Tuesday, October 27, 2015

Problem Solving: Sometimes They Hide in Plain Sight

Scene 1: A business lunch in Saginaw Michigan

I had the pleasure of grabbing lunch with an old friend of my father's last summer. Well, they were friends a long time, and worked closely together for the better part of two decades. I should also qualify that Dad's "old friend" is 86 years young, and the founder of Morley Companies, in Saginaw Michigan, a growing organization of over 2,000. A vibrant Lou Furlo, Sr. drove to lunch with one of his three sons who run the business he started, I followed, and had to work to keep up. Slow is not in Lou's DNA.

My father had spoken highly of his friend's sales, promotional, and marketing acumen from the time I was old enough to know that sales and marketing and promotion had something to do with business. Dad was a Finance man. He counted the money and his friend convinced people to send it in to the company. This was the simplistic perspective of  a teenager more interested in cars and hockey.

Fast forward 30 or so years, and I now know the importance of all three aforementioned functional areas as they relate to making a business thrive and grow. I have also become an engaged observer and advocate of process management, system thinking and problem solving. As such, I find it keenly interesting to hear of stories of complex problems that had simple solutions.

Lou went on to tell the story of when my dad was with former Big 5 Accounting firm Arthur Andersen doing audit work in the early fifties, after finishing his Accounting degree at University of Michigan. He was running an audit for a Kroger grocery store. This particular store had always just missed the mark, underperforming in spite of sharing common demographics, inventories, store layouts and merchandising. Kroger was applying Standard Work back then too. Consistency was key. The firm had been doing the Kroger audits for several years, and the mystery related to the lower revenues and margins at this one outlier was still perplexing for both the accounting firm and Kroger management.

After the audit my dad returned to the office and submitted his work. Nothing new, nothing different. The store was still an anomaly. Then, weeks later he overheard a co-worker talking about how Kroger and standardized everything: Freezers, floor plans, loading docks, fixtures and end caps ... and every store had 12 check out lanes. Bingo. After convincing his manager that the store in question did indeed have 13 checkout lanes the audit team returned. The store's manager had embezzled millions over several years with a 13th checkout lane that never made it to the books.

Scene 2: A hunting blind in east Texas

A couple of years ago I got to hunt wild hogs with one of the brightest Lean Six Sigma Master Black Belts I have had the pleasure of knowing. Mike Carnell was a Marine and a bull rider before getting into Quality and Operational Excellence. His resume includes Lean Six Sigma deployments at Motorola, Allied Signal, GE and many other F500 firms. He drove over $100 million in financial impact from 2006-2009 alone, and has trained of 6,000 employees in continuous Process Improvement and Change Management.

In 2012 was hunting wild hogs with one of the brightest Lean Six Sigma Master Black Belts I have had the pleasure of knowing. Mike Carnell was a Marine and a bull rider (yes a cowboy) before getting into Quality and Operational Excellence. His resume includes Lean and Six Sigma deployments at Motorola, Allied Signal, GE and many other F500 and International firms. He has driven over $1 billion in financial impact over a career spanning 30 years, and trained 6,000 or so in Continuous Process Improvement and Change Management methodologies.

Mike and I were talking Lean. OK, ‘whispering Lean’ as dusk was approaching, and after all we were hunting. Wild hogs have terrible vision, but their sense of hearing and smell are acute. I guess they are also incapable of seeing problems that are right in front of them, but they can smell and hear problems just fine! Mike was explaining that applying Lean principles in manufacturing operations was not always as complex as it might sometimes seem. The story he told to illustrate that point was about a project with one of a global brand’s coffee processing operations.

The problem was simple: The plant was at capacity even though outputs had been higher in prior years, and it was being forced to move product to other facilities to accommodate production demands. In the plant the coffee beans were stored in silos lined along exterior walls. The beans were then moved pneumatically via pipes from the silos to roasting ovens, then back to another set of silos to cool. Some of the roasted beans were then routed directly to packaging lines to be marketed as whole bean coffee. The other roasted beans went to grinders, and the ground coffee was then moved to a large valve assembly for blending. All the silos with ground coffee fed into a pipe leading to the valve. But, there was also another pipe coming out of the feed in front of the valve, going up to the ceiling, over the valve assembly, and into the pipe that moved the ground coffee from the valve to the packaging lines.  

Mike asked the plant foreman what the pipe that went to the ceiling and over the valve was for.

Foreman: “They don't use that anymore.”

The follow-on question was per Mike's style, pretty straight forward, “What was it used for when they used it?”

Foreman: “Well, not all of the coffee is blended, so some of it used to go through that pipe and up to the ceiling, then straight to packaging.”

Mike: “O.K., just curious, but how much of the ground coffee is packaged as blended coffee?”

Foreman: “Most of the coffee is not blended; probably 90% of it is not blended.”

Mike: “So, just to make sure I’m not over analyzing this – all of the coffee ground in the plant goes through this one valve, and 10% of the coffee gets blended … but everything goes through the valve?”

Since you can all see how this movie ends by now, we'll fast-forward. The valve was indeed the point of constraint for the system. A PLC (Programmable Logic Controller) that diverted unblended ground coffee needed to be reprogrammed. A single controller was creating a capacity limitation valued at approximately $2 million a year.

Mike went on to add, “I felt I had earned a longer lunch at that point.”

… And, the moral of our stories is:

Even though expert problem solvers and finance professionals are able to collect more data, use sophisticated analytical tools and software visualize that data, and apply Lean, Six Sigma and Theory of Constraints methodologies to glean deeper insights than ever before; big problems are still capable of hiding in plain sight. Walking past them everyday does not minimize their impact, but it sure seems to shroud them in camouflage. So, the next time you are searching for answers to solve a problem, keep in mind that right under your nose, at least in some cases – might be a great place to start.