Oct
31
An Open letter to Governors Strickland (D – Ohio), Daniels (R – Indiana), Granholm (D – Michigan), and Premier McGuinty (Liberal – Ontario) – The Buck Stops Here (please)
Filed Under Leadership | 1 Comment
Your economy stinks and it is getting worse. It is in no small way being influenced by The Big Three US Automakers. And it is about to be made dramatically worse. This is either going to be because GM or Chrysler or both go bankrupt or they merge. Merge is a kind word, it is really that Chrysler will be bought and the lives of people who have dedicated their careers to Chrysler will be devastated.
First, let me say that I agree with Governor Granholm that the merger is the lesser of the two evils and because that is true, it is what is going to happen.
Why is this happening? I know people will point to Wall Street and the financial crisis and the corporate greed and all of today’s headlines and there is some truth to that, but the truth is that both of these once great companies have been in decline for a half of a century and today’s headlines are the corporate equivalent to bird flu – the weakest of the population die. Period, end of story.
The truth is all of the indicators have been there and every one of you has examples in your area of companies that have done the opposite. Think Toyota and Honda. What is different? Three factors –
1) Toyota and Honda have a local supply chain to a much greater extent than the Big 3. The Big 3 have “saved” billions by going to an Asian supply chain. Wow, some savings. What they have really done is avoided the hard work of building a competitive supply chain locally. You, nor the leadership of the Big 3 can do anything about the sins of our forefathers, but you can make sure that any concessions you grant in the future guarantee the rebuilding of local supply chains. Read The Machine that Changed the World if you are unclear about the concept.
2) Toyota and Honda don’t have the “legacy” costs of the Big 3. True, but this should have been “pay as you go” and it wasn’t. GM, Ford, and Chrysler are on the hook for promises made decades ago and not funded or funded and lost in high risk investments. Toyota and Honda are paying a living wage to their workers; in fact you will find they are preferred employers everywhere they go. You, nor the leadership of the Big 3 can do anything about the sins of our forefathers, but you can make sure that any concessions you grant in the future come with a guarantee to “pay as you go” and low risk investment.
3) The cost of the leadership overhead. This comes in two forms, number of layers of management and executive compensation. Go look at the org charts of GM and Toyota, notice any difference in the number of levels? Five is ideal and has been documented thousands of places. The Big 3 (still) have a lot more. Executive compensation - G Richard Wagoner Jr. Total Compensation: $8.5 million 5-Year Compensation Total: $22 million – Alan Mulally $2 million base, $18.5 million bonus – Robert Nardelli reportedly $1, but let’s see what happens at the sale. Sorry Rick, Alan, and Bob - I believe that you deserve to be paid well but that’s obscene while you are presiding over the destruction of people’s lives that have dedicated their lives to your companies. In a reflection of Toyota’s team-oriented approach, its executive pay is paltry by U.S. standards. Analyst Ron Tadross at Banc of America Securities estimates the total annual compensation of Toyota’s CEO at under $1 million - about as much as a vice president at GM or Ford Motor Co. makes. At the risk of being rude, it’s time to stop the bullshit.
Governors Strickland, Daniels, Granholm, and Premier McGuinty; you are going to be asked for concessions by these companies. Think about the concessions you should be demanding of them. The Buck can stop here (in the mid Americas) and also not in just a few hands.
Gary
Oct
28
There are frequent questions on the discussion boards asking for things like a z table from -6 to +6 standard deviations – or a derivative of it a sigma table from 0 to 6 sigma (the old 1.5 sigma shift). I have also helped people through things like the CQE or CSSBB exams where they are carrying multiple books just to get access to statistical tables. With a little knowledge of Excel, you can create all of these things for your self.
Excel basics – all of what you will need is contained in the fx (mouseover and it is called paste function) button. When you click on it, you will be given several options, choose statistical. You will find multiple distributions covered there, certainly all of the ones used in Six Sigma training and loads you have probably never heard of. Think about how table are laid out, the convention in Excel is to call having a stat looking for a probability (distribution)dist. For example the standard normal where you are looking for a probability given a z value is called normsdist. The convention for having a probability looking for a stat (distribution)inv. For example, the standard normal distribution where you have a probability looking for the associated z value is normsinv.
Setting up a z (standard normal) table from -6 to +6 standard deviations –
1) Start in cell A1 and type in z value
2) In cell A2, type -6. In cell A3, type -5.9. Then highlight cell A2 and A3, go to the bottom right of cell A3 until the cursor becomes a small cross. Drag down to cell A122.
3) In cell B1, type .09. In cell C1, type .08. Then highlight B1 and C1, go to bottom right of cell C1 until the cursor becomes a small cross. Drag across to cell K1.
4) In cell B2, open fx by double clicking. Go to statistical, normsdist. And for the z value, type in $A2+B$1. Go to the bottom right hand corner of B2 until the cursor becomes a small cross and drag across to K2. Release the mouse and while cells B2 through K2 are still highlighted go to the bottom right of cell K2 until the cursor becomes a small cross and double click. That will fill out the whole table from -6.09 to +6.09.
5) All of the values listed are correct, but for clarity we need to reverse the column headings starting in row 64. Go to row 64, highlight both the 64 and 65 right click and insert. This will give you two blank rows.
6) In cell A65, type 0.
7) In cell A64, type z value. In cell B64, type .00. In cell C64, type .01. Then highlight B64 and C64, go to bottom right of cell C64 until the cursor becomes a small cross. Drag across to cell K64
Modify the formula in B66 to =NORMSDIST($A66+B$64). Go to the bottom right hand corner of B66 until the cursor becomes a small cross and drag across to K66. Release the mouse and while cells B65 through K65 are still highlighted go to the bottom right of cell K65 until the cursor becomes a small cross and first drag up to row 65. Release the mouse and while cells B65 through K66 are still highlighted go to the bottom right of cell K66 until the cursor becomes a small cross and double click. That will fill out the whole table from 0.01 to +6.09.
9) Label the tab for the worksheet z table.
Your table is done.
Setting up a Sigma Table table from 0 to 6 Sigma –
1) Start with a blank worksheet.
2) Start in cell A1 and type in Sigma value
3) In cell A2, type 0. In cell A3, type .01. Then highlight cell A2 and A3, go to the bottom right of cell A3 until the cursor becomes a small cross. Drag down to cell A62.
4) In cell B1, type 0. In cell C1, type .01. Then highlight B1 and C1, go to bottom right of cell C1 until the cursor becomes a small cross. Drag across to cell K1.
5) In cell B2, type in =(1-NORMSDIST($A2+B$1-1.5))*1000000. Go to the bottom right hand corner of B2 until the cursor becomes a small cross and drag across to K2. Release the mouse and while cells B2 through K2 are still highlighted go to the bottom right of cell K2 until the cursor becomes a small cross and double click. That will fill out the whole table from 0 to +6.09.
6) Label the tab of the worksheet Sigma value (1.5 sigma shift).
Your table is done.
Gary
Oct
21
A note to Senators McCain and Obama and those passionate about reducing waste
Filed Under Uncategorized | Leave a Comment
The presidential politics have got me intrigued. Obama wasn’t going to take donations; McCain was going to stay on the high road. Obama hangs out with Bill Ayers; McCain hangs out with G. Gordon Liddy. ……..
Who cares guys? I live in metro Detroit and people here are worried about food and shelter and having to leave the place they grew up and love. Yes, economies and power shifts in the US and in the world, but there are some basic truths we have to face regardless of who is the 44th president of the United States.
The basic truths –
1) We are in debt as a nation, and most of that debt has been accumulated because of our consumption – of oil from people who hate us and consumer goods from a communist regime with a poor human rights record. Realistically our children will pay for the debt we have incurred. Either candidate can affect this and it has to be a combination of reduced spending and increased revenue. If we did a pareto of entitlements, cost of war, and all of the legacy costs; the legacy costs overshadow both by a huge margin. Entitlements would be shown in the other category. It does not mean we should not get rid of entitlements or figure out how to limit the cost of war, but these are not the big-ticket items.
2) We need to switch from fossil fuels and that is true whether or not you believe in global warming and the effects of pollution. Quite simply, they are a finite resource. We knew that clearly in the 70’s and we have not done enough about it. Either presidential candidate can put a vision out there to be energy independent by 2020 and to be 100% renewable energy by 2030. The technology is there, but the infrastructure build out will take time and money. Our friends in Canada and Brasil will achieve independence in the near future, maybe we should be talking to them.
3) The price of gas and food has risen and will remain high. Not because big oil is gouging us and not because corn is being used for ethanol, but because there is an emerging middle class in China, Russia, Viet Nam, Poland, Brasil, Mexico, … The middle class is driving more cars and eating more meat. The laws of supply and demand say the costs will go up and they have. Neither presidential candidate can affect this.
4) America lags the world in education of our children. This is not true for every child or every school district, but it is truer than it is false. To power the move to energy independence, we will need more engineers and scientists, which means better math skills. We will need to fund this while we are reducing the cost of government in general. We will need to assure it is happening without a massive agency to enforce it. Both Senators McCain and Obama have a good education and know what a good education looks like. They should think about talking about this every time they talk about anything – that has tremendous power. If you need advice on how to act like that, ask Jack Welch.
5) Every human being deserves good health care and it is not the reality of the United States. I propose we lock all of the Congress in the capital and tell them not to come out until they have a plan that will get good health care to every human being on US soil. And the budget to go with it (revenue - spending > 0). Either presidential candidate can affect this.
I am sure there are things that should be added to this list, but I am positive I have hit the vital few.
Why am I writing this on a blog of a guy who has dedicated his career to Operational Excellence®? Two reasons – I have been thinking about this fairly constantly since the last debate and I know that my life and yours must go forward regardless of the outcome. I also know I would not want to be anywhere other that the US regardless of who wins.
My passion is seeing improvement happen, whether it is making a factory run well or a financial forecast drive less waste. I think those of us who are driven to do this are kind of like that chemical company that does not make products; they make products better. We don’t make systems and processes; we make systems and processes better. We are probably not the ones who will create the solar cell that will make the cost per kW equal to the cost from a coal fired power plant; but we could well be the ones that make the process run in such a way that the theoretical cost per kW is achieved. Think about the energy and passion around the debates and figure out how you can contribute to the achievement of moving us closer to a better place on any of the five issues above. And think about it everyday, not every four years
To those of you who do not live in the US, I sincerely hope you feel the same way about your country and will align your skills with making the next generation better.
By the way, any of you trying to figure out how to make a billion dollars off of the transition probably are not the right folks to put proper processes in place.
Gary
Oct
6
Tools You Should Know
Filed Under Tools you should know | Leave a Comment
There are many tools from the basic quality toolset omitted from Lean and Six Sigma training. One of them is the OC Curve which basically defines the protection you get when doing any kind of acceptance sampling. It can be correctly argued that acceptance sampling has no place in a truly Lean organization, but the reality is that that is the end result of years of work and most have some form of this going on. It may be called Incoming Inspection and it might be called an audit, but it’s going on.
We’ll take the most common example to show how the tool works – sampling from a finite population. The appropriate distribution is the hypergeometric, and while it can be approximated by the binomial or poisson, why bother? We have software available to us.
Let’s take the example of where we have a population of 3201 and we are going to sample 125 from that population and accept on 3, reject on 4. This is a common 1% AQL plan.
Using Excel, the insert function (f(x)), statistical, and hypgeomdist we can create a table to give us the Probability of Acceptance (P(a)) of a given quality level of the population.
|
% Defective in the Poplation |
P(a) |
|
0.72% |
0.99 |
|
1.12% |
0.95 |
|
1.41% |
0.90 |
|
2.03% |
0.75 |
|
2.91% |
0.50 |
|
4.03% |
0.25 |
|
5.22% |
0.10 |
|
6.03% |
0.05 |
|
7.69% |
0.01 |
The resulting curve is easy to plot in Excel or Minitab.
Interpretation of the curve is simple and usually involves the P(.95) and the P(.10) points. This particular plan has a 95% probability of accepting a 1.1% defective lot and a 10% probability of accepting a 5.2% defective lot. Not very good protection which is usually the real discovery - acceptance sampling is not a good control! Read Deming.
Gary