Plug The Leaks In Your Cash Flow

Can Small Businesses Afford Lean Six Sigma?

2007-06-10T08:33:00.000-07:00

A business coach recently sent me this email. I've included my response.

Hi Jay,

I have a client who is a small businesspaint distributorauto body shops, some house paint, etc., ~ $2 million in annual volume. He's expressed an interest in lean six sigma at his company after reading a couple of books on the topic.

To boost profits, your client will want to reduce:

delay (typically 95% of total turnaround time) - Use Lean
defects (wrong paint, wrong time, wrong customer, wrong quantity, inaccurate invoices, etc.) - Use Six Sigma
deviation (off-color, inconsistency, etc.) - Use Six Sigma

My understanding of lean six sigma is that it can take a significant investment to make it work, and I've only heard of large(r) businesses implementing it.

If you do it the Jack Welch way, you can spend a fortune on Lean Six Sigma.
(A lot of businesses that start this way end up abandoning Lean Six Sigma because this approach dilutes the results.)

If you do it my way, you only invest in solving mission critical problems, not training all colors of belts.
The difference is focus.

Remember my 4-50 rule: 4% of the business is causing 50% of the delay, defects and deviation.
You only have to fix the 4% to make breakthrough improvements in speed, quality and profitability.

For small businesses we offer a Lean Six Sigma Do-it-yourself System: http://www.qimacros.com/sixsig290.html.
We also offer telephone and email coaching at $175/half hour.

How small a business have you worked with, and have you worked w/this industry or type of industry?

I use LSS on my small business.
One consultant I know helped her father run his muffler shop this way so that he could compete with Midas.
I've done it with credit unions, aluminum manufacturers, hospitals, Federal Reserve, telephony of all sizes.

They all have the same problems: delay, defects, and deviation which can be solved with a handful of tools and methods.

Your client can sign up for our free Lean Six Sigma Lessons on line at: http://www.qimacros.com/freestuff.html.

Jay Arthur, the KnowWareâ Man, works with companies that want to fire up their profits by plugging the leaks in their cash flow using Lean Six Sigma. He is the author of Lean Six Sigma DeMYSTiFieD (McGraw Hill 2007) and the QI Macros SPC Software for Excel. train Black Belts and Green Belts, Jay wants you to develop Money Belts--people who can find and fix the leaks in your cash flow.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

Can Innovation and Six Sigma Coexist?

2006-11-25T07:12:00.000-08:00

Motorola, one of the champions of Six Sigma that got into trouble when it fell behind in the cell phone innovation race, has found a way to make innovation and Six Sigma coexist. With phones like the Razr, Motorola has recovered from a 15% market share to a 22% market share.

The efficiencies created by Six Sigma can free employees to do more innovation.

Innovation, by it's nature, is somewhat sloppy. Six Sigma can help ensure that the next big thing will be delivered in a flawless fashion and improved beyond the reach of copycat competitors.

Be an innovator and an improver. Don't settle for just one or the other. Do both.

Jay Arthur, the KnowWareâ Man, works with companies that want to plug the leaks in their cash flow using Lean Six Sigma. He is the author of the Lean Six Sigma Simplified System and the QI Macros SPC Software for Excel. While most consultants tell you to train some Black Belts, Jay wants you to develop Money Belts--people who can find and fix the leaks in your cash flow.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

Mistake-proofing Drunk Drivers

2006-10-02T05:43:00.000-07:00

According to Businessweek's October 9th issue, Nissan and Toyota are developing sensors and software to detect when a driver is drunk and then disable the vehicle. After watching a drunk driver plow into a stalled lane of traffic on a local interstate recently, it seems like a heck of a good idea.

They haven't quite perfected it yet; erratic drivers can trigger the safety mechanism. Knowing Toyota and Nissan, I'm sure they'll figure it out.
That's mistake-proofing.
How do you change your processes, product or service to make it impossible for humans to cause an error, especially a potentially fatal one?

Lean Computers

2006-09-13T05:27:00.000-07:00

Sun Microsystems' "One Touch" supply chain accelerates the configuration and delivery of network servers. Instead of building a basic server at one of their suppliers and shipping it to Sun for final configuration, the customized server is shipped directly to the customer saving Sun an estimated $20 million.
Speed and Simplicity
It's all about speed and simplicity. One Touch has enabled Sun to deliver products on time 95% of the time vs 85%.
What are You Doing?
How can you reduce many touches to one touch?
How can you reduce delay and improve on time deliveries?

Jay Arthur, the KnowWareâ Man, works with companies that want to plug the leaks in their cash flow using Lean Six Sigma. He is the author of the Lean Six Sigma Simplified System and the QI Macros SPC Software for Excel.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

Costly Battery Recall at Dell

2006-08-16T05:34:00.000-07:00

Dell recalled 4.1 million batteries for laptops built between April Fool's Day 2004 and July 18, 2006. While known for their quality, it seems that crimping of metal strips in Sony's production of the Lithium batteries left tiny shards of metal in the battery that can cause it to short and overheat.

Estimated cost of this recall: $200-400 million. Ouch!

Kudos to Dell and Sony for admitting the problem and stepping up to its resolution.

While quality may not be totally free, as Phil Crosby once said, the cost of poor quality can be brutal.

What are you doing to plug the leaks in your cash flow?

Jay Arthur, the KnowWareâ Man, works with companies that want to plug the leaks in their cash flow. Jay specializes in Lean Six Sigma for Health Care and Information Systems applications: ordering, billing, purchasing, and payments. He is the author of Six Sigma Simplified and the QI Macros SPC Software for Excel.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

Toyota Tops in Satisfaction Survey

2006-08-16T05:26:00.000-07:00

Tuesday's Rocky Mountain News article by Tom Krisher reported that Toyota leads customer satisfaction in the automotive industry with a record score of 87 out of 100. One point back at 86 were:

Toyota Lexus
Honda
GM (Buick)

It's tight at the top, but overall rankings are up a point (which from a pure variability standpoint isn't much). Is it really a trend or just natural variation? Only time will tell.

IRS Software System Costs Taxpayers $321 Million

2006-07-16T08:04:00.000-07:00

The July 15th Rocky Mountain News article by Mary Dalrymple sites the failure of a software developer to deliver the new IRS tax refund fraud screening system as the reason for their inability to catch the estimated $200-300 million in tax fraud. The IRS has caught only 34% of the fraudulent claims caught the prior year.

While Computer Sciences Corporation was paid $21 million for the project, the IRS has asked them to stop work and restore the original program to operating status before 2007 tax returns are filed.

Why do companies continue to think it's easier to build a new but complex system from scratch than it is to upgrade an existing one that works? Murphy's law says that every complex system will be found to have evolved from a simple system that works. Trying to build a complex system from scratch is doomed to failure and you will have to start over with a simple system that works. The IRS already had a complex system that worked that had evolved from a simple system that worked.

The 4-50 Rule
I'll bet that only 4% of the code contained 50% of the defects and could be rewritten to eliminate the bugs. I'll also bet that only 4% of the code suffers 50% of the enhancements; this code could be rewritten to be table driven, instead of code driven, to maximize maintainability and flexibility. New systems sound sexy, but rarely do what they're supposed to do. Existing systems have so much embedded knowledge that it's almost impossible to capture all of the requirements such that you can build it.

Simplify, Simplify, Simplify
Any simple system will become more complex over time. The trick is to continuously simplify and streamline the simple system as it grows in complexity. That way, you'll never have to try and fail at replacing it.

Case Studies

2006-07-04T09:20:00.000-07:00

Lean http://curiouscat.net/library/leanthinking2.cfm
AFB http://www.af.mil/news/story.asp?storyID=123013979
Mil http://www.dod.mil/news/Nov2004/n11302004_2004113008.html
Toyota http://www.advancedmanufacturing.com/JanFeb06/coverstory.htm
http://www.superfactory.com/articles/smalley_tps_vs_lean.htm
Healthcare http://www.ihi.org/NR/rdonlyres/F4E4084A-6297-44DB-8A78-75008F6DA7A1/0/GoingLeaninHealthCareWhitePaper.pdf
Software http://www.poppendieck.com/pdfs/Lean_Software_Development.pdf
http://www.reed-electronics.com/eb-mag/article/CA6339520
http://www.leanadvisors.com/Lean/articles/edson.cfm
IT http://www.cio.com/archive/081503/sigma.html
Cell Design http://www.strategosinc.com/celldesign.htm

Wikipedia http://en.wikipedia.org/wiki/Lean_manufacturing
Theory of Constraints http://en.wikipedia.org/wiki/Theory_of_constraints
Six Sigma http://en.wikipedia.org/wiki/Six_Sigma

Six Sigma

Welfare Payment Errors Over $90 Million

2006-07-03T06:28:00.000-07:00

The July 3, 2006 Rocky Mountain News has an article on page 4 about improper welfare payments--overpayment, underpayment and fraud--adding up to $90 million handled incorrectly. And it's not the first time. The auditing department found that there have always been problems.

Medicaid $48 million (3% of payments-3 sigma)
Food Stamps $36 million (14% of payments-2 sigma). $15.7 million overpaid; $7.5 million underpaid. USDA estimates that Colorado could have saved $8.2 million and served 80,135 new clients.
Temporary aid $8 million (12% of payments-2 sigma)

Of course, all three welfare agencies questions the audit's findings.
Four years after Congress required states to track improper payments, neither the medicaid or needy family program had set up methods to track payments.

This is the sort of problem that can be easily tackled by Six Sigma's defect reduction efforts.

While automated tracking of these errors will take time to develop, a simple checksheet of errors could easily collect and analyze the types and causes of overpayments, underpayments and fraud for each of these three welfare programs. Then, root cause teams of welfare workers could identify the root causes and solutions to the most common kinds of problems (usually procedural) and reduce the error rates. And I can assure you that it wouldn't cost $8 million to find and fix most of these errors.

A Cold Day in Hotel Hell

2006-05-07T07:56:00.000-07:00

Last week I spent three days at the Hilton in Milwaukee attending the American Society for Quality's 60th Anniversary Conference. When I flew in, it was cold and rainy. I got right into my room, dropped my stuff, turned on the heat in the chilly room and made a dash for the exhibit hall to setup our booth.

When I got back from setting up, the room was still cold and cold air was blowing out of the vent. I called maintenance.

Fix it Fast!
They came promptly, fiddled with the cold water valve and got a trickle of heat flowing and proclaimed the heat fixed. When I woke up the next morning huddled under my blanket, it was cold again. Whatever they fixed, unfixed itself.

I reported the problem that morning before I went to the exhibit booth. That evening when I got back, it was still blowing cold air. So, I popped the cover off the vent and turned off the power. The fan died and within a half an hour the temperature in the room rose three degrees. Not warm, but not arctic either.

Three's a Charm
The next morning, I reported that neither of the two previous repair calls had solved my problem. When I came back from exhibiting that evening, there was a new thermostat on the wall and a refreshing warmth to the room.

The next morning, my bill for my stay was under the door, but there wasn't any discount for my frigid room. I didn't want to have to nag Hilton for some compensation, but I went to the front desk and asked the staff what they could do for me. They discounted the room by $30/night or a total of $90.

Repeat Repairs
Maybe this has happened to you or your customers: the first repair doesn't fix the problem, so you have to do it again. Here's what customers want:

Fix it right the first time!

If they'd have gotten it fixed the second time, you probably wouldn't be reading this.

Make it right!
If you can't fix it right the first time, then make it right.
Give customers something for their lost time and effort, but don't make them ask for it.
If Hilton's staff would have recognized that they'd inconvenienced me twice and given me $30/night off my hotel room, you probably wouldn't be reading this.

The thermostat cost me at least an hour of my time, when I should have been meeting with prospects. It cost me some mental energy that I should have devoted to prospects.

It cost Hilton three repair calls and three front desk calls and $90 in lost revenue. The total was probably several hundred dollars. Plus I'm telling you about my woes and I'm going to look for alternatives when I book my next hotel room. That means they've lost my future revenue as well.

Printer SNAFU

2006-04-26T04:48:00.000-07:00

The printer that wouldn't print was returned to OfficeMax. I requested a replacement. They told me it was out of stock and would be delivered as soon as it arrived.

Yesterday, FedEx Ground showed up with a printer, but it was a black-and-white Brother, not the HP Color Laserjet I'd ordered. "Wrong printer," I said when then FedEx guy asked for a signature.

So I'm sure OfficeMax has to pay for the freight out and back, plus the rework to get the right printer shipped and then pay the freight to send the right printer. Based on the weight of the printer, I'd guess that cost at $25 per trip.

You have to wonder how any OfficeMax employee could confuse an HP2840 Color Laserjet with a Brother 9900 laserjet (B/W). I'm sure they're in different parts of the warehouse.

You'd think there would be a way to mistake proof that process.

Businesses often try to rationalize these kinds of mistakes by saying that my experience was a rare exception. I disagree. If I can experience it at all that means it's systemic and deeply rooted in how they do business.

I can tell you that OfficeMax's customer service has improved, but their delivery still stinks. Sell your stock now. It's only a matter of time.

Printers Should Print, Shouldn't They?

2006-04-20T06:10:00.000-07:00

Yesterday, I bought an HP 2840 Color Laser printer. At over $800, it was a hefty price tag. It also weighs a ton. They say it will start printing a color document in about 20 seconds and print four a minute.

So, after I got it all set up, I tried to print a color PDF using Adobe Acrobat. PDF documents are a universal standard. You'd think someone would have tried printing a color PDF on the HP 2840, wouldn't you?

I waited and I waited and I waited and finally I got a message: Document failed to print. On my old inkjet printer the document would start printing right away. So I wondered what was wrong.

I downloaded new print drivers from HP's website. (Why did they include the old ones with my printer?) Still no luck.

I went through the Troubleshooter process that had stupid stuff like: Turn your printer on and off to reset it. No Luck.

Finally, I opened up a chat session with someone named Mahesh who must be in Bangalore. After much discussion, he gave me a useful bit of advice:

In Acrobat, Click on File-Print and then click on the Advanced button and click the checkbox labeled Print as Image. It worked! But why isn't this bit of information in the user's guide or on the website? And why does this printer require exotic adjustments to print a simple PDF?

I'm a geek and I struggled for hours with what should have been a plug and play situation. OfficeMax has a 14 day return policy and I'm still thinking about exercising it, but I need more speed than the inkjets. Maybe I should try the Epson? or Canon?

Expected Levels of Quality
Customers have every right to expect your gizmo or gadget to do what every other similar gadget can do (e.g., print a PDF without a struggle). It's expected. Are you making too hard for customers and too easy for them to switch to a new vendor?

Printers should print, shouldn't they?

Restaurant Errors

2006-04-12T07:40:00.000-07:00

My wife took off work yesterday, so I took her to lunch at the Fresh Fish Company, a local restaurant. We arrived early and were the third couple seated.

She ordered the Fish and Chips and I ordered a Baked Cod Florentine (I like anything with spinach). Unlike many restaurant waiters, he actually wrote our order down on an order pad. So many of them just listen and then write it down or enter it later.

It took a surprisingly long time for our order to arrive, but when it did, the waiter served Shirley her Fish and Chips and as he placed a lovely filleted fish in front of me he said: "And here's your trout, sir."

I said: "It looks lovely, but I think I ordered the baked cod florentine."
He shook his head and said: "Yes, you did."
He picked up the trout and headed back to the kitchen.

I told Shirley to start eating because someone else was probably eating my cod, thinking it was trout.

About 10 minutes later, my cod arrived. It was great, but late. And unlike other restaurants, they didn't offer to take the meal off the check, give us a free dessert or coffee or anything.

Root Cause Analysis
It wouldn't bug me so much if this wasn't such a common occurrence in restaurants. How hard can it be to:
1. Get the order right.
(Did he write it down correctly? There's very few ways to confuse "cod" with "trout.")
2. Prepare the order correctly.
(Did the cook get it wrong?)
3. Deliver the correct order.
(Or did the cook set two orders side by side and the waiter picked up the wrong dish?)
4. If you make a mistake, fix it fast and make it right with the customer.
I'm guessing that because the second order took so long that it was never ordered correctly in the first place.

At least the bill was correct, although it didn't convey any apology for our inconvenience. I don't eat at this restaurant very often because, although the food is good, the rest of the process is error prone.

Your product ain't the product!
The product is the total customer experience. There may be nothing wrong with your product, but your service may stink. Incorrect orders, bills, or late delivery are all part of your product or service.

Find ways to mistake proof the whole chain of customer experience or customers will find someone who can.

Job Security

2006-04-11T06:46:00.000-07:00

There's been a lot of press over the last few weeks about France's law to allow businesses to fire employees who have been with a company less than two years. Up until now, if you were hired in France you had a job for life no matter what kind of job you did (no wonder unemployment is over 10% nationally and over 22% for younger workers).

Today, France's leadership caved to youth and student demonstrations and revoked the new law.

France clearly doesn't understand, nor do unions in the U.S. that you are not entitled to a job. There is only one true job security: creating products and services that customers want and are willing to pay for over and over again. If you fail to:

create a quality product
provide a quality service
deliver on time
service the customer with affection
fix it fast and make it right for the customer if something goes wrong

it doesn't matter if your company guarantees lifetime job security or not. The marketplace will force your company (and you) out of business.

Everybody seems to want job security, but few people want to do what it takes to earn that security. Everybody seems to expect someone else to create job security. But it's everyone's job. It's your job.

Delighting and satisfying customers = job security

The only loyal customer is one that hasn't found a better supplier.

I feel sorry for France and its workers. Until they wake up and realize that job security is stifling innovation and productivity and quality, they are destined for worse unemployment and more unrest.

It's up to you. If you want job security, you've got to earn it every day, not just the day you were hired.

SAT Score SNAFU

2006-04-05T06:44:00.000-07:00

The April 10th People Magazine reported that Pearson Education Management miscalculated SAT test scores for 4,400 college applicants. Only after a few students coughed up $50 to have their tests manually graded did the error come to light. Scores were high by as much as 50 points and low by as much as 400! Sheldon Steinbach, general council for the American Council on Education said: "This has played havoc with this year's admission process."

The Costs
1. Rework at colleges to reassess rejected students.
2. Student's loss of scholarships and desired college admissions due to low scores.
3. Parental dissatisfaction and family conflict over scores.

Root Cause
Pearson blames the rain which caused test forms to expand causing highly calibrated machines to misread the results. If that's their best guess, then my SAT scores from 1969 are in doubt. Any chance it rained in the past or it might rain in the future during SAT testing?

Wrong Answer: Water is not a root cause. Just like the butterfly ballot, design of the test materials is at fault. The root cause is test forms that expand when subjected to moisture or miscalibrated readres. My guess is that there's some paper formulation that doesn't react significantly to moisture. Or there's some way to align the form so that the mechanical readers aren't confused.

If Florida Power and Light, which does business in arguably the wettest state in the U.S., can find ways to waterproof electrical connections to prevent power outages, then SAT tests can find a way to create better forms or smarter readers.

Mistakes like these are costing our children their future. Isn't it time to get wise about process improvement?

Secrets to Succeed at Six Sigma

2005-07-19T14:34:00.000-07:00

To succeed at Six Sigma, laser-focus every team you start. This means that leadership will want to work with an improvement expert to develop the first two elements of a successful improvement story:

1. Line graph showing defects (preferably in parts per million) or delay over a period of time. This answers the questions: "Where are the defects? Where are the delays?" See a sample line graph at http://www.qimacros.com/qiwizard/linegraph.html

2. Pareto chart(s) showing 1, 2, or 3 "big bars" that contribute 50-60% of the problem identified in the line graph. This answers the question "Where's the Mother Lode." See a sample pareto chart at http://www.qimacros.com/qiwizard/pareto.html

Use the 4-50 Rule: 4% of any business creates over half of the waste and rework. Find it and fix it.

3. Write a Good Problem Statement. Use the first big bar on the pareto chart to write your problem statement. A sample problem statement is: During the first 6 months of 2002, time code errors accounted for 47% of the incorrect paychecks, which was 2 times higher than the next highest contributor and resulted in 78 employee complaints.

4. Cost of Quality Analysis showing how much this portion of the Fix-it Factory costs and what the benefits will be. These four steps should take no more than 3-5 days using existing data. Each of these charts and worksheets are available in the QI Macros for Excel Six Sigma Software at http://www.qimacros.com/six-sigma-software.html or http://www.qimacros.com/spc-charts.html

Time: It rarely takes more than 2-3 days to analyze all of a company’s data and develop a master improvement story that identifies the 4% of the business causing over 50% of the waste and rework.

Download a 30 day evaluation copy of the QI Macros at http://www.qimacros.com/free-excel-templates.html or http://www.qimacros.com/free-excel-macros.html

Can Speed Save Lives?

2005-02-22T11:02:00.000-08:00

According to the story in the Valentine's day edition of the Rocky Mountain
News, Swedish Medical Center has "quadrupled the treatment success rate"
for stoke patients. That's a 400% improvement.

How? Speed! "People used to lay in the hospital for days without getting
any help. Now, they get help in minutes," says Capt. Ted Hockenberry of
West Metro Fire Rescue.

1. Paramedics evaluate a patient for symptoms of a stroke on the way to the
hospital.
2. They alert the hospital which clears their CAT scans and other services
for arrival of the patient.
3. Patients go directly from the ambulance to the CAT scan for evaluation.

"Time is brain," says Dr. Donald Frei. Patients treated with clot busting
drugs within three hours of the onset of a stroke recover most rapidly.

Lesson: Eliminate delay and integrate the elements of the process, from
paramedics to rehabilitation, and you can save lives.

You don't have to be in a life-saving job to eliminate the delay and
integrate the elements of your mission-critical business processes. Just
use the essential tools of Lean Simplified to simplify, streamline and
accelerate your business to maximize results and profits. Haven't you
waited long enough to start getting your business hooked on speed?

Jay Arthur, the KnowWare Man, works with companies that want to plug the
leaks in their cash flow. Jay is the only consultant who specializes in
transactional Six Sigma for IT and Financial applications: ordering,
billing, purchasing, and payments. He is the author of Six Sigma Simplified.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

Lost Luggage Costs $1.6 Billion

2005-02-22T10:14:00.000-08:00

The February 22nd Rocky Mountain News reports that lost luggage costs
airlines worldwide an estimated $1.6 billion for approximately 20 million
lost bags.

While the percent of mishandled and misdirected bags is only 0.7% (4 Sigma
or 6,280 bags-per-million), it costs an estimated $87.50 per lost bag to
correct the problem (tracking and delivery).

If airlines could drive mishandled bags to 5 Sigma (233 BPM), the savings
would be over $500,000 per million bags or about $0.50/bag. Multiply this
times the billions of bags flown every year and you've got something to
counteract the rising costs of fuel.

One of the root causes: delays through baggage screening.
Solution: Lean thinking applied to baggage screening.

One of the defects: misdirected bags
Solution: Dirty 30 root cause analysis focused on misdirected bags.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144 (888) 468-1537

The 2005 Pulse of Leadership

2005-02-16T07:41:00.000-08:00

According to the Leadership Pulse Study from the Stephen M. Ross School of Business at U. of Michigan, when asked "What are you doing to improve your company's performance beyond cutting costs?", the top response was:
27% said they are undertaking company-wide performance improvement initiatives to refine current processes.

Haven't you waited long enough to start plugging the leaks in your cash flow?

The High Cost of Low Quality

2005-01-05T07:12:00.000-08:00

The January 10, 2005, BusinessWeek cites Howard Pien, CEO of Chiron, the maker of flu vaccine as one of the worst managers. As "one of only two major flu vaccine providers" it was prohibited from distributing its vaccine when "British regulators suspended its license in October citing contamination problems."

Estimated hit to revenues in 2004: $300 million, reducing earnings to $78.5 million, less than half of 2003 earnings. "Now critics wonder if Pien dropped the ball on quality." I doubt if the CEO directly dropped the ball, but more than likely did it by subtle messages about quality and its value to the bottom line.

Don't let the high cost of low quality spring a leak in your cash flow. Make quality a priority before the government or your customers do it for you.

Jay Arthur, The KnowWare Man, works with operational managers who want to plug the leaks in their cash flow. He is the author of the Small Business Guerrilla Guide to Six Sigma and Six Sigma Simplified.
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Top 10 Ways You Know You Need to Plug the Leaks in Your Cash Flow
10. Customers tell you to take your product, fold it five ways and put it where the moon don't shine.
9. The end of your production line has more scrap than a New Jersey dump.
8. The media casually refer to you as Mistakes-R-Us
7. Daily operations has all the earmarks of a five-alarm fire:
   -    Heroics
   -    People getting burned
   -    Customer service is afraid to answer the phone for fear that they might get hosed
   -    Dalmations get promoted because they've been to all of the fires.
6. Customer orders are filled at half the speed of escargot.
5. Your software has more bugs than a roach motel.
4. Root cause teams create whalebone diagrams.
    Your two main root causes are FUBAR and SNAFU.
3. Your invoices have more inaccuracies than a butterfly ballot.
2. Gage R&R is something your measurement tools do when they're overworked.
1. You think the House of Quality is a strip joint on Bourbon Street.

Vital Few, Not The Trivial Many

2005-01-05T05:29:00.000-08:00

Dr. Juran said it many years ago: Focus on the "vital few, not the trivial
many."

This is the essence of Pareto's Rule, but few people abide by it. Most
managers start by selecting a team of people and then sending them off to
solve a problem. Most of the time these teams fumble around trying to find
where to start and take months to find even meager gains.

The best way to solve a problem is to start from your data about the
problem, let the data narrow your focus to the vital few real problems,
then let the data dictate who should be on the team. The counts of misses,
mistakes, errors, waste and rework will always narrow your focus to
problems that can be solved. Then you can identify the vital few employees
with the most knowledge about how to solve that particular problem, but not
before.

To plug the leaks in your cash flow, focus on the vital few, not the trival
many.

Jay Arthur, The KnowWare Man
KnowWare International Inc
2244 S Olive St
Denver, CO 80224
303-756-9144
888-468-1537
www.qimacros.com

Tsunami Early Warning System

2004-12-30T06:17:00.000-08:00

There was little warning of the tsunami that wreaked havoc in the Indian Ocean this week.
With technology doubling in power and halving in price every 18 months (Moore's Law), there's a series of technological waves hammering your business every few months.
Do you have an early warning system for your business that detect changes in sales, cash flow, defects, and delay? If not, isn't it time to create one?

Service Contracts

2004-12-27T08:38:00.000-08:00

The December 20th BusinessWeek covers "The Warranty Windafall."
While service contracts are only 3-4% of sales, they may represent 45-100% of profits at electronics stores.

You don't need a service contract on most electronics because of the U-shaped Wiebull curve: Electronics either fail early (covered by the basic warranty) or not for 300,000 hours or more.

By the time they do fail, there will be newer models with more features available at cheaper prices.
PCs, for example double in performance and halve in price every 18 months.

What does BusinessWeek suggest getting service contracts on?
Anything that runs hot: laptops and plasma TVs.

Save money by skipping the service contract and use it to buy the next generation.

Chronic Pain reduced 38%

2004-12-23T14:10:00.000-08:00

Studies of nursing homes have shown a 38% drop in chronic pain rates nationwide according to David Schulke, executive vice president of the American Health Quality Association. In Colorado, rates fell from 1-in-7 patients reporting pain, to 1-in-14.
It's all part of the National Nursing Home Quality Initiative.

Who said Big Hairy Audacious Goals (BHAGs) aren't achievable in clinical care?

Employees Lash Back at Six Sigma

2004-12-23T14:03:00.000-08:00

Employees of 3M filed suit against the company charging age discrimination because the leadership targets people under 45 for Six Sigma training. See this news article for more information:
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20041221005517&newsLang=en

Maybe 3M thinks it just can't afford to train workers who will retire in a decade or two before their investment in Six Sigma can pay off. Customers using the Six Sigma Simplified approach can easily achieve dramatic improvements in six months or less.

Another recent release from employees in Caterpillar sited Six Sigma as a way to dumb-size jobs, slash wages, and reward leaders and investors.

Ouch!