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| Developing Disciplined Systems for Excellence while Maintaining Operational Flexibility Don M. Owen, Jr., CQE 12th Annual Quality Audit Conference Reno, Nevada 6 - 7 February 2003 Developing Disciplined Systems for Excellence while Maintaining Operational Flexibility The Mannington Model Don M. Owen, Jr., CQE Director of Operational Excellence Mannington Mills, Inc. Salem, New Jersey 856.339.6114 don_owen@mannington.com Introduction (2) - Purpose of Discussion - To describe a comprehensive framework for organizing for excellence and to challenge the conventional role of the ISO Quality Management System in an organization where operational flexibility is a key component to a sustainable competitive advantage in a mature industry. - Don M. Owen, Jr. - Director of Operational Excellence Mannington Mills, Inc., Salem, NJ - Certified Quality Engineer since 1992 - BS Electrical Engineering (1988), MBA (1999) - Concentration in Strategy Formulation and Value Creation Topics of Discussion (3) - How has Mannington structured its organization and processes to be positioned for sustained excellence? - Look at the organization and a key business process - An auditor's first consideration is usually to audit for "systems compliance". But do auditors help the business "stay the course" strategically? - understanding and integrating concepts of strategy and other business "tools" into the ISO world - Can ISO systems be used to drive businesses to sustainable advantage over other ISO competitors? Operational Excellence & The Value Chain (4) - Firm Infrastructure - H.R. Management - Tech. Development - Procurement - Inbound Logistics - Operations - Outbound Logistics - Marketing & Sales - Service After the Sale Organizational Synergy (5) Executive Vice President of Operations Director of Operational Excellence Higher Level Framework (6) Strategy - Practices we employ - Design elements Vision - Where we want to be - Frameworks we use Values - Fundamentals of success - How we behave Slide 7 (7)  Winning Strategy (8) What is Strategy? The central purpose of strategy is, first, to identify opportunities to create disequilibrium, and then to protect and sustain those conditions as long as possible. This is the essence of long-term competitive advantage. Winning Strategy (9) - Imitation may be the finest form of flattery, but it is the worst form of strategy. - If you are not the leader, never play the game according to the rules the leader has set. - When everyone in an industry plays the game according to the same rules, no one wins! Not Strategic - Given! (10) People often confuse these "givens" as a strategic thrust. - Quality - Customer Service - Lower Manufacturing Cost - Must aggressively pursue reduction of costs on order of 8% - 15% per year or die as a business entity - Growth - Profit Value-Driven Strategy 1 (11) See Treacy & Wiersema, Discipline of Market Leaders [image] Customer Intimacy (12) - Culture - Client and field driven - Variation: "Have it your way" mindset - Organization - Entrepreneurial client teams - High skills in the field - Core Processes - Client acquisition and development - Solution development - Flexible and responsive work procedures - Management Systems - Revenue and share of wallet driven - Rewards based in part on client feedback - Lifetime value of client analysis - Information Technology - Customer databases linking internal and external information - Knowledge bases built around expertise Kano Model of Product Attributes (13)  Product Development "Have it Your Way!" (14) Scoping to Building Business Case (15) - Preliminary Product Definition - Preliminary Market Assessment - Preliminary Technical Assessment - Preliminary Business & Financial Assessment - Project Plan for Stage 2 It starts with Voice of the Customer (16)  Build Business Case to Development (17) - Detailed Market Assessment - Detailed Technical Assessment - Manufacturing Assessment - Product Definition - Business & Financial Analysis - Project Plan for next Stage (Development Plan) - MS-Project timeline - Resource requirements - Preliminary Market Launch Plan Development to Validation (18) - Technology protection (IP) strategy defined and underway - Detailed product specifications (locked) - Product regulatory plan defined and underway - Defined production process (with estimated costs and expenditures) or supply route - Up-dated, detailed Business & Financial Analysis (same as at Gate 3, only with up-dated and more accurate data) - Action Plans: - Project Plan for Validation, Stage 4 - Market Launch Plan - Production & Supply Plan Validation to Launch (19) - Locked product specifications - final - Commercially tested and customer-proven product - Completed actions SH&E (safety, health, environmental) and plant regulatory issues - Completed I.P. issues - Product approvals secured - Demonstrated manufacturability - Confirmed purchase intent Validation to Launch (20) - Final Production & Supply Plan - Up-dated Business & Financial Analysis - Complete Manufacturing/Operations Control Plan started in Stage 3 - Final Market Launch Plan - Post Launch & Monitoring Plan Manufacturing/Operations Control Planning Matrix (21)  "Column 1:" (22) - Column 1: Parameter: A process or product characteristic that is going to be controlled or monitored because of its relationship with an important product performance or cost feature. - Column 2: List the known or suspected product performance or cost characteristics you expect the parameter in column 1 to be related. - Column 3: Is this a product (i.e. color, weight, tuft bind) or process (i.e. line speed, oven temperature, roll pressure) parameter. "Column 4:" (23) - Column 4: Current Ppk/DPMO/Sigma Level: What is the current performance or capability of this parameter relative to specified tolerances (if applicable). - Column 5: Variables/Attribute: Is this parameter variables (quantifiable on a continuous scale) or attribute (quantified on a nominal or ordinal scale) data. - Column 6: What is the measurement device for this parameter. "Column 8:" (24) - Column 8: Manual/Auto: Is the data generated by an automatic measurement device, or is the measurement of the parameter performed manually. - Column 9: Expected Sampling Frequency: What is the frequency (i.e. once per hour, once per set-up, etc.) this parameter will be monitored. - Column 10: Expected Sample Size: When sampled, how many data (observations) make up the sample. - Column 11: Expected Charting/Monitoring Method: When sampled, in what format will the data be graphically displayed on a real-time basis. - Column 7: Gage R&R (P/T Ratio): What is the error, as measured as a percent of the specified tolerance for this parameter, contributed by the measurement system. "Difficulty to Control" (25) The DFSA Model assesses each parameter and assigns a value of 1 - 5 on an ordinal scale in the following dimensions: - Difficulty to Control - Frequency of Expected Change - Severity of Impact - Ability to Detect Movement of Parameter "Column 12:" (26) - Column 12: Who, or what function, is responsible/accountable for the monitoring of this parameter at the specified frequency. - Column 13: OCAP Developed?: Is there an investigation plan that has been developed in the event this parameter goes out- of-control. - Column 14: PCH Developed?: Is there a compensation plan for this parameter in the event the parameter either deviates, or must deviate, from its nominal or centerline value. Wise to Standardize? (27) Only if sub-optimization is the goal "The Manufacturing/Operations Control Planning Matrix..." (28) - The Manufacturing/Operations Control Planning Matrix is the matrix referenced in our ISO documentation with respect to controlled or monitored process characteristics - This matrix is a dynamic document that can be easily changed as our product and process knowledge increases and as performance improves - It is reviewed (along with other information) for continued validity at each ISO management team review meeting - Changes/updates are implemented immediately without necessitating a revision of the master Quality manual Strategy Driven Process Management Systems (29) - Strategic parameter evaluation methodology - Used for critical parameter selection, sampling scheme and control methodology determination - Focus on development of "turn-key" operations/process management systems - Do things differently from the competition... the right things! - Understand resources are fixed and scarce; More efforts will be aligned with the stated business strategy Strategic Intent (30) - There are costs associated with attaining a leadership position. - Only one company can sit in the leadership position for any given strategy. - Efforts that are not aligned with your strategy must be minimized, while efforts that are strategic must be optimized. - The "givens" cannot be ignored! Balanced Scorecard (31) - Provides executives with a framework that translates a company's strategic objectives into a coherent set of performance measures. - Presents managers with four different perspectives from which to choose measures. - Financial - Customer - Internal - Growth Balanced Scorecard (32)  Some Measures of "Operational Excellence" (33) - Distribution of Ppk or Cpk indices - Manufacturing Variances Roll-up - Distribution of Supplier Evaluations - Capacity Utilization - Six Sigma Black Belt and Green Belt training effectiveness - Customer Service Metrics - Schedule Conformance - Cycle Time Tracking - Product Development Cycle Time - Degree of "Hit" with New Products - Process Effectiveness What This Means (34) - When everybody is equal, everybody is poor! - Companies cannot win by merely rushing to a new level of parity. - Externally driven standardization breeds parity! - Frameworks for Excellence that cannot sufficiently incorporate strategic positioning will prove to be less than effective. - Any system that slows down our ability to respond quickly to our customers' needs will be eliminated. - We're not interested in merely auditing for compliance to standards, but to compliance with our strategy. Next Steps (35) - Auditors should be well versed in strategy and competitive positioning assessment and be able to identify system inconsistencies within that context. - Auditors should also have experience with metrics outside of those typically thought of as "quality" metrics, specifically financial or market share related metrics. - Future standards can be enhanced by expanding scope of audit examination. - ISO management representatives should be integrated into strategy formulation process. - External auditors have to understand that individual business have to be unique to achieve long-term success. |
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