Building a Business Excellence Program in Multi-Nationals

I see many questions asked regarding the development of a BE /OE/CI/LSS (Business Excellence Operational Excellence/Continuous Improvement/Lean Six Sigma) program. There is no right or wrong answer since every business is different. However, I wanted to share my experience, thoughts and some options as it relates to multi-national organizations. Hopefully you will find them useful.

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Before starting, I firmly believe that the majority of the resources need to be in the business and not as part of a large corporate team. After all, that is where the benefits are delivered and that is where the culture needs to transform. A small COE at the corporate level is necessary, but always remember that this is purely a cost which supports the businesses. Unless those businesses see you supporting them and delivering results for them, the program will be a short lived one. I’ll also share thoughts on the use of consultants, who can play an invaluable role in giving you a fast start in getting your program going in multiple locations and to extend you internal competencies.

Finding your play space

Start with a baseline assessment of the businesses and locations. In an ideal world there will be a single transformational program for the corporation, but we know that is an unlikely starting point. So assess what exists already, what may have gone before and what didn’t work well. Talk to the business owners to identify their challenges and where they need help and then close the loop back with your superiors. You don’t want to establish something in competition to any existing programs and you want to make sure your program is aimed at their needs and they can link the benefits back to your program.

The SQDC (Safety, Quality, Delivery, Cost) model may give you a good framework as you work through talking to the business owners. They own the P&L and balance sheets, so understand their metrics and performance gaps. Dig a little through some of the why’s to get towards root cause. Also take the opportunity to see how they are deploying any existing programs. Talk to enough people to cover all divisions and locations. I recall working with 3 business leaders all running very different businesses. Their needs from the program had some common themes, but a lot of individual differences – right down to how they might resource the program. I wanted a global program and consistency everywhere. One wanted to run each site as an independent business.

As you work here, don’t be frustrated if safety and quality already exist. There is probably a huge opportunity in delivery even before getting to cost. Let’s explore those a little. Failing to deliver to the customer not only creates a loss of revenue and therefore profit, it also leaves inventory as WIP or finished goods in the corporation. So that is why I mention discussing both the P&L and balance sheet. What if delivery is OK, but cycle times are long. That means you are slow to respond to customer demands and may even be turning away orders. You may be investing in new capacity where latent capacity already exists (if you could just eliminate waste). A comprehensive baseline analysis can be done, called several names:  Cost of Failure, Cost of Poor Quality, Cost of Non Conformance, etc. These consume a lot of effort and most business leaders will have a good sense of the outcome already. I would embark on this if you got a feeling those business leaders were not seeing the opportunity.  Remember this is your chance to understand their businesses, let them help you establish contacts with the right people on their staff. On a day to day basis, you will not be working with the business leaders at this executive level. So make sure they give you that day to day contact name.

In closing the loop back with your superiors, let them know where your program will focus. Go as high as you can in the organization to ensure you fit with strategy and that you have that executive support. When you launch your program is has to relate to the executive vision even if it is not mentioned explicitly. Look for key words like “cash flow”, “improved execution” or “increased flexibility”.

What do you need and what do you have

Knowing the scope of your program, go ahead and assess what is happening in your play space. Now you know what you will focus on, you need to understand what is currently happening. This will cover a lot of areas – resources and competencies, materials, publicity, reporting, consultant activity, training, reward and recognition, best practice sharing, etc. There is no short cut here in multi nationals. It requires a lot of travel. Do not try and replace it with conference calls or video calls. For you to build an effective program you need to see the business first hand. In practice, you are likely to be doing executive discussions and the current state assessments in parallel.

So you are beginning to formulate your future state vision. You will be thinking about how you will measure progress.  Your program should not be measured on the number of people trained or the number of tools used. The focus needs to be on delivering results through giving the right people the right skills. So there is a clear path from focus on the problem; who are the resources; do they have the right skills. What I am saying is tailor your thoughts to the need. Do not assume everyone needs all the skills all the time.

I had a benchmark situation where we had limited internal resources and the business used a lot of consultant input. We were paying for a lot of basic skills training from consultants who came in every couple of months. At other times they came in to perform and teach complicated tools and analysis. I was not happy with the former but content in the short term with the latter. So a blended internal/external approach is quite acceptable based on the tools needed, the current resourcing and complexity. That’s where the internal competency assessment comes in.

Another consideration is how well developed each location is. It is most likely that they are all at different stages. In the desire for global consistency and leverage, you cannot force solutions or approaches on the more advanced locations. I recall a situation where most sites were doing 5S pretty badly and in different ways. We got good traction in developing a consistent approach globally, but we had one very advanced site. They felt like we were going to impose 5S on them, when it was already so ingrained in their culture that they no longer needed even a formal audit process. The lesson here is that as you think about your vision, don’t get trapped into forcing adoption, but rather think about providing a globally leveraged solution for when that technique is required. Develop the vision and direction and let the tools be as needed by individuals and locations.

Many of your considerations here will need to account for different cultures, languages, local practices and legislation. I recall developing a certification reward formula based on a percentage of salary rather than taking a dollar figures and translating it to local currency. As you think about branding and publicity, local languages always present problems. Saying CTQ in some Latin America countries raised a few eyebrows. On another occasion, I had a great theme of taking the e’s in excellence and using them for Engage, Enable, Empower to Excel, but we could not get it to work in Portuguese. Despite these challenges you will always get good support from the executives who cover multiple sites/regions as you try to drive consistency. As they travel globally, it is very difficult for them when the same things are presented in different words and formats. My only caveat is that you need to leave enough room at the local level to make sure the message works in that location at the lowest levels. You are trying to change a global culture after all.

Don’t be afraid to demand information. I recall having a few consultants being employed in multiple locations, but no one having global visibility (other than the consultants themselves.) Just make sure you are copied on all future engagements requests and get a monthly schedule from them and circulate it internally. That should allow some exchange and leverage between sites.

The chart below shows the tenants of a successful program. Use it to help make sure you are considering all the elements. At this time you should also be getting a good idea of your programs identity.

Plan to close the gap

With your future state vision fairly clear, you move to developing your implementation plan. Below I tried to share a few anecdotes that may be helpful as you look across your global organization.

If your program is going to cover all disciplines then it is unlikely you will implement all at the same time. In most cases starting in manufacturing is easiest. The tools fit well and most operational folks already have exposure to the ideas and concepts. However, unless you are very vertically integrated there is much more benefit in looking across the whole value stream. For example, what would your manufacturing look like if every purchased part arrived correctly at the right time on very short lead times? What if your customer’s requirements were so clear and firm that you didn’t have to process engineering change while parts were in production? I recently used theory of constraint principles to increase engineering output by 27%, delivering 100% on time. Surprisingly most of the benefit comes from stopping to constant reprioritization of tasks and the incessant stop start of work. You have to think about how to support your supply base. Do you force you program into them or do you make sure your supplier quality or supplier development staff have the right level of understanding? If nothing else, listen to what they are saying. You could have a global sourcing group driving global suppliers, but local regions/sites giving that supplier different instructions/standards/requirements.

I always recommend migrating to internal staff based within the businesses. To drive cultural change you need a consistent and frequent message going out to all employees. We are all trainers and employees learn by doing. They need that 24/7 support, coaching and mentoring. As the tools get more advanced and used less frequently then consultant support or having SMEs in your COE is a good option.

So how do you drive consistent competencies across those internal staff and provide them with consistent materials? The solution you choose will be time sensitive. I have built a complete Six Sigma program internally, but it takes a lot of time and effort. There is a huge amount of web based training available to you, but are often very generic. Yes, you can work with providers to customize but they do not provide that coaching and mentoring. However, internal resources, with internal examples and an internal business language are critical. More recently, my preferred option has been to leverage the best of current consultant activity, and to utilize them as “train the trainers” along with customizing and licensing their materials. This is probably your quickest and most effective way to getting consistent competencies and materials.

You cannot really leverage the results from your program until you can take existing solutions and apply them globally. Enabling that best practice sharing is critical. Knowledge sharing network technologies (Google/Bing search engines) have really given us the opportunity to leverage keywords, tags, etc., to quickly search through information to find existing solutions. As a leader you will get network statistics, the option to push out communication and to have chat room type boards to solve issues within the network. So go visit your IT/KM folks.

You are not going to have the right people in the right places. If you have the materials and train the trainer program in place then you can have a fast learning curve with existing resources and new recruits. Of course you need to sell the plan and benefits to the business leaders since they will be investing in those local resources.

The COE (center of excellence) is a great concept to follow. It should include you and SMEs for the more advanced tools and to help mentor the developing team. I would also recommend having these SME’s be responsible for different functions, with a good alignment of knowledge and skills. Typically I have seen manufacturing, supply chain/sourcing and engineering experts. In the short term, you can continue to leverage consultants for this level of expertise, but minimize the variety and ensure a consistent message.

If you use consultants through this process, then you’ll need to address global coverage. Most will tell you that they can provide global coverage. That is usually by getting their staff to travel. So be mindful of cost especially in lower cost economies. Also make sure you understand the language skills. That will depend on what they are doing in what location. SME roles in English language will usually be OK. Shop floor coaching will not work in English in many countries. That being said, you have to negotiate a global pricing agreement as it just takes all the hassle out of every individual engagement. Establish the ground rules on which part of the business pays for what. I strongly discourage keeping all that cost in the center. Global program is your cost (train the trainer, materials, global meetings, branding). The rest should be paid for by the businesses.

In summary, there is no right or wrong, but always listen to the business needs and deliver a program to support those needs. So a final thought that I have carried for many years – the projects must be important to the individual or team doing it, as well as their superiors. That is what gets support and action. Your program is about providing the vision, direction, foundation and skills to achieve those projects. For me, Excellence is Engaging, Enabling and Empowering all Employees to Excel.

By Alan Davies

Driving both client and internal development in demand and supply arenas. With global expertise in both consumer goods and oil and gas industries. Additionally, employing both lean and systems skills to fully integrate lean supply chains.

Led the development of a global business program for business excellence within FMC Technologies. Established the vison, internal communication, external partnerships to drive improved execution across all divisions. Executing a global competancy program to ensure consistent internal communcation and branding.Implementing Lean Visual Flow throughout the business.

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