Volume 24 March 25, 2003
Message From Charles Loew
Comments From Our Readers
New On The Maset Web Site
Helpful Hints from fellow Practitioners
New Truths on Quality
Feature Of This Issue
Second Feature Of This Issue
Coming in the Next Few Issues
Welcome to MASET News. A monthly publication dedicated to the communication between MASET and our many interested friends, customers and potential customers
MESSAGE FROM CHARLES LOEW:
I am very pleased to announce a partnership between Maset and PCI Global, a supplier of Project Management, Manufacturing Supervisory and Transactional Supervisory training programs. The strength of the PCI Global offerings include the ability to reduce training time and training costs by using simulations, providing a much stronger learning experience to the participants. They have four separate curriculums with specialization in the different areas. To fully understand their capabilities please see the description on our web site at PCI Global.
The feature article this month addresses the secrets behind the true Quality Companies. This article really emphasizes the value of enlisting every employee in attaining the vision of becoming a world class organization.
The second article in this month's Maset News deals with the hidden factories that exist in many of our businesses. The identification and elimination of these hidden factories will significantly reduce costs and increase profitability. When properly applied to your business, the two featured articles will help you in your journey to becoming World Class.
A new article written by Philippe Vaney, one of our associates, "Structuring a Manufacturing Process Technology Development Program for Success" has been added to our web site. With the cycle time for new product development becoming shorter and shorter, one needs to structure New Product Development and Introduction following a very strict process to insure the highest probability of having a successful product, product launch and finally a profitable business.
COMMENTS FROM OUR READERS:
"Thank you for the always enlightening and rich monthly news bulletins you provide us with. It is really a pleasure to be constantly updated with your innovative and inspiring ideas." - Jordon
"MASET News, Twenty-Second Edition Glad to see the China capabilities added." -Tennessee
"Thank you! I love reading this newsletter from you all. And, I pass it on to many grateful people." - Florida
NEW ON THE MASET WEB SITE:
We have significantly enhanced our capability in the area of Project Management. Please refer to the updated article on this Product and Service at Project Management - The Competitive Edge.
Four new curriculums have been added to our web site. The first covers Project Management, which includes full Project Management Certification. The second is geared to Project managers in the IT world and can be reviewed at IT Project Management.
The third & fourth curriculums cover training for first level supervisors. One emphasizes the Manufacturing field and the second is geared towards Financial Services Leadership.
We have also added a new course titled Crossing The Cultural Divide. This is an excellent workshop for global organizations or those who are considering becoming global. It also serves as an introduction to cultural differences and offers suggestions for interaction with individuals from different cultures.
HELPFUL HINTS FROM FELLOW PRACTITIONERS:
From one of our readers "Know what it takes to do every job yourself before you pass it on to others. Even a Managing Director should have a sound knowledge of various jobs that need to be done in the business. To be the big boss and not knowing what goes on along the line is the beginning of disaster" - Germany.
NEW TRUTHS ON QUALITY:
Quality improvements are made in small, continuous steps.
Both small and large Strides are needed to improve quality.
FEATURE OF THIS ISSUE:
The Secret Behind Quality Companies
Teams make an organization good, but individuals make it great.
By H. James Harrington
An organization will excel only when it taps the full potential of all the individuals within it, sparking their creative abilities and providing them with a high degree of personal self-worth and pride. As psychologist Abraham Maslow pointed out so long ago, people's first instinct is to survive. Once that need is satisfied, the desire for camaraderie and friendship - which membership in a team provides - becomes their top priority. But it's by means of self-actualization that people perform best. This isn't because they're driven to perform by promises, threats or praise but because excelling in their chosen jobs provides personal satisfaction and fulfillment.
Don't fool yourself; the job you have today is your chosen job. Everyone has options. It's you who decide whether to continue doing what you're doing. It's your choice, and you must accept your responsibility to excel at the job you have.
As Martin Luther King Jr. put it: "If a man is called to be a street sweeper, he should sweep the street even as Michelangelo painted, Beethoven composed music or Shakespeare wrote poetry. He should sweep streets so well that the host of heaven and earth will pause to say, 'Here lives a great street sweeper who did his job well.'"
For employees to perform effectively, management must provide them with the three T's: training, tools and time.
The three T's will get an employee to the starting gate. They're a requirement for good performance. To excel, an individual must build upon these basics, using individual creativity, pride and sacrifice as he or she reaches for self-fulfillment. The trick is to build into your present job personal challenges that will throw off the chains of boredom and mediocrity. What could be more boring than hitting a walnut with a stick and then running after it and hitting it again for eight hours a day? Put 18 holes in the ground and that boring task becomes golf, a sport that millions of people wait anxiously, and pay good money, to play.
I'm not suggesting that people invest their entire lives in their work. Everyone should spend time in each quadrant of life's arena: work, religion, family and self.
When it comes down to it, everyone spends time in the work quadrant in order to provide funding for the other three. The average hours per day devoted to work - from the time an individual leaves home until he or she returns - are 13 hours in Japan, 11.3 hours in the United States, 10.5 hours in Germany, 10.4 hours in France, and 10.2 in Great Britain.
Selling half of your life to support your needs should be enough without working additional overtime. As individuals, we must use our time effectively and creatively while at work, excelling in everything we do so that we don't need to work overtime. I doubt that you've ever heard a person lying on his or her deathbed say, "I wish I had spent more time at work."
Paul M. Schyve, M.D., vice president of research and standards for the Joint Commission, stated: "While the standards clearly emphasize systems and processes rather than individuals in health care, you cannot ignore the role that an individual professional's knowledge and skills play in outcomes. In the interest of driving out fear from an organization, you can't choose to ignore issues of individual competence. The standards represent the need to balance those issues."
Yes, you must have good processes and teamwork to get into the race, but when it comes right down to it, an individual's personal excellence makes or breaks an organization.
Kaoru Ishikawa, the man who started the quality circle movement in Japan, openly recognized that individuals were more productive and effective at solving quality problems than teams. The need to excel is an idea to which everyone can relate on a very personal, fundamental level. Excellence applies to everyone's occupation. The need to excel, to be the very best we can be, can't be imposed upon us. It can only come from within.
We all need to improve the way we perform our jobs so they don't interfere with the activities that occur in life's other three quadrants. At the same time, we must increase our value to our organizations, excelling at everything we do, so we can accept more responsible assignments and improve our financial status. To accomplish this, individuals must:
- Be educated to perform their assigned task(s)
- Understand their organization's business plan and how it relates to their jobs
- Understand how well they're performing
- Not be afraid to take risks
- Be willing to take on new assignments
- Be uncomfortable with the status quo
- Think creatively
- Be willing to share credit
Indira Gandhi said: "My grandfather once told me that there are two kinds of people: those who do the work and those who take the credit. He told me to try to be in the first group; there's less competition there."
Make excellence your way of life.
About the Author
H. James Harrington recently retired from his position as COO of Systemcorp, an Internet-software development company. He has more than 45 years of experience as a quality professional and is the author of 20 books. Visit his Web site at www.hjharrington.com.
Reprinted with permission of H. James Harrington. Article appeared in Quality Digest, December 2002, p. 14.
SECOND FEATURE OF THIS ISSUE:
Making Money by Working Smart
Hidden costs are really hidden profits.
By A. Blanton Godfrey
Years ago, Joseph M. Juran stunned senior management audiences by introducing the idea of the hidden factory. Having discovered that the waste caused by the cost of poor quality averaged more than 30 percent in most companies, he described them as having "hidden factories." It's as if the companies had two manufacturing plants that made products and one that produced scrap. Juran asked the executives to consider how much they could improve profits by finding their hidden factories and closing them.
He offered a simple example. A company has $1 billion in sales and 30-percent waste. Senior management wants the company to grow and double its profits; it's currently making 10-percent margins, or a profit of $100 million per year. They could double sales to $2 billion per year with the same margins and double profits. Or they could reduce their waste by one-third, from 30 percent to 20 percent and achieve the same profit increase of $100 million per year. Every dollar saved by reducing this waste goes straight to the bottom line.
This example was often met with skepticism by executives. But it is, in essence, exactly what many companies are doing today with Six Sigma quality initiatives. And it's what many companies did with total quality management, reengineering, kaizen or whatever their quality improvement efforts were named. Many companies have reduced waste by one-third or even more in a few plants or selected administrative functions or service operations, but very few have achieved these savings throughout the entire organization.
If these costs are eliminated, savings will flow immediately to the bottom line. Hidden costs are really hidden profits.
There are many reasons why these potential profits remain hidden. Perhaps the main one is that our accounting systems aren't designed to maximize profits. Most have evolved historically and were designed to ensure that proper taxes were paid, that shareholders received fair value for their investments, that laws were followed, and that various parts of the business were managed. Because accounting practices in large corporations are quite complex, many simplifications and approximations were devised. These included allocations based on labor costs, average costs for space, depreciation costs set by government formulae, standard charges for inventories and so on. Not only are most of these measures out of date or no longer applicable, but they're just plain wrong. They lead companies to make wrong decisions.
Examples abound. Once companies found that its standard practice of negotiating the lowest transportation costs meant that it "owned" its finished goods an average of 30 days instead of the seven it could achieve with direct shipments. Because the company's finished goods were specialty chemicals, the costs of carrying this high-value inventory an extra 23 days equaled 30 percent of the company's annual profit.
Other companies have discovered the hidden costs in labor turnover. One company that makes high-tech devices for consumer electronics and computers found that, on average, experienced employees produced five times as many items per day as employees with fewer than three months' experience. Yet this company had a 20-percent employee turnover. In its effort to keep salaries as low as possible, it was losing trained employees to competitors. But just as important, it was losing huge amounts of production.
Lost capacity is common in many companies. By minimizing raw materials costs, companies create downtime on expensive machinery. Many companies have discovered that by reducing downtime through proper preventive maintenance, correct raw materials and trained employees, they can gain 30- or even 40-percent capacity. For many companies this is like adding a new factory for free.
The good news is that solutions abound. Most were created for very specific problems. Some are so successful at reducing one particular type of cost that they become management fads. Examples include reengineering and business process quality improvement. There is so much waste in the white-collar side of business operations-the administrative rather than the manufacturing side-that reengineering had a huge impact on waking companies up and achieving spectacular savings.
Many years before, the same thing happened with reducing variation in manufacturing processes. The advent of control charts, and the ensuing near-religious fervor by companies to use them, was a direct result of the enormous savings those companies achieved by simply controlling variation in their production processes.
It's not hard to trace the advent of each of the many (perhaps hundreds) of tools in well-managed companies' quality toolboxes to the problems they were designed to solve. When first used, many of these tools had spectacular results. When applied to other problems, they either had little impact or failed completely. Sometimes they even did more harm than good.
During the past few years, analysts have begun to systematically identify waste in organizations. A science is emerging. We're now not only able to identify hidden costs far better than ever before, but also to begin matching the right tools for eliminating the costs with the actual problems.
About the author
A. Blanton Godfrey is dean and Joseph D. Moore Distinguished University Professor at North Carolina State University's College of Textiles.
Originally appeared in Quality Digest, November 2002, p. 14. Reprinted by permission.
COMING IN THE NEXT FEW ISSUES:
Ethics in Business
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