection to give you the tools to help make your team meetings as productive as possible.

The following guidelines are commonsense steps you should follow when preparing for, and when conducting a meeting. Modify the steps as necessary to suit your particular needs.

1. Know what you are going to do before you get to the meeting.

2. Come to every meeting prepared with previous commitments completed on schedule.

3. Begin on time.

4. Post agenda and time schedule at the beginning of each meeting.

5. Distribute copies of the action item list from the previous meeting.

6. Keep meeting on track and on schedule.

7. Record action items and responsibility. Distribute and post with your process flow diagram.

8. Prepare a plan and agenda for the next meeting. Determine meeting length in accordance with the agenda. Plan ahead!

9. End on time.

An unstructured, free-flowing meeting may also be unproductive. A well-managed meeting, where each individual has assigned roles and responsibilities, is more likely to proceed smoothly and without confusion.

The Improvement Habit

There are many ways to accomplish change. However, to effect a fundamental change in the way people think and act is not easy and cannot be achieved in a short time. It takes us many years to become the people we are and to develop the habits that are totally ours. Therefore changing such patterns requires a common focal point, something that everyone involved with can rally around and constantly remain attached to, and this will take time.

Earlier, I recounted conversation with a product assurance manager about the difficulties he encountered in trying to accomplish change in his organization. He suggested that people needed the "improvement habit." The idea stuck, and the sequential steps he outlined have become synonymous with CPI:

* Plan
* Act
* Verify
* Institutionalize

The improvement habit simply replaces individual procrastination with a "we-can-find-a-better-way!" team attitude.

When the process was being introduced into another business one manager offered the following observation, one not peculiar to that business alone:

"Plan, act, verify, and institutionalize" is a great idea. We can make it happen, but it's going to take a lot of effort because what we do now is plan, then we talk about it, then we procrastinate, and finally we have to cover our rears because we never took the time to do what we initially set out to do.

Continuous application of the improvement habit will enable your team to improve the processes in their "natural" work area on an ongoing basis. The graphical representation of the improvement habit is shown in the form of a wheel in Figure 1-4. It illustrates the unending nature of CPI and provides a simple picture to associate with the process. This is reproduced with the consent of GE.

Proof That It Works

Proof that CPI really works comes in testimonials from people using it and in some impressive bottom-line results. Several businesses reported $35 million in cumulative savings from eliminating unnecessary and nonproductive work during the first two years after CPI was introduced. Three testimonials by managers from those businesses are included for your information and as a baseline to test and gauge your progress.

When asked, "Does CPI have a positive effect on cost," the manager of quality and test previously quoted replied:

As a matter of fact it addresses what's called the "Iceberg Effect."

Little mistakes, let's face it, cost big dollars in the number of reports generated to correct them...the actions that have to be taken to turn them around.

That's why, if you save a buck through CPI, you're really saving six dollars or more through the hidden costs that will not be chalked up, thanks to the problem you've eliminated.

When asked to comment on the value of CPI, a manager of manufacturing engineering responded:

If you accept the "Iceberg Effect" of every dollar saved multiplying itself six times or better, that could amount to over $1 million. We think that's conservative. We can see CPI's demonstrated cost savings in shop and support costs.

The manager of production engineering from the electronics business referred to in the earlier case study had these comments:

In the matrix and screening area we obtained a 5% yield improvement in combined efficiency. In addition, we hit a twenty-two-year high in matrix efficiency and we never did that before. Involvement of people who used to just sit back and watch, plus these results, is proof that it's working.

The following project summaries will give you an idea of the various types of improvement projects teams chose. Your team will have an opportunity to make a similar summary after your initial project has been completed. The summary sheet gives you an idea of the expectations that need to be fulfilled and the progression of steps required to complete a project.

Project Summary A

TEAM FOCUS:

Supplier process

AREA OF OPPORTUNITY:

This team was established to address the process used to control suppliers. Vendor-supplied hardware had become the largest single item of cost on major contracts. Adequate control of suppliers was essential to meet management objectives.

PROBLEM STATEMENT:

The team identified the time delay of issuing design changes as the first area they would address. Through process flow diagraming and statistical data analysis, they arrived at a problem statement:

It takes four to six weeks for an issued alteration notice (AN) to get to our supplier base.

ACTION PLAN:

Analyzing the process flow diagram revealed that most of the steps were redundant when compared with the "AN" approval process. A cause and effect analysis showed that much time was lost due to delays in the internal mail system. The team developed a new process flow and reduced the number of steps from 106 to 7. This flow required electronic sign-off and the co-location of some support organizations, both of which were being planned. The team was able to ensure their requirements were included as part of the overall plan.

VERIFICATION OF RESULTS:

The team conducted a timing study to determine the effectiveness of the changes. The new procedure reduced the "AN" cycle from four to six weeks to two days. Relocation of support units continues.

INSTITUTIONALIZATION PROCESS:

Training for the support organization was implemented concurrently. Procedures were updated to reflect the new process flow and relocation of support units continues.

CONTINUING ACTIONS:

The team is identifying other areas of improvement with the new business-wide sourcing organization.

Project Summary B

TEAM FOCUS:

Shop Tooling and Setup

AREA OF OPPORTUNITY;

This was a natural work team responsible for shop tooling in a business that performs machining on virtually all major commodities they deliver. The setup and teardown of tooling has a direct effect on shop productivity.

PROBLEM STATEMENT:

The team's first project dealt with delays, not defects. After performing a statistical analysis of setup time, they arrived at the following problem statement:

Approximately one-third of the time to set up a job is wasted because fixtures, gauges, tools, and hardware are not available to operators.

ACTION PLAN:

The process flow diagram indicated a number of delays and "re's" in the setup cycle. A detailed structure tree identified 32 separate root causes. It was discovered that most of the causes could be eliminated by creating a central storage area where all fixtures, gauges, and tools could be organized in sequential order. The team established a detailed plan to implement this system within four weeks.

VERIFICATION OF RESULTS:

Since the team started measuring and tracking setup time, only minor improvement was realized. The plan to establish a new system was implemented with estimated savings of 1,700 hours per year.

INSTITUTIONALIZATION PROCESS:

The new system was documented and operator training was implemented. A monthly analysis of setup time was established to verify corrective action.

CONTINUING ACTIONS:

The team continued to address other setup issues including universal fixturing. In addition, they initiated a team to evaluate inspection procedures and fixtures and the way they are used.

Project Summary C

TEAM FOCUS:

Plastics and Bond Shop

AREA OF OPPORTUNITY:

This was a natural work team of people from the bonding shop. All products manufactured in this business require bonding, so virtually all hardware cycles through the bond shop. The process is lengthy, and if it is done improperly the entire product must be scrapped. High throughput with a low defect rate is essential to maintain product quality and meet customer delivery schedules.

PROBLEM STATEMENT:

The team conducted a "re's" analysis on their process flow diagram. A Pareto analysis of the identified re's led them to develop three problem statements:

1. From July 19 to September 10, 41 units were manufactured. No defects were recorded during any "in-process" inspections, which verify that a"certified" manufacturing operator has performed his task as specified. These "re-checks" increase manufacturing and inspection time by an average of 1.01 hours per unit, with no added value.

2. Forty-six percent of units bonded from fiscal week FW 30 through FW 36 required rework for minor damage, such as nicks, scratches, and burrs.

3. All bonded units demonstrate overall dimensional changes from prebonded dimensions. During the period from FW 44 through FW 46, 22.4% of the units bonded recorded dimensions beyond the acceptable tolerances.

ACTION PLAN:

The team addressed the first two problems during their training sessions. By creating and analyzing the process flow diagram, they eliminated 5 of the 17 steps, including three in-process inspections. They also conducted a Pareto analysis of the locations where minor damage occurs, to gain insight into causes of the damage. (Use of the Pareto analysis is addressed in Chapter 3.) This led to several minor changes in tooling and handling devices. Efforts on the first two problem areas were progressing well, so they started work on their third problem statement. A structure tree to identify root causes was developed to investigate specific potential causes.

VERIFICATION OF RESULTS;

Changes to the assembly instructions were successfully implemented, leading to a reduction in cycle time while maintaining a high level of product quality. After changing tools and fixtures, the number of damage defects was reduced from 1.29 defects per unit to.18 defects per unit.

INSTITUTIONALIZATION PROCESS:

Work instructions have been changed and unit inspection is now used to document the location of any nicks or scratches. This is correlated with other data to help identify problem areas.

CONTINUING ACTIONS:

The team continued to review other assemblies to eliminate non-value-added steps and they tracked recurring damage defects to identify root causes. As a result of continued attention to the process, a third problem statement was developed which logically led to a root cause analysis and subsequent problem correction and prevention.

TEAM FOCUS:

Project Summary D

Quality Data Systems

AREA OF OPPORTUNITY:

This was a natural work team involved with collecting and analyzing defect and inspection data on all production hardware which in turn was reported monthly to the customer. Any adverse trends or significant problems resulted in customer audits, inspections, and deficiency reports. It was essential that the analysis be timely and accurate to help ensure customer satisfaction.

PROBLEM STATEMENT:

The team developed a process flow diagram and conducted a "re's" analysis. Initially they felt that reprocessing inaccurate data was the major problem; however, their analysis showed less than 1% of the data was inaccurate. The more pressing problem was found to be redundancy between reporting systems. This led to the problem statement:

Inspectors are duplicating efforts by inputting similar data on the Inspection Input Module Sheets and the Electronic Direct Labor Computer System.

ACTION PLAN:

A root cause analysis of why the duplication existed showed the primary reason to be the nature of the forms used. It also indicated that some inspectors required additional training to be able to complete the forms correctly. The team established a two-phase plan. The first phase focused on eliminating redundancy between the two forms, thereby saving time required by the inspectors to complete them. The second phase incorporated all the required information on the current electronic form, thereby eliminating the need for the paper form.

VERIFICATION OF RESULTS:

When phase one was completed, reporting time per inspection was reduced by approximately one minute. This resulted in a direct savings of $85 per day, or about $2,040 per month.

INSTITUTIONALIZATION PROCESS:

Data fields for the new electronic form were established for integration into the next software update. A plan for a real time data retrieval system was developed and implemented with phase two.

CONTINUING ACTIONS:

In addition to monitoring phase two of the implementation plan, the team continued to evaluate the reports generated by the system to determine if they could be reduced or eliminated.

Project Summary E

TEAM FOCUS:

Electronic Assembly Shop

AREA OF OPPORTUNITY:

This natural work team was formed in the electronic assembly area, the critical path item for production programs. The area was plagued by high scrap rates, low productivity, and schedule delays. Dramatic improvement was required to meet contract schedules.

PROBLEM STATEMENT:

The team benefited from experiences of other teams when they began analyzing their process flow diagram and were easily able to identify non-value-added steps. They also decided to focus on defects. A Pareto analysis showed damaged grommets were their worst problem. This led to the problem statement:

During the past year, 50% of all cable defects were damaged grommets and connectors. These defects in turn resulted in rework and replacement costs near $27,000 in the shop alone (i.e., without Iceberg Effect).

ACTION PLAN:

The team analyzed the process flow diagram and eliminated non-value-added work. To reduce damaged grommet defects they developed a structure tree which identified grommet extractions as the primary cause of defects. This led to the discovery that tooling and manufacturing methods were inducing damage. Process changes to correct and prevent the damage were devised and introduced into the process.

VERIFICATION OF RESULTS:

The number of operations in the work instructions were reduced from 70 to 36 on the first cable that was studied. Since the various changes to grommet extraction procedures were implemented, the defect rate has been reduced from a high of 41% to 12%. The scrap cost has been reduced from $142 per cable to $29 per cable.

INSTITUTIONALIZATION PROCESS:

Work instructions and procedures were changed for the cable initially studied. Lessons learned were applied to all other cable harness assemblies. Training on grommet extractors was established to ensure that operators understood the new procedure and were trained to integrate the preventive actions into the daily work process.

CONTINUING ACTIONS:

The team continued to review all other assemblies in the area for similar work instruction simplifications. Since corrective action improved the grommet extraction process, they began to address the insertion process for similar improvements.

Project Summary F

TEAM FOCUS:

Final Assembly.

AREA OF OPPORTUNITY:

This was a natural work team from the manufacturing shop which performed final product assembly prior to customer review.

PROBLEM STATEMENT:

The team identified defects as the first area they wanted to address. A Pareto analysis of all defect data in the shop led to the following problem statement:

During September, the assembly package had an 89% reject rate at final inspection.

On average, there were 3.9 defects per unit. Including customer buy off, there were 5.2 defects per unit. Of' all the defects, 60% were attributed to damage (nicks and scratches.) The cost of rework per reinspection and support was estimated at $10,000 during this time period.

ACTION PLAN:

A structure tree analysis helped identify manpower and methods as the main causes of damage. Analysis of the process flow diagram identified 11 unnecessary steps in the assembly sequence. In addition several tools and fixtures were identified that could damage the units. The actions taken included (1) streamlining of assembly work instructions, (2) modification of seven tools and fixtures so that they would not damage the units, (3) clarification of work planning and inspection procedures to eliminate confusion among operators, and (4) devising methods to catalog and track recurring defects.

VERIFICATION OF RESULTS:

The number of defects per unit had been reduced from 5.2 to 1.3. The number of damage-related defects decreased from 3.7 to 1.6 per unit. The rework and reinspection costs had dropped from $10,000 per month to $3,400 per month.

INSTITUTIONALIZATION PROCESS:

Work instructions and procedures were changed and a new method for recording recurring damage-related defects was implemented. Lessons learned in this shop were applied in other shops.

CONTINUING ACTIONS:

The team followed through by working on the assembly with the next highest defect rate and conducted a similar process flow diagram analysis. The method for recording defects helped identify an area to be studied with structure tree methodology.

Team Identification

You have one last piece of work to do before you actually begin the implementation process. That is, you must clearly identify your team. You can look at this as the initial step in making meetings productive. Use your imagination when selecting a team name. You can be mundane and simply relate a team name directly to a process or product or you can be creative and dream up something more fun, but still appropriate. This is a good place to use your brainstorming skills. Again, remember to have fun.

Real Time Application Assignment

This marks the beginning of the implementation process where you can practice all the skills you have learned thus far. Your first assignment is not designed with skill application in mind. Rather, it will allow you to begin the process on your own and then enable you and your team to build progressively from this base. The objective is to have you begin building a list of opportunities to improve your work area. When developing your list, consider:

* Pet peeves
* Things you've learned to live with
* Things you've always wanted to do something about, but you could never get anyone to listen

After completing your personal list, keep it confidential. Later on you will share copies of this list among your team members.

Copyright © 1991 by George D. Robson

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