171 Red beads   The company as a system - Essential Lean 2014 01
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171 Red beads The company as a system - Essential Lean 2014 01

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I run the Red beads simulation as the basis for describing how any business is a system and the need to understand how it really works to manage it effectively.

I run the Red beads simulation as the basis for describing how any business is a system and the need to understand how it really works to manage it effectively.

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171 Red beads   The company as a system - Essential Lean 2014 01 171 Red beads The company as a system - Essential Lean 2014 01 Presentation Transcript

  • Concept of a System – Fundamentals of Lean Thinking Written by Francisco Pulgar-Vidal, fkiQuality fpulgarvidal@fkiquality.com 1/26/2014 171 Copyright fkiQualityLLC 2014 1
  • presents the Executive Education Series Discovering Lean and Deming 1/26/2014 171 Copyright fkiQualityLLC 2014 2
  • Goals of this presentation: Describe how any business is a system, and the need to understand how it really works.
  • We will cover these topics: 1. Red Beads simulation 2. Learnings from Red Beads simulation 3. The company as a system
  • 1. Red Beads simulation
  • Red Beads simulate a factory with a daily production quota. The simulation records the number of undesirable beads (red) in each work day.
  • Our production standard is: “no more than 5 red beads per day per worker”.
  • The Red Beads simulation runs over four days, involving several workers, inspectors and management.
  • Production Log and Worksheet Willing worker Akhil Sai Kaushik Dheeraj Srujan Anubha Narmada Shah Total Cumulative avg Production quality (# red beads) Day1 Day2 Day3 Day4 10 13 4 10 10 9 7 6 6 10 7 10 10 5 10 8 8 8 11 16 15 8 6 10 7 11 11 5 7 9 6 8 73 73 62 73 9.125 9.125 8.666667 8.78125 Total 37 32 33 33 43 39 34 30 281 8.78125 Stay employed * * * *
  • We did not meet the production standard and had to fire half of our personnel, the low-performing workers.
  • After participating, how do you feel?
  • Willing Workers still employed, tell us why, how did you succeed! • We were able to achieve consistency through hard work and dedication. • I succeeded because of my concentration: “it’s all in the wrist!” • We made sure mistakes wouldn’t happen over and over.
  • How well do these workers know the reason for their success? • They seem to believe in themselves and their own skills! • Who could blame them? • To avoid more pain, no feedback was requested from fired workers …
  • All-observers Feedback • • • • • • I felt nervous, tense. I tried to fix my mind on the goal. I wanted to know the logic behind this process. I wanted to find the standard procedure, to reduce variations. I wanted more beads to do a better job with the paddle. I think that the process could have been improved before it got to me. • I didn’t want to get fired. • I wanted to change the procedure to do the right thing.
  • Management Feedback • The cumulative average decreased in later cycles – we are improving! • There is need for more training to meet customer requirements. • We must change the tooling to do better.
  • How well does management know the reasons for the current situation? • Asking for more training and technology are sure bets … They can‘t hurt? Can they? • If given numbers, a person will try to see something … perhaps an improvement?
  • 2. Learnings from Red Beads simulation
  • Production Run Chart
  • Average Percent = Total red beads/(number of days*number of operators*50) = 281/(4*8*50) = 0.1756 Average = Total red beads/(number of days*number of operators) = 8.7812, approx. 9 UCL = Average + 3*SQRT(Average*(1-Average Percent)) = 16.85, approx. 17 LCL = Average 3*SQRT(Average*(1-Average Percent)) = 0.7696, approx. 1 Target = 5
  • SPC tells this is a system in a state of control. So, all recorded variation was random, not assignable to any causes. SPC: statistical process control, invented by Walter Shewhart.
  • Lesson 1: It's the system, not the workers. If you want to improve performance, you must work on the system.
  • Willing workers still employed are no more skilled than the workers laid off.
  • Laid off workers did the best they could in their given work environment, just like everybody else.
  • Lesson 2: Quality is made at the top. Quality is an outcome of the system. Top management owns the system.
  • Management reacted when no action was needed. A common error in the absence of knowledge.
  • Another type of error occurs when management does not react when action is needed.
  • Plus, management acted on the wrong production factor, the workers. Management went for what they could see, not for the root cause.
  • Management went for what they could see, not for the root cause. Any ideas what it may be?
  • Not understanding the behavior of its production system, management made the wrong decision trying to improve quality.
  • Lesson 3: Production standards can be meaningless. What is the impact of demanding no more than 5 red beads?
  • The number of red beads produced is determined by the process, not by the standard.
  • Lesson 4: Rewarding or punishing the workers had no effect on the outcome. Extrinsic motivation is not effective.
  • Lesson 5: Use a quality control chart to look for problem areas and predict future performance.
  • We can predict that the average will continue to be about 9 red beads per day.
  • Lesson 6: Rigid and precise procedures are not sufficient to produce the desired quality.
  • So, just providing training and communication is a false solution. Besides, who does as told?
  • Lesson 7: Keeping the business open with only the "best" workers was acting on "superstitious knowledge.”
  • Workers still employed were wrong to believe that their skills were a success factor. • We were able to achieve consistency through hard work and dedication. • I succeeded because of my concentration: “it’s all in the wrist!” • We made sure mistakes wouldn’t happen over and over.
  • Superficial, “superstitious knowledge” has started! This is what many call “experience.”
  • Laid off workers ignore even the true reasons why they were laid off. Everybody loses.
  • Participant feedback indicates that management overreaction can kill the joy in the workplace.
  • • • • • I felt nervous, tense. I didn’t want to get fired. I tried to fix my mind on the goal. I wanted more beads to do a better job with the paddle. • I wanted to know the logic behind this process. • I wanted to find the standard procedure, to reduce variations. • I wanted to change the procedure to do the right thing. • I think that the process could have been improved before it got to me. I don’t like this work arrangement. I want more control over my daily work life. I feel tricked by others.
  • Joy in the workplace is key to innovation and improvement. It is also healthier. See 170 Fundamental of Lean Thinking, slides 55-59.
  • Management insights… Were they real or perceived? What about recommending more technology or training?
  • There was no real reduction in the number of red beads. It was just the natural variation of the process. Superstition wins again!
  • Lesson 8: Management was influencing the system by rewarding and punishing the workers.
  • Lesson 9: People are not always the main source of variability.
  • What about raw material quality? … the equipment in use? … the methods followed? … how things are measured? … and what gets rewarded?
  • Lesson 10: Slogans, exhortations and posters are at best useless to the worker.
  • 3. The company as a system
  • A system in operation may show a great deal of variation. Use SPC to identify which variation indicates problems and which does not.
  • This is a stable production system Number of red beads vary, but stay within natural limits.
  • This production system is not stable A special cause produced this excessive number of red beads.
  • 22 red beads indicate an abnormal behavior. The special cause may be any of the components of the production system.
  • Manpower is just one of the components. So do not ask “who did it?”, rather, “why it happened?”
  • One of the two Toyota Production System (TPS) principles, seeks awareness of production problems.
  • Once found, teams ask “why this problem happened?” “Awareness” is a TPS principle called Jidoka or autonomation.
  • Fishbone diagram helps ask “why” – with a broad view
  • How to reduce the number of red beads? Target is 5 but historical average is 9. Use the fishbone to think broadly.
  • Expand your awareness: what about looking beyond our operation?
  • Be aware of all possible sources of excessive variation and poor quality. This may include suppliers.
  • Deming view of the company as a system includes value chain suppliers
  • Looking at suppliers does not excuse you from looking inside your operation first.
  • So, understand the capability of the system and do not ask for what is outside it.
  • This means, understand the concepts of systems and variation.
  • If disappointed with results, work on making the system better. This is the work of management.
  • In summary, operations and businesses are systems made of many components.
  • For this reason, there is always variation in the daily work.
  • So, use SPC to tell the difference between normal and abnormal situations.
  • And avoid reacting to what does not matter and ignoring what matters.
  • This is a step toward awareness of your own business. This is a key Lean principle.
  • References: • • • Out of the Crisis, by W. Edwards Deming, 1982 Four Days with Dr. Deming, by William Latzko and David Saunders, 1995 Suckcess, by Allen Fahden.
  • Next presentations will discuss: • Constancy of purpose. • Quality built-in, not inspected. 1/26/2014 171 Copyright fkiQualityLLC 2014 73