Management

Manual data collection at end of shift

Oct 24 2011

A management perspective on data quality

Prof. Mei-chen Lo, of National University and Kainan University in Taiwan, worked with Operations Managers in two semiconductor companies to establish a list of 16 dimensions of data quality. Most are not parameters that can be measured and should be considered instead as questions to be asked about a company’s data. I learned it from her at an IE conference in Kitakyushu in 2009 and found it useful by itself as a checklist for a thorough assessment of a current state. Her research is about methods for ranking the importance of these criteria.

They are grouped into four main categories:

  1. Intrinsic. Agreement of the data with reality.
  2. Context.  Usability of the information in the data to support decisions or solve problems.
  3. Representation. The way the data is structured, or not.
  4. Accessibility. The ability to retrieve, analyze and protect the data.

Each category breaks further down as follows:

  1. Intrinsic quality

    • Accuracy. Accuracy is the most obvious issue and is measurable. If the inventory data says that slot 2-3-2 contains two bins of screws, then can we be confident that, if we walk to aisle 2, column 3, level 2 in the warehouse, we will actually find two bins of screws?
    • Fact or judgment. That slot 2-3-2 contains two bins of screws is a statement of fact. Its accuracy is in principle independent of the observer. On the other hand, “Operator X does not get along with teammates” is a subjective judgment and cannot carry the same weight as a statement of fact.
    • Source credibility. Is the source of the data credible? Credibility problems may arise due to the following:
      • Lack of training. For example, measurements that are supposed to be taken on “random samples” of parts are not, because no one in the organization knows how to draw a random sample.
      • Mistake-prone collection methods. For example, manually collected measurements are affected by typing errors.
      • Conflicts of interest. Employees collecting data stand to be rewarded or punished depending on the values of the data. For example, forecasters are often rewarded for optimistic forecasts.
    • Believability of the content. Data can unbelievable because it is valid news of extraordinary results, or because it is inaccurate. In either case, it warrants special attention.

  2. Context.

    • Relevance. Companies often collect data because they can, rather than because it is relevant. It is the corporate equivalent of looking for keys at night under the street light rather than next to the car. The semiconductor industry, that established this list of criteria, routinely takes measurements after each step of the wafer process and plots them in control charts. This data is relatively easy to collect but of little relevance to the control and improvement of the wafer process as a whole. The engineers cannot capture most of the relevant data until the circuits undergo tests at the end of the process.
    • Value-added. Some of the data produced in a plant have direct economic value. Aerospace or defense goods, for example, include documentation of their production process, as part of the product. More generally, the data from commercial transactions, such as orders, invoices, shipping notices, or receipts, is at the heart of the company’s business activity. By contrast, the organization generates data to satisfy internal needs, including, for example, the number of employees trained in transaction processing on the ERP system.
    • Timeliness. Is the data available early enough to be actionable? A field failure report on a product that is due to problems with a manufacturing process as it was 6 months ago is not timely if this process has been the object to two engineering changes since then.
    • Completeness. Measurements must come with units of measure and all the data describing who collected them, where, when, and how.
    • Sufficiency. Does the data cover all the parameters needed to support a decision or solve a problem?

  3. Representation

    • Interpretability. What inferences can you draw directly from the data? If the demand for an item has been rising 5%/month for the past 18 months, it is no stretch to infer that this trend will continue next month. On the other hand, if a chart tells you that a machine has an Overall Equipment Effectiveness (OEE) of 35%, what can you deduce from it? The OEE is the product of three ratios: availability, yield, and actual over nominal speed. The 35% figure may tell you that there is a problem, but not where it is.
    • Ease of understanding. Management accounting exists for the purpose of supporting decision making by operations managers. Yet the reports provided to managers are often in a language they don’t understand. This does not have to be, and financial officers like Orrie Fiume have modified the vocabulary used in these reports to make them easier for actual managers to understand. Engineers using cryptics instead of plain language make technical data more difficult to understand.
    • Conciseness. A table with 100 columns and 20,000 rows with 90% of its cells empty is a verbose representation of a sparse matrix. A concise representation would be a list of the rows and columns IDs with values.
    • Consistency. Consistency problems often arise as a result of mergers and acquisitions, when companies mash together their different data models.

  4. Accessibility

    • Convenience of access. Data that an end-user can retrieve directly through a graphic interface is conveniently accessible; data in paper folders on library shelves are not. Neither are databases in which each new query requires the development of a custom report by a specially trained programmer.
    • Usability. High-usability data, for example, take the form of lists of property names and values that you can easily tabulate into spreadsheets or database tables. From that point on, you can select, filter and summarize it in a variety of informative ways. Low-usability data often comes in the form of a string of characters that you first need to parse, with character 1 to 5 being one field, 6 to 12 another, etc. Then you need to retrieve the meaning of each of these substrings from a correspondence table, to find that ’00at3′ means “lime green.”
    • Security. Manufacturing data contain some of the company’s intellectual property, which you need to protect not only from theft but from inadvertent alterations by unqualified employees. But you must also provide security effectively so that security procedures do not slow down qualified, authorized employees accessing data.

Prof. Mei-Chen Lo’s research on this topic was published in The assessment of the information quality with the aid of multiple criteria analysis (European Journal of Operational Research, Volume 195, Issue 3, 16 June 2009, Pages 850-856)

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Dashboard assembly stations

Oct 23 2011

Why production matters

On LinkedIn Lean Business Process group, Ralph Bartelmann asked the following:

Is it really the matter to squeeze the last cent out of production ? In many environments production costs represent a minor part of the over all product cost. Following Pareto reasoning it seems more reasonable to work on other parts of the value stream like supplier developpement, product design etc. What is your opinion and experience ? What are the real challenges ?

Following is my answer:

It’s not about what production costs  but about what it does for the business. Improving production is about making is faster, better, safer, less tedious,… and cheaper.  It needs to be faster to make you more responsive, better so that production does not introduce defects that harm your reputation, safer and less tedious so that you can retain your work force and grow its skills.

If you improve on all these fronts, guess what? Your costs go down, and not only in production but in other parts of the value stream too, because they are not independent of production. For example, there is no point in trying to develop just-in-sequence suppliers unless you practice leveled-sequencing (a.k.a. Heijunka)  in your assembly line.

A manufacturing company ignoring production is an army ignoring combat on the grounds that more money is spent moving soldiers and keeping them supplied.

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To get to Dublin, you don't start from here

Oct 22 2011

Kaizen without prerequisites

Question from Pedro Burgos: You have an assembly line where ‘Standardized Work’ is not utilized. The operators have ‘work instructions’ and follow them. They do not miss steps. But there are differences between operators in how the work is performed in terms of sequence. All of them perform under takt time, some more than others. Due to ‘wastes’ of motion. You are asked to do a Kaizen to reduce inventory quantities and space. Inventory quantities on the production floor varies, some parts have 3 days of inventory, some have 2 days, some have 1 day (16 hours). The goal is a ‘kanban’ of 2 hours of inventory in the assembly line. Do you think is possible to do this Kaizen? (Discussion in the LinkedIn Global Lean & Six Sigma Network)

Your question reminds me of the old story about asking a farmer in the countryside of Ireland how to get to Dublin, and getting the answer that “you don’t start from here.” In fact, regardless of its current state, a production line can always be improved.

Looking further at the way you describe the challenge, however, several things disturb me. First, while Kaizen, meaning improvement, is always possible, “a Kaizen” seems to designate a Kaizen event, a project template which is not always appropriate. Second, your description suggests opportunities for productivity and quality improvement, but neither is stated as an objective.

A top-down mandate to use a particular method to pursue two goals like inventory and space reduction does not strike me as a recipe for success. Instead, someone needs to do the following:
1. Take a close look at this assembly line.
2. Identify improvement opportunities in all dimensions of its performance.
3. Select one or two to pursue in priority based on improvement potential, technical feasibility, and human feasibility.
4. Determine the project management approach based on content, rather than the other way around.

This approach is much more likely to achieve the desired inventory and space reductions, among other improvements, than just running a Kaizen event to pursue these objectives directly and exclusively.

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Continuous improvement from bolts to clamps

Oct 19 2011

The Role of Technology in Continuous Improvement

In an article on this topic in Industry Week today, Ralph Keller asserts that Continuous Improvement is focused on business processes rather than technology.

However, if you wrap tinfoil around the feet of a welding fixture to make it easier to clean, replace bolts with clamps on a machine to reduce setup time, or mount a hand tool on the machine on which it is used, it usually counts as Continuous Improvement but involves technical changes to work that I don’t think anyone would describe as business processes.

Yes, Continuous Improvement is done without expensive technology, but it does involve cheap technology.

Ralph Keller also reminds us that Continuous Improvement is not “rocket science,” which implies that it is easier. I agree that it is different, but not easier. I don’t know any rocket scientist with the skills to facilitate Continuous Improvement.

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Speaker competing for attention with laptops, reduced resolution

Oct 16 2011

Meetings, seminars, and laptops

Communicating face to face is supposed to be more effective than electronically. Yet it is common today to see professionals travel thousands of miles to be in the same room and then engage in parallel play on their laptops while one of them is giving a presentation. The speaker stands in front of tables arranged in a U, facing a wall of open laptops. The people behind are silent and focused, and seldom make comments or ask questions. They appear to be taking notes, but in fact, they are completing an unrelated budget spreadsheet, checking emails, or playing solitaire.

It takes the presentation skills of a Steve Jobs to successfully compete for attention with the rest of the world coming to each seat through the web, and most speakers do not have these skills, especially when in a foreign language, and it is also quite possible that the information they have to convey does not lend itself to an entertaining presentation, but today’s business audiences make no allowance for this.  The notion of giving each person a polite hearing, as taught in elementary school, is gone.

The intrinsic discourtesy of this behavior, however, is not the main problem. By providing escapes,web-connected laptops make badly-organized, boring meetings bearable, and allow them to continue unchallenged. Possibly the most tedious of all business rites, the regular staff meeting involves members of a department standing up one after the other and giving a status update on issues that are usually of interest only to themselves and the manager. Without laptops, some members would fall asleep and snore, and others would eventually rebel against this waste of time. And this would lead to a positive change. Wired in to their laptops, they don’t challenge the status quo.

A few years ago, cell phones routinely disrupted meetings,   with their owners leaving the room to take the calls, which were obviously more important than anything the people present in the flesh might have to say.  Today, cell phones disruptions are abating, as meeting participants usually comply with requests to turn them off, or, even better, to “turn them back on at the end of the meeting, so that they don’t miss their important calls.” The current situation with laptops, however, is not sustainable. It is a technology-induced problem, that technology may actually solve. Laptops are an endangered species, likely to be replaced with tablets that do not provide the same kind of visual shield as a raised laptop screen. Already today, people who bring iPads to meetings actually participate in the meetings, as doing otherwise would be too conspicuous.

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Jun 14 2011

Management Whack-a-Mole and the Value of Lean

On 5/24/2011, NWLEAN moderator Bill Kluck launched the richest, most vigorous debate in the 13-year history of that forum by asking members whether they were cost cutters or capacity enhancers. Over the following three weeks, 29 authors posted 68 spirited, yet courteous messages accessible from NWLEAN to anyone with a Yahoo! ID.  The contributors included several well-known authors and some of my favorite sparring partners. In alphabetical order, they were  Dan Barch, William Bowman, Robert Byrd, Abhijit Deshpande, Mark Graban, Jim Harrington, Jonathan Harrison, Rob Herhold, Blair Hogg, Gangadhar Joshi, Bill Kluck, Joachim Knuf, Ed Larmore, Paul Layton, Ted Mayeshiba, Jim McKechnie, Larry Miller, Joe Murli, John Nelson, Stephen P. O’Brien, Anthony Reardon, Tom Robinson, Sunita Sangra, Dale Savage, Patrick D. Smith, Tom Stogsdill, Mike Thelen, Chuck Woods, plus a few others who did not use their real names.

The message that started the thread was as follows:

“It seems more and more (especially in this recession!) that lean professionals fall into 2 camps:
– Cost cutters
– Capacity enhancers
There are some out there that are saying that you HAVE to cut costs, or you’re not getting lean.
There are others that say lean is about improving capacity, so you can enhance the customer experience.
Which are you, and why? Is this driven by the top of your organization, people who may not understand what lean is? Do we risk becoming cost cutters, or smoke-and-mirror guys?
Just askin’!

Bill”

Although I didn’t participate initially, it was clear to me that the effect of a successful Lean implementation was limited neither to cost cutting nor to capacity enhancement. Instead, I see Lean as the pursuit of concurrent improvement in all dimensions of manufacturing performance, but I had already shared my thoughts on this matter in Lean as the End of Management Whack-a-Mole. Management Whack-a-Mole is the game illustrated in Figure 1, in which managers  boost performance in one dimension at the expense of the others, shifting focus every few months without ever achieving a genuine overall improvement.

Figure 1. Management Whack-a-Mole

Several of the early posts, however, prompted me to  jump into the fray and respond on a variety of topics, initially as follows:

  1. People trained in Finance and Management Accounting have had their shot at running US Manufacturing from the 1950s to the 1970s, with outcomes that should make them modest about the value of their approaches.
  2. Companies that have grown through Lean include Toyota since 1950, Wiremold from 1991 to 2000, and many others that are not publicized. A successful Lean effort helps Sales in specific ways, as, for example, when more flexibility enables Manufacturing to accept a sample order for a new component by a customer, who then designs it into his own products and becomes a major OEM.
  3. Cost reductions are a by-product of Lean but not its primary purpose. Manufacturing is a competitive sport, and Lean a strategy that makes you a stronger player, and not just right now but in the long run as well. When you hire a top coach for a sports team it’s not to cut costs but to win games.
  4. ROI is just one ratio, invented at DuPont 100 years ago to report in a common form the activities of multiple business units. There is nothing magic about it, and, by itself, it certainly does not give a complete picture of the health of a business, as even finance people recognize.

This caused further exchanges with Robert Byrd, who wrote: “…The most basic concept is Profit = Price – Cost. The market dictates price, so we have the best leverage for maximizing profit through controlling our cost structure…”  My response:

Is this always true? What about situations in which time to market is of the essence? I remember a client that was introducing a new frozen food product. On one of our visits they had us taste the R&D prototype, which was delicious. Three months later, they had a jury-rigged production line making 900 units/minute. The line left much to be desired, but we could not argue with their focus on getting the product to market. During all that time, their focus was not on getting it done cheaply but on getting it done at all. Then they could go back and improve the line.

He also wrote: “…Which is best accomplished through the elimination of waste and problem solving…”  My response:

This is the key point. We have yet to encounter a manufacturing or service organization in which the details of how work is being done contains no improvement opportunity, and this is what most managers simply do not believe. They are trained to think in terms of “big pictures,” and look for cost cutting opportunities like eliminating entire departments or reducing every department’s budget by 5%.

And finally: “If the aim is only to increase profit by reducing cost, without focus to grow the business, then the culture will never take root and only a short-term improvement will be realized. Or the company will never achieve it’s true potential.”

Your point does not fit in a 30-sec sound-bite or tag line. Good managers are able to monitor all aspects of performance at the same time, from growth to costs. But communication is tricky. For example, if you showcase ” Profit = Price – Cost,” what behaviors do you expect to stimulate, other than cost cutting?

In his second response, he added: “However, what was their business objective once they focused on improvement? I would venture to guess that it was focused on cost reduction.” My response:

I don’t recall them mentioning cost reduction explicitly. When the line first started, about 20% of the units were defective, and that was a focus of concern. Of course, quality improvements reduce costs as a side effect, but they also have other effects: quality problems have an impact on customer perceptions of the product because of variability among the units that are not defective.

In their other production lines, improvement was driven by marketing concerns. This was in Europe, and, in spite of the existence of the EU, frozen food packages had a different sizes by country, in addition to having labels in different languages. Based in Italy, they pursued quick changeovers in package sizes in order to be able to export to Germany, France, the UK, etc.

Their Lean program fit within their business strategy, but it is a stretch to say that this strategy was centered on cost reduction.

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