The Data Heads

I just got off the phone with Kris Deckard, the Director of Ready Indiana. Ready Indiana is my state’s effort to help Indiana businesses “Engage, Elevate and Educate our Workforce.”  In the last few months we’ve seen a modest uptick in customers calling us from across the country with the news that they’ve received a training grant from some regional or state agency for training and workforce development. I wanted more of that, so I had tracked Kris down using Google.

These training grants seem like such a win-win.

I don’t think we have any customers who are over-trained; people will always be able to get more value out of a tool that they really know and understand.  Knowing more about the tool can translate directly into higher individual worker productivity and effectiveness. If you’ve been following my last few posts you know that that can turn into huge increases in throughput and quality, and huge decreases in downtime, rework, repair, and other wastes.

But in a recessionary economy, a lot of manufacturers are squeezing every gram of copper out of every penny they have. Training budgets are one of the first things to get slashed. So investing in training is one use of stimulus money that makes an awful lot of sense. Of course I’m biased, because the money eventually trickles down to me and enables me to create and retain jobs. Like I said, I wanted more of this.

Kris confirmed that American Recovery and Reinvestment Act (ARRA) does have substantial funds available for workforce development. Actually the buzz word these days is “Incumbent Worker Training”.

In Indiana there is a special grant called the Skill Enhancement Fund (SEF - these people seem to be huge believers in the wonder of acronyms). SEF will pay out up to $200,000 every two years to employers so they can train or retrain their workers.  The grants are especially supportive of manufacturers. Eligible training activities specifically mention “Quality-Assurance Skills: Skills that are intended to increase the quality of the company’s product (Statistical Process Control [SPC], Total Quality Management [TQM], ISO and QS).”

So if you’re one of our Indiana customers, contact me and I’ll introduce you to Kris. She’ll guide you through the application process maze.

Which brings me to the bad news, if there is bad news. There is no centralized clearing house for this information. It seems very regionally based. Actually Indiana seems progressive compared to some other states where grants are administered through regions that may be as small as a couple of counties. So navigating the maze may be difficult.

Have you checked what’s available in your area? What is your company doing to develop you and your staff? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

I’m working on a case study with one of my customers that I think you’ll be interested in. I’m just beginning to put it together now, but I thought you’d appreciate a sneak preview. I’ll let you know when the final article is ready.

Last fall this customer came to us with a sizeable integration and customization project. It came at a time when the financial and manufacturing world seemed to be falling down around us. I was, frankly, surprised that they wanted to spend that kind of money at the same time that banks and investment firms were collapsing, the stock market was imploding, and businesses were shedding employees like autumn leaves.

But we worked with him through our standard process of defining the project and formalizing a Statement of Work. We launched the project right around the new year. During that process, my customer agreed to meet with me in six months to do a post-mortem on the project. He said he’d be willing to open his books so we could evaluate - objectively - whether the project was paying for itself.

We finally got together last month - seven months after we finished our deployment. True to his word, he did open his books to me and demonstrated - with CFO-approved numbers - that he had paid for the initial investment in less than three months.

Many organizations look for a two-year payback. He had achieved his in an eighth of that time.

Now, seven months into the project, he had documented an ROI of 171%.

That got my attention.

We started by reviewing the work we had done with his team.  This was a truly collaborative effort. His engineers had done an exceptionally fine job of building the foundation for the project, and then worked with my staff to implement the solution. Together they did a fantastic job of automating and integrating a variety of work flows and data systems. The result was a streamlined process for tracking repair and rework processes across multiple departments.

It was the classic tactic of “reduce the cost of data”. I knew that going into the debriefing meeting. And I expected that the ROI would be based on the efficiencies gained by eliminating islands of data, removing duplicate data entry, and integrating disparate data systems.  I expected that he paid for the project by eliminating staff (I knew the company was going through a downsizing concurrent with our project) through automation.  Clearly we were helping this customer move laterally on the Data Cost / Value Matrix from expensive data to low cost data.

As we dove into the data, I found a number of surprises.

First, he didn’t eliminate any jobs because of this project. As he reduced rework he reassigned the rework staff to more productive activities. They shifted from non-value-added status (overhead) to value-added production staff.

Second, reducing the cost of the data contributed only about 2% to the ROI. It was such a puny number. I had expected reducing the cost of the data would account for maybe 50% or 60% of the cost savings.

The lion’s share of the ROI came from improved throughput. Cheaper, more reliable, and more accessible data enabled his staff to drive defects out of the process. Reducing defects increased first pass yield. This resulted in lower WIP (work in process), faster product delivery cycle times, and improved order to cash cycle times.

How are you looking at ROI? Do you ever understate (as I was tempted to do) the benefit you get from the value of the data? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.