The Data Heads

With all the economic doom and gloom in the main stream media, let’s take time to celebrate Del Monte Foods’ Third Quarter Earnings report, which boasts a 14% profit increase for the third quarter.

In a Del Monte Foods press release, Richard G. Wolford, Chairman and CEO of Del Monte Foods, said the company’s aggressive focus on cost reduction is a key part of their strategy:

“The work we have done, combined with continued marketing and innovation investment and an ongoing, aggressive focus on cost reduction, position Del Monte to deliver our fiscal 2009 goals and drive shareholder value.”

During the Third Quarter conference call, Wolford provided more details: “We are focused very aggressively as a company on cost reduction programs and that’s key for us and we’ve got a good history of that, and we plan to redouble our efforts there and that’s going to be important for us going forward. Our target is 2% to 3% of costs, and we’d rather see a three handle on it, and so would our operating guys.”

This dovetails nicely with this news story describing how Del Monte’s Milk Bone Division used GainSeeker Suite to drive a 3% improvement in performance across all packing lines.

Congratulations to the entire team at Del Monte.

How does this compare with your 3rd Quarter profitability? Please comment, schedule a conversation, or call us at 800-958-2709.

Since writing the series of posts about calculating OEE, I’ve been thinking about how you can best use OEE data to drive improvements in throughput and profitability.

Recently I showed this OEE Dashboard to a customer.

He said to me,

“Evan, this is exactly what I’m looking for. Today we’re collecting OEE data on paper and in spreadsheets. It is so cumbersome because we have to compile and massage the data, and by the time we actually see a problem it is too late to do much about it. If we could display this on the plant floor and people could react right away, it would make a huge difference.”

I have no doubt that he is absolutely right: making the data visible in an understandable form will make a huge difference.

Here is the “Yes, And…”

Yes, making the data visible has a positive effect. And with the right tools you can convert that data into knowledge about your organization so your people can focus their efforts on the right things.

Here is a new video I’ve just posted on YouTube that walks you through how you can drill into OEE data for more knowledge.

What do you think? Would being able to visualize and drill into OEE data like this be useful at your plant? How would you use this?

Please comment, schedule a conversation, or call us at 800-958-2709.

As I talk to people in many different businesses, I’m often amazed at how much time they spend extracting, massaging, and scrubbing data for analysis and reporting. I call this “The Data Shuffle“. A friend of mine at Minitab calls it “The stuff we do that we call our job.”

My informal surveys of Six Sigma Black Belts and Green Belts tell me that there is often a 20:1 or 25:1 ratio of massaging and scrubbing data to analyzing that data. And Six Sigma people aren’t the only ones doing the data shuffle. I’ve seen it in all kinds of environments and for all kinds of reasons.

Any way you look at it, The Data Shuffle is not value added activity. It is a business cost that enables better communications with customers and better business decisions.

So why might you not want to show this post to your boss?

Because if you’re doing the data shuffle this post points out that the data shuffle can be eliminated through automation, and that part of your job can be eliminated.

And in this economy I’m guessing you don’t need any more reasons to have your boss eliminate your job.

So what can you do instead?

OK - here is the gutsy move:

Start by studying this matrix:

(You can read more about the Cost Value Matrix.) Chances are good that if you’re doing the Data Shuffle, you’re down in quadrant D where the cost of data is High and value of the data is Low.

There is also a good chance that right now your company is very interested in reducing costs. If we automate the Data Shuffle we can shift towards Quadrant C.

So take this matrix to your boss and say something like:

“Look - I know the company is interested in saving money. The economy is tightening up all around us and we need to lean out operations so we’re more competitive… blah blah blah.”

Then say: “I know how to cut some significant Non Value Added costs out of our system. I can help you do that, but if I’m successful, it will eliminate part of my job. Instead of working myself out of a job I’d like to invest this freed time in helping the business make better use of that data. By making better use of the data we can reduce scrap and material costs, improve customer satisfaction… blah blah blah. In other words, I want to help us move up to Quadrant A.”

This gives your boss three options: business as usual, or eliminate the data shuffle and your job, or eliminate the data shuffle and free up time to do more important and value added work. If he chooses business as usual you might want to keep your resume up to date because of the way the economy is going. If he chooses to eliminate the data shuffle and your job, you will at least have learned how to eliminate the data shuffle and you may be able to take that skill into a new business that will appreciate the value of moving to Quadrant A. And if he chooses to reinvest in you and in process improvement, everybody wins.

So give me some feedback: How much time do you spend on the Data Shuffle today? How would this strategy work in your organization?

Recently a colleague forwarded this email from a friend of his and asked me for my comments:

Please let me know what lean/6sigma book you would recommend. I’ve read a couple over the years but they are a bit dull and won’t fire up our management - is there one that is simple but convincing?

You’d be surprised how hard it is to get their heads out of the sand. Part of the problem is that we are so successful and dominant in our field.

e.g. At a major meeting last week, the exec responsible for customer satisfaction presented data to show that our competitor is the leader in terms of quality and customer satisfaction. He actually said “we don’t want to copy THEM because their margin is lower than ours so their quality is costing them money”. That’s how dumb and simplistic we are.

My response:

The problem you’re facing is way too common, and I don’t think there is any pill you can give your CEO to adjust his attitude. This isn’t what you want to hear, but until your CEO’s hair is on fire, I don’t think there is any book that will make a difference.

If you can find some smoke somewhere above the hairline, and then tie that back to quality and customer satisfaction, you might get somewhere. Sadly there is usually a huge disconnect between the ceo/finance function and quality/performance. Here is an true example:

I’ve been working with a customer (an electronics firm) on a data collection/analysis project. A bright Six Sigma Black Belt proved a direct correlation between the statistically significant variation on a handful of test results and out-of-box failures at the customer’s site. These were units that met specifications on well over a thousand tests, but still failed out of the box. Those OOB failures were threatening the contract: the customer was ready to pull the business.

We put together a proposal using SPC software to capture the signals so engineers would know immediately when they had a unit that was statistically different than the others (even though it still passed all the tests). It was a beautiful solution and everyone was really excited about it.

To sell that proposal to upper management my contact bypassed the (to me) obvious argument that identifing statistically significant variation would isolate defective units, which protects the customer from receiving bad product, thereby saving the contract.

(I can hear all the MBBs in the audience saying I’m not really using statistics right, but they were doing 100% testing here so pardon me.)

Instead my contact framed the proposal around faster product release cycles and the impact that would have on inventory turns. By having real-time data as the units were produced, he argued that they would be able to release production lots from WIP to Inventory 3 or 4 hours earlier. That was an argument that got the finance guy and the CEO excited.

I tell this story because it is an example of how a creative (read politically savvy) middle manager pushed through his agenda for quality process improvement using language that any  CEO understands. No book on SS or TQM or anything else would accomplish the same thing.

So look for smoke above the hairline. Something is keeping your CEO awake at night, and unless it is his girlfriend, you can probably tie it back to quality and customer sat.

Hope that helps, and best wishes.

Regards,

Evan

Even though the CEO and CFO didn’t care, in the first 10 days of the pilot project, GainSeeker real-time SPC software trapped two defects that the test process couldn’t catch. My contact reported: “Three defects in a year is enough to knock us out of ‘Preferred Vendor’ status. Anytime I stop two defects from getting to this customer, I’m a happy man.”