NCES Conference

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NCES Conference

• July 25, 2002
• Washington D.C.

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Business Change Pressures 70-80s

• Intense increasing competition
• Rising costs
• Dissatisfied customers
• Organized in silos
• Slow No sense of urgency
• Huge waste high defect rate
• Poor quality AQL

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First Reactions

• Denial Were No. 1
• Protection and subsidies
• Anger Its the Japanese government, culture,
  MITI
• Its our unions fault
• Our employees dont care
• Customers dont care about quality
• Quality is too expensive

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When those responses didnt work,businesses
began to change

• Benchmarking trips to Japan
• A quality focus
• --- Quality tools (initially all Japanese)
• ---TQM, Baldrige
• Involvement, empowerment, teams
• Attention to customer satisfaction
• Use of cross functional processes

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• Speed time-to-market, just-in-time, simultaneous
  engineering
• Integrated operating systems
• Closer union-mgmt. relations
• Cycle time reduction and prevention of errors
  waste

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Cycle Time

• Elapsed time of any process from beginning to end
• From the time a customer places an order to
  delivery
• From the time a new product is conceived to time
  shipped
• Time from fabric production to wholesaler to
  retailer to customer
• From test taking to test results in the hands of
  a teacher

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Cycle Time Reduction CTR

• Cycle Time Reduction
• Rapid Response
• Re-engineering Value engineering
• Quality/Process Improvement
• Cost reduction Job redesign
• Process simplification
• Supply Chain Management

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Cycle Time ReductionQuick Response

• Roger Milliken held a meeting
• Chicago, June 1985
• Textile mills, Apparel manufacturers
• Retail stores, Warehouses
• To explore cooperative relations

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Quick Response

• Goal Shorten pipeline from Mfg. to Retail
• Strategy Synchronize entire supply chain
• from Mfg. to 4 big department stores
• Used bar codes EDI to link Millikens 55
• plants with suppliers and customers

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Quick Response Results

• Response time cut from 18 weeks to 3
• weeks from ordering to response
• All on-time deliveries
• 47 sales increase 30 increase in
• inventory turns gross margin
• Cut cycle time from inventory counts
• to replenishment by 50

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Quick Response Results

• Penneys working with Lanier Clothes and
  Burlington Mills increased sales by 59
  inventory turns by 90 in 5 months
• A dept. store cut purchase order time from 10
  days to 3 days

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Quick Response Results

• A fabric mfr. cut lead time from 8 weeks to 2
  weeks
• Levi Strauss stores, using LeviLink saw sales
  increases averaging 30
• A top mill cut its raw material inventory by 40
  million in lt 2 years

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Other Industries did the same

• Housewares, Footwear
• Health and beauty aids
• Consumer electronics, Hardware
• Jewelry, Food and Drug chains
• Home building, Toys, Tools
• Health industries, Chemicals

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CTR Results

• Home builder Contract to Deed
• 160 to 90 days
• Foundry and metal Fabrication
• Operations 10 weeks to 5 days
• Safety Lighting Make-to- ship
• 55 days to 34.3 days
• Insurance/Pre-funeral planning
• 90 days to same day or next

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Changes Required

• A war on all waste and errors
• An emphasis on speed
• Changes in transportation systems
• Processes flow charted in detail
• An emphasis on prevention not inspection and
  rework
• Involvement of suppliers customers, sometimes
  even competitors

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Changes Required

• Integration across organizations
• Sharing of information
• Top level commitment to connect
• Shifts in roles/responsibilities
• Agreement on info needed
• Parallel, not serial processes

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Fanatic focus on reducing waste and errors

• Rejects, rework, retest
• Turnover, Redundancy
• Firefighting/expediting time
• Equipment downtime
• Inventory Supplies, Products
• Inspection Re-inspection

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Reducing time

• Counting things Moving things
• Transporting goods/people
• Preparation time Getting tools
• Waiting time overtime
• Turning things on/off
• Idle time downtime
• Materials handling time

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Cutting Inspection Costs

• Inspection/Testing Outgoing
• Inspection/Testing Incoming
• Field inspection internal audits
• Reviewing letters and orders for accuracy
• Checking work of others
• Reliability testing

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Data Errors Rework Time Contract Services
Quality Costs Picked Up by Accounting
Quality Costs NOT Picked Up by Accounting
Waiting, Moving Things, Rework, Inspection,
Customer Complaints, Downtime, Duplicate Files,
Cleaning Bad Data, Idle Time, Absences, Turnover,
Reviewing, Sorting, Lost Documents, Invoice
Errors, Mail Delays, Coding Errors, Lost Records,
Software Bugs, Work Duplication
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Overcame objections barriers

• It cant be done differently.
• We cant change. Its not our culture.
• Were too busy right now.
• It isnt our problem its their problem
• We dont have waste
• The error rate is acceptable--its industry
  standard

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Used CTR Improvement tools

• Process mapping
• Ask Why 5 times
• Supply Chain Management
• NOAC, Just-in-time
• Cross functional teaming
• Complexity reduction
• Activity-based costing

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Improvement Tools

• Root cause analysis
• After Action Reviews
• Knowledge Mgmt Knowledge Sharing Communities of
  Practice
• Systems Analysis Data Analysis
• Zero defects Six Sigma
• Supply Chain Management

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Success factors

• A focus on waste and error reduction
• A mindset It doesnt have to be this way
• Challenge everything everybody every process
• Engage in prevention, not inspection/fixing
• Simplify. Simplify. Simplify
• Wring the towel dry. Then, wring it again.
• Seek cost drivers. Use activity-based costing.

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Success factors

• Start the journey to six sigma.
• Map the entire process flow--inside and outside
• Use supply chain management
• Collaborate across organizations
• Change transportation systems
• Involve all stakeholders

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• The largest and easiest gains in knowledge work
  come from redefining the task and eliminating
  what need not be done.
• Peter Drucker, 1992
• Managing for the Future

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Reduce Cycle Time and Increase Data Quality

• For Student Assessments