The Data Heads

Over the last few days we’ve posted information about an upcoming User Conference on our Events page and our Press Release pages.  Because this is a joint Hertzler User Group and Minitab User Group, I wondered briefly if we should call it a MUG HUG.  Too cheesy. (Detailed information and Registration here.)

Here is some more background.

I’m really looking forward to the conference for several reasons.

First, I’m pleased that two old friends will be giving presentations. Wayne Tollefsen (Omron Automotive) and Jamie Dobravec (Grayhill Inc.) have both been customers for years, and they always have interesting, real-world perspectives. I always learn something when I talk to them. This is the first time (I think) that I’ve heard either of them give formal talks.  They’re definitely worth hearing.

Second, I’m looking forward to sharing something about the learning path that I’ve been on in the last eight or ten months on Appreciative Inquiry. Appreciative Inquiry (Ai) is an exciting organizational change model that is based on the idea that organizations move in the direction of the questions that they ask. It is rich in philosophy and research, and has a well-developed methodology for application. In addition to describing my personal journey in Ai, I’m eager to explore the possibilities of learning together about the best practices for aligning strategy, culture, and tools to achieve optimal results.

Third, we spent the last year hard at work on the GainSeeker Suite Version 8.  We released Version 8 a couple months ago, and my business partner and Hertzler’s Alpha Geek, Byron Shetler, is going to share his perspectives on the new release.  If you’ve heard Byron speak before, you know you’re in for a treat. His insights and ability to bridge technology and the way people work are unique, and for a guy who claims to be uncomfortable up in front of an audience, he is a great communicator.

Finally, I’m looking forward to learning more about what our customers want from the integration between GainSeeker and Minitab. We formed a loose alliance with Minitab over 10 years ago because we didn’t want to get into the advanced statistics side of things, and Minitab is the most important app in that arena. We see the combination of GainSeeker and Minitab as far “more than the sum of parts.” Jay Bronec, whose company, QualiFine, is hosting this users conference, has been a strong voice for that synergy. Here is how Jay describes it:

“Back in 2000 I sponsored a conference highlighting the integration of GainSeeker Real-Time SPC with Minitab.  At the time it was clear to me that integrating these two systems increased the value of both tremendously.  A decade later this innovative approach still ranks at the top of my list of best-kept secrets to thriving in manufacturing. To get full value out of Minitab, a manufacturer needs to implement a real-time data automation solution like GainSeeker. I tell my customers to think of it like this, ‘If your best talent is too busy collecting, scrubbing and creating pivot tables to extract basic reports from Minitab, there’s little to no time left for making sense of the data. You’re reacting, not leading. In the current business environment, real-time data are essential for success.’”

Putting Jay, customers of both Minitab and GainSeeker, as well as people from Minitab and Hertzler Systems in the same room on the same day is a great opportunity to learn. I can’t predict what will come out of it, but it will be good.

Those are my top reasons for attending. What about you? Are you coming? What do you hope to gain? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

Yesterday my colleague Chris called me. “I just had a really interesting call from Bob,” he said. (Bob isn’t his real name. “Bob” is a customer who doesn’t want me to divulge his or his company’s name.) Bob’s company makes  packages filled with something that you can find in most grocery stores. They make a lot of these packages.

In one of my last conversations with Bob he told me “I’m almost embarrassed to tell you how much money GainSeeker is saving us by helping us reduce over pack (give away). The ROI on our deployment is shocking.”

We love it when we hear these stories – even if Bob won’t let me do a full-blown write up with all the gory details.

But Bob’s call to Chris raised an interesting question. Chris told me that Bob said he now believes they’ve been under-reporting the payback on his GainSeeker deployment. After six months or eight months of reducing over pack, Bob is discovering that his plant has made significant increases in yield.

He had been counting the savings realized by not giving away the product, but he wasn’t thinking about where the product he had been giving away was going.

It seems to me that the answer to this question hinges on whether the major constraint to his system is plant capacity, or demand for the product. If demand for the product is unlimited (we could sell every package we make) then any reduction in over pack goes into new packages and brand new sales. That is like picking up free money off the floor.

On the other hand, if the constraint on the system is capacity for production, then any reduction in over pack reduces the total cost of filling the package. If you have an order for 1000 packages and you can produce them in 7 hours instead of 8 hours, then you save one hour’s cost (energy, labor, etc.) and use less materials.

This reminds me of a chapter out of Goldratt’s The Goal. Do you remember when Jonah walks through the plant with the hero Alex and his team and discusses bottlenecks? They get to the heat treat area and the consensus among the team is that the parts waiting in the queue (WIP) are worth only a few thousand dollars. Jonah helps them realize that in reality those parts represent over a million dollars of revenue stuck in WIP. (p155-156)

I think Bob’s controller will have to weigh in on the final answer. What is clear to me is that Bob was delighted with GainSeeker Suite’s power to collect and analyze data so he could reduce material  costs and increase yields.

After I wrote most of this I had a chance to talk directly with Bob, and I learned a little more. He produces to order, not to stock, so improving yield does not lead directly to new sales. Improving yield means that he can produce the same output at lower costs. If the cost of over pack already includes all his overhead costs (energy, labor, materials) then I think it would be double-dipping to count increased sales. However, at some point it does seem that increased capacity would result in increased sales. He told me that last year he had the place open half the Saturdays of the year to meet demand. Now they’ve eliminated overtime and increased volume. Can he get his accounting people to recognize this? We’ll see.

What do you think? How are you tracking the ROI on your data efforts? How might GainSeeker help you? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

Recently I ran across the latest report by the National Association of Manufacturers (NAM) on the state of manufacturing in the United States. You can get your own copy of Manufacturing Resurgence – A Must for U.S. Prosperity.

Not surprisingly (given that funding for the report came from a manufacturing lobbying organization) the report finds that manufacturing fuels economic prosperity, that manufacturing in the U.S. is struggling in recession, and that the industry needs pro-growth policies to create jobs and remain competitive globally.

The report points out that the large trade deficit in manufactured goods and services exports are inadequate to pay for all U.S. imports. Supported with a dizzying recitation of statistics, the report details how U.S. indebtedness to foreign countries, particularly China, continues to rise.

The authors draw some comfort from the recent resurgence in exports due to a decline in the U.S. dollar relative to other currencies. “The responsiveness of exports overall to a fall in the value of the dollar is hopeful; it suggests that narrowing the U.S. competitive disadvantage can help restore the health of the industrial sector.”

A couple of specifics in the report caught my eye.

In the discussion on R&D investment, did you know that 19% of all R&D came from firms with 5 to 499 employees? Or that 85% of this was self-funded? This is an impressive statistic. “Small firm patents tend to outperform large firm patents using measures such as close link to research, originality and generality.”

The report also addresses energy use and global climate change. It calls for quick decisions about national policies on carbon emissions, arguing that a state-by-state patch-work of regulations makes compliance much more difficult. It also points out that “Using energy more efficiently will require innovation within the manufacturing process itself, but will also provide a market for manufactured products that will help reduce energy use for others.”

The report concludes with about a dozen policy recommendations that would support a resurgence in manufacturing in this country. Here are the highlights:

• Reduce the burden on corporate income derived from production and sale of U.S. made products.
• Invest in research and encourage business investment in R&D.
• Make the policy commitments to develop cleaner, more efficient, more sustainable fuel technologies
• Continue to improve our own education quality and accessibility to enhance our home grown pool of science and technology graduates and help in assuring foreign-born graduates that they have opportunities in the U.S. as well.
• Government at all appropriate levels should make infrastructure investment in transportation, communication channels and the energy grid.
• Reconsider the scope and definition of manufacturing used by government statistical agencies.
• Support the health of the manufacturing supply-chain.
• Establish tax (and other) policies that encourage the vibrancy of U.S. small businesses.
• Stabilize the financial markets and work toward developing a fully functioning financial sector.
• Facilitate a more strategic process for legal immigration.
• Follow a system of fairly-conducted trade that supports the expansion of U.S. manufactured exports using the international trading systems rules for governing a level playing field.

I encourage you to take a look at the full report. What do you think – would these programs help your business? Use the ShareThis button below to mark this page, leave a comment, schedule a conversation, or call 800-958-2709.

Recently I’ve been diving into some fascinating books. Almost none of them have been fiction. (Which is a departure for me – I like a good story. Moreover, if part of the job of a leader is to understand people, fiction is a great way to explore human nature.) My readings have taken me off the beaten track of “Outsourcing” or “The e-Mythl”, or whatever the latest hot business book is into some new and interesting territory. I’ve found myself in reading Wendell Berry, Ray Anderson, Barbara Fredrickson, and, most recently, Peter Block. Maybe in future posts I’ll offer reviews of some of these other writers. Today I’d like to share some thoughts on Peter Block and his 2002 book: “The Answer to How is Yes.”

Even before you open the cover to “The Answer to How is Yes” you realize that you’re in for a new perspective. The cover sports a photo of three rocks stacked on top of each other in a complete defiance of gravity. You wonder “How did they do that?” and then you remember the title. These photos crop up throughout the book and in the credits you learn they are the work of  California-based sculptor Bill Dan. Dan works only with found objects and a uniquely-focused mental state. Looking at these photos one begins to believe that almost anything is possible.

Block’s fundamental premise is that our world jumps too quickly to asking and answering “How” questions. By focusing on How? we invest our energies on what is practical, rather than what is really, no kidding, important. Block doesn’t say we shouldn’t ask or answer How?, but that we should delay those questions as long as possible so we can act on what matters.

Block identifies six fundamental How? questions:

• How do you do it?
• How long will it take?
• How much will it cost?
• How do you get those people to change?
• How do we measure it?
• How have other people done it successfully?

Sound familiar? I’ll bet that anyone who is reading this post makes their living – indeed has built their life – answering these questions.

Block turns that upside down. How questions, he argues,

“define the debate about the changes we have in mind and thereby create a set of boundaries on how we approach the task. This, in turn, influences how we approach the future and determines the kind of institutions we create and inhabit… When asked too soon and taken too literally [How questions] may actually postpone the future and keep us encased in our present way of thinking.”

Eventually Block admits that we need to answer those questions, but not before we answer some alternative questions, what he calls the Yes questions:

• What refusal have I been postponing? (The inverse of this question is “What have I said yes to that I do not really mean?)
• What commitment am I willing to make?
• What price am I willing to pay?
• What is my contribution to the problem I am concerned with?
• What is the crossroad at which I find myself at this point in my life/work?
• What do we want to create together?

And the bonus question:

• What is the question that, if you had the answer, would set you free?

Block explains:

“The Yes questions transform our inquiries into a deeper, more intimate discussion of why we do what we do. They bring us to the larger question…: ‘How will the world be different tomorrow as a result of what we do today?’ This kind of question brings our purpose into focus.”

Actually, these questions go together, as Block explains. When we shift from “How do you do it? to “What refusal have I been postponing?” we’re forced to face the fact that we can’t take on something new until we stopped doing something old. If we want to engage in change, we have to say no to something.

The Yes questions are not comfortable. They’re full of ambiguity and anxiety, and they force us to put ourselves on the line. They force us to take responsibility.

Scary stuff. But Block is relentless: shifting to Yes questions is an act of embracing our freedom, and claiming our responsibility for creating a world that matters. “Freedom is not doing your own thing, but just the opposite. It means we are the authors of our own experience. It means that we are accountable for the well-being of all that is around us.” Yes questions move us into accountability. How questions relieve us of that responsibility.

In Part 2, Block claims that we need to develop a foundation of three qualities to make full use of the Yes questions. These three qualities are reawakening our idealism, cultivating our ability to become more intimate with our environment, and our willingness to choose depth in the face of an ever-quickening pace of modern life. Block argues that we have “forsaken idealism for cynicism, forgone intimacy for consumption and virtual experience… and in an effort to go fast, we sacrifice depth.” And I love this statement: “When we lose idealism, intimacy, and depth, we function at a cosmetic level, pushed along by fashion, our of touch with our center, and we react as if we are the effect of the culture, rather that its cause.”

I wonder how many times I’ve heard a speaker at some business conference decry the difficulty of transforming organizational culture. Perhaps Block is onto something important here. Perhaps we have misunderstood our relationship with culture. What if we are the cause of culture, rather than its effect?

The last half of the book, Parts 3 and 4, explore the full implications of what it means to claim full citizenship in the world. By full citizenship, Block is not talking about citizenship in a nation or other political entity. He is talking about stepping up to full responsibility for the well-being of our world.

“We must act as if our institutions are ours to create, our learning is ours to define, the leadership we seek is ours to become.” With chapter titles like “Home School Yourself” and “Oh, by the Way… You Have to Give Up Your Ambition”, and (my personal favorite) “Your Boss Doesn’t Have What You Want”, don’t be surprised to find you’re on a wild ride. This section will shake up your view of the old command-and-control paradigm. Oddly I found the message more inspirational than threatening. I say ‘Oddly’ because as I’m well-practiced in the world of command-and-control. Instead, I find myself wanting to hand the book out to friends, family, colleagues, and customers.

Block concludes by developing portraits of four archetypes that we find in business today. Engineers and Economists dominate our current business environment. Engineers and economists have much to contribute to our world. But, Block argues, their values act to constrain our future, rather than create it. Under the guidance of engineers and economists, the future is much like the past, only more efficient. “Instead of creating a future, the economist and the engineer focus on predicting and controlling it.”

Against these archetypes, Block introduces the Artist. The artist archetype is least compatible with the business world because the artist thrives on surprise and emotion. The artist is, by design, a permanent outsider, and views commerce with suspicion. You can’t get much further polarized than the Engineer/Economist and the Artist.

Block’s fourth archetype is the one he sees as the model for leadership: the Architect.  The architect forms a bridge between the poles of Engineer/Economist and Artist. Architects bring the best of all worlds together: the aesthetic and ultilitarian; the subjective and the practical. The business leader as architect is a role for bosses and employees. The business leader as architect makes space for what matters, names the questions, initiates new conversations for learning, and designs strategies for empowerment, consent, and local choice.

You may feel the earth shake under your feet when you read “The Answer to How is Yes”. That’s a good sign that you’re paying attention.

What about you? Have you read “The Answer…” or any other Block books? What are your thoughts on his arguments (or at least how I’ve interpreted them?) Do you have any suggestions for “must-read” books?  Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

I mentioned in yesterday’s post announcing the release of GainSeeker Suite Version 8 that I have been working on a case study about the new report writer.

You can read the case study here, and download a PDF version to share with others.

A little bit of the back story:

This project came about during a training class we held for Valeo (the subject of the case study) early in the new year. During the class, Stacey (who is quoted extensively in the case study) made the comment “You’ll never find a kid who wants to grow up to be a data jockey.”  What a great comment.

Mel (the guy from our staff doing the training) was intrigued and scratched away at it. What did he mean by data jockey? Why had he become a data jockey? Who cared about the results of his data jockey work? What difference would it make if we could eliminate the data jockey work? What would it take to eliminate the work?

At the time, Version 8 hadn’t been released, and Mel had had only minimal exposure to the power of the new Dynamic Reports module. He came back and started asking his colleagues “So this is what they really want. Could Dynamic Reports handle it?” Dale, one of our senior developers whom I sometimes call Obi-Wan Kenobi, put together a prototype and we were off to the races.

In manufacturing circles it not at all uncommon to talk about “The hidden factory.” The hidden factory is rework. Another case study about our customer Titleist includes this analogy from the rubber and plastics industry:

Another benefit of reduced scrap is that equipment is freed to do productive work. A shop with a 5 percent scrap rate and 20 molding machines has one machine dedicated to making scrap. Using real-time production data to eliminate scrap is the equivalent of buying a new machine.

Working as a Data Jockey is a hidden factory in our offices. Like a machine producing scrap, it is not value added. Eliminating the data shuffle – freeing the data jockey – pays huge benefits to your organization. The case study outlines some of them.

What about you? What is your experience as a Data Jockey? What have you done to eliminate this hidden factory in your office? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

In a recent post I described the difference between the Voice of the Customer (VOC) and the Voice of the Process (VOP). I used a simple Input => Process => Output diagram to explain that both the VOC and VOP have an important role in evaluating our systems and processes. I said that it isn’t a case of one being right and the other wrong, or one being better or worse than the other. Both approaches have their place. But they are different.

It seems to me that the biggest issue comes when we confuse the two approaches.

I suspect someone is confusing the two approaches when they point to a control chart with subgrouped data plotted on it and say something like:

“When I see a point out near our limits then I know we’re getting close to going out of spec.”

On the surface this seems like a reasonable thing to say. And it must be reasonable because I hear it so often. So why do I get all worked up when I hear it?

(Because I do get worked up. I have a hard time not jumping up and down and raising my voice. )

“When I see a point out near our limits…”

The issue is that the point is the average of the data in a subgroup.

Lets look at a picture:

We’re looking at three subgroups of data.

What is your vote?
Specs are 25 plus or minus 5, we have no problem, right?
Specs are 25 plus or minus 1, we should worry, right?

Here is the actual data:
Sample A: 24.9, 25.0, 25.1
Sample B: 20.0, 25.0, 30.0
Sample C: 20.0, 20.5, 33.0

And here is what it looks like plotted on the same run chart:

Plotting subgroup averages on an X-Bar chart and then comparing those average points against the specifications is misleading. You’re blurring the use of VOC and VOP. Don’t stop using either loop – but don’t try to use them at the same time.

Have you ever seen the VOC and VOP loops confused? What issues has it raised for you? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

In the weeks leading up to American Thanksgiving and the rest of the holiday season, I found myself buried in a couple of projects related to the release of GainSeeker Suite, Version 8; and a course in Appreciative Inquiry. In the process, I got out of the blogging groove. (Version 8 is pretty cool. It includes some brand new modules that will help you get more value from your data, and make it even easier to use. More on the new version in subsequent posts. Likewise, I’ll write more about my interest in Appreciative Inquiry in the weeks and months to come.)

Now my editor at Quality Magazine is prodding me, so it is about time to get back in the rhythm, even though I still have some tasks on Version 8.

My last post at Quality Magazine on ‘Defining Quality’ (which was a revision of ‘What are they thinking…?’ published here) generated a number of thoughtful comments from readers. I really appreciate hearing other perspectives on the questions I posed in the post, especially this comment:

Only in the world of utopia are there processes with zero variation and where only Green or on target values are produced. In the real world you have to look at each process and determine the ability and cost required to reduce process variability. In some cases it may be more cost effective to use an inspection system (like a vision system) to inspect out defects, then it would be to reduce the variation that creates these defects. The rule I use is if prevention is not practical and if detection methods are effective and reliable, then the inspection method is the right choice. When detection is difficult or not reliable, then prevention efforts must be taken.

This got me thinking about a model for inspection that I’ve found helpful in recent years. Here it is:

Bear with me because this graphic still needs some explanation.

If you look at this carefully, you’ll see that it is a typical ‘Input – Process – Output’ diagram. If you look at it even more carefully you’ll see that it is there are two loops on the graphic. The question isn’t so much which loop is right and which is wrong. The question is: Which loop is primary? Which loop is emphasized?

Both loops start in the middle with an observation or a measurement. The right-hand loop is the Voice of the Customer. I’ve highlighted it here in yellow:

The right-hand loop compares the observation to the customer’s requirements and asks “Does this meet the customer’s requirements?” If it passes, you can ship the product. If it doesn’t, you have a couple of options.

If your product fails to meet specs in a manufacturing environment, your options are to Scrap, Rework or Downgrade the product. In a transactional world, your options are to Remediate, Replace, or Compensate. In either situation your options for response are always reactive and wasteful.

I see people tolerate this waste for all kinds of reasons. Perhaps there are other, more expensive issues that need to be addressed before this problem can be tackled. Perhaps the cost of getting rid of a problem seems too high. Perhaps they’re just used to it and can’t imagine any other way of doing business. Some of these reasons are probably better than others, and I’m really not here to pass judgment in this blog. The point that I want to be clear about is that the right hand loop – the Voice of the Customer Loop – captures waste and protects the customer. There is nothing wrong with that (actually there are some good things about it). But it doesn’t prevent the problems from recurring.

The left hand loop starts at the same place, but has a very different impact. This is the Voice of the Process Loop, highlighted here in green:

The Voice of the Process Loop also requires an observation or a measurement, but here is the crucial difference. Where the Voice of Customer Loop compared the observation against specifications, the Voice of the Process Loop compares the observation against what is expected.

On what do we base our expectations? Well you can guess that it isn’t a specification – or anything that is derived from a specification or a requirement.

We base our expectations on our past experience with the process. This is why we call it the Voice of the Process. The best way to tap into our past experience with the process is with the humble control chart.

The control chart tells us what we need to know about the process. If the data we observe shows no patterns, no shifts in mean, and no more variation than we’ve experienced before, then we have reason to conclude that the process is stable. Once we know the process is stable, then we can still ask ourselves “is there a way to improve (reduce) chronic variation? This can lead to improvements in the process or the inputs to the process.

If the process tells us that it isn’t stable, then we can (and should) address that. We can focus our efforts on improving the process or the inputs to the process.

Using the left-hand loop – the Voice of the Process Loop – is how you improve processes and ultimately reduce or even eliminate the need for the Voice of Customer Loop. In an ideal world our processes are well understood and stable, and we don’t need to check against specs because we know that we’ll always meet customer requirements.

In the meantime, we live in the real world. In the real world, inspections against specifications are a reality and will probably be around for a long time. They’re useful and I would be the last to advocate their complete elimination.

But they don’t lead to process or quality improvement, or to an elimination of the waste associated with failure to meet requirements. To get there you need to pay attention to the Voice of the Process. You need to stabilize your processes and then systematically reduce chronic variation.

Where is your emphasis? Which loop do you follow? What are the biggest challenges you face or have faced in shifting your emphasis to the Voice of the Process Loop? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

Last Friday evening I drove up two hours to Valpo University. The Business Department at Valpo has an annual lecture series, and this year’s topic was Sustainable Business. I have no real connections with Valpo, but when I got a notice about the lecture from an associate, I followed the link to a video clip about the keynote speaker, Ray C. Anderson. If you’ve followed my posts with the tag “Environmental Sustainability” you won’t be surprised that I made the trip.)

Anderson gave a compelling talk. He is an industrialist – actually an industrial engineer by training. His company, Interface Global, is a $1B carpet and floor coverings company. Fifteen years ago Interface began climbing what he calls “Mount Sustainability”, with the goal of meeting the United Nations definition of sustainability by 2020:

”Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

I really appreciated the fact that Anderson is rooted in the industrial world and is actually doing something. At the risk of oversimplifying it sometimes seems like there are two camps in the environmental debate: the environmentalists who have all the theories and spend their time throwing stones and distrusting the industrialists, and the industrialists who focus on “the message” and are mostly not doing much besides “greenwashing.”

Anderson had the passion of an environmentalist and the discipline of Six Sigma Black Belt.

His talk oscillated between the macro and the micro. On the macro level he addressed issues of species extinction, depletion of resources, and the burden of industrial waste. On the micro level he dove into details of specific projects (very Six Sigma-like) where his company has reduced energy use and waste, switched to renewable power sources, and taken responsibility for recycling their products at the end of the product life cycle.

Another thing that impressed me was the fact that there were probably about 100 undergrad business students who gave up their Friday night to come to an evening of lectures. How cool is that?

I bought Anderson’s latest book, Confessions of a Radical Industrialist. When he signed it we talked briefly about all the gap between his company and the manufacturers who didn’t seem to see beyond the end of the quarter, much less a five year plan, much less to the next generation. His parting comment? “One mind at a time. One mind at a time.”

I don’t think I’ve ever plugged a book before in this blog. I urge you to buy Anderson’s book, and watch some of the videos floating out there on the internet. Pass it around your office and to your CEO.

And he got me thinking about what’s next on Hertzler Systems’ sustainable business journey.

One mind at a time.

Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

Back in August I gave a sneak preview of a new case study that I was working on. Yesterday I finally completed it and published it on our web site. You can read the entire study and download a copy to share with colleagues.

My favorite quote?

“We can’t credit GainSeeker with all of these benefits. We still had to do the work. But we would never have been able to capture the changes we needed to make if we didn’t have GainSeeker. We’d never have been able to do any of this if we didn’t have the system. So truly it deserves the credit. GainSeeker is the tool that enabled our people to make the changes.”

Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.

This week at the Quality Expo I ran into an old friend who described a business transaction that left me shaking my head.

He told me about a company that went to their customer and negotiated a 10% price increase for the product they supplied. The customer agreed to it because the supplier was using the increase to fund new high-speed vision inspection equipment. The new equipment would enable the supplier to 100% inspect the product they’re supplying and guarantee that the customer would receive only good parts.

On the surface it’s hard to argue against that. Evidently the customer had been very frustrated with this supplier because they had had to put up with a lot of defects. They seemed eager to shift the effort to inspect and sort good from bad to the supplier, and were even willing to share in the cost. They must have felt 10% was a pretty good deal. (Given all the estimates out there that total cost of poor quality is 30 – 40% of sales, I can see how they could reach that conclusion.)

So why am I shaking my head?

If your definition of good quality is “no bad parts” then this is a perfect solution.

But “no bad parts” is only one definition of quality. And it is the wrong one.

Don’t get hung up on the “parts” language. At the risk of over-simplifying, it doesn’t matter if you’re talking about the diameter of a metal part, the time it takes to close a call in a support center; the amount of yellow ink printed on a magazine cover, the weight of peanut butter in a jar, or the sales of a particular product by a sales rep. All of these are processes, and all have targets and acceptable limits (specifications).

Regardless of the product or the service, “no bad parts” is a poor definition.

Maybe a picture would help:

What the graphic shows is that the green dot is our target and when our output is on target, it is the best that it can be. It also says that the further you get from target, the worse the quality.

“No Bad Parts” says that “Best” and “Fair” are the same. They’re not.

Think about this: A product that is at the yellow dot is closer to the red dot than the green one. It is closer to Unacceptable than it is to Target. When you’re out there in the boondocks of your specifications, you’re a long ways from target, and it doesn’t take much to push you over the edge.

A far better definition of good quality is “on target with no variation.”

Twenty-seven years ago W. Edwards Deming published his 14 Points to guide businesses “Out of the Crisis”. Point 3 of Deming’s 14 points was “Cease dependence on inspection to achieve quality.” My friend’s story tells me that we’re still depending on inspection to achieve quality. Is there any doubt that we’re still in crisis?

How about you? What examples do you have of inspecting quality into a product? How is it working for you? Use the ShareThis button below to mark this page, leave a comment, tweet me, schedule a conversation, or call 800-958-2709.