1. Quality Standards.  Documents and records are used all throughout the company.  Nobody should know more about quality, compliance and processes than the Quality Manager.  Your experience with Good Manufacturing Practices (GMP), ISO standards (i.e. ISO 9001), Sarbanes Oxley, or 21 CFR 820 within a regulated industry are important to managing and controlling documents and records.
2. Quality Project Management.  A Quality Manager is also a project manager managing corrective action, process improvement, and auditing projects.  One must have strong self-motivation, the ability to work independently, and within a team environment with strong follow up, organization and prioritization skills and excellent attention to detail helps too.  Perhaps most important of all is understanding the financial – risk-reward – trade-offs in good project management.
3. Business Process Documentation.  A Quality Manager must be able to understand, comply, and improve established company policies and procedures.  Developing standard work, policies, procedures, job aids, and business process communications are a part of the job.  A Quality Manager is also a technical writer.  Familiarity with policy and procedure writing will help you to succeed.  Technical writing conveys technical information using active voice construction, instructional design, and desktop publishing methods to transfer information into understandable and useful information.
4. Document Control.  As the Quality Manager, your Knowledge of the Quality documentation process, Document Control practices, and managing documents, records, forms, and work instructions is vital to maintaining your company’s compliance program.  A Quality Manager may be the Document Control Manager responsible for organizing documents into an easy to use and fast retrieval system.  Users need their policies and procedures to conform to requirements.  If they cannot find them, then they cannot follow them… Document control is an important priority.
5. Quality Communications.  It might go without saying but explaining business process compliance to others is what a Quality Manager has to do.  Being able to understand a variety of instructions furnished in written, oral, diagram, or schedule form helps others to follow and conform to the established best practice.  Communicating compliance and conformance is done using software such as Microsoft Word and Excel, training using PowerPoint, process mapping using Visio, Statistical Process Control (SPC) using statistics, as well as document revision control software for policies and procedures management.
6. People Management.  A Quality Manager should not be afraid of asking questions, collecting business process information, and working with others in a positive and collaborative manner.  Business processes include sensitive accounting and financial processes too.  So, you must be comfortable speaking effectively and communicating directly with all levels of personnel.
7. Quality Auditing.  A Quality Manager performs some of the quality audits.  Supply chain audits, process audits, and may even lead ISO audits an act as a Lead Auditor managing teams of auditors.  Clearly understanding the compliance requirements, collecting objective evidence, and writing up audit reports ensure the quality management system is operating effectively.
8. Problem Solving.  The Quality Manager solves problems, typically in situations where general standardization should exist, but may not be operating effectively.  Using process mapping techniques, lean, or Six Sigma process improvement methodology is essential to reducing waste and being effective in the Quality role.   A delicate balance exists between resolving problems yourself and identifying those situations that require management intervention for a solution.  Good political judgment is required where quality and compliance are concerned.
9. Team Player.  The Quality Manager is involved in teams and meetings at every level of the organization.  Management reviews, material reviews, supplier reviews, corrective action reviews, process improvement teams, audits, customer visits and strategy discussions.  A good Quality Manager is involved with many areas of the company.
10. Quality “Go To” Guy.  The Quality Manager is the person that everybody goes to to get answers about quality.  Product specifications, supplier requirements, testing, inspections, part verification, equipment calibration, corrective actions, non-conformances, workers compensation, benchmarking, voice of the customer, and on and on.  The buck stops here at Quality.

The Top Ten Quality Manager Job Description Responsibilities

1. Quality Standards.
2. Quality Project Management.
3. Business Process Documentation
4. Document Control.
5. Quality Communications.
6. People Management.
7. Quality Auditing.
8. Problem Solving.
9. Team Player.
10. Quality “Go To” Guy.

As the Quality Manager you are responsible for Quality Management System (QMS) and all of its related compliance.  You manage quality policies, procedures, processes, programs, and practices, to assure the company of continuous improvement, conformance and effectiveness.  In a smaller company you may also be the document control manager, quality auditor, and process improvement specialist.  But you are always a team player that has input on anything to do with quality.

Earning the AC-S award is an outstanding accomplishment. The Toastmasters educational program is self-paced; earning the AC-S demonstrates Steve’s strong self-discipline, dedication, and his desire to continually improve himself.  Additionally, it shows enthusiasm and dedication to the Toastmasters program and the individual’s club (in Steve’s case, South County Toastmasters). By achieving the AC-S rank, Steve demonstrated the ability to share his communication skills with other club members and help them improve theirs.

Steve Flick, Bizmanualz Product Director

To be eligible for the AC-S award, you must have:

• Achieved Advanced Communicator Bronze award (or achieved Able Toastmaster award or Advanced Toastmaster Bronze award)
• Completed two additional advanced communication manuals
• Conducted any two presentations from The Better Speaker Series and/or The Successful Club Series

Steve has been an active Toastmaster and a member of SCTM since January, 2005. The AC-S is the third award he’s earned; he received his “Competent Communicator”, or CC, award in 2006 and his “Advanced Communicator-Bronze” (AC-B) in 2008.  The next level in the Communication track is “Advanced Communicator-Gold”.  Steve has also served SCTM in virtually every officer role, including club President and Vice-President of Education, and is a member of SCTM’s Speakers Bureau.

Steve has been with Bizmanualz since May, 2005 as Product Director, Quality Manager, and ISO 9000 Quality Auditor.

About Bizmanualz

Bizmanualz is speeding-up the evolution of SaaS-delivered document compliance applications.  The company’s policy management software is designed for ISO 9000 document compliance and encompasses a full library of over 2,000 policies, procedures and forms for various business departments.  This SAS 70 Level II certified solution “simplifies document compliance” and allows clients to focus on their core business functions. More than 20,000 companies rely on Bizmanualz solutions and services to comply with document management requirements.  Bizmanualz is located in Saint Louis, MO. and is an ISO 9000 certified company.

About Toastmasters International

Toastmasters International is a non-profit international organization aimed at helping people become more competent and comfortable speaking in front of any audience.  A worldwide network of local clubs teach communication and leadership skills to over 260,000 members. South County Toastmasters (club #1957) was chartered in October, 1975 and has established an enviable record of achievement, including President’s Select Club status every year since 1977.

Contact:

Dan Davison, 314-863-5079,  dan@bizmanualz.com

If you think of spending cash as making an investment in your business then understanding the Return On Investment you are about to make becomes critical in making your decision.

Returns are a function of risk; typically the higher the return the greater the risk. Thirty-year government bonds are low risk with returns in the 3-5% range. The overall stock market is a more risky but produces an 8-13% return. Small or new businesses are considered the most risky, which is one reason why venture capitalists require average returns of 25-30%.

Return on Invested Capital (ROIC)

ROIC is used to determine the effectiveness of the cash invested in your business. It is determined by dividing your net profit by your total assets less cash and investments (we subtract cash and investments because these are not investments in the business itself)

ROIC = Net Profit / (Assets – Cash)

As mentioned above, most businesses are considered risky investments, so the ROIC for your business should be 20-30% in order to interest investors. (Even for a closely held company or for a single shareholder – you want a competitive rate for yourself). If your ROIC is low then your business is not compensating its shareholders for the risk they are taking. What causes a low ROIC? It is all in how you spend cash;

• Purchasing assets should be the first choice for spending money but only to a point. We want performing assets that can be productively used to make more profit. Returns vary by industry but a reasonable target is a 15-30% ROA (Return on Assets).
• Spending cash on expenses may be necessary but is limited by profit. Spending too much can reduce profits to zero and constrain growth.
• Paying off debt is an investment consideration. Currently interest rates are around 6%. Paying down debt might be better than holding it in a money market account.
• Holding cash is not an effective use of cash. Typically safe investments produce a very low return of 2-5%. This may be considered, however, if you have specific plans (i.e. expansion, acquisition) that will require large amounts of cash in the future.
• Returning cash to shareholders should be the last option, however, but with many mature companies it is the only option available. It basically means there are no good assets to purchase, debt and expenses are at reasonable levels, and as noted above investing usually produces poor returns. In this case, with no better options left, you should give the cash to your shareholders to invest somewhere else.

Cost of Capital

We know we need a decent Return on Invested Capital to attract capital, but we also need the cost of capital (i.e. debt interest) to be lower than our Return on Invested Capital (what we do with the investor’s money). The goal is to find capital for as little as possible and then invest it on projects within your business that will return as much as possible, but at minimum for more than the cost of capital.

To do this we need to determine the cost of capital from debt and equity using the Weighted Average Cost of Capital or WACC. Basically your WACC weighs the contribution of each piece of debt or equity using the capital’s cost factor times the percentage of capital used from each source to produce the weighting factor.

Where:
Re = cost of equity (investor’s expectations of risk)
Rd = cost of debt (interest rate)
E = market value of the firm’s equity
D = market value of the firm’s debt
V = E + D (or total assets)
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
(Note how the cost of debt is reduced by the company’s tax rate because interest is tax deductible.)

It is easy to determine the cost of debt capital because the debt holder tells us upfront. If you borrow from the bank at 6% or from your credit cards at 15% then your cost of capital is 6% and 15% respectively. But what is the cost of your equity capital?

For large public companies this is easy, you add your dividends (per share) divided by the current stocks market value to your dividend’s growth rate.

Cost of equity capital = (Dividends / market value) + dividend growth rate

If you don’t have dividends then this becomes the expected growth in your stock’s value. The earlier table shows this appreciation at 20-30% for small companies. Therefore, equity is the most expensive form of capital and using (less expensive) debt can reduce our cost of capital. Debt provides leverage, which increases both positive growth and negative downturns. Debt keeps management focused on managing better, and reduces the cost of capital.

This week we looked at Return on Investment both in how capital is deployed and in how capital is raised. We looked at the cost of capital for both equity and debt. So what implications does this have for capital planning?

First, determine your revenue growth and compare that to your equity growth. If your revenue growth is less than your equity growth then you should be able to grow using internal financing. But you still may want to raise cash to decrease your weighted average cost of capital and lower the threshold return needed for investment projects. Use the cash for assets first, followed by increasing expenses, paying down debt, holding cash, and finally returning excess cash to shareholders as the last resort.

To learn more about changing your paradigm and using process improvement programs for your organization then attend the next How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work then the How to Create Well-Defined Processes class is right for you. ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.

Of course, pilots need to pay attention to a number of things while flying a plane, as the plethora of dials, gauges, and displays on an airplane’s instrument cluster indicate. Some instruments require constant monitoring, some are checked occasionally, and still others may be checked only prior to takeoff or before landing. Still, they all have a role in helping the pilot safely operate the aircraft. I doubt if any of us want to fly with a pilot who doesn’t make effective use of the information that this complex set of instruments provides.

A Business Instrument Panel

The same idea applies to operating a business or a department. Sometimes managers get very focused on monitoring one thing in their business (i.e. on-time shipments), to the exclusion of everything else. In this scenario, they have as much a chance of success as myopic, single instrument pilots do of reaching their destination. Successful managers, like good pilots, need to monitor various aspects of performance in order to make informed decisions and appropriate corrections.

We have already shared two aspects of the Bizmanualz improvement journey in this series; reorganizing a production area according to lean principles and creating an atmosphere of continual improvement through a kaizen program. Another important feature of such an improvement journey is the Bizmanualz Scoreboard.

Bizmanualz has divided its organizational efforts into five broad categories:

• Development
• Marketing/Technology
• Sales
• Fulfillment (Production, Delivery)
• Customer Satisfaction

The first step in creating a scoreboard is to recognize key objectives for each business segment or category, and set specific targets. The next step is to find or develop ways to measure performance in relation to these objectives. Then, the objectives and targets are listed clearly and specifically, and posted on the scoreboard. Data is gathered by collecting and processing performance measurements, and then it is typically formatted into an easy to read graph or chart and posted next to the objectives.

Monitor All the Key Business Activities

Let’s consider Development activities as an example. One aspect of Development is researching, writing, and reviewing new procedures for forthcoming Policy, Procedures & Forms manuals. An objective in Development is for the technical writing staff to complete 2 procedures every week. We have regular review meetings where procedures in process are reviewed by the technical writing staff and by subject matter experts.

For every review meeting there is an agenda, and as part of the meeting minutes we capture data about the status of procedures in process, and when a procedure is “closed” (work on it is complete until the final manual reviews). Using these meeting minutes as a way to capture data about procedures, it is easy to take the next step and chart the number of procedures closed each week and compare it against the stated objective.

When performance does not match objective goals, we try to understand why. Sometimes there are valid reasons for not meeting objective goals that fall into a “special case” category. For example, a review meeting was postponed, or a technical writer was on vacation. (These circumstances should be built into an overall project schedule.) Regularly missing goals, however, indicates an issue with the objectives themselves or with the process that needs to be addressed.

The Bizmanualz Scoreboard displays key segment processes, clearly stated objectives, and on-going performance metrics.

Creating the Scoreboard

Key objectives and goals for each of the five business segments are posted on the “scoreboard.” (Be sure to look outside your business when setting objectives and goals: what are industry standard benchmarks? What is your best competitor doing?) Regular chart updates display current measurements relative to objectives. Now, at a glance, everyone can see how the company is performing in key aspects of each business area.

So, while on time shipping is important, we don’t focus solely on it or on any single facet of the business. To know and understand how the business is performing we watch all the indicators, some closer than others, just as a pilot watches all the indicators in the cockpit.

The bottom line is, how can you improve if you don’t know how your doing compared to how you should be doing? How would baseball managers know whether to bunt, hit and run, or swing for the fences if they do not have access to the situational information a scoreboard provides?

How do pilots know if flying at 30,000 feet is good or bad if they do not know the altitude the plane is supposed to be flying at? Setting and communicating clear objectives, understanding situational information, and reflecting on measured performance is a key to success, as well as to continual improvement.

Business Improvement – The Bizmanualz Mission

You will find this theme, of combining clear objectives and metrics with analysis and progression, applied throughout our business improvement products and services (manuals, training, and consulting). But it is also applied it in managing our own business processes. After all, no matter how successful a business may be, there is always room for improvement. Businesses complacent with past success and a “we’re good enough” attitude are usually the ones caught unaware by innovative competitors or an industry paradigm shift.

A scoreboard is an improvement journey in itself. It must be constantly reviewed, enhanced, and updated. Admittedly, it is through unsuccessful ideas and implementations that real lessons about objectives and performance measurement are frequently learned.

Occasional big improvements, constant small improvements, and the process of objective-measurement-review: these are just three of the mechanisms used on our improvement journey. Where is your improvement journey taking you? We hope your journey takes you onto continued growth, and delivering better and better products and services. If you are unsure then perhaps we can help. After all, that is why we are here and what our journey is all about.

To learn more about using process improvement programs for your organization, attend the next Implementing Lean Thinking or How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.

¹This anecdote is borrowed from The Balanced Scorecard by Kaplan and Norton

Sometimes segments and departments need major reorganization efforts, but obviously it can be counter productive to constantly go around reorganizing departments.  There are also ways to promote improvement that doesn’t involve radical change or reorganization.  Kaizens are one method we use at Bizmanualz to foster an atmosphere of improvement.

Small Improvements Add Up

Kaizen, translated literally, means good change.  Kaizens represent a philosophy whereby organizations, and the individuals within it, undertake small, incremental, continual improvements of all aspects of organizational life.  

A kaizen program encourages employees to spot and implement improvements around the workplace, no matter how small.  Not only does this program put a systematic method in place that implements and communicates employees suggestions for improvements, resulting in a more productive workplace, it also

• Creates an atmosphere were employee suggestions are valued
• Makes employees more vigilant in looking for improvements
• Creates awareness that even small improvements are important
• Provides a system where such improvements are communicated to other employees

Kaizens at Bizmanualz

The kaizen system at Bizmanualz is very simple and straight-forward.  An employee recognizes a positive change or an opportunity for improvement.  They complete a form that describes the change in detail, with a brief description of what was occurring before, the specific improvement, and what occurs now, after the improvement.  Then, the kaizen is announced and explained at the next meeting, and the completed form is posted in an obvious and highly visible place so everyone can see and take note of the improvement. 

The Bizmanualz Kaizen Wall

Another important facet of the Bizmanualz kaizen process is that kaizen goals are set for each employee.  In practical terms, this means that a number of kaizens revolve around very small improvements that do not have drastic impacts.  Setting kaizen goals and even creating a stream of small kaizens, however, helps promote an atmosphere where employees are always looking for things to improve, and it is through this improvement mindset that breakthrough advances can occur.

If It Saves a ½ Second, It’s Worth Improving

At Bizmanualz we have had kaizens that improved the visual workplace, as well as kaizens that keep newer magazines in the lobby.  We have had kaizens that improve customer order forms, purchase order processing, and kaizens that moved coffee cups closer to the coffee pot.  While some might have a more significant impact than others, all kaizens are important because they promote the environment of improvement.

A Purchase Order Kaizen: Information about purchase orders was stored in two different places in two different formats (Word and Excel). This kaizan consolidated the information in one place, along with using Excel features to automatically copy information entered into one place to all other relevant places.

 Remember, when implementing a kaizen system:

• Design improvement into everyone’s job.
• Build a structure to implement ideas
• Celebrate small employee successes 
• No idea is too small

Next week we will talk about using objectives and measurements in our improvement journey.

To learn more about using process improvement programs for your organization, attend the next Implementing Lean Thinking or How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.

CTMT is one of the nation’s most successful real estate and facility management companies, but their responsibilities at a data center facility for a prominent finance company in St. Louis exceeded the usual management company’s duties.  For this important client, CTMT had to meet very strict requirements in order to prevent power outages and mechanical failures, as well as reduce human error. 

Power loss at any data center is a critical risk.  A loss of processing ability and a loss of information are simply unacceptable.  As facility managers of the data center, the task of ensuring that the data center did not lose power or mechanical systems fell to the CTMT Data Facilities Team led by Senior Manager John Scheer and Data Center Manager Chris Wanger.  How could they improve on a system that was already very effective?  They didn’t want to wait for a system failure to learn where they were vulnerable.  

Designing an Internal Control System to Meet Their Needs

The facility managers at the site determined that one of the best options for maintaining control of such a critical area is to institute a Quality Management System like that specified by ISO 9000.  Instituting a Quality Management System would help them assure that they were assessing risks and addressing the critical areas needed to reach their goals and satisfy their customer.

CTMT called on Bizmanualz to help them evaluate their current internal control systems and to plot a course for implementing a Quality Management System.  They needed a system that fit their particular needs and that would lead them toward ISO 9000 Certification.  CTMT began their journey in early June 2006, and by early that December they had become only the second data center facility in the U. S. to achieve ISO 9000 Certification.

“While they were meeting their goals, putting an ISO 9000 Quality Management System in place raised their level of confidence significantly” said Steve Mundwiller, the Lead Project Consultant from Bizmanualz.  “They are more in control and more prepared, and therefore more capable of fulfilling their responsibility.”

ISO Certification is More Than a Piece of Paper

Some important benefits of being ISO 9000 Certified for CTMT related to their system of standardized procedures and document control.  Frequency and consistency of preventative maintenance activities, for example, were more controlled and documented.  Plus, documents that described the corrective actions taken to address equipment problems became a valuable resource for ongoing repair and maintenance activities.  The required routine testing and checking of the power system and its back-ups were now well-documented as well, so critical activities were not just left to the initiative of individual employees.   A well-documented training program ensured that team members were aware of, and used, procedures and forms.

Another important facet of implementing a Quality Management System was the control CTMT gained over their materials.  Incoming inspection and testing procedures, along with proper storage mechanisms, played an important role in separating known-good or conforming material from non-conforming or untested materials.  Now replacement parts could be installed quickly and efficiently without any concern about their effectiveness.

Company owners and managers that see ISO 9000 Certification as just a piece of paper to frame and hang on the wall are missing an opportunity to improve their business.  A quality management system can be more than a system of checks and controls, it can be a system of continual improvement that institutionalizes learning and propagates innovation.  CTMT used ISO 9000 Certification to not only feel more confident about being able to satisfy their customer now, they used it to ensure that they would only get better in the future. 

“Our new system is centered on continual improvement,” said Chris Wanger.  “Our old system provided operating procedures and training manuals, but the ISO system is structured in a way that grows with the business and continually improves.”  Chris explains that CTMT had the right idea by documenting procedures, but without the level of control built into the ISO system they were outdated and ineffective in a matter of months.  Following the ISO system ensures that does not happen.

Now, with the continuing assistance of Bizmanualz, CTMT is proceeding with ISO 9000 Certification at its sister Data Center facility in Tempe, Arizona.   Do you feel in control of your internal processes?  Do you have systems in place to make the most of your resources?  Do you want your business to be in that same place in five years that it is now?  If the answer to any or all of the above questions is “no”, then answer the most important question of all.  What are you going to do to be better? 

To learn more about using process improvement programs for your organization, attend the next Implementing Lean Thinking  or How to Align a System of People and Processes for Results class.  If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you. 

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor.  Call for information on having your own private in-house classes today.

Precoat Metals is a leading provider of metal coating services, and much of their production process is geared around painting large coils of raw steel or aluminum. The pre-painted coils will later be stamped or cut into pieces and assembled into products by their customers.

Precoat Metals has always been focused on serving customer needs, but the demands of a rapidly changing market place were starting to put a strain on their manufacturing capabilities.

The problem was that, even though Precoat had a continuously running production line capable of changing coating types and colors on the fly, they were not able to conduct change-overs as fast as they wanted. The market place was demanding smaller orders, less inventory, and a broader variety of colors and coating types, which meant more frequent change-overs.

Tackling the Problem Head-On

Change-over speed was not an issue when customers wanted fewer color and metal choices, but the demand for smaller quantities of a wide product assortment was jeopardizing their ability to maintain their continuous line rate.

Chris Anderson (center) of Bizmanualz works with the Precoat Metals production staff

“When they learned the methods we used to analyze and improve their processes, they really took the ball and ran with it.”

Precoat could have avoided the change-over issue by queuing production orders until there could be longer runs of the same color, but that would have meant a longer turn-around time for orders. Avoiding the issue did not match their business philosophy of serving the customer. They turned to Bizmanualz for help.

Bizmanualz consultants began with an analysis of the current process. Data was collected on all the steps, equipment, and ancillary issues required for change-overs. The entire process was mapped and analyzed in order to find areas for improvement.

Waste and unnecessary actions were identified and eliminated, some steps were combined, and a control panel was moved. Then training and documentation ensured consistency among different operators. Average change-over times decreased from about 13 minutes to about 5 minutes.

Lean Thinking Can Improve Your Business

“We changed more than just a process step in their production line,” said Chris Anderson, managing director of Bizmanualz and leader of the consultation task. “When they learned the methods we used to analyze and improve their processes, they really took the ball and ran with it. They are using this approach to improve how they do things all over their facility.”

A philosophy of improving processes and lean thinking is not just about the factory floor, it can improve operations throughout your business. Sales and Marketing, Human Resources, Quality Assurance, Customer Service, Accounting, and Finance operations can all become more effective and consistent using a lean, continually improving process approach. Plus, processes from different business segments can be aligned to create a more efficient business operation.

Why wait until market conditions force to you address waste? Taking control of your business processes means releasing existing but unutilized capacity, which then leads to increased profitability, motivated employees, and improved customer satisfaction. Innovation in products is very important, but innovation in your processes can help make you a strong competitor in the long run.

To learn more about using process improvement programs for your organization, attend the next Implementing Lean Thinking or How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.

Action Planning

Start by making a list of all of the gaps that need to be resolved and then brainstorm around each item to determine possible solutions. Assign each solution to a team member and then meet again in a week or two to discuss the results. What you have created is an action list organized around your strategy.

Remember our end-to-end process above? Some of the things that should be on your action list include:

• Cost of inquiries or leads are too high
• Sales conversion is too low
• % on-time delivery is too low
• Improvement projects are too focused on manufacturing

Finalizing Your Strategy

When your team meets again it will be time to decide on your strategy. Some of the proposed solutions will be easy, some hard. Some will take years to implement and some can happen quickly. That is ok because strategy takes years. We can’t change overnight. The important thing to produce is a direction, a target (your vision), and a plan on how to get there.

The final step is to condense the process and what you have learned into a presentation for the world. You will need to tell your customers, employees, other management, shareholders, suppliers, and anyone else. So, you will need a presentation that can be modified. Your presentation is your story of the future. People love and remember stories so tell a good one. I am not talking about a dry presentation of the schedule and the tasks to be completed, but one that tells others what your future looks like. Tell it in a way so that people can experience your vision and you will get their buy-in. Engage the listener’s senses.

Does Your Strategy Work?

How do you know if your strategy aligns with your vision? If it does then you should be c reating compelling new product/service offerings for your customers, providing product delivery as defined by your customers, generating attractive returns for your stakeholders, developing the best place to work for our employees, and operating value-creating partnerships with your suppliers. In short, you should be seeing success in multiple areas of your organization.

Now you know that your strategy is working. If it continues over time, then it’s aligned with your vision too. If you notice opportunities for improvement, then that is great as well. Now you have a focus of what to work on in the future. Either way, you now have a strategy for your business model.

To learn more about using process improvement programs for your organization, attend the next How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.

End-to-End Process Design

Your end-to-end process is comprised of four major areas: New Product Introduction, Inquiry to Order, Order to Remittance, and Customer Improvement. These four areas represent your company; how it satisfies your customers and makes money.

For each area we need begin to understand the flow:

• How many advertising impressions does it take to obtain an inquiry?
• How many inquiries need to be qualified to become leads?
• How many leads are needed before we can quote some business?
• How many quotes does it take to get an order?
• How many orders will reorder?

This is the basic description of your end-to-end process. In sales we call this the sales pipeline. However, this is more than a set of sales pipeline metrics; it is a description of your business model itself. Now, if we also track the defects that occur at each stage of the process, we can calculate the capability of our business model, or how good we are at getting and pleasing customers. Let’s examine each one to see how this information supports our strategy.

New Product Introduction

How do people become aware of your products? Typically this is done through marketing. But how good is your marketing? We only know how good it is if we examine the whole system. Does your marketing produce good leads for sales? Do your sales people provide feedback that allows you to improve your marketing?

Once you have begun to understand your marketing system, its effectiveness, and how it interacts with the other parts of the system, you are starting to understand how your strategy will work or not work. Areas of concern should be noted on an action items list, which we will discuss next week.

Inquiry to Order

How do you handle leads? Are leads qualified and developed into clear opportunities? Are you producing cash fast enough? What is your conversion rate from inquiry to lead to quote to order? Have you compared this to other companies, competitors or industries? If not, then how do you know if your strategy is any good?

Order to Remittance

What is your process for fulfillment? Have you measured your on-time delivery, % compete orders, quality and looked at your inventory? High inventory turns implies a good strategy to align all of the processes within your company. A good leadership strategy incorporates all of your critical processes.

Many companies focus 99% of their effort on the order to remittance process. You will probably find most of your lean and six sigma improvement efforts here too. Why? Because it is the most obvious place to find waste, see waste, and the easiest to remove waste.

The only problem is that this is not where you find 99% of the waste. For most companies there is more waste in the other three processes, but many managers do not know what to look for. As a result, it is not considered for improvement or incorporated into strategy efforts.

Customer Improvement

How do you keep your customers happy enough to re-order? This is about more than just a customer satisfaction survey; we are talking about working with your customer to improve their business. At General Electric they call this “At the Customer for the Customer.” GE provides training and assistance, often at no charge, in order to improve a customers business, save them money, and build a stronger relationship.

Current six sigma thinking introduces this external customer focus as a way to contract the entire supply chain from the supplier to the customer. If you want to really improve your organization then at some point you will have to move outside your own company and incorporate your suppliers and customers in a much closer (read trusting) supply chain relationship than you can imagine.

Once you have done this, then you are able to truly create a strategy with a competitive advantage. After all, isn’t this what strategy is all about ?

Next week we will look the action steps your organization needs to take to build your business model and achieve your vision.

To learn more about using process improvement programs for your organization, attend the next How to Align a System of People and Processes for Results class. If you are eager to learn more about creating order out of the chaos you feel at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having private in-house training classes today.

As an auditor, consultant, employee, and trainer, I have been in many dozens of different facilities. With that background I have been able to identify a common trait among companies that have strong business management systems, strong quality systems, a high customer satisfaction, and high employee morale. “What is it you ask?” Companies with these positive attributes and, oh yes, profitability, have very good employee training programs.

It should be understood that highly trained, competent employees are among a company’s greatest assets. These employees grow and change as the business changes. They are a tangible part of the company. However, many of you are going to say, “But, we can’t afford to train right now. Our direct labor costs are too high and our productivity is too low!”

That brings to mind a plant tour I was on at Wainwright Industries in St. Peters, Missouri about 10 years ago. When the company was well in the “red” and losing money, the ownership instituted a dramatic employee training program to supplement the changes being made to the way the business was being run. Three or four years later Wainwright won the Malcolm Baldrige National Quality Award. Guess what happened to their profitability!

Last year I was conducting a Second Party Audit at an aerospace parts machining company in Central Illinois. This was a privately owned company with about 125 employees. I had the following Objective Evidence to support a training finding (QMS nonconformance):

A. Not all managers have a training file. For example the Engineering Projects Manager that was hired seven months prior to this audit does not have a training file.

B. Training records for Internal Auditors, both management and hourly could not be produced. (Note that this training was limited to two hours for each Internal Auditor)

• A training needs assessment, or identified training needs for management personnel does not exist. For example the Quality Manager does not have any future training needs identified, even though he has been the Quality Manager for less than two years and has less than 10 years in the field. None of the management personnel or other personnel have completed ISO 9000 Lead Auditor training.
• New hire orientation training records are incomplete. Those new hire orientation records that do exist do not reflect a review of the Quality System.

This is just one of several Findings identified during this Audit. The On-The-Job training performance was also weak. Typically, a new employee at this company was given minimal direction for their OJT; “Here, just do this and when you get that figured out come and see me.” Were there serious problems;absolutely! There is a reason the customer sent me to this company. Late shipments, damaged shipments, incorrect packaging, defective parts, incorrectly labeled parts were some of the problems that the customer had been experiencing from this supplier in the previous several months. A typical indication of the absence of well-defined processes.

Contrast this audit with another aerospace parts supplier the customer sent me to, also located in Central Illinois, which I Audited the next day. I found out later that this company was being considered for additional business. They were also privately owned and had about 75 employees. The following is a portion of my Audit Report:

XYZ demonstrates a determined effort to invest in the business. Recent investments are a 10,000 sq. ft. building addition and recent major machining equipment purchases. Housekeeping was very good considering the nature of the operation. Even though this is a small operation, each manager has a fully trained back-up, and a total of 5 managers have gone through QS 9000 Lead Auditor training.

There were not any issues or concerns as a result of this audit.

This company had an incredible training program; both formal and OJT. They clearly had the desire to invest in their business, including their employees. There is a reason this company was being considered for additional business. In addition, they had low employee turn-over and apparently high morale – all integral ingredients for continuous improvement.

Some training program strengths that I’ve observed:

• Managers are involved in the training needs identification and program development.
• There is an understanding that the purpose of training is to change behavior.
• Expectations are created prior to the training.
• Training is Simple, Relevant, and Factual
• Juran’s thinking is followed in that the vital few concepts are taught and not the trivial many.
• There is an understanding that training is not an expense, rather it is an investment.
• Effective training programs in general follow a Deming Cycle: Training needs are identified;Training is developed;Training is delivered;Training feedback and effectiveness are obtained.
• In-House trainers are well trained, enthusiastic and passionate ‘experts’.
• Training is made as enjoyable as possible for both the trainer and trainees.
• Training is considered part of one’s job. When a person goes back to their normal activities the work is not piled up waiting for them to catch up, rather it has been distributed to others as much as possible.

Why companies don’t do training?

I’ve discovered two primary reasons. One, managers, including top management, don’t understand the benefits and need for thoroughly training employees at all levels. Two, managers don’t understand that employee training is an investment and not an expense. Note that both of the reasons rest with management.

Managers, who are often not trained past their education or OJT, do not understand the need for and benefit of a well-trained workforce. The key element here is the need for enlightenment. Different people learn differently and, a company needs to invest in their entire workforce, with relevant and appropriate training. As management becomes more enlightened (trained), they will see the need and benefit for a well trained hourly and professional workforce.

Too often companies are run by cost and tax returns (the accounting department). While the discussion of this will have to wait for another article, companies operating in this mode typically have problems. Companies in this mode will state that they cannot afford to have direct labor employees taken away from their normal work and put into training sessions. This activity is measured as a loss of productivity and is considered an expense.

However, an interesting thing I notice about these companies is that they can always find the time and means to rework bad product or to accept high scrap rates. Both of these items are direct expenses—in other words, wastes. In addition, managers at these companies are typically left on their own for training and career enhancement. Enlightenment is needed here to. These companies need to understand the concept of training as an investment and not an expense.

To learn more about implementing continuous process improvement within your organization, attend the next improvement class How to Align a System of People and Processes for Results . Or, Learn How to Create Well-Defined Processes and to document processes.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having your own private in-house classes today.