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R E LECt LECtions ions on Ex ExCE CELLEn LLEnCE: CE: R. Keith Mobley’s 15 Laws or Continuous Improvement R. Keith Mobley, renowned practitioner and author o 22 books, shares his experience and observations gleaned rom a 46-year career devoted to continuous improvement in manuacturing. Keith’s letters contain real examples o what works – and what doesn’t – in the quest or excellence.
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MobLEy’s 1st Law: “All things are possible – i you are willing to roll up your sleeves and do it.” At the cajoling o riends and associates, this is the rst in a series o letters that will share my experience and observations gleaned rom a career devoted to continuous improvement in manuacturing. manuacturing. I nothing else, almost 50 years o involvement at all levels o plant and corporate management has shown me what does not work and hopeully what is needed to be successul and competitive. competitive. As the oldest son o a millwright, the ocial start o my career was working the night shit as a maintenance technician to pay or my education. I was introduced to the business world by stories my ather shared about his perception o management and how its “baling wires and band aid” mentality destroyed equipment and morale. This perception seemed to be conrmed when viewed through the eyes o an 18 year old engineering student. Ater college, my career evolved much quicker than most – growing rom a rst job as a plant engineer to plant manager at 25, V.P. V.P. Engineering and Manuacturing Manuacturing at 30, and E.V.P E.V.P and C.O.O. at 4 0. Looking or even more o a challenge, I have spent the past 27 years helping clients around the world transorm and achieve their ull potential. Two actors are responsible or my ast-track growth. First, a God-given talent or seeing beyond the surace conditions and truly understanding the underlying cause o problems and actors that limit perormance has been the cornerstone o my growth and success. I have dedicated my lie to honing what was given and using it to its best advantage. The second actor was pure, dumb luck. When I needed it the most, I had the opportunity to meet and work with three gited men who also had the insight to understand what companies need to succeed. Dr. Edwards Deming, Philip Crosby and Joseph Juran helped me to ocus my vision on how to create a sustainable, highly successul company. company. I treasure the education and mentoring that these gentlemen provided to a brash, perhaps egotistical, young man. Without them, my career would have been quite dierent. Now, as I too quickly near the end o my career, it is time to share as much as I can with others and this series o letters is one avenue or sharing what I have learned. As you know, I live to work—nothing gives me more pleasure. At 67 I must ace the realization that no one lives orever, but I am still convinced that we can create legacies that do. While I don’t presume to be on the same level as my mentors, creating a legacy is important to me. Hopeully, Hopeully, the lessons that I have learned the hard way will help and in some small way be my legacy. In this series o letters, titled Refections on Excellence, I will share my observations o the characteristics common to all highly successul companies; how they were able to overcome the myriad problems that limit perormance; and the pitalls that should be avoided in your journey to sustainable sustainable world-class status. I think think that these characteristics characteristics may surprise you. you. They are not complex complex or sophisticated. sophisticated. In act, most are common sense and cost nothing to implement.
i h ere leer, i ll hre m erv he chrcerc cmm ll hghl ccel cmpe As a taste o what is to come, let me share a recent conversation with a colleague. We were discussing discussing the sources o limiting actors that we all ace in business. To prove his point, he cited one o Dr. Deming’s better-known sayings: “85% o problems are caused by management issues.” My colleague was arguing that management decisions, too oten based on opinion, partial or skewed data, or emotions, are at the heart o our inability to be competitive and protable. What What do you think? Are 85% o the problems that you ace each day caused by aulty decision-making? From my perspective, perspective, I think that Dr. Deming was an optimist. The contribution o sel-induced limiting actors is much more than 85% -- perhaps 90% or more. Let me share an example. A ew years ago we evaluated the perormance o a ood processing plant and ound that their asset utilization was 27%. They controlled 70% market share, but with only a marginal operating prot. When we sat down to discuss these and other issues, the client could not or would not accept that low utilization was a problem. Once this was overcome, we tried to discuss possible solutions that would better utilize their installed capacity and improve their operating prot. The client was adamant that nothing could be done. We suggested suggested private labeled products as a means to increase utilization; exporting to larger markets; and consolidating plants to match their ootprint to demand. For each solution the client had 101 reasons it would not work. It took two years o almost constant education, but the client nally moved away rom their “it cannot be done” attitude. They are exporting products, producing private brands or the domestic market and have consolidated plants to eliminate duplication. The result is a much-improved operating prot and positive growth trend that should take them to the next level.
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MobLEy’s 2nd Law: “There are no silver bullets; change takes time.” I I had a nickel or every time a client has said, “…but you don’t understand, we’re dierent,” dierent,” I would be a rich man. While it is true that there are dierences, this is too oten an excuse we use or not doing what we need to do—acknowledge our shortcomings and admit our imperections. Then and only then can we overcome limitations and truly achieve our ull potential. This is especially true when it comes to continuous improvement. I have lost count o the times when I have visited plants that have embraced or adopted Lean, Six Sigma, TPM or one o the other alphabet soup o continuous improvement philosophies only to nd they really have not. In many o these plants, the leadership, leadership, implementation team, and sometimes even the associates on the foor know all the right words and can parrot all o the important words. But it quickly becomes clear they do not really understand what the words mean or the real philosophy o continuous improvement.
t relve hee “mece ecece” e m re he rce he vle mpm h me ecece prc, per, egeerg, prcreme her c... In a recent visit to a large discrete manuacturing plant, I heard the V.P. V.P. o Operations espouse the merits o Lean and the value o Kaizen. What he was really taking about was Kaizen Blitz—short duration, high intensity improvements, not Kaizen—a methodical, long-term continuous improvement process. When When asked, he armed that their transormation rom almost totally reactive to world-class would be accomplished in a ew months and with no other eort than a ew teams implementing Kaizen. The instant gratication o Kaizen Blitz, even though gains are not sustainable, was his and the company’s preerred solution, rather than a slower, steady journey to sustainable excellence. How one can expect brute orce changes, such as those created by blitz activities, will survive without changing the culture that enable the deciencies in the rst place escapes me. Unless and until the enabling culture is changed, nothing is sustainable. As in this example, we have become a culture that is obsessed with instant gratication and short-term short-term ocus. Read any trade magazine or listen to the multitude o continuous improvement consultancies and you will be bombarded with proven solutions to your problems. Although the solutions vary, most share a common theme: the solution is quick, cheap and painless. Some ocus on maintenance; others on reliability and still others on production improvement. Maybe it is just me, but none o these solutions and their associated gains ring true. A statement I hear oten is that maintenance is the sole reason a company cannot capture and retain market share. No matter how hard I try, the logic behind this escapes me. I one really looks into the “maintenance deciencies” that plague most plants, the true cause is not maintenance. Most deciencies, regardless regardless o where they are generated, maniest as maintenance issues, e.g. breakdowns, unplanned cost and reduced output. The old s aw “One operator can wreck a machine aster than ten mechanics can repair it” is true. To resolve these “maintenance deciencies” deciencies” one must address the sources o the visible symptoms and that means deciencies in production, operations, engineering, engineering, procurement and other unctions whose combined deciencies deciencies create them. Anything short o a holistic—a total approach to continuous improvement must result in partial, less than desired results. I have learned with absolute certainty that there are no silver bullets—no quick solutions to the complex issues that must be resolved beore any company can capture and retain sucient market share and margins to assure continuance and protability. Once this simple act is accepted, one can begin the process o reengineering with some assurance o success. Where should you start? There can be only one answer—everywhere, but with production or manuacturing as the ocal point. The interdependency interdependency o plants and corporations orces a holistic approach. Think about how you would improve your production organization. The best place to start is to eliminate variability in the way work is planned and executed. I one looks at the results o each operating team and shit on a day-to-day basis, the level o variability is clear. Next, eliminate the waste and losses by value-stream mapping all o the work activities required to eectively produce the requisite output; create value-added standard processes and procedures and then enorce them. Continued on next page
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MobLEy’s 2nd Law: “There are no silver bullets; change takes time.”
Continued from previous page
As you go through the process, one thing should become clear—the ability to eectively produce or manuacture depends on the supply chain, engineering, engineering, maintenance, human resources, sales—in other w ords, the entire company. A holistic or tot al approach is the only option that assures changes that eliminate the loss and waste in today’s environment, precludes recurrence o poor practices, and engrains a culture o continuous improvement. Oh, beore I orget, there is one other small thing you must do to transorm—enorce policies and standards. When did compliance compliance with company policy and adherence to established practices become optional?
...he l eecvel prce r mcre epe he ppl ch, egeerg, mece, hm rerce, le— her r, he ere cmp. A ew years ago, I was asked to help a mid-western manuacturer o high-end automotive consumer products. In our initial conversation, the General Manager laid out the problem—they were losing a little more than $2 per unit shipped, resulting in a signicant annual loss. He, and others, believed that a technology problem in their oundry was the reason or high scrap rates and low production rates. What we ound was quite dierent. While their oundry technology was dated, the real reason was simply ailure o their operators to comply with standard procedures. Their procedures procedures were near perect; they simply were not being used. As a result, throughput was less than 50% o capacity—not enough to cover xed costs and their scrap rate in excess o 25%. The truly amazing part o this story is that no one on the management team had any idea that this was going on. Why? For the same reason the problem occurred in the rst place: no one rom the management team, including the ront-line ront-line supervisors, were on the foor and no one was looking at the perormance data. Because they already had valid standards and standard work procedures, solving the problem was straightorward. Get the supervisors back on the foor and universally enorce the procedures. Within a month, the plant was consistently doubling their previous daily output—and making more than $4 per shipped unit. I can hear you now. “You “You just don’t understand. We’re dierent. We know what’s going on in our plant, and besides we can’t aord to make the kind o investment you’re talking about. It takes too long.” long.” I once elt that way too, but ater striving or excellence or these past our plus decades, I encourage you to reconsider your approach. Change takes time and cannot be achieved by selective or partial solutions. No matter how hard or how oten you try, there are no silver bullets and no way to shortcut the change process. Approach change with an open mind and patience to see it through. The results are certainly worth the eort.
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MobLEy’s 3Rd Law: “People do what you inspect, not what you expect.” How much time do you spend in your plant and with your direct reports? Years Years ago, we were asked to lead the transormation o the second largest integrated steel mill in the world, all 20,000+ hourly employees and 13 labor unions. In our initial meeting, the V.P. V.P. and General Manager, who was also the corporate “xer”, “xer”, asked what had to be done to transorm this operation rom one that was losing key customers and hundreds o millions annually to one that could compete in the new global marketplace. At rst, he was stunned by our answer, which was simply that he needed to change the way he managed the operation. Ater recovering rom this initial shock, we discussed what these changes would be. When John was rst assigned to either x or shut down this ailing operation, he dedicated one ull day each week to spending time on the plant foor—listening to the workers and having open, honest communications that gave both parties an understanding o the business and its drivers. In this heavily union environment, neither labor nor management trusted the other and through this “management by walking around” style, he was able to break down some o the barriers and open a dialogue that was having positive impact on perormance.
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His time on the foor was essential or two reasons. First, the simple act that John cared enough to spend his time on the plant foor listening and learning about the issues and problems that impacted the workorce’s ability to meet perormance standards had a positive impact on everyone. The key to his success was that he really listened and learned.
Second, the act that he allocated a measurable portion o his busy schedule to these regular plant foor visits sent a message that the employees and their input were valued—what they do has value to the company and their insights are important. I can remember my early mentors and how impressed I was with them when they would ask me about my work. It really elt good to think they—as busy as they were—took the time to check with me about my contribution to the company. Even ater I learned that this was a planned activity and that they kept “tickler les” to remind them to ollow up on key points, my admiration did not diminish. There is another reason that executive managers—especially the most senior—should spend time on the foor. It is the only way he or she can have a actual understanding o the plant’s operations. One cannot rely on the reporting systems, no matter how good they are, or the level o understanding needed to eectively lead and assure sustainable competitive perormance levels. The only way to truly understand what is or is not happening on the plant foor or within your span o control is to regularly spend time directly observing observing or participating in its operations. Whether Whether we recognize it or not, there is a communications ltering system in place in all plants or corporations. These lters may be inadvertent or intentional but either either way they distort reality as inormation fows rom the plant foor to the executive oce as well as rom the executive oce to the plant foor. When inadvertent, inadvertent, the ltering is the subconscious interpretation or skewing o inormation as it is passed up or down the hierarchy o the organization. This is compounded by the inherent desire or job security that leads us to put the best ace on any data or inormation that may be seen by our superiors. For those o you who are into Lean, this “management by walking around” is called Gemba, which means “the real place” and is appropriate to this discussion in that the plant or actory foor is the most critical part o a ny operation. Regardless o what you call it, this simple management tool aords company leaders, managers and supervisors a simple, easy means o supporting overall continuous improvement and process standardization while helping to insure alignment o the eorts o all teams. What happened to John and the world’s second largest integrated steel mill? It took time, but the transormation was successul. Within a year, the mill was generating a substantial operating prot and regaining lost market share. One key to this success was the active, willing participation and involvement o the mill’s entire workorce—created by a mutual trust between labor and management driven by John’s weekly time on the plant foor. Yes Yes there was much more involved, including a new enterprise inormation management system, standard work processes and procedures that eliminated waste and losses, and culture that embraced continuous improvement. As John s aid, “It was like pulling an impacted wisdom tooth without Novocain, but it was worth it.” I you’re considering spending more time on the plant foor or with your direct reports, I would caution you to do it right. Be open and sincere. Encourage everyone to be open and honest. Really listen to what you hear and always, always respond to questions and suggestions. I you still need motivation to get out o your oce, remember Mobley’s 3rd Law.
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MobLEy’s 4tH Law: “Change cannot be mandated; the workorce must acknowledge the need, create the means and embrace the changes.” Over much o my career, discussions centering centering on how to change the work culture—viewed to be one o the roots o poor perormance— have been requent and oten quite heated. It seems everyone has an opinion or avored methodology to get the workorce to adopt new policies or work practices. These methods vary depending on the organizational level and background o the individual. Senior executives tend to believe that they can mandate change. change. All that is needed is to tell the workorce what they must do to comply with changes developed solely by a core group o the management team and then hold the workers accountable or success. They point to Hoshin Kanri, a avored Japanese management concept, which is interpreted as an executive-developed policy deployment process. Hoshin Kanri does establish a discipline that helps an organization create and ocus on shared goals, eectively communicate these goals to all leaders, involve all leaders in the planning, and hold participants accountable or achieving their part o the plan. I believe they are interpreting the word “leaders”. “leaders”. Leaders occur at all levels within the organization, not just in the raried strata o the executive wing. There are two primary reasons that actory level leaders—including hourly and salaried employees—must be involved in the change process. First, only those on the actory foor have a true, practical understanding o actors that limit their ability to be eective and ecient. This practical knowledge o actory-foor limiting actors is inversely proportional to one’s position on the corporate ladder. As you climb the corporate ladder, your rst-hand knowledge diminishes until you rely solely on reports and communications that oten distort act. Others believe that change is a straightorward, tactical exercise. All one must do is make the workorce aware o the change, create a desire to change, have the workorce exhibit its ability to make the change and then everything will be better. I you believe their logic, creating awareness is simply a matter o one-way communication. Again, management communicates that change is coming and the employee’s role in the change. Sometimes, this communication will include management’s reason or the change—in the better attempts they try to couch the reasons in terms the employee can relate to or at least understand—in others it is just deployment communications.
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I you are not too ar removed rom your days on the actory foor or a true member o the workorce, try to remember what it was like to be on the receiving end o these mandated changes. How did you like being told that you must change the way to think, the way your work is to be perormed, and how your worth would be measured? Couple this with your experience with all o the previous changes that invariably led to workorce reductions, expansion o workload and a myriad o other negative impacts on your work lie. What do you think—will mandated change really change anything? Over my career, I have tried or been involved in every possible approach o eecting sustainable cultural change. Most o these early attempts, patterned ater my interpretation o popular methodology, ailed. While we could create short-term improvement and gain the appearance o change, the workorce would revert to its old habits as soon as management pressure was removed. As we progressed, we tried everything rom threats to incentives to get the workorce to accept the changes that we as management thought necessary to meet business goals. Nothing seemed to gain traction with the workorce. Three epiphanies, one quickly ollowing the other, nally showed the way to successul change: Identiy true attributes o change: When I looked back at the changes we had attempted, it became clear that too oten we were
attempting to change the wrong things. We were trying to x systemic or inrastructural problems by orcing cost reductions, elimination o overtime and other cosmetic changes that did little other than alienate the workorce. I remember sitting in a leadership team meeting years ago. Around the table sat 21 vice presidents discussing discussing a reduction in the hourly workorce. Business had not been good and we were alling below our business goals. The obvious solution was to reduce the hourly workorce to compensate—right? At that point in my career, I was responsible or the manuacturing organization and knew we could not meet demand with the reduced workorce that was being suggested. As an alternative, I suggested that three o us—the vice presidents—resign presidents—resign instead o cutting the workorce. Eliminating three vice presidents would have the same impact on our bottom line and still support our ability to meet customer demand. What do you think happened? Continued on next page
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MobLEy’s 4tH Law: “Change cannot be mandated; the workorce must acknowledge the need, create the means and embrace the changes.”
Continued from previous page Involve the workorce and natural leaders: My second epiphany was i I cannot get the workorce to accept and adopt management’s
view o needed change, let them develop it. Think or one minute. When you have an idea, it is in your view logical and totally viable; but when you hear or read someone else’s idea you can quickly see faws and aults that need changing. That’s simply human nature. Why not leverage this trait and eliminate the resistance by letting the workorce develop and create the changes needed to eliminate waste and improve eectiveness. The use o cross-unctional teams comprised o stakeholders in the change and at all levels o the organization has proven to be highly eective. Leveraging natural work teams and leaders—at all levels o the organization—empowers the change process and is essential to sustainability.
the e cr-cl em cmpre kehler he chge ll level he rgz h prve e hghl eecve. The workorce encompasses the entire organization: The third epiphany changed my ocus rom downward to the actory foor. One
reason or these early ailures was that we ignored required changes in the executive, senior and middle level management strata o the organization. One allacy o management-created change is that we tend to overlook the deciencies within our own span o control. It’s simply too easy to xate on the perceived weaknesses in the execution o the production and maintenance unctions and not see that they are the result o policies that we created.
oe llc mgeme-cree chge h e e verlk he ecece h r p crl. One thing that I have learned is that change is not easy, but it is not as hard as we too oten make it. You You can ght the workorce and try to orce them to adopt your view o change or you can lead them through the process o recognizing the need or change, dening how they can best eect the needed change and nally enable them to succeed. Change can be easy—i you just let it be. Use your workorce. Let them make you a hero.
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MobLEy’s 5tH Law: “Change is a personal choice and must be implemented one person at a time.” Last week I attended a workshop on change management—even old dogs can learn new tricks, or at least renew old lessons. One o the rst topics discussed was how you change the work culture in a plant or company. As you can imagine, the discussion quickly migrated to organizational behavior, getting people involved and tipping point. All o the more popular theories were espoused in great detail but everyone immediately xated on the mechanics o getting everyone involved in the change process by creating cross-unctional teams, building a change inrastructure comprised o natural leaders and change management proessionals, and a variety o other methodologies designed to get as many people as possible involved in the mechanics o change management. As I listened to these discussions, at times quite passionate, my mind—as it tends to do more and more oten lately—wandered o to what change really means. Thinking back, I thought about all o the transormations and their requisite culture changes in which I have participated over almost ve decades. Some succeeded and some ailed. What made the dierence? To be eective, change must be at the individual level. Each member o the workorce—no matter how signicant their role—must choose to change the way they think and behave beore the work culture can change. Change is a very personal thing and all culture change must start with one individual and continue until all individuals within the culture you are trying to change have made that personal decision to change. Impossible? No, it is quite possible. Let me give two simple examples. First, every major religion began with one individual who had a vision, passion and an absolute commitment to a set o values and belies. That individual shared this unique vision with others who chose to become disciples and then helped others choose to embrace their shared vision. From this simple beginning, hundreds o millions o people share the same vision, passion and commitment to these religions—but in each religion it started with one individual who made a decision—a personal choice—to choice—to embrace certain values as a way o lie. I you want urther proo, look to Japan, which grew rapidly rom a devastated country to become one o the world’s manuacturing leaders. This remarkable transormation began with a ew visionaries, like Dr. Edwards Deming, Philip Crosby, and later, James Womack, who were able to share their visions o eective manuacturing and management with the people who would become the leaders o today’s leading Japanese companies. These three men, and a ew others, were able to help hundreds o thousands share a common vision and strive together as a team to become successul.
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A more mundane example is a plant transormation that we led over a decade ago. The plant, an integrated steel mill consisting o more than 20,000 employees, had a culture that had passed on management responsibilities to successive generations generations o amily members. Combine that culture with 13 unions and an almost total lack o standard processes and procedures and you have a guaranteed ormula or ailure. As you would expect, this plant was losing money—more than $150 million annually—as well as key customers because o quality and late delivery issues. Even the Japanese experts, who spent six months evaluating the plant, thought this plant was beyond hope and should be shut down. In everyone’s view this was a hopeless cause. Within three years, this hopeless plant was protable, had been certied as a preerred vendor by its major customers and was well on its way to success. What changed? Continued on next page
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MobLEy’s 5tH Law: “Change is a personal choice and must be implemented one person at a time.”
Continued from previous page
The simple answer is that 20,000 employees made a personal choice to embrace new ideas, to work together as a team to make the plant successul. O course it wasn’t quite that simple. It was imperative that all employees change their thought and action patterns, but we never lost sight o the simple act that each employee had to make a personal choice to embrace the changes and to join the team eort to succeed. Starting with a ew select disciples including executives executives and plant foor employees, we were able to help a core group see the vision, the opportunities and the possibilities that the plant could enjoy. They chose to embrace the vision and pursue the dream. Through them, more and more o the employees were able to embrace the vision until all 20,000 were unied into a team that could not be dissuaded. This team reversed the nancial losses and created a plant that anyone could be proud o. Today, Today, more than a decade later, this plant is still presenting papers at trade conerences touting their drive or continuous improvement—their improvement—their constant search or perection. My wie o 47 years always includes a scripture or quote as part o her signature block on emails and correspondence. Her most recent quote rings true to this discussion. It is one o Edmund Burke’s better comments, “Nobody made a greater mistake than he w ho did nothing because he could do only a little.” In the context o change management, think about what Burke is saying. I change is dependent on one individual making a choice to do something dierent, then is he right? Is our greatest ailure the ailure to take that rst step toward change—because change—because we can only do so little?
Ech c mke erece. we c chge r clre, r ce, r rl— r e m chge relve e llg eh r p cmmme chge. To quote one o my heroes—Yoda rom Star Wars—who, when asked, “Can one ray o light change the universe?” responded “It depends on who is holding it.” Each o us can make a dierence. We can change our culture, our society, our world—but rst we must change ourselves and be willing to exhibit our passion and commitment to change. Being the prophet o change can be career limiting—not all will view it as a good thing. But once you have made the decision to be a change leader it becomes a straightorward, constant process. All you need to do is help a ew o your coworkers or members o your group share the same vision and passion; or change that you eel; they in turn will help others and beore you know it, change will happen. It’s not instant gratication. Change will take time, but with perseverance and commitment all things are possible. In the beginning o this letter, I started talking about the tools and methodologies o change and I don’t want to leave you with the wrong impression. A process, complete with tools and guidelines, is essential or eective and sustainable cultural change. I would not attempt any substantive change without my toolbox. toolbox. My warning, i it is a warning, is to never lose ocus on the simple act that each individual within the culture you are attempting to change must make a personal decision to either ignore or embrace the proposed change or changes. Keep your ocus and change will happen. Become enamored with the tools, audits, and pretty graphs and you are destined to ail.
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MobLEy’s 6tH Law: “The frst step toward solving a problem is to acknowledge you have one.” Recently I rediscovered a passion that has been dormant or too long—I returned to the classroom to lead a group o business leaders through a year-long workshop that will prepare them to lead their companies on the journey to excellence. I had orgotten just how much helping others really means to me. Now that this passion has been rekindled, more o my time will be allocated to the classroom.
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One thing that occurred in the opening workshop is worth sharing with you. We used a recent MIT study, “Made in America: Regaining the Competitive Edge”, to set the stage or discussing the challenges that we all ace in today’s global economy. The study denes six o the more serious deciencies that limit our ability to compete and then ve imperatives that we must address to regain a competitive edge. The workshop participants, 16 senior and mid-level managers rom a cross-section o industries, acknowledged acknowledged the validity o the study results and we enjoyed a lively discussion o our options to overcome them.
Ater the rst day, several o my colleagues, who had audited the course, suggested that we might want to use a more upbeat study—perhaps a success story—in uture workshops because the MIT article is just too depressing. Perhaps Perhaps it’s just me—I have been accused o being weird or years—but the MIT article is ar rom being depressing. While it does present present a dark picture o our lessthan-desirable than-desirable current position, it also points out the ve imperatives—the ve tasks—that we must achieve to regain our ability to compete. In my view, the article is upliting in that it provides a path that will overcome our limitations and once again permit us to be competitive in the global marketplace. The MIT study points to six limitations that prevent us rom being competitive: Outdated strategies: We have been much too slow to recognize the change in the marketplace. We did not adapt rom a mass producer
o consumer goods or a predominately domestic market to a global market that relies on manuacturing fexibility fexibility and eective valuestream management. Short time horizons: American industry is too ocused upon short-term prots and has ailed to invest in long-term production expansion
and modernization. In part, this ailure has been driven by our societal need or quick solutions and instant gratication. Technology limitations: While we may still lead in some elds o basic research, we have ailed to apply new technologies to industry.
In part, our ailure in this area is tied to our short-term horizons and perceived need to maximize short-term prot. Neglect o human resources: Deciencies in our education
systems and the lack o eective on-the-job training have created a technology and skills gap that seriously limits our ability to compete with the new global workorce. Our ailure in this area goes much urther. We We have orgotten that the workorce—not the physical assets that comprise our actories and plants—is the actor that will determine our long-term survival. We can buy state-o-the-art production assets, invest in the latest technologies and shit to a long-term view o protability, but without an educated, motivated and involved workorce we will ail.
we c c ee--he he- -r r prc e, ve he le echlge h lg-erm ve prl, h ece, mve vlve rkrce e ll l.
Failures o cooperation: A undamental lack o cooperation and communication between individuals and groups within rms and across
the supply chain has directly impacted our eectiveness. We all joke about the adversarial relationship between plant unctions, such as maintenance and production and ail to recognize just how much impact this lack o cooperation and coordination has on our ability to compete and win market share. Recently, I visited an operation that not only had vertical silos (unctions) that would not communicate—at any level—with other silos but would not do so within the silos. Everyone held inormation close and reused to share even the simplest data with others. Is it any surprise that this operation is losing tens o millions each year? Continued on next page
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MobLEy’s 6tH Law: “The frst step toward solving a problem is to acknowledge you have one.”
Continued from previous page
intervention—rather than the amount o Government and industry at cross-purposes: cross-purposes: The report cited the kinds o government intervention—rather it—that have hurt productivity. We We are the most regulated country in the world and these restrictions do adversely aect our ability to be competitive in the global market. No one can disagree with the deciencies identied by the study. They should be obvious to anyone who can look inward and dispassionately dispassionately evaluate their company’s current state. Is it depressing? Yes. Yes. Should we throw up our hands in deeat? What do you think? The study countered these deciencies with ve imperatives that would at least begin the journey back to our once premier position as the global manuacturing leader. Like the deciencies, these recommendations are clear and achievable. New manuacturing undamentals: I we want to regain our ability to compete, we must rethink and change the way we evaluate and
manage our operations. The ocus must shit rom short-term, solely nancial perormance to long-term survivability survivability and protability. Shortterm prots may well suer, but we must build a strong oundation by investing in the uture. This shit in culture will not be easy. It has become so deeply ingrained into the corporate psyche that change will t ake time—perhaps too much time. technological competence o our workorce—at all levels. We cannot count on shortNew economic citizenship: We must increase the technological term solutions to the ailures in our education system; we must invest in direct training o our existing workorce and establish viable means to grow our uture workorces. Teaming Teaming with community colleges, technical schools and creation o in-house training capabilities is no longer optional—it is a undamental requirement or survival. Blend cooperation and individualism: individualism: Elimination o variability in the way that we identiy, plan, manage and execute the myriad
o activities required by a best-in-class best-in-class operation is essential; but survival also depends on innovation and continuous improvement. Successul companies must develop a culture that balances the need or standardization and the individualism needed to drive innovation and improvement. This must include replacing unctional silos with a ully integrated operation where all share a single vision and work seamlessly together to accomplish a common goal.
sccel cmpe m evelp clre h lce he ee r rz he vlm eee rve v mprveme. Adapt to the global economy: We must become more aware o the diversity in world cultures and become much more involved in the
global economy. This includes shopping internationally or technology, materials and innovative industrial practices. Provide or the uture: Educational reorm must create a more technically literate and culturally tolerant workorce. Industry must take
the lead in lobbying and supporting these reorms to assure that we have a workorce that is capable o competing with those in the global market. Depressing? I do not think so. The study would be depressing only i there were no solution and that is denitely not the case. With the possible exception o the last imperative, all o these are well within our capability as company leaders to accomplish. In act, i one looks closely at the M IT recommendations, these imperatives are common to the reliability and operational excellence model. They are changes that all best-in-class operations have already implemented; they are proven to be achievable. So in closing this letter, my response to my colleagues is that not only is the MIT study not depressing, it is or should be an upliting, encouraging roadmap to the uture in which we reclaim a leadership position in the global market.
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MobLEy’s 7tH Law: “Take Nothing or Granted, Question Everything.” A ew years ago, I had the opportunity to work with a client to improve their production perormance. The plant consisted o high-speed continuous process systems that, to say the least, were highly variable in output and operating costs. Shit-to-shit and module-to-module, the output had only one common trait—it was always well below the system designed capacity—ranging capacity—ranging rom zero to perhaps one-hal o design. The production systems were not new, had been well-used, and perhaps had not been maintained as well as they should have been. In the client’s view the resultant loss o asset reliability was the sole reason or the poor perormance. The plant leaders pointed to high aults, such as plugs and breaks, as well asset downtime to support their view. They were absolutely convinced that these systems could no longer operate at, or even near, design capacity. Our rst evaluation o the mountains o data the client provided seemed to support their conclusions. It contained thousands o trouble calls that would seem to indicate excessive downtime and point to asset reliability as the dominant reason or poor perormance. Candidly, Candidly, it would have be easy to simply conrm the client’s conclusion and recommend they rebuild or replace their assets—that’s what they were already prepared to hear. One thing that I have learned the hard way is to never, ever take anything or granted. Never accept the obvious answer. When When I look back over almost ve decades o solving problems, every time I accepted the rst—easiest—answer or the obvious conclusion, it turned out to be wrong. We are all conditioned to see or hear the answers we expect to see or hear. In this instance asset r eliability issues resulting rom poor maintenance was a believable answer. So, we dug deeper into the historical data, questioned operators and maintenance technicians, analyzed the design, and dened the inherent reliability o the production systems. This extra step resulted in a totally dierent view o production perormance and its limiting actors. O course there were asset reliability issues. Years Years o improper operation and deerred maintenance had taken a toll. But the inherent reliability was still adequate to support reliable perormance at or near design levels. Lack o standard procedures, training deciencies deciencies and limited supervision led the list o issues that turned out to be the real source o their perormance problems. Believe it or not, the primary reason or this client’s poor perormance was the simple act that management—rom the top executive to ront line supervisors—had decided that these production systems could not run at design capacity. As a result, they had substantially lowered the target outputs and did nothing to resolve chronic production shortalls. They had basically given up and just accepted that only a complete rebuild or replacement o their installed capacity would solve the problem. This view had become a shared vision throughout the plant and, as one would expect, had become the reality. Convincing rst the management team and then the workorce that their production systems could reliably perorm at design-level turned out to be our biggest challenge in this turnaround. Years Years o conditioning are very dicult to overcome and cannot be accomplished quickly. But i one ollows sound change management practices and makes sure that each step is careully evaluated—remember, never assume anything—it can be done. Ater a ew months o concentrated eort and careully crated steps to both recondition the workorce and i mprove production perormance, everyone could see measurable improvement. Outputs were substantially higher—not at ull design, but denitely trending in that direction. Operators were beginning to believe that their modules could actually deliver design outputs. Some modules had posted shit outputs within 10% o maximum. Overall, production perormance (OEE) had improved by 5.3%. At this point, one could assume the turnaround had succeeded and celebrate success, right? Unortunately, this was not—and typically is not—true. Changing the conditioned belies o the workorce and management team t akes proo and time. Careul observations as well as communications with the workorce at all levels revealed hidden resistors who remained convinced that operating these production systems at higher speeds was absolutely the wrong thing to do. While they were not overtly resisting change, their convictions aected their decisions and work executions, and infuenced the perormance o others. Success was and is dependent on careul, continuous analysis and resultant actions that assume nothing and question everything. Do not assume anything—especially anything—especially when it comes to how people will react, think or act. Oh, the project was successul. It took several years to institutionalize the changes and create a new work culture, but the results were worth the eort. The ultimate solution incorporated workorce-generated standard procedures that now govern all aspects o the production, procurement, materials handling and maintenance activities that had contributed to the plant’s poor perormance. The heart o their turnaround is the workorce-driven continuous improvement culture that now permeates the plant. Now the workorce—rom executive management to the actory foor—believes that design-level perormance is possible and can be maint ained.
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MobLEy’s 8tH Law: “Be eective frst, then strive or efciency.” Why is everyone always in such a hurry? Recently, Recently, I was approached by yet another production manager who was in a panic to improve the perormance o his production area. Nothing would do other than immediate help and instantaneous results. It did not matter that the poor perormance that he was so anxious to resolve had existed or years—he wanted improvement right now. Obviously the pressure rom above was on and the need or change was immediate. For someone in my proession, this is a common request—instant solutions to problems that have evolved over years o variance rom best practices or just plain bad practices. They want us to wave a magic wand, speed up their production process, eliminate waste and improve their operating prot. And they want it done yesterday. What What they do not seem to understand is that it is just not that simple. The keys to eective production are consistency and stability. Each step, task and action in the production process must be perormed in the same way and in the same sequence each and every time. Variability Variability in the operation, rom incoming materials to nished goods and rom startup to shutdown, must be eliminated or at least held within acceptable norms. Achieving this consistency and stability takes time and cannot be speeded up in a rush to instant gratication. Years o solving these types o problems have taught me an important lesson. Always seek eectiveness rst, and then worry about how ast it can be done. I was reminded o this lesson as I listened to this potential client. He just could not understand why his eorts to improve his operation were not having the desired eect. He argued that he had copied exactly what we had done in another area o the plant. He had established process control boards and new standard procedures copied directly rom what we had done. He had instructed his supervisors to enorce these changes. Why was it not working? The dierence between the approach that worked and the one that did not is that the successul approach concentrated on being eective rst. It took the time to create cross-unctional teams made up o the operators, maintainers and support personnel in the subject production area. These teams were charged with the responsibility and authority to resolve the issues that impacted the consistency and stability o the production operation. They identied the waste, losses and non-value activities associated with their current mode o operating. They designed new standard procedures containing specic, step-by-step instructions to guide execution o the production process—procedures process—procedures that were eective and provided consistency and st ability. ability. Because the teams created these new procedures, acceptance and adherence was a natural progression.
Ecec m e l p le, ce plrm. i c e cheve kg hrc, elmg elmg eee k r cve, r rrrl recg hec. In contrast, in the approach that did not work, the workorce was not involved at all. Instead the production manager attempted to mandate change—to bypass eectiveness eectiveness in an attempt to speed up the process. Hopeully you recall our discussion o Mobley’s Law #5 and understand the reasons that change must be voluntary and accepted on a personal level. It cannot be orced or mandated. The evolution rom current, less-than-desired less-than-desired operating perormance to best-in-class does not stop with the reengineering process. Ater the cross-unctional teams have accomplished their assigned task, these new procedures and methods must become an integral part o the operation’s DNA. This is a two-old process. First, these procedures must be implemented and validated to assure eectiveness. Then you need to establish the means to assure long-term compliance. Only ater this is done, can we switch ocus to eciency. Eciency must be built upon a st able, consistent platorm. It cannot be achieved by taking shortcuts, eliminating needed tasks or activities, or by arbitrarily reducing headcount. Eciency improvement is a continuous, long-term process ocused on eliminating waste and ineciency in all aspects o the production process. This might entail implementing a kanban materials handling system to eliminate lost time waiting on materials, a redesign o the module or cell layout or urther elimination o unnecessary steps, but it is constant and never-ending. In closing, always remember to concentrate on doing it right rst, and then worry about how ast it can be done. Cheaper, aster, quicker quicker is a guaranteed journey to ailure.
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MobLEy’s 9tH Law: “Praise, honestly given, works miracles.” A ew months ago during one o my requent walks o the manuacturing foor at a client’s site, I stopped to read the previous shit operator’s comments that appeared to express some rustration. To To do so, I had to ask two men who were carrying on a conversation to move slightly so that I could get to the visual control board. As part o my polite request, I made a comment about how proud I was o the operators and what they have been able to accomplish as part o the transormation process. This natural expression expression o praise was spontaneous and I truly was not even aware o making it. Both o the men stopped and look at me with the strangest expression on their aces. One o them tilted his head, looked me in the eyes and asked me to repeat what I had just said. Caught o guard, I paused or a moment and repeated my expression o pride in the workers who, through their natural work teams and as individuals, had eliminated many o the constraints and restrictions associated with their manuacturing processes and literally raised the bar or the entire acility. With this strange look still on his ace, this gentleman said, “You really mean that, don’t you?” When I answered in the armative, he thanked me or my eelings and open expression o pride. He went on to comment that no one had ever thanked the operators or expressed pride in them. As it turned out, the man was the president o the local union and that brie, unintentional unintentional conversation assured his support and elevated the eort put orward by the hourly workorce to an even higher level. I have shared this incident with others, including the executive o this client. Most have been skeptical and attributed this chance encounter to pure luck. I do honestly believe that it is people who make the dierence. Involved, motivated motivated employees can and in most cases do work miracles. This incident and the response o those I shared it with rekindled memories o my rst mentor. The world was a dierent place in the early 196 0s when a brash, egotistical, reshly vetted engineer entered the business business world. In those days it was all about me. Any success was my success, any win was my win. Without me, the world would no longer turn. Fortunately or me, a very wise man decided to help this sel-centered person recognize recognize the error o his ways. He showed me by his actions that no one—no matter how smart or how good—can achieve success success alone. He never tried to be the center o attention, actively sought input input rom everyone on the team, listened more than he talked and never, ever accepted credit when the team successully nished a project. Invariably, Invariably, he would pass the credit on to the team or elevate a team member into the spotlight. Conversely, Conversely, i we ailed it was his ailure, not the team’s or someone on the team, even when it truly was because someone on the team was responsible. I nally asked him why he never accepted credit and always absorbed blame. His answer has st ayed with me and has become a part o my DNA. He said he did it out o selshness—that he wanted to be successul in everything that he attempted, that he wanted to be viewed as a success. I will admit that I did not get it at rst, but he continued to explain that his success depended on others. No matter how hard he worked, no matter how smart he was, he could not possibly be successul without the help o others. He said that the best way to gain that help was to swallow his ego and elevate others. Ater acknowledging his rationale, my naivety led me to my next conclusion. “You “You mean all I need to do is tell other people they are important, praise them or their work and basically con them into making me successul?” Looking back, I am surprised he did not throw up his hands, give up on me and walk away. Fortunately Fortunately or me he did not. Instead, he patiently adjusted my lack o logic and claried my vision. He explained that one cannot ake praise; no one can con others into doing anything. It has to be genuine. You probably all know someone who says the right words, sends the right memos and goes through the motions o praising the eort o others, while claiming all the glory or wins and passing on the blame or ailures. These individuals may enjoy some short-term success. They may even climb the corporate ladder but in the end they will ail. Why? Remember, no one can do it alone. True success depends on a team eort—when everyone works together to accomplish a common goal. True success comes when you can orget the “me” and embrace the “we”. “we”. Remember to absorb the blame and pass on the praise. A ew words o praise—honestly praise—honestly given—will work miracles.
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MobLEy’ Mob LEy’s s 10tH Law: “Making the same mistake twice is unorgivable.” From an early age, my ather instilled in me rules that I was to live by—or else. Near the top o his list was one that has, and does, resonate with me almost every day. He explained that making mistakes was a natural part o the learning process—only those who do nothing can go through lie and never make a mistake. Sound advice, but he did not stop there. Instead he continued to admonish me that making the same mistake twice was absolutely unorgivable. Admittedly I am not the brightest star in the universe and was somewhat o a slow learner in my early years. As a result, my ather had more than one opportunity to reinorce his mandate that making the same mistake would not be tolerated. With repetition and some pain, I learned this invaluable lesson and today strive to learn rom my mistakes and never, ever make the same one twice. The reason this early lesson resonates with me almost every day is simple. As part o my proession, I am exposed to classic examples o the same mistake being made not just twice but too oten tens or even hundreds o times. I the results were not so serious, some o these are so ridiculous that they are almost unny. Others are so catastrophic in nature that there is nothing unny about them. Consider the steel mill that manuactured a product that severely damaged critical production systems each time they ran it. When asked i they were aware o the damage this product produced, they acknowledged that they did. Why did they continue to produce it? It was a niche market; no one else would produce it so they had a captive market. Oh, by the way, their margins on this product were practically zero. Why would one elect to make a product that caused severe damage and then give it away? Or there was the ood company that continued to run a critical packaging line ater all o its timing belts and drive chains had stretched well beyond their limits. Even ater repeated wrecks, they continued to run the line without ordering new belts and chains—until the line catastrophically ailed. I wonder i they will repeat this mistake.
i e c cklege r mke h le pe m er h he ccrre e re ee repe hem ver ver g. Another example o repeating mistakes: management teams that continue to listen to and act upon bad advice. Even when history clearly shows that the inner circle o advisors lack the ability to provide sound business advice, management continues to turn a blind eye to acts and continues to make decisions that limit success, sometimes to the point o bankruptcy. bankruptcy. I once worked or a company owned and managed by three proessors. Primarily because o this recurring mistake, the company was orced to le or bankruptcy. bankruptcy. The recovery plan led with the courts oered a solution that the owners and their small inner circle o advisors thought would guarantee uture success— the owners would change roles within the company. Each o the three owner-managers would assume a new role. Ted who was over engineering would move to marketing; Jim to manuacturing and Bert to engineering. The judge with a bit o a smirk on his ace asked them i changing positions would make them any smarter. The reorganization plan was rejected. I have never truly understood why it is so hard to learn rom our mistakes. Granted, I hate to make mistakes but when a mistake is made, I am the rst to acknowledge it and accept ull responsibility. Perhaps this is because o my upbringing, but it is also the logical thing to do. I we cannot acknowledge our mistakes and with an absolute open mind understand how they occurred we are destined to repeat them over and over again. To my ather and now to me, lie is too short to be wasted on recurring mistakes. One common trait o highly successul companies is their ability to limit mistakes and never to make the s ame mistake twice. They are driven by knowledge gained rom accurate, timely data—not the opinion o an inner circle o advisors who may or may not provide good advice. They have standard processes that isolate and identiy mistakes—without placing blame or penalty—as well as provide a positive means o preventing repetition. In other words they are ollowing the same mandate that my ather impressed upon me—it is acceptable to make mistakes, but unorgivable to make the same mistake twice. Mistakes are a part o learning and growth. Failure to learn rom one’s mistakes assures stagnation and mediocrity. Never ear making mistakes. They are an inevitable part o change and growth—embrace them and use them to become smarter both as a person and as a company.
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MobLEy’ Mob LEy’s s 11tH Law: “Work Smart, Smar t, Not Hard. Hard.” ” When I state, as I oten do, that I am basically lazy, those who know me are incredulous. They know that my work is constant and almost continuous. What they do not understand is that w hen you work smart, it is not stressul or tiring—it’s actually quite enjoyable, even un. Have you ever observed an operator or maintenance technician ght a problem until the symptoms disappeared only to have the same problem occur later—oten repeating this cycle or weeks or even months? This is a too-requent example o working hard, not smart. We too oten mistake activity or value-added work, in this case problem-solving. One o my avorite examples o working hard not smart comes rom a plate glass plant. I had the opportunity to evaluate the eectiveness o their operation, including maintenance. While reviewing their maintenance logs, one shit stood out. Eight times during the midnight shit, the on-duty maintenance technician technician was called to repair a robot that unloaded plate glass rom the production line. He had to walk rom his shop to the robot—about one-hal mile round trip—to respond to each call. What caught my attention was the action taken on each o the trips. In each case, the technician reset the breaker and returned to his shop. Perhaps that is an appropriate action on the rst call. Surely one would recognize that something was causing the breaker ault on the subsequent seven calls; but apparently not. On the ollowing shit, a dierent maintenance technician technician responded to the ninth call and ound the mechanical binding that was the source o the repeated trips. In this example, working smart would be to trouble-shoot the problem on the rst call and prevent the subsequent calls.
there re l m ere ch chev eve e e ere re cme, l e h ll ccmplh he jecve h he le er veme me me.
Working Working hard is not a bad thing. In act it is the oundation o every successul person and organization. But simply working hard is not enough. It is ascinating to watch the renetic activities that too many think is productive work. Another o my avorite examples is budget development. The norm seems to be to consume the third and ourth quarter o each scal year developing the budget or the ollowing year. Hours upon hours o key employees’ time is consumed by this one annual event. The sad part is that the budgets are too there lel hme oten arbitrary rather than data or act-based. We all know that budgets are a recurring requirement o any business, so why not kg r help. n e c automate the process and eliminate the excessive labor-hours that k everhg r e he we oer up to the budget god each year? I each o the unctional groups that make up a company are eectively managing and eper ever ce he measuring their operations, creating next year’s budget should be a non-event. e rl. Here are my undamentals or working smart: •Pla •Plan nbe befo fore rey you oua act ct:: One trait that has helped me more than any other is that I rarely do anything without a reason. Everything one does should have a clear objective and your actions should be careully evaluated beore they are executed. •Use •Uset the he80 80/2 /20 0rul rule: e:As an engineer, this was one o the hardest traits or me. There are always many dierent ways to achieve a desired outcome, but only one that will accomplish the objective with the least eort and investment o time and money. You You must also know when to stop—80% is oten perectly acceptable. •A •Autom utomat ate: e: I you know that a task or activity is recurring, create a work aid—a tool—that will eliminate as many o the repetitive activities as possible. Those who know me accuse me o having a tool or everything—an exaggeration, exaggeration, but not by much. •As •Ask kfo for rhe help lp: :There is absolutely no shame in asking or help. No one can know everything or be the expert in every acet o the business world. Asking or help rom others will let you accomplish your objectives much more quickly—and with better results. •Alwa •Always ysloo lookf kfor orab abett etter erway way: :As my ather said, “Son, i you have done anything the same way or years, odds are there is a better way.” Good advice then and now. Never restrict yoursel to a certain set o rules just to maintain status quo. Think outside the box and nd better, more ecient ways to accomplish your objective. When you work smart, work can be enjoyable—even un. It certainly eliminates much o the rustration and atigue that are the outcome o working hard. Take Take a hard look at yoursel. Are you working smart?
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MobLEy’ Mob LEy’s s 12tH Law: “Never, never, never give up.” It has been too long since my last letter, but 2011 closed with a burst o new problems with dire consequences that mandated immediate immediate attention. I am happy to tell you that all o these have been resolved and our clients enter 2012 with a much brighter uture. Let me start o the new year by sharing news that I received rom a protégé in South America. I had the opportunity to work with John about ve years ago and over a three-year period was able to share our approach to Reliability Excellence. As we applied this approach, his company – an alumina renery – achieved a rst-year reduction in operating cost o more than $11M and rmly established the oundation or continuous improvement. improvement. The renery was well on its way to excellence. About three years ago, John was lured away rom the renery by another company in the same country. They had heard o the renery’s success and wanted John to duplicate it or them. When he accepted the position, everyone on his new employer’s leadership team was excited and eager or change—or were they?
we p p ge gehe herr l l e ce h cervvel l el $25M mprveme perg c ver hreeer per, ge here he cle – gvermee eerpre – l hve mke l chge he he mge he cmp.
We were asked to spend a ew weeks with the client to assess the situation and recommend the best approach to implementing a Reliability Excellence-based continuous improvement program. It was a hard, long two weeks but with John’s help we were able to gather the necessary cost and perormance data needed to ully understand the strengths and weaknesses o his new company. We put together a solid business case that conservatively would yield a $25M improvement in operating cost over a three-year period, but to get there the client – a government-owned government-owned enterprise – would have to make substantial changes in the way they managed the company. The company, citing too many initiatives, elected not to pursue Reliability Excellence. John reused to give up. Instead o simply accepting the company’s decision to deer implementation, he set about resolving some o the deciencies that we had identied through the assessment process. He ocused on those that were within his and the Reliability Engineering Manager’s span o control and through persistent eorts he was able to achieve substantial results.
One o my best Christmas presents in 2011 was an email rom John sharing the results o his eorts. Without any support rom senior management and despite resistance rom a bureaucratic organization, he was able to reduce operating cost by more than $9M and identied an additional $4.5M that would be enjoyed in the rst quarter o 2012. He took some pride in reporting this to his management team and tactully reminding them o the $25M potential that achieving Reliability Excellence would provide. Needless to say, I am proud to have been a part o John’s introduction to and education in Reliability Excellence. Excellence. His success in applying what he learned is commendable, but I am most proud o his adherence to Mobley’s 12th Law – “Never, never, never give up.”
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MobLEy’ Mob LEy’s s 13tH Law: “Seek perection; never settle or anything less.” Granted, I am old and perhaps set in my ways but there is one thing that I just cannot understand. Why is everyone averse to striving or perection? It seems that almost every time we broach the subject o improvement, the client always has a thousand and one reasons why their company cannot achieve and thereore should not pursue perection in the orm o asset utilization, cost o goods sold and elimination o waste. I one looks at asset utilization, or ex ample, many companies give up at least hal o their install ed capacity beore actual production losses enter the picture. When a company elects to operate on a ve-day, 24 hours/day production schedule, they automatically give up 104 days or 28.5% o their capacity. Add holidays, outage downtime and other arbitrary reasons or non-productive time and the net result is that only 4 0% to 50% o possible capacity is available—assuming no actual production (OE E) losses. Over the past three years I have had the opportunity to evaluate numerous, multi-national, multiple plant organizations and the best asset utilization I ound was 36%. None o them recognized their low utilization. According to their internal numbers, these plants were operating in the 75% to 90% asset eciency or eectiveness range with no consideration or true utilization. When we discussed discussed the absolute need to improve their use o installed capacity none believed that they could or should try to achieve ull utilization. Instead, each wanted to set their goals well below 100% -- in some cases as low as 60% to 70%. When pressured or a reason, the most common answer was, “We just cannot achieve higher levels o perormance in our culture.” All had a myriad o reasons, such as cleaning requirements, seasonal sales, asset maintenance requirements, requirements, etc., but none had any data or statistics to support them. Asset utilization losses compound when one considers those associated with operations. Overall Equipment Eective Eectiveness ness (OEE) is the most common measure o these losses and includes actual run time, production rate and yield losses as a measure o eectiveness. Most o the clients we have evaluated over the past decade ail to accurately measure these losses and instead assume that they are a result o asset reliability and maintenance deciencies. In truth, the single largest source o OE E losses is reduced speed operation—caused solely by operators who elect to run at a l ower speed. We have observed operations where as much as 40% o shit output is lost to run-below-rate decisions. One would think that enorcing consistent operation at the rated speed o an asset would be a no-brainer, right? Wrong. In most cases the management response is that the assets will not r un at design. This type o response really bothers me as a reliability engineer and machinery designer. designer. Machines are designed to operate at their design speed—anything less actually accelerates the wear and tear on the machine and will increase the interval and l evel o sustaining maintenance. There are several things that I would like you to think about. First, take a long, hard look at your use o installed capacity. Do you really know what it is or ar e you relying on numbers that are skewed and give everyone a alse sense o well-being? I your utilization i s less than 8,760 8,760 hours per year, can you isolate and identiy the reason or each day lost? Is each reason real and justiable? There is one legitimate reason or not running 24/7/365: sustaining maintenance. All electro-mechanical equipment requires some level o maintenance to retain r eliable perormance and useul operating lie. Depending Depending on asset type, between 400 and 1000 hours per year ( 5% - 11%) should be allocated to maintenance. All other deductions rom continuous operation are controllable losses. Second, are you ully and eectively using those hours that you currently plan to run? Have you really considered the cost associated with your production schedule and mode o operation? How much time are you losing to changeovers and are they r eally necessary? Production planning and the coordination within the internal supply chain combine to severely r educe the eectiveness and increase the cost o most operations. And nally, write down all o the losses, including everything. Once you have the list, calculate the cost o each o them. Remember that there is a real cost associated with everything and this is certainly true o production losses. For example, what is the cost associated with a ully manned production asset that produces one hal o designed capacity? It should be obvious that your cost is double—it takes twice as long to make the same amount o product. What about running one shit a day? What is the cost o the idle capacity or the other two shits? Now, list the reason that you cannot eliminate each o the losses on your list. In light o the costs, are these justiable? Can you justiy these losses? Should you not seek perection—ull, eective utilization o your installed capacity? Can you really justiy continued operation with some or all o these losses? As stated at the beginning, I simply do not understand why anyone would choose to ignore obvious, controllable losses and not make a concerted eort to eliminate all—not just some o them. One cannot violate the laws o physics—there are only 24 hours in a day, seven days in a week and 365 days in a year. One should strive to eectively use all o this time—anything less is a controllable loss. I one is satised with less than perection, then that’s all they will ever achieve. I you truly want to be world-class, you must seek perection and never, ever settle or anything less.
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MobLEy’ Mob LEy’s s 14tH Law: “I you change nothing, nothing changes.” Almost three decades ago I was approached by a major publisher to write a book that dened the tenets o a successul company. Not knowing any better, I accepted the challenge and over the next months the book took orm. When it was nally nished and the galley proos received, I made a slight miscalculation—I asked my wie to read it. You need to understand, my wie was put on earth to keep me humble and she has done an exceptionally good job over our 46 years o marriage. She reluctantly complied with my request—well almost. Ater reading the preace and introduction, she came into my oce, threw the book on my deck and s aid, “No one will read this book— all you have written is just simple, common sense.” sense.” She was right, o course, but what she ailed to understand is that there is a void o common sense in the world o business. I am constantly amazed by the almost total lack o common sense or even simple logic that exists in today’s business world. Too many companies seem to be managed—not led—by those who either cannot or will not acknowledge the simple truths that limit their ability to compete in an ever-changing world market. One recurring, almost universal, example o this lack o common sense is the belie that things—perormance, nance and market share—will magically improve i we ignore the actors that limit them enough and just continue to do what we have always done in exactly the same way as it has always been done. Most rational people understand that it is insane to expect a dierent outcome when one continues to do exactly the same things, the same way. Why is it so dicult to see the allacy in this logic? Even my ather, with his limited education, taught me this lesson with his constant reminder, “Son, i you have done the same thing, in the same way or years, the odds are there is a better way.” For more than ve decades in the business world, I have tried to push down the rustration when dealing with this lack o common sense and tried to ocus on understanding the reasons or this inability o so many to see the obvious and use simple logic to made decisions. Success has been slow in coming and at best remains limited. I have nally accepted the act that a complete understanding understanding will always elude me, but have been able to isolate a ew o the more requent reasons. One o the most common reasons is the risk-averse mentality that has come to permeate corporate and plant management. Everyone has become so araid o ailure that they will not t ake any risk. This translates into maintain status quo—do not change anything and you will not be blamed. A classic, recurring example o this is trying to get a client to establish goals that stretch production production and the workorce to a higher level o perormance. Even when the goals are achievable, they expose the management team to a modest risk—i they ailed to achieve the goals, their perormance reviews, promotions and bonuses could suer. More oten than not, the management team will reuse to accept the higher goals, electing instead to retain current, or modestly higher, goals—ones that they are absolutely sure can be achieved. Obviously, Obviously, this is not good or the business, and one would think would not be accepted by higher-level management. management. Wrong, this risk aversion is not limited to line and middle management. In too many corporations it permeates the entire management team. These companies tend to struggle, maintaining just enough market share to stay in business but never very protable or successul.
Evere h ecme r lre h he ll ke rk. th rle m q— chge hg ll e lme. Change is inevitable; one cannot go through lie without adapting, without changing. We begin lie totally dependent on others to care or us, over time reach some level o independence and as we near the end perhaps become dependent upon others again. Common sense should make it clear that it is no dierent in business. I there is any doubt, look at commercial air travel. In the 1950’s air travel rom New York to Paris took 20 plus hours and two reueling stops on a TWA Constellation, a our-engine, propeller-driven aircrat. In the 1960’s, Pan Am oered direct fights using their new 707 jet aircrat in eight hours. In the intervening years, both TWA and Pan AM ailed to adapt to the changing market and as a result no longer exist, yet another example o change or perish. My reerence library is ull o books, many written beore 1970, that tout the tenets o success. Almost all reerence example companies that support their theories o how a world-class company should be run. You know the names: AT&T, General Motors, TWA, Pan Am and so on. These were the shining examples o how to be successul when I entered the business world; but look at them today. Many no longer exist; others retain the name but are no longer the world leader that they once were. What happened? happened? The one common theme or all o them is that they ailed to adapt. They ailed to recognize the changes that were taking place all around them. They ailed to change. How about you and your company? Will you change or perish?
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MobLEy’ Mob LEy’s s 15tH Law: “Impatience Never Commands Success.” Being ast is important in a race and perhaps other instances, but not when changing individual individual habits or work culture. Both take time and innite patience. Change cannot be rushed. rushed. This simple act has been the downall o too many attempts to transorm a reactive, poor perormance company into one that can compete—survive—in compete—survive—in today’s marketplace. Frankly, I continue to struggle with why companies ignore poor perormance until it is much too late and then demand instant solutions to a sometimes decades-old problem. Invariably, they will expect miracles that require little, i any, eort on their part, and they just cannot understand why they are not possible. Ater all it’s not a management or inrastructure problem. Just make the workorce work longer, harder, or with less, and the problem is solved.
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Surprisingly, Surprisingly, the workorce is just as impatient. The business reengineering reengineering process, when done correctly, requires the commitment and involvement o the workorce or periods o 18 to 36 months. The rst year is generally dedicated to value-stream mapping and reengineering o the processes and procedures. This eort is intensive and requires hours o concentrated work. Long beore this initial eort is complete; the workorce will grow impatient and want to opt out. “Just tell us the answer or what the best-in-class process looks like and let’s get on with it,” is the typical request. Unortunately, Unortunately, neither o these demands can be satised. Resolving the complex actors that limit poorly perorming companies cannot be accomplished with the snap o your ngers. There are no silver bullets or magic wands that will undo bad habits, ineective processes and inecient procedures that are at the heart o poor perormance. Current-state perormance must be systematically evaluated, limiting actors must be identied and solutions that will provide long-term, eective resolution must be implemented. There is also no quick solution or workorce impatience. The only way that the workorce will embrace and universally adopt change is to go through the process o sel-creation. They must understand the deciencies in their current practices and develop solutions that will add value to the operation. Giving them the answer is not an option. They must go through the pain o creation beore the new way o lie is theirs.
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I know what you are thinking; it’s the same rationale that we get rom almost all clients. “You don’t understand. We cannot wait.” You and they will cite tens or hundreds o reasons—ranging rom operating prot to loss o market share—as reasons an immediate solution is needed. While many o these arguments are based in reality, quick xes and permanent resolutions are diametric opposites. The conundrum is that you are right; many companies cannot wait. The problems have become critical and survival is a real concern. How do you resolve both the short-term need and a permanent change that will prevent a recurrence and assure long-term survivability?
There is no short cut to the permanent solution. Patience and absolute commitment to doing it right is not optional. With that said, there is no reason that one cannot integrate a parallel, more tactical eort that can be used to stop or at least slow down the bleeding. In most cases, one can nd problems or issues that can be resolved using viable tactical or technical eorts. For example, we were able to nd $11.3MM in unnecessary costs in a renery that could be saved by changing the control logic—a quick x that could, and most likely would, reoccur without a permanent change in the way these logics are developed. There really is not any reason that temporary xes cannot be integrated into the journey to a permanent solution. However, one must understand that temporary xes are just that—temporary. Do not let impatience overrule logic. Do not let the short-term pressures, no matter how grave, prevent permanent solutions to the limiting actors that prevent sustainable best-in-class best-in-class perormance.
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about abo ut tHE tH E autHo autHoR: R: Keith Mobley, MBB, CMRP Keith Mobley is a Principal Consultant with Lie Cycle Engineering. Mr. Mobley has earned an international reputation as a leader in corporate transormations, reliability engineering and process optimization. He is on the advisory boards o ANS I and ISO; a Distinguished Lecturer or ASME; and recipient o the Smarro Award or outstanding contribution in engineering and reliability. Mr. Mobley has served on Technical Advisory Boards or the Technical Association or Pulp and Paper Industry (TAPPI), Association o Iron and Steel Engineers (AISE), Society o Manuacturing Engineers (SME), and the Electric Power Research Institute (EPRI). Mobley has 46 years o combined business, nance, engineering and consulting experience in a wide variety o industries. He has 21 years o international consulting experience and 25 years experience in corporate positions including: • • • •
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He has also served as President and CEO o a $50M international consulting, engineering services and training company specializing in corporate transormations. Motorola-Juran Institute Institute trained, he is a Master Black Belt with hundreds o successul projects and 20 years o direct Lean-Six Sigma application. Mobley is the author o 22 textbooks including: • • • • •
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Contact Keith:
[email protected] 865.207.5640 Subscribe to Refections on Excellence
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