1. EbeFixer Stooge and the Cost of Quality Past

    December 19, 2010 by

    Hello all,

    Here is another great article from our friend Adam Stoehr of the National Quality Institute in Canada. The National Quality Institute, http://www.nqi.ca, are BPIR.com’s partner for Canada.  Adam’s article is about the story of EbeFixer Stooge and the cost of quality.


    EbeFixer Stooge and the Cost of Quality Past   

    Adam
    By:  Adam Stoehr, MBA, BBA, NQI CEP®
    Vice President, Educational Services, National Quality Institute

    Once upon a time there was a manager named EbeFixer Stooge.  Stooge was always in a bad mood.  His job was to find problems and fix them.  He was an expert at fixing things.  He would sit in his office long days and nights reworking all the mistakes that were made by his co-workers.  He was known around the office as the Re-Man.  His specialties were re-work, re-pair, re-do, re-place, re-call, re-anything!  Despite his grumpiness, Stooge was really good at what he did.

    One of the things that he was particularly good at was counting all the money he was saving the company.  Every day at 7:30 pm he would sit at his desk and calculate the money he saved the company and produce his re-ports.  These daily re-ports could easily have 30 plus pages of charts and figures in them.  By the end of the week the re-ports would pile up high on his desk so that he couldn’t be seen behind them.   Sometimes you could walk past his office and hear him mumbling under his breath behind the huge piles, “money, money, money, money, saving all this money”.

    piles

    Stooge loved Christmas time.  Not the way that most of us love Christmas time.  He loved it because he could go into the office and have some peace and quiet.  His office was one of those offices that closes for the Christmas holidays.  This year was no different.  All of the staff were home with their families.  Everyone except for Stooge.

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    It was Christmas Eve and Stooge was sitting at his desk cranking out re-ports.  He was quite happy sitting by himself.   It was past dinnertime and Stooge was about to lock up for the day.  He was planning on coming in bright and early on Christmas morning to finish off some more of his re-man duties.   Just before he shut down his computer a new message arrived in his inbox.  The message was from an old mentor of his named Jacob Smartly and the message was titled: “The Cost…”

    He opened the message and it read: “EbeFixer.  Don’t forget about the Cost of Quality.   You will receive 3 messages before midnight, each one giving you insight into the Cost of Quality.  The messages will explain how the cost of quality can be divided into three categories.  Cost of prevention, cost of inspection, and the cost of failure.   Don’t forget the best places to spend the money.  Best Regards, Jacob Smartly (aka re-bug).”

    Stooge was surprised by the email.  He hadn’t heard from Smartly for months.  Last time they spoke, Smartly told Stooge that he had been meaning to share some thoughts. Smartly was known as re-bug because he always bugged Stooge about his re-man ways.  Stooge was thinking back to what it was like working with Smartly and thought… bah….re-bug….

    He shut down his computer and reached for his coat.  Just then, his BlackBerry buzzed and sure enough there was a message titled: “The Cost of Quality Past.”  Stooge sat back down and read the message.  The message was all about prevention costs.  Prevention costs are things like training costs, planning costs, process improvement costs, and continuous improvement activity costs.  Prevention costs are sometimes referred to as controllable costs, meaning that we have control over how much we spend on them.  Prevention costs are things that organizations spend or spent money on to reduce exposure to future failure costs.  Great organizations spend most of their quality dollars on these “good” prevention costs.   A dollar spent in the past will prevent a bunch of dollars being spent in the future.

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    Stooge was reminded of a time when he used to think more about controllable costs.  A few years ago when the company hit hard times, he had to make the decision to put a freeze on all training dollars.  Travel for planning meetings was also axed.  Plus, all continuous improvement efforts were put on hold until further notice.  Instead, all hands were to be on deck for crisis management with a focus on getting through the storm.  At the time it saved the company around 20% of the HR budget and he was rewarded and praised for his efforts.   

    His BlackBerry buzzed again.  The second message was titled: “The Cost of Quality Present.”  This message built on the theme of prevention from the first message.   It went on to talk about the cost of inspection and appraisal.  Inspection costs are things like auditing, checking, proof-reading, and testing.  It is the cost of checking for deficiencies before they affect customers.  These costs are also controllable.  They don’t happen in the past; they happen after the fact or in the present.  These costs are important things to spend money on, but world-class organizations try to avoid these inspection costs over the long term.  Inspection costs are the last chance to catch problems before the customer sees them.  They are necessary, but the best organizations in the world try to figure out ways to prevent problems before they become something that can be inspected in the present.

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    Before Stooge had time to reflect his BlackBerry buzzed again.  This message was titled: “The Cost of Quality Future.”  This message was darker.  It was all about failure.   Failure costs are the costs of getting things wrong.  Examples of failure costs are re-work, re-do, re-call, re-pair, re-anything.  These costs are no longer controllable.  They are resultant.   Resultant costs are not those that we make happen, they are those costs that happen to us.  The worst part about failure costs is that they are much more expensive than the other two costs.   The email detailed recent examples like the oil company that could have prevented the oil spill by installing a $50,000 (controllable) valve but instead was exposed to the cost of clean-up of $23 billion (resultant).  Or the food company that could have prevented a listeria outbreak that caused deaths, with a $1 million prevention plan.  Failure is expensive and when we fail, it’s too late to fix the long-term damage.

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    Just then, Stooge was overcome with self-awareness.  I am the re-man.  I focus on failure.  I am a failure expert.  How could this be?  I’ve always thought that quality is about fixing stuff.  But Quality is really about preventing stuff from going wrong.   He looked at the piles of re-ports on his desk and thought that he was measuring the wrong thing.  In fact he wasn’t saving the company any money.  He was costing the company money.  Failure is way more expensive than prevention.   

    “It’s not too late!  I can change!  I can shift the focus of our spending from expensive resultant costs to cheaper controllable costs!” shouted Stooge as he stood up and in one fell swoop knocked all the re-ports into the recycling bin.

    Stooge decided to take a week off for Christmas.  Then on January 3rd he was back at work, a new man.  No more re-man.  He was Pre-Man (short for prevention man).   That morning he lifted the freeze on training dollars.  He reinstated travel for planning meetings.  He planned out a pathway for organization-wide continuous improvement activities.  He built a cost of quality communication plan to share his new-found knowledge with the rest of the organization.  He even had a new nameplate printed for his office door and desk with the new nickname of Pre(vention)-Man.

    As the year went by, the organization started performing better.  They were failing less.  Stooge was always in a good mood.  His job was now to find problems and prevent them.  He was an expert at preventing things from going wrong.  He would work with his colleagues to find ways to prevent mistakes.  He was known around the office as the Pre-Man.  His specialties were training, planning, and continuous improvement.  Stooge was really good at what he did.

    Stooge was even rewarded for his efforts with the De-Stress Award that was highly regarded around the office.  After receiving the award Stooge read the inscription out loud.  It read: The De-Stress Award, presented to EbeFixer Pre-Man Stooge.

    De-Stress Us… Every One…

    destress


  2. Steve Unwin on the Spirit of Quality and the Search for Answers

    October 6, 2010 by

     

    Steve Unwin

     

    Steve Unwin provides entertaining yet unquestionably valuable insights to modern life in his Access to Excellence newsletters. In “Illusions – What happened to the spirit of quality?”, he presents the three illusions — time, money, and quality — that may hinder the possibilities of having a better lifestyle.  He questions the “drumbeat of quality” – therefore to do more with less, whether this be less effort, less cost, less time or less waste.   In “The search isn’t for the answer,” Steve addresses man’s persistent need for answers and solutions. He explains that often the outcome does not appear to matter to people/organisations as much as the need to be seen to be doing something (however, incorrect the action might be).  Steve emphasises the need to continually ask questions.

    Other areas of interest in the newsletters are “Children of Chernobyl,” Steve’s way of reminding us of the existence of the people in Belarus; and an offer of a book review opportunity for Six Days, the story of a simple business manager who found a way to view the world in a different light.

    To download “Illusions – What happened to the spirit of quality?” click here

    To download “The search isn’t for the answer” click here  


  3. Culture for Continuous Improvement

    August 13, 2009 by
    There is some exciting research going on at the COER (Centre of Organisational Excellence Research) at the moment.
     
    Past research shows that culture plays a key role in sustaining continuous improvement in organisations. Continuous improvement, in turn, is often viewed as critical for organisational efficiency and waste reduction. However, the effect of culture in the specific context is less well understood. Several levels of culture such as the national culture, corporate culture and organisational sub-cultures, are present simultaneously. Which ones are important, and under what conditions do they become important? What needs to happen to ensure that the existing cultural diversity results in continuous improvement? Which role does – and, in fact, can – management and organisational leadership play?
     
    This doctoral research is seeking answers to these questions using a multiple-case methodology. For participating organisations, this presents an opportunity to benefit from cutting-edge research and at the same time help advance the scientific understanding.
     
    Participation in the study is free of charge. If you are interested in having your organisation participate, please get in touch with me for further information – either by email (J.P.Wagner@massey.ac.nz ) or by leaving a comment.
     
    Jürgen 'Phil' Wagner

    PhD Student
    Centre for Organisational Excellence Research (COER)
    Massey University


  4. The World Recession is Great for Quality Professionals Or Is It?

    May 12, 2009 by

    I recently attented the Annual Quality Congress Middle East in Dubai hosted by the Hamdan Bin Mohammed e-University. It was clear that I was in a Dubai much different to the one I visited a year previous. The economic recession had hit Dubai hard – much of the construction work had stopped, many of the foreign workers had been forced to return home.. I visited a few companies there – one company whose Head Office had previously been bustling with people was now quiet – there were mostly empty desks and one of their first departments to experience lay-offs was their Business Excellence Dept – deemed to be expendable in hard times.

    At the conference many of the presentations addressed the recent downturn.   

    One of the most interesting presentations was by Steve Unwin of AssesstoExcellence – titled "Role of Paradox and Uncertainty in Success".  The general theme of the presentation was on "change" and "perception" – informing us that we all perceive situations differently based on our experiences, our culture and how we filter information and that  when a potential learning event occurs (e.g. a quality problem or a recession) can we really learn from it and is it useful to do so? The point here is that we never find ourselves in exactly the same situation as every moment in time is different – time is constantly changing, we are changing, our perceptions change, the business environment and associated variables are changing etc etc..     

    Whether you agree or not with Steve's views he certainly got everyone thinking – something many of us don't usually have time to do!

    To highlight Steve's thought provoking views on life I have provided a snapshot of his recent newsletter below. He begins his newsletter by sharing his experience at the conference in Dubai …

     "Much of the conference reflected the current 'exceptional' times. I was struck by one speaker's plea from the heart. 'I wish we had tools to deal with the unexpected'. In my hotel I noticed the fire buttons. My mind wandered and I imagined an Emergency button for Improvement Tools.

    In a fire we'd all be breaking the glass, yet I don't see anyone breaking my imagined glass..

    I am sure many quality professionals would argue this is precisely what we should be doing. And that we aren't because we don't understand, or "we lack management commitment", or vision or the good sense to realise the power of the tools.

    I can't help thinking that if these worked we'd be deafened by the breaking glass in times like these.

    The real explanation I think is much simpler. The tools don't work. That isn't to say that they can't work, just that they very seldom do, and even when they appear to work, it's only briefly and always by accident." 

    So do you agree with Steve? Why is it that quality professionals do not become more valuable in times like these? Is it because the tools don't work? Your thoughts please..

    Dr Robin Mann

    Co-owner, BPIR.com Limited.  

    PS. The American Society of Quality published a report on How The Economic Recession is Affecting Quality Activities in December 2008. This report presented the views of 47 individuals offering comments on ways that the economic recession is affecting them and the companies where they work. The results show companies paying more attention to cost cutting, waste reduction, efficiency, and downsizing, and somewhat less attention to growth through either new product introduction or acquisitions.


  5. The Cult of Six Sigma and PodCasts

    by

    In a recent survey it was found that from 20 improvement tools that Six Sigma was the least popular.. with 22% of respondents indicating they used Six Sigma.  Whilst this % is relatively high (more than 1 in 5 organisations) I was a little surprised that it was the least popular considering the publicity and fanfare it has received over the past five years.

    Obviously least popular does not mean that it is not effective. Popularity and effectiveness do not necessarily go together.. Also, perhaps, some industries are more likely to apply this technique than others – perhaps Service Industries do not see the relevance of Six Sigma as much as other industries where data may be more readily available or perhaps some organisations think that they are too small to get the benefits from Six Sigma. 

    Some answers to the relevance of Six Sigma to Service Industries and Small Organisations and an excellent overview of the technique has been provided by Alan Skinner of the Faculty of Business, University of Sydney. Go to the PodCast here to hear Alan's views.

    Also, if you are aware of other useful PodCasts or Videos showing the use of quality tools or best practices, please let us know at the BPIR.com.

    Thanks 

    Dr Robin Mann

    Co-owner, BPIR.com Limited.