Getting the Big Returns

Dec. 1, 2004
How does a 146-year old insulation manufacturer emerge from asbestos-triggered bankruptcy to become the $2 billion market leader in every segment it serves? Dick Cunningham, program director for advanced process at Johns Manville, a Berkshire Hathaway company, says it’s all about delivering the best performance at the lowest price, so the customer wants to buy your product. Here, Cunningham discusses with Automation World Editorial Director Jane Gerold, how Six Sigma and Lean Manufacturing are applied at Johns Manville to define and deliver Critical-to-Quality (CTQ) requirements and achieve big investment returns.

Automation World: As the Program Director for Advanced Process at Johns Manville, what are your job responsibilities?

Dick Cunningham: I work in corporate Research and Development, and support the four manufacturing groups within Johns Manville, including building insulation, performance materials, roofing and engineered products. My job is to find or develop processes that will make existing and future products more competitive.

We’re not just trying to improve on a current process—we’re trying to break out of the box and approach things differently from the way we have in the past. We need to design new processes that meet both customer-defined Critical-to-Quality requirements and our internal CTQs. For example, a customer CTQ might be lower product price, while internal CTQs might be lowest-cost process, reduced inventory and improved cash flow.

AW: How does the improvement process get started?

Cunningham: We start with a need—an existing process is not competitive or we have a new product coming down the pipeline. This often involves talking with focus groups to define the CTQ requirements.

For instance, we make insulation for homes. The focus group may include homeowners, builders and installers, each with their unique concerns. We interpret and prioritize these requirements as part of the product and process development.

AW: Does Six Sigma play a role?

Cunningham: Sometimes customers make vague statements. We go though a rigorous Six Sigma process to try to interpret what the customer is saying, in order to relate performance criteria to product and process criteria.

We’ll bring together our own technical and non-technical personnel in a brainstorming session, to get different perspectives on the customers’ comments. We’ll also use a number of Six Sigma tools—such as a Pugh decision matrix, Sipoc (Suppliers, Inputs, Process, Outputs, Customer) models, and Kano analysis—to classify and prioritize requirements based on their impact on customer satisfaction.

I mentioned earlier a focus panel on home insulation. Mold was one of the areas of concern for the homeowners on the panel. “Stop that damn mold,” became a CTQ requirement in our Kano model. But that wasn’t a concern for the installers. To satisfy both of these customers, our Six Sigma models indicated that we had to develop a mold-resistant facing for insulation that met the homeowners needs, but had no impact on the way the installer handled the product. And we couldn’t raise the price or builders wouldn’t buy our insulation.

AW: How do you apply Lean and Six Sigma tools in manufacturing?

Cunningham: One of the things that is key to our customers is consistency. And one of the best ways to control consistency is to take out human factors and minimize the impact of variables you can’t control. We use Six Sigma tools to identify all of the variables in our manufacturing process and define ways to make them constants.

On the Lean side, we look at ways to eliminate the variables altogether, so we don’t have to worry about them. In other words, we use Six Sigma to reduce variability, and we use Lean Manufacturing to eliminate the variables, or waste.

For example, our insulation has a certain amount of edge trim. Six Sigma would look at ways to reduce that wasted edge trim from three inches to one inch. Lean Manufacturing would ask, “Why do we have edge trim? Is there a process we can put in place to eliminate edge trim?” With Lean and Six Sigma, we get to the root causes of manufacturing problems.

AW: Can you quantify the benefits of this approach?

Cunningham: First, in order to quantify benefits, you must measure—and you must measure yourself the same way your customer measures you. If you measure rejects in parts per thousand, but your customer measures you in truckloads, you may have a serious quality issue, where every truckload is rejected because it has a bad part.

The second step is to decide how to make the process improvements and to calculate what these improvements are worth to the company. Will I increase sales? Will I keep a customer that I may otherwise have lost? Will I capture a bigger share of the market? Sometimes you don’t have all the data you need to answers these questions, but you have to take your best educated guess. You then start to implement your process changes, and measure—using your same metrics—to see if there is improvement.

Each process improvement project has a sponsor who has P&L (profit and loss) responsibility. In manufacturing, these sponsors can be the plant manager, the director of manufacturing or the manager of automation, for instance.

To go back to my example of edge trim, if that machine is “sold out”—working at 100 percent capacity—eliminating edge trim could be worth $10 million of savings. The sponsor of the edge trim project is responsible for meeting that financial metric.

AW: How do you decide which projects to attack first?

Cunningham: Often, when a company starts the Six Sigma journey, management has to make a leap of faith that the process will pay dividends. It’s not cheap. Since there’s not a lot of data available at this point, companies look for a quick return on investment.

This results in a lot of small projects that address the low-hanging fruit. By applying Six Sigma tools to get to the root cause of problems and solving them, you can see an immediate payback. Sure enough, these projects put money on the bottom-line. I call this a “push system,” where you put the project first and then accrue the benefits. Push system projects are internally focused and fight fires, but won’t change the corporate culture or build a foundation for long-term growth.

There is a way to get a bigger dollar return on a Black Belt Six Sigma effort. This is what I call a “pull system” approach. First, a company establishes its strategic goals, and then it looks at the “gap to entitlement”—which is the difference between where you want to be and where you’re at. You put a dollar benefit on what it’s worth to close that gap, and prioritize and focus on things that are really important.

From there, you identify the projects that will help you close the gap. Instead of pushing projects, you’re pulling on the system to define the projects. Fewer big projects generate many small projects, and a better fit with the corporate strategy.

Lo and behold, with the pull system, we found that our return per Black Belt goes up significantly. Senior management can see how Six Sigma is helping them. Instead of just delivering small returns to the bottom line, you’re working on “their” projects. The leap of faith now becomes a belief.

AW: Does automation have a part in this process?

Cunningham: Good decisions are based on data. You must put in a system that will give you the data to understand how the process is performing. If you don’t measure the process, you’re just guessing at what’s going on.

The data variation is the “voice of the process.” Our older processes did not have a way of getting to that data. At the outset, before we bought any automation equipment, we had Green Belt-trained operators manually collect data. This gave us a direction of variability, and showed us the influence variability had on the final product.

However, we found we needed much better and faster data collection. This is where we used outside sources, such as ABB, Rockwell Automation and Siemens, to help us put together an automation strategy and build algorithms to control the causes of process variability. My best piece of advice—make the data talk to you.

See sidebar to this article: About Dick Cunningham

See sidebar to this article: Glossary of Terms