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Measuring Cost of Quality August 29, 2016

Posted by Tim Rodgers in Operations, Process engineering, Quality, Supply chain.
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I’ve always thought “cost of quality” was a great idea in principle. If you could take the costs associated with defects, field failures, returns, and warranty claims, and add the costs of inspection, testing, scrap, and rework, then you could get everyone’s attention.

Quality would no longer be some abstract “nice to have” thing, but a real expense category that could be monitored and managed. With an objective, quantitative model to view how much money is actually being spent because of poor quality and associated practices, you would be able to evaluate proposed improvement programs and measure their performance. You would have something concrete to discuss with design and production teams to compare with estimates of future sales and operating expenses, apples to apples. All of this would lead to informed, balanced, and better decisions.

It sounds great, but it’s a lot harder than it sounds. You may be measuring yields and defects and returns, but now you’ve got to measure costs.

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Are You Looking For Root Cause, Or Someone to Blame? August 15, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Process engineering, Quality.
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When I worked as a quality manager in my first career I was often required to investigate quality failures to determine the cause. There were times when it was pretty easy to figure out, but in an uncontrolled business environment it can be hard to identify a simple dependent relationship between cause and effect. There are usually multiple contributing factors. Sometimes a small thing (the cause) can become a big thing when it’s overlooked (another cause).

Most of the other managers I worked with didn’t have much patience with the complexities of root cause analysis. They wanted a simple, actionable outcome: this is the cause, and if we eliminate this cause then this problem will never happen again (right?), so let’s eliminate the cause. The people who were impacted by this quality failure want answers, and they want to feel confident that the business has taken decisive and effective action. They don’t want to endure an extended period of uncertainty and exposure to risk while the business figures out what to do in order to prevent re-occurrence.

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Quality Decisions in Hindsight July 25, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Organizational dynamics, Process engineering, Product design.
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For the last several years there’s been at least one high-profile case of quality failure that captures the attention of the business press for months at a time. Since late 2015 and early 2016 we’ve been watching to see if air-bag supplier Takata, iconic auto maker Volkswagen, and fast food chain Chipotle will survive their highly-publicized quality missteps. There’s always a lot of apologizing to the public, and a commitment to conduct internal investigations to identify and eliminate the causes of field failures. Senior management and boards of directors scramble to regain the trust of their customers.

I’m not at all surprised by the frequency of these events. What surprises me is that these events don’t happen more often. We should expect to continue to hear about similar catastrophic quality problems from otherwise reputable companies despite all the talk about six sigma and customer satisfaction, and despite all the investments in quality improvement programs. It’s the nature of business.

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Is This The Right Problem To Work On? July 11, 2016

Posted by Tim Rodgers in Management & leadership, Process engineering, Project management, strategy.
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The ability to prioritize and focus is widely praised as a characteristic of successful business leaders. There are too many things to do, and not enough time or resources to do them all, much less do them all well. Leaders have to make choices, not just to determine how they spend their own time, but how their teams should be spending theirs. This is the definition of opportunity cost: when we consciously choose to do this instead of that, we forgo or at least postpone any benefits or gains that might have been achieved otherwise.

One of the most common choices that we consider in business is between short-term operational goals vs. longer-term strategic change management. Some people talk about the challenges of “building the plane while flying the plane,” or “changing the tires while driving the bus.” Both of these metaphors emphasize the difficulties of keeping the business running and generating revenue under the current model while developing and implementing a new business model or strategic direction.

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Formulas Without Understanding February 22, 2016

Posted by Tim Rodgers in Education, Management & leadership.
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I’ve just started my second year teaching courses in supply chain management and operations management at two local universities. It’s been a long time since I was a teaching assistant as a graduate student, and my time outside the academic world has taught me a few things about educational objectives and what students really should be learning. One of the things I’ve noticed in my business classes is a tendency of some teachers and textbook authors to focus on formulas that give a “right” answer. I think that’s a mistake, and when we do that we’re not helping business students or their future employers.

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When You Neglect Operations February 1, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Process engineering, Quality.
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A few months ago I heard that one of the companies I used to work for decided to shut down a business unit. I wasn’t surprised, but some people might have been. They had a diversified product line and a hard-working sales force that maintained a high level of demand. Large customers were excited about the new products under development. The supply chain was well-established. What went wrong?

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Why Should a Supplier Work Harder For You? September 22, 2014

Posted by Tim Rodgers in International management, Management & leadership, Quality, Supply chain.
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A recent LinkedIn discussion addressed the question of the best strategy for dealing with poor supplier performance. A lot of the respondents seemed to advocate a punitive approach, either threatening the loss of future business if performance doesn’t improve, or combing through the terms & conditions in the contract for enforcement language. I’ve always thought that there’s a lot of similarity between managing suppliers and managing subordinates, and I wonder if some of these same people threaten their teams with punitive actions when individual performance doesn’t meet expectations.

I’m not a psychologist, but I’ve always been suspicious about the long-term effectiveness of threats. A supplier who works to avoid negative consequences may achieve a minimum level of performance, but probably not much more than that. If you expect your supplier to represent your interests when you’re not actively observing their performance, you have to provide a reason for them to do so. What’s in it for them? An ongoing relationship with future business? That assumes that the supplier actually wants or values your business, which is not a given, and that you are sincerely prepared to switch suppliers if you don’t get the performance you expect.

Two important questions to consider before threatening to switch suppliers are: (1) What is the switching cost, including the risk to current production? and (2) Is switching suppliers really going to lead to higher performance? Regarding the latter question, there’s an assumption that the supplier is the cause of the poor performance. Before changing suppliers you need to be confident that the same performance problems won’t be repeated elsewhere.

A supplier is more likely to behave as a partner if they get something more out of the relationship than money for services rendered. So, what do suppliers want? Here are some examples:

  • Large, well-known customers that they can use in their advertising to attract new customers. This is especially valuable for smaller suppliers that are looking for revenue growth.
  • Technical capabilities that can be leveraged to other customers. If the customer’s requirements drive the supplier to develop new technology, or higher levels of quality or throughput, then the supplier will be able to attract other customers.
  • Entry into new markets. Suppliers that focus on specific markets (e.g., consumer electronics, semiconductors, automotive, aerospace) are at risk due to economic and demand cycles. A diversified portfolio of customers and markets provides more stability.
  • Predictable demand for better asset utilization. Suppliers are just like any other business: they like being able to confidently plan into the future. This is so important that some suppliers are willing to give a discount if the customer is willing to commit to use a fixed level of their capacity over a period of time.

Most suppliers operate with very small profit margins, and if they are in a position to choose their customers, they have to consider the cost to service each customer. If you can’t give them a reason to value your business, then you shouldn’t be surprised or disappointed if they don’t go the extra mile.

The Danger of Quick Fixes September 17, 2014

Posted by Tim Rodgers in Management & leadership, Process engineering, Quality.
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I think it’s fair to say that most people make better decisions when they have more time. With more time we can collect more data, consult with people who have more experience, and weigh the alternatives before choosing a course of action. In the specific case of problem solving, we can propose alternate root causes and perform experiments to verify the cause before implementing a solution. This kind of disciplined approach helps ensure that the problem doesn’t reoccur.

The thing is that in business we rarely have enough time, or all the time we wish we had. All of us make daily, small decisions about how to spend our time and resources based on external priorities and internal heuristics. Some of us have jobs in rapidly-changing or unstable environments, with periodic crises that need management attention. Unresolved situations create ambiguity in the organization, and ultimately these situations cost money, and this cost creates pressure to do something quickly. There’s an emotional and perception component as well: it “looks better” when we’re doing “something” instead of sitting and thinking about it. After all, “you can always fix it later.”

Of course “fixing it later” comes at its own cost, but that’s often underestimated and under appreciated. It’s tempting to implement a quick fix while continuing to investigate the problem. It takes the pressure off by addressing the organization’s need for action, which is both good and bad. The danger is that the quick fix becomes the de facto solution when the urgency is removed and we become distracted by another problem. The quick fix can also bias subsequent root cause analysis, especially if it appears to be effective in the short term.

Please note that I’m not suggesting that every decision or problem solving effort requires more time and more inputs. I’m not advocating “analysis paralysis.” We’re often faced with situations where we have to work with incomplete and sometimes even inaccurate data that may not even accurately represent the true problem. Sometimes a quick fix is exactly what’s needed: a tourniquet to stop the bleeding. However, corrective action is not the same as preventive action. If we want better decisions and better long-term outcomes, let’s not forget that a quick fix is a temporary measure.

Teaching Students and Managing Subordinates August 29, 2014

Posted by Tim Rodgers in Management & leadership.
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Last week I finished teaching a class in project management at a local university. I’ve always planned to spend my time teaching as an adjunct professor after “retirement,” and this extended period of involuntary unemployment has given me the chance to pursue that plan a little earlier. It was a small class, only ten students. I enjoyed it thoroughly, and I think I did a pretty good job passing on some knowledge and maybe inspiring some of the students. I’m looking forward to teaching this class again sometime soon.

While reviewing the homework assignments and papers to prepare the final grades I’ve been thinking about the different kinds of students in the class and how they remind me of some of the different employees I used to manage.

1. The “literalists” are the students who really internalize the grading rubric and do exactly what was assigned, no more and no less. For example, this is a class that requires participation in on-line discussion threads between the classroom sessions, and the students are graded according to how often they post, including posting early in the week (instead of posting several times in one day). This is to encourage actual discussion among the students. The literalists do the minimum required number of posts, but miss the point about engaging with other students. They’re like the employees who want to know how their job performance will be measured, including what it looks like when they “exceed expectations,” but fail to understand how their performance fits into the larger picture. They don’t have the inner drive to learn more or contribute more, and they’re unlikely to exercise leadership, unless it’s something they’re going to be “graded on.” In class, they’ll get a good grade, but I wonder how valuable they’re going to be to their future employer.

2. On the other hand, the “generalists” seem to have a deeper understanding of the material, ask questions in class, and engage in the discussions, but don’t always turn in the homework, or turn it in late. They’re not going to get the best grade if I follow the strict guidelines of the grading rubric. They remind me of the rare employees who aren’t thinking only about how they’re going to do on their next performance review. Maybe they don’t care about external rewards like salary increases. They may be motivated by a desire to learn and grow and master new skills. These are the folks I used to really enjoy working with because they tended to take a longer view that was less self-centered. They could be inspired to take on more challenging assignments, including leadership positions.

3. The “strugglers” are the students who are really trying, but just can’t seem to get it. They turn in the work, participate in the classroom, make mistakes, sometimes get frustrated, and appreciate any help they can get. I like them because they try, and I look for ways to give them extra points for the effort. They’re not going to become project managers. This isn’t the right class for them, but they’re going to get through it, and I hope they find a different class or focus area that will be a better use of their talents and skills. I’ve managed people like that who are in the wrong job. Sometimes the organization can accommodate a change in responsibilities that will help these people shine, and if they can they’ll get a lot more out of these folks.

4. Finally, there are the “slackers” who don’t always show up for class, don’t always turn in the homework, don’t participate in class discussions, and generally aren’t engaged at all. They may or may not be aware of the fact that they’re not going to pass the class, and they may or may not care. When they get negative feedback and written warnings that they’re headed for a failing grade, there’s no response. I can’t “fire” these students, and there’s a limit to how much effort I’m willing to put into improving their performance. It doesn’t work if I care more about how a student is doing than they do. As with the strugglers, they will eventually move on to other things, but will they find something that inspires them? Do they have skills and inner drive, and what will it take to draw them out?

Anyway, as I said, these are some of my observations and comparisons. The classroom is a different environment than the workplace, and it’s unlikely that I’ll see any of these students again. The grade they get from this class or any other is not necessarily a reflection of how well they’ll do after they graduate or otherwise leave the university.

Quality Under Constraints: Making the Best of It July 9, 2014

Posted by Tim Rodgers in Management & leadership, Product design, Quality.
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Lately I’ve been seeing news reports that illustrate the difficult environment that most quality professionals operate in. Here’s one example: executives from the US Chemical Safety Board (CSB) were recently called to testify before the US House of Representatives Committee on Oversight and Government Reform to address recent, highly-publicized delays and whistle-blower complaints. Former board members and employees have described a dysfunctional culture where criticism of management is considered “disloyal.” Independent investigators have reported a large and growing backlog of unfinished investigations, a situation made worse by employee attrition. The former employees report a failure to prioritize the pending investigations, “nor is there any discussion of the priorities.” The current CSB Chairman cited a lack of resources in his testimony: “We are a very small agency charged with a huge mission of investigating far more accidents than we have the resources to tackle.”

Obviously the report of a dysfunctional culture at the CSB is something that should be seriously investigated and addressed. However, my interest in this story is the struggle to prioritize investigations, do a thorough job, and close them out while operating within a constrained budget and increasing workload. I think everyone has to deal with this kind of problem in their work: too much to do and not enough time or resources to do it all with the level of completeness and quality that we would like. The old joke is you can’t have cost and schedule and quality, you can only choose two.

However, people who work in quality feel this problem more acutely than most. After all, you can directly measure cost and schedule, but it’s a lot harder to measure quality objectively. Quality professionals deal with statistical probabilities and risks, rarely with 100% certainties. In most cases, all you can do is minimize the risk of failure within the given constraints, and make sure everyone understands the inherent assumptions.

A good example is the hardware product development environment. The release schedule and ship dates are often constrained by contractual commitments to channels or customers. If the design work runs longer than planned, as it almost always does when you’re doing something new, the time to fully test and qualify the design before going into production gets squeezed. This is the same problem that happens with teams that use the old waterfall model for software development.

Yes, you shouldn’t wait until the end of the project to start thinking about quality, and there are certainly things you can do to enhance quality while you’re doing the work, and sometimes quality itself can be a constraint (as in highly-regulated environments). However I contend that managing quality will always be about prioritizing; applying good judgment based on experience, and data, and statistical models; and generally doing the best you can within constraints. Ultimately our success in managing quality should be judged by the soundness of our processes and methods, and our commitment to continuous improvement.

For the CSB, these are the questions I would ask if I were on the House Committee looking into their effectiveness: What is the quality requirement for their investigation reports, and how well do they understand it? How much faster could they release reports if those requirements were changed, while still operating under a limited staff and budget? What is their process for prioritizing investigations? CSB management should certainly be changed if the work environment has become dysfunctional, but they should also be changed if they can’t articulate a clear process for managing quality within the constraints they’ve been given.

 

 

 

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