Organizational Opportunities from the Frontline Story 5: Defining Best Practices | Operational Excellence Quick Hits

Speaker 1: (00:07)
In today’s session on organizational opportunities, stories from the frontlines and lessons learned from the frontlines. Today’s session, we’re going to talk about a construction company. So this construction company is a custom home builder and I was trying to help them improve their process. And so when I started to go look at the framing process, so when they started to frame the house, they had three different guys that were trained as framers. And so when I talked to the first one, he’s like, “Oh, my process is the best. These other two don’t know what they’re doing, because when I do it, my labor is much less, I use a little bit more material and so mine’s better than theirs.”

Speaker 1: (00:46)
So then I go talk to the second guy and I talk to him. He says, “Well, those other two, they don’t know what they’re doing. My practice is the best. And so when I do it, I use a little bit less material, but my labor’s a little bit more.” I’m like, “Okay.” So now I go talk to the third guy and he says, “Oh, those other two don’t know what they’re doing. My process is the best. I might use a little bit more material, a little bit more labor, but my quality’s a lot better.”

Speaker 1: (01:11)
So the question is, which one’s correct? So if I have three different guys that are framing and they all have different perspectives on which process is the best, then we have conflict. And so how do we overcome that? So which one is the best in this case? And they all believe that their process is the best. What we want to look at is we want to look at processes that are repeatable and reproducible. So that creates a reliable process. And so if processes are not repeatable and not reproducible, then they’re unreliable. And that unreliability, what does that cause? It causes variation. That variation in the process gives us different outcomes. So the variation is the enemy to any process. So of course if we’re using different methods, we have variability in the process just from that.

Speaker 1: (02:02)
So what is variation? So if we define variation, variation’s everywhere, we can’t eliminate variation. It’s going to happen in every process. So what’s the definition of variation is basically the difference between what we get from the process and what we expect from the process. So of course, this construction company, we have a standard in terms of how many hours they expect to frame the house. They have a standard bill of material on how much material it should take to frame the house. And at the end of the framing process we have variations. So it’s different than what we expected in terms of labor and material. And of course, if we got different processes of doing it, quality’s going to vary. So the variation becomes the root cause of all the problems that we have throughout the day because we all know that stuff happens.

Speaker 1: (02:51)
So how do we deal with this? So if we have a lack of standard work, what are the effects that we see from that? So the issues from lack of standard work is we have quality issues. So we got to go back and rework stuff or scrap stuff. We have labor variances, so it takes longer or less than what we expect, or we have material variances. Most of the time I see the variances in excess of the standard, not less than the standard. We have finger pointing, so everyone’s like blaming other people for the problems. Then we have conflicts between employees. We have management blaming employees for problems. We get customer complaints and then our costs increase.

Speaker 1: (03:31)
So if you have any of these issues in your organization, it’s probably due to a lack of standard work. But in this case, what is standard work? So standard is a rule or an example that provides clear expectations. So it’s the practice of setting, communicating, and following and improving standards. And it’s agreed-upon set of work procedures that establish the best and most reliable methods and the sequences for each process and each worker. So we got to strive to move towards standard work.

Speaker 1: (04:03)
Now in this case, we had multiple people thinking that their process was the best. So I went back to the owner and I said, “Well, first thing we need to do is we need to determine what’s the criteria that we’re going to evaluate the process against.” So if we don’t have a standard method for evaluating the process, then everyone thinks that their process is the best.

Speaker 1: (04:24)
How do we establish this criteria? So if we establish this criteria on how we’re going to evaluate the process, then each method can be evaluated for that best practice. If we can evaluate each method against that criteria, we can establish best practice. And it’s evaluated with data. So it takes out people’s opinions. So that’s what we needed to do. We needed to come up with a criteria for evaluating each of the framers and then take that criteria, establish what is the best practice. And it’s probably a combination of what all three of them are doing. Very rarely do I find that one person has best practice and the other two are not best practice. It’s usually a combination of the three. But we need to get all three of them to agree on best practice and then start working to that best practice.

Speaker 1: (05:13)
So when I work with companies, and if you talk to any of my customers and you ask them what’s the one rule, so when we’re implementing operational excellence, we only have one rule. And so if you ask them what the one rule is, they’ll tell you the one rule is we follow the rules, period, zero exceptions. So why is that important? So this comes from what I learned from Dr. Deming. So Dr. Deming said, “Do a process consistently, even if it’s wrong.” And the reason he said that is because if you have each person doing the process differently, you have no idea between the cause and the effect of the outcome of the process.

Speaker 1: (05:54)
So in order to establish what the cause of the problem is in the process, we need everyone to do it the same. So that’s why the one rule. So when we establish the rules on how things are done, we follow the rules with zero exceptions. So now if we follow the process and we don’t have any exceptions, then when we don’t get the results we’re expecting, we can document what happened and why we didn’t get the results. Then we can go back and do the analysis and figure out the true reason why the process didn’t achieve the results we were getting and correct the process.

Speaker 1: (06:33)
So this following the one rule is extremely hard. It takes a lot of discipline. So if we can establish standard work, what are the benefits of that? Of course, it enables us to visualize a difficult process. It provides a means for documenting the process. Reduces variation in the process. Gives us a glimpse into the entire process and how it flows. Documents how the process should be performed. Can help us identify opportunities for improvement. Eliminates redundancy and non-value-added activities. And focuses on facts not personalities, perceptions, biases and misconceptions.

Speaker 1: (07:07)
So that’s our session for today. I hope you enjoyed our session. And join us next week for our next story of opportunities from the frontlines.