Sunday, July 17, 2022

Painting a Leader’s Vision or Dream - Lean Six Sigma Success

Painting a Leader’s Vision or Dream - Lean Six Sigma Success A good leader always paints and explains their vision very well. When I took over as head of a procurement division for an integrated paper company, there were three plants with over $500 million in purchases per year. I was to transform Purchasing into Supply Management with some Lean Six Sigma tools. Plant senior management, who were not supportive, decided to downsize my department at the plant where I was located from eight to four employees, starting from day one. The plant manager was not committed to the transformation attempt and actually wanted it to fail. I decided to do everything in my power to disappoint him and be a success. At the first meeting I had with the department team, two people actually started to cry. They just didn’t know how they were going to keep up with the work. This showed me that they were conscientious enough to care and feared being overwhelmed. I pledged that within six months, they would have so much spare time; they would be coming to me, asking me to give them a project to work on to move the business ahead. They all suddenly burst out laughing at my statement either out of nervousness, fear or what they felt was a preposterous statement. I was not sure what emotions were driving the laughter but I resolved to make it happen. I volunteered to take over buying of one of the major com¬ponents in the plant. Of course, I had no idea about the workload involved in the buying process. The next day, four file drawers of paperwork for the component were moved into my office. I rolled up my sleeves spent a week creating a database to help me manage the com¬ponent, which had no previous reliable information. Eventually a supplier helped me improve the database and dramatically streamline the ordering process. I then sat down with the team and explained what happened and restated my vision to dramatically reduce their non-value adding work. I soon found out that purchasing data was scarce or non¬existent. The current purchasing employees could not give me any good sum¬mary statistics and were so caught up in firefighting, transaction chasing and expediting, that confusion reigned supreme. No one could adequately explain the purchase-order process (the as-is process). There were no standard operating procedures. Undaunted, I rolled up my sleeves and typed purchase orders myself just to get an idea of what happened. Their previous boss had shown no such interest in the actual day-to-day work. As a team did a process map of the purchase-order process. We locked the doors to the department while we had process-mapping meetings. Then we all went on a data expedition, and since I knew some computer programming and could query from the company data¬bases, we started to compile our data. We discovered that we had approximately forty thousand transactions or buys per year. By using a Pareto chart, we saw that over 80 % of the purchase orders were under $200. The majority of our purchases were small-dollar items. Additionally, only about twenty people made about 90% of these buys. They were our super-users or power req¬uisitioners. We decided to concentrate on them and educate them about our efforts to transform the entire process. We designed a short-order purchase form for purchases under $1,000 that they could use. They participated in the design of the form. No inter¬face with purchasing was required for the form. The middleman (purchasing) was eliminated. The only catch was they had to buy from a list of our preferred suppliers. If they wanted to deviate from the list, they needed to get our approval. The team started to see the potential of my vision and the approach and enthusiasm and confidence grew. We did a new process map for the short-order form with the super-users participating. We created a manual and SOP for the super-users that included the preferred supplier list, contact information, and basic purchasing terms and rules. We posted a process flow map in the department for everyone to see. The result was our workload was drastically reduced, and the buyers didn’t have to worry about these small purchase orders. Our suppliers remarked that the error rate on these short orders was greatly reduced. We recognized super-users who had error-free months, and who worked well with suppliers. We eventually switched to purchase credit cards for these twenty superusers, which practically eliminated all paperwork. Finally, we had time for supplier rationalization or reduction-and-strategic initiatives. Again, we mined the data and found out that we had over 20,000 suppliers. With hard work and consolidation of buys, we got that number down to 209. We set up new preferred suppliers and greatly simplified the entire process from requisition to payment. We standardized payment terms, which greatly relieved accounts-payable’s workload— they instantly became our allies. In four months (not six), my employees had the confidence and trust in me to come to my office and admit that they had nothing to do that day, and asked what projects could they work on to move the business ahead. Most of this progress was due to using some simple Lean Six Sigma process improvement tools. The key element was articulating the vision well, reinforcing the vision with success and never giving up on the dream. The best part was that corporate gave us an award for the best purchasing department for the year. The vice president of purchasing, with plant senior management and the plant manager present, awarded it to us in front of the entire plant. A good leader always paints and explains their vision very well Contact Dr. Tom = for newsletter sign up My Books link:

Saturday, July 16, 2022

Listen to your followers and help them

Listen to Your Followers’ Problems and Help Them. I once had an employee who was initially very upset that I took over as leader of the department. She thought that she deserved to be promoted and become the leader. She had more experience than me. She was very cold to me and resisted any initiatives that I proposed. Shortly thereafter, her mother became very sick and it got to the point that she needed caregivers. I gave her as much time of as I could and was very flexible with her work duties and responsibilities. She finally requested family leave for eight weeks and it was granted. While she was gone, I attempted to do as much of her work as possible and got a very good understanding of her duties, systems and techniques. I stayed late many nights and weekends working at both my job and hers. When she came back from family leave she expected piles of work awaiting her and very hectic weeks. She was surprised that I had kept up and completed almost all of the work. She came into my office and started to cry and I thought that something had happened to her mother. Instead she was grateful for what I had done and thanked me informing me that no boss had ever done anything so kind. I then suggested that we make a request to our information technology department to upgrade some for the systems that she used, and I was now familiar with by doing her job. We jointly filled out the request that day and it was installed in three weeks. Her attitude towards me completely turned around. Whenever there was a tough project she volunteered for it. She became the most loyal employee to me in the department and a friend. As a leader, if someone has a problem and needs help, especially when it is personal or family related, go out of your way to help them. Listen to your followers’ problems and help them. Contact Dr. Tom = for newsletter sign up My Books link:

Friday, July 15, 2022

Website Design and Voice of the Customer

Website Design and Voice of the Customer A major company that I worked for wanted to redesign their inter¬nal website. They assigned their best programmers and some marketing people to design the new website. The programmers insisted on putting all the latest bells and whistles on the website and convinced the project leader that these were necessary upgrades. Unfortunately they did not complete any Voice of the Customer exercises in the design of the web-site; they did not do any surveys or focus groups or figure out what was critical to the internal customers. They were too enamored with the latest website designs. The first preview or showing of the new website was a disaster that ended in chaos. The programmers were disheartened and did not know what to do. A senior manager suggested some voice of the customer tools to the team, and they quickly started them. Small focus groups yielded the best information. They gradually redesigned the website and incorporated many of the suggestions of the internal customers. The website was a huge success and many of its principles were reapplied to the company’s external website, but not without thoroughly testing the voice of the external cus¬tomers first. Contact Dr. Tom = for newsletter sign up My Books link:

Innovation Via Shopping Cart Reverse Engineering Works!

Benchmarking Via the Shopping-Cart or As Is to To Be Many organizations brag about their benchmarking efforts and how good they are at it. I once worked for a large paper company, and a lot of our spending was for pack-aging materials involved in the making of toilet tissue and paper towels. I was involved in materials management, plant scheduling, and packaging engineering at the time. Fortunately, all the people involved in these operations reported to me. We were also very fortunate that the plant manager had a materials background and was open to suggestions from us. At first, we went out and tried to get information from various paper institutes, but we found this data to be unwieldy, expensive, and not up-to-date. Then we just decided to use the shopping cart. We went out to various supermarkets and stores and purchased as many of our competitor’s products as we could. We basically dissected them and the materials that they used, looking to see what they had done differently than we had. They were using cheaper mate¬rials but had suffered no disconcerting quality drops. Over the years, we had not kept up with the advances in materials. In addi¬tion, the process to get new materials approved was unwieldy and required corporate approval. This discouraged almost all the plants from taking risks in the materials area. In other words the As Is was our materials that we used in our products and the To Be was our competition’s materials that they used in their products. We put a matrix together of us versus all the competitors and all the materials. We also showed the estimated cost dif¬ferential and savings on a one-year basis if we in fact adapted the most cost-effective material of our competitors. We were just striving for our competition’s To Be state! We could not believe the numbers, and we were shaking when we presented the matrix to our plant manager. Lucky for us, he brought it up at a staff meeting, and told all the department heads that they were to cooperate with our materials trials and experiments. He also told us to not ask permission from corporate for the trials and to just do them; sort of a Just Doits type project. If any flak developed, he would run air cover for us. I was fortunate to have an extremely enthusiastic people working for me. In addition, we got superb cooperation from our shop-floor staff. They knew our materials inside out. They were all very familiar with the As Is state! People are competitive, and when they heard that our competitors had made it work, their personal pride took over, and they wanted to make it work. It helped when we showed them the competitor’s product and the materials that they were using. Thyme literally tore them apart and examined them. Then they knew that this was not just us making up a plan and trying to achieve some impossible goals. They participated in the brainstorming to get to the To Be. We assembled a trial plan, started intense packaging-supplier visits, took shop-floor people along with us to talk with our sup¬pliers, and asked further advice on changing over to the new materials. Our suppliers were extremely cooperative in making suggestions. Many of them were in the plant on the shop floor when we ran the trials. They could see firsthand any issues we had, and they made suggestions on how we could improve the tests. We were stunned at how rapid and successful the trials were. We knew the brainstorming had paid off. Many of the materials specifications (As Is) had been in force for years and had not been updated, challenged, or changed. Let me give you an example—one that will make you just shake your head. Many of our corrugated boxes for toilet tissue products were placed in two-, three-, or four-color cases. Our marketing people had free reign to decide how many colors they wanted on their cases. All of the cases had barcodes on them, and when they went by our production counter reader or scanner, the reader counted them as one case. Obviously, it’s vitally important to have an accurate production count. Unfortunately, the red barcodes were extremely difficult for the reader to read, and often they were skipped or sent to an off-count conveyor. Bottom line, it hurt our production-count accuracy. We also knew that the only person who usually even saw the case that our prod¬uct was in was the stocker in the store—not our final custom¬ers. The cases were usually cut up, bundled, and recycled. Our plant manager soon convinced marketing that a one-color black case would be the cheaper, more efficient strategy. We were very lucky to have a plant manager, enthusiastic shop floor personnel and cooperative suppliers who understood materials, and supported our use of Kaizen tools. In the first year, we saved over $20 million dollars. Contact Dr. Tom = for newsletter sign up My Books link:

Thursday, July 14, 2022

Treat People Like You Would Like to Be Treated

Treat People Like You Would Like to Be Treated Late one Friday afternoon I was working late in my Human Resources office. My phone rang and I identified myself and my title. The person on the other end of the line sounded frantic and wanted to order some cases of our products. I informed them that this was Human Resources and not Distribution but she pleaded for me to please help. She proceeded to list her order and what she needed. It was a list of about 15 of our most popular brands. I wrote it down and repeated the request back to her. I also gave her our fax number in Human Resources and requested that she fax the order to me. I would wait and let her know if I received the fax. I told her that I would put the phone down and go to the fax machine. I stood by the fax machine and sure enough, the fax shortly came through with the brands she ordered and where to ship it. I requested her phone number and said I would call her back shortly. I quickly walked over to the distribution center and talked directly to the shipping manager. I showed him the order and he recognized the person who requested the order. He put the order together immediately and procured a truck to rush ship it to the requested location. I then went back to my office and called her back and gave her the order number. She thanked me profusely. Subsequently the order arrived that night to the required location. After the weekend, I learned that the order was shipped directly to a marketing and trade show of one of our major customers that showcased our product. Treat people like you would like to be treated. Contact Dr. Tom = for newsletter sign up My Books link:

The Billion Dollar Boys

The Billion-Dollar Boys and Mega-Negotiations Story By Dr. Tom DePaoli I and a supply management colleague had been working diligently for a year to try and standardize MRO (Maintenance Repair and Operating) parts to include pumps, pipes and valves, electrical and operating supplies. We divided the storeroom parts into these four bucket areas. These were storeroom related parts for a major process chemical company. We used a market basket sourcing approach. We had conducted numerous strategic sourcing cross-functional teams and had worked hard to get our engineers to select standardized parts for our plants. These sessions were long and arduous. We had reduced the number of suppliers or OEMs (Original Equipment Manufacturers) in many categories to one or two. Our goal was to gradually replace the existing parts as they wore out with the new OEMs and strive for standardization in the MRO arena. We had a systematic well thought out plan for doing this and had negotiated contracts with the OEMs and distributers. We were approximately 80% complete which was quite an accomplishment for the fifty North American plants. Then the company suddenly announced that they were in the initial stages of planning a five-billion-dollar expansion in the United States. The winning five plants had already been selected. Some of the expansion was to be entirely new plants and the others were major rebuilds. The capital expansion was to start in six months. We were faced with managing a major capital expansion and a significant spend in the MRO area. We met with the Vice-President of engineering and decided to have a strategy session with him and the five selected plant engineers. We decided to have a one-shot bidding meeting with our preferred suppliers in Louisiana. We had a very good idea about the dollar amount of spend in the various buckets for the expansion. The capital job estimates had already been done and approved. We had four bucket areas in MRO: mechanical, electrical, piping and valves and operating supplies. We already had cost plus pricing contracts for 80% of our MRO. We did however still have at least two preferred suppliers in almost every major component MRO area like pumps. I suggested that we leverage the hard work that we had already accomplished. We would announce the capital expansion at a preferred supplier meeting and give an approximate future dollar spend in each of the four buckets (areas). We obviously had a lot of leverage and many of the bucket dollar numbers were huge. We had fairly accurate data from recent expansions and the capital job estimates. We then established these ground rules for the bidding process: 1. There would be only one round of bids. We urged the suppliers to give the bid their best shot. There would be no second bid rounds. We did not have the time to manage multiple bids. 2. We announced that we would in many cases narrow down the areas where we had two preferred suppliers to one, unless we had a good business reason for keeping two. 3. Although we had negotiated some significant total cost of ownership savings in the current contracts, we were open to enhancements from the suppliers and distributers. 4. We told the suppliers that we would not accept their standard spare parts packages like we had in the past. We would challenge their typical spares packages but would be especially open to creative ways of them controlling and managing the spares at minimal or no cost to us. 5. OEMs could work with distributers to propose any additional creative services to provide us. Quite frankly we had no idea how this mega-negotiation process would work. Fortunately, we had done a lot of supplier consolidation before this process. We had not had the time to even predict cost savings or eventual outcomes. We just did it. As the bids rolled back in, it was obvious that our suppliers had done their homework. All told the cost and other savings amounted to 20% of the 5 billion dollars or 1 billion dollars! We were stunned. For the next year, I and my supply management colleague, had to endure the “handle” or nickname of “the billion-dollar boys”, whenever we entered a meeting. Yes, we were good and worked hard, but we were also very lucky. The fact that the company was spending that much capital at one time when we were transforming to supply management really helped our leverage and savings potential. Author’s Biography Dr. Tom DePaoli, (Dr. Tom) is currently the CEO of Apollo Solutions (, which does general business consulting. He has had successful careers in corporations, non-profits, the military and academia. He has authored 11 books all available on Amazon. Contact Dr. Tom = for newsletter sign up My Books link:
Luck Helps or My E-procurement Software Installation Story I have extensive functional procurement and supply management experience. This attribute attracted an e-procurement software company to hire me as a sales representative and software installer. I went through a rigorous software boot camp and went to my first installation client. I was obviously very nervous and wanted to make sure that the client was satisfied with my performance and that the software installation went well. The client was a software company also but not in supply management. This was the equivalent of installing plumbing in a plumber’s house! They were highly critical of the capabilities of our e-procurement software and its limitations. I soon had a long punch list of aspects of our software that they were not satisfied with or wanted improved. Being new to the company I diligently sent every one of their requests up the chain to corporate development. I also made sure by phone call that development completely understood their request. The night before go live day I received the software installation disks from corporate. Much to my surprise the installation disk were version 6.0 and the client had only paid for version 5.0, I could not get anyone to give me any direction on what to do, and with the deadline fast approaching so I decided to install version 6.0. As I went through the testing I was relieved that the new software was up and running and stable. It had passed all the benchmark tests. I however was not looking forward to the meeting with the client the next day. I was sure that they would find even more issues that they wanted improved. I started the meeting and before I could get into the training plan, one of my client’s harshest critics spoke up, “Mr. DePaoli I want to commend you. I signed onto the software very early this morning and checked all the punch list issues that we had talked about and they were fixed. I apologize for being so critical of you and your company.” Although I was more shocked than him about these circumstances, I remained composed and just replied, “Great! I stayed up all night modifying the software to solve those issues.” What was amazing was that I said it convincingly and with a straight face. What had happened was that like a good soldier I had sent all these issues to development using the system required, and they had incorporated them directly into version 6.0 as a fix or as an option. Our client was ecstatic and within three months the client requested to upgrade to version 7.0. They specifically asked for me to personally install it. Luckily I was already involved in another major project and our vice president of sales assigned another installer to them that he said that I specifically recommended for them. They remained loyal customers for many years. Contact Dr. Tom = for newsletter sign up My Books link:

Know What Your Employees Do

A classmate of mine in the Navy Reserve was put in charge of a new concept Navy fuel unit that was to assist in fueling requirements during a war or national emergency. Members of the unit were all of different Navy rates, with little or no fuel experience, and had to learn all about fuel and how to fuel planes, ships, trucks, tanks etc. After the unit was trained the Navy decided to have a realistic war-like exercise at a Naval Air Station. During a twenty-four-hour period, the squadron would fly as many missions as possible. The sorties would be simulated by a computer and the planes would take off, complete the sortie and returned to base to be refueled, then immediately fly the next computer simulated sortie. The unit was divided into fuel teams for the exercise. The units would take turns fueling aircraft as then returned from their sortie, then the planes would take off immediately for the next simulated sortie. The planes were hot-fueled (and armed) and did not turn off their engines. My classmate could have just stayed in the command shack and watched the exercise but he had a different idea. He insisted that he inspect each team just before they went out to fuel the aircraft. After about 14 hours some men were visibly tired. When he inspected each team, he would “disqualify” one member for some reason, usually something innocuous like sloppy uniform, and take their place on the tarmac, directly helping fuel the aircraft and giving the sailor time to rest. The men knew the disqualifying reason was bogus and he was just giving them a break. After the exercise was over, my classmate had even stronger teamwork in the unit and each man knew that he clearly understood their work, mission and danger. Contact Dr. Tom = for newsletter sign up My Books link:

Lean Six sigma is Not Complicated

De-mystifying Lean Six Sigma (LSS) for Supply Chain and Purchasing Professionals Many supply chain and purchasing professionals are intimidated by Lean Six Sigma (LSS) and its proponents. Relax; it is just a disciplined approach to problem solving. It uses many tools that have been around for years and the tools have just been cleverly repackaged by consultants. Decisions are data based, disciplined and plodding. Without top-down commitment, it is doomed to fail. Make sure you secure this executive commitment, and better yet make participation a strong criterion for individual performance reviews (raises). Projects should be selected by ROI and since much time and teams are required for a project, they must return or save at least $300,000 to qualify as a full blown LSS project. Supply Chain and purchasing professionals must be involved in sourcing the LSS consultant. Experience is critical and a proven track record of project success essential. Get references and insist on examples of work. Use a fixed hourly rate and make sure all developed training and projects remain your property. You can try to make the contract performance based but many LSS firms will not agree to this. Make the goal to be self-sufficient internally within two years with all LSS training and projects. Some projects that have been done in purchasing and the supply chain are: inventory cost, part obsolescence prevention, lead-time reduction, backlogs, unexpected orders, customer service internal and external, cost of schedule changes, transaction flows, cost of return product, and supply chain optimization. Many of these involve process mapping which is a type of flow chart that illustrates how things are done and identifies areas of strength or weakness. LSS is not the only tool that can be used by supply management professionals for improvement. In my experience LSS should be used when the potential savings is great and you have some good data to analyze. If you do not have good data the LSS project will take even longer. If data is sparse, the Lean approach is much preferred which is highly visual, intuitive and does not require as much data. Always Lean a process before your use LSS. By this I mean eliminate any redundant steps in the process that can be easily eliminated first. Reduce the number of variables in the process. Try to understand the voice of the customer (VOC) clearly before your start process improvement. Remember if the customer does not really care or value a process step; ask yourself, “Why are we doing it?” Finally use kaizens for straight forward less complicated projects. The kaizen approach is usually done by the work team using the process and strives to eliminate waste in the process. The new kaizen improved process should then be quickly implemented. Supply chain and purchasing professionals must take the leadership role in LSS, Lean and kaizens. In my professional experience, the rewards of these approaches can be astounding. They do however require a measured and disciplined approach, and a commitment to not giving up! Dr. Tom DePaoli Contact Dr. Tom = for newsletter sign up My Books link: