Improvement opportunities that are hard for managers to see

Improvement opportunities that are hard for managers to see

Managers deal primarily with information that has been aggregated—such as “profits are down,” “market share is dropping,” or “labor as a percentage of costs is up” (Hayek 1945). Information in this form is helpful in identifying issues, but not so helpful in dealing with them. But, as Hayek also observed, front-line workers are the ones who have specific and detailed knowledge of how their organization’s work actually gets done. As such, they are in much better positions than their managers to see many problems and opportunities. They also are in the best positions to develop ideas that will work to deal with these problems and opportunities. Consider the example of the Coca-Cola bottling plant in Stockholm, Sweden, the highest-performing corporate bottling plant in the Coca-Cola system.

A few years ago, Coca-Cola headquarters required all corporate-owned bottlers to implement Six Sigma. Each plant was expected to: a) train a cadre of Black and Green Belts; b) focus on Six Sigma improvement projects that generated largely documented monetary savings, and c) strive for high plant capacity utilization. But unlike its peers, Coca-Cola Stockholm already had a high-performance idea system in place. In 2007, the company implemented 15 ideas per person.

The implementation of Six Sigma on top of an effective idea system provided interesting data on the relative impact of both approaches. In 2007, there were seven Six Sigma projects (both Green and Black Belt), which saved a total of 2.5 million Swedish Kronor (one U.S. dollar equals about seven Swedish Kronor). The idea system, however, generated 8 million in savings from a total of 1,720 front-line ideas. In 2008, Coca- Cola Stockholm increased its emphasis on the idea system. As a result, front-line ideas saved 9 million Swedish Kronor as compared to 1.5 million from Six Sigma projects.

One example of an idea that illustrated the advantage of the front-line perspective came from a worker on the high-speed, half-liter Coca-Cola bottling line. It solved what had been a tricky problem there. After being filled and capped, the bottles zoomed around a 90-degree curve before passing an electronic eye that scanned each bottle in order to assure it had been properly filled. If not, an air piston would automatically activate and push the defective bottle off the line. As long as the bottles were properly spaced, this process worked quite well. Unfortunately, the bottles often would bunch together as they rounded the corner. Then, when the air piston pushed a defective bottle aside, the next bottle (now in contact with the first one) sometimes would be shifted slightly, nick the corner, and tip over and block the line. Ten bottles of Coke per second would then slam into the fallen bottle and fly everywhere, creating a huge mess and many defective bottles before the line could be stopped. This disruption to production occurred two or three times per day.

Two Six Sigma Black Belt projects had failed to solve the problem, which was caused by friction between the bottles and the corner guide. The project teams had fiddled with many variables: the line speed, different kinds of lubricating strips along the curve guide, the spacing of the bottles—but with little success. The problem eventually was solved by an idea from one of the bottling-line workers. His simple solution was to reduce the contact surface area between the guide and the bottles. By using a standard washer as a spacer in between the guide and its lower mounting bracket, the guide was

cocked inward slightly so only its upper edge now came in contact with the bottle. In this way, the friction was lowered enough to keep the bottles from bunching. The idea saved 91,000 kronor per year, not including the costs of the damaged product.

Over the three-year period that the authors tracked this plant, it ranked first among Coca-Cola’s corporate- owned bottlers around the world in productivity, quality, safety, environmental performance, and customer fulfillment. The only key metric in which the Stockholm bottler did not outperform its peers was plant capacity utilization. Managers said this was because a large number of front-line improvement ideas kept increasing plant capacity.

Notice that in 2007, 76 percent of the overall cost savings for Coca-Cola Stockholm came from its idea system. In 2008, the figure was 86 percent. Five other companies in the authors’ sample with high performing idea systems also measured bottom-line improvement by source. Each of these companies reported similar results—around 80 percent of  the overall improvement came from front-line ideas. While the authors initially were surprised by these data, they clearly attest to the extent that front-line people see improvement possibilities that their bosses do not.

In case you missed it, my last post was 3 golden rules to sustain Kaizen/ Lean

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Alan G. Robinson, University of Massachusetts

Dean M. Schroeder, Valparaiso University

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