Sometimes It’s a Financial Question

A global ceilings manufacturer was building a plant in China. Things were going pretty well until they realized they were going to be two months late starting up. The team wasn’t sure what they could do to get back on schedule, so I was invited to join them and use Lean thinking to help solve the problem.

I had been to China before, helping the team with Kaizens during different stages of plant development. These Kaizens were more challenging than most, as they required an interpreter, so the team and I would understand each other.  As a result, I had to communicate more slowly than I was used to, making sure I didn’t use any slang or other terms unfamiliar to Chinese team members.

As I boarded my flight to meet them, I wondered what I could do to help the team. After all, they had been working and solving problems as they came up all along the way. They had their best engineers and scientists on the team who had come up with many breakthroughs. Why couldn’t they solve this problem? Why was this problem stumping them to the point they required my help? I always sleep well on airplanes, but during this 15-hour flight to China, I was more restless than usual.

I met my interpreter on Monday and we reviewed the approach for the Kaizen. I would help the team look at their problem from many angles, trying to uncover opportunities they hadn’t thought of and brainstorm as many potential solutions as possible.  My interpreter reminded me in the Chinese culture, people don’t like to make a suggestion or offer an idea unless they are completely sure it is correct. In a Kaizen we want people to bring out ideas that aren’t fully formed or guaranteed to work, so others can build from them. I knew I had to make the team comfortable to say anything at any time. To do that, I would use sticky notes and pens and ask all team members to write their ideas down and share them, one person at a time, one idea at a time. This technique tends to make people comfortable saying whatever they are thinking, regardless of the country or culture.

The goal of our Kaizen was to have the plant start up on time. Our objective was to develop contingency plans to take two months out of the schedule and meet the initial commitments to the Board of Directors and the customers in China.  I knew very little about why the plant wasn’t on schedule, so I had the team brainstorm possible reasons why they were behind schedule. Using the sticky note technique, more than 100 ideas were written down, some in Chinese, some in English. Knowing we couldn’t solve all 100, I asked the team to prioritize the most critical reasons for the delay. I used a technique called “multi-voting”. Each team member placed a dot or a mark on the sticky notes that contained the top five ideas or reasons for the delay from their perspective. The sticky note with the most dots was the idea the team felt was the most likely reason for the delay.

There were 15 team members and 14 dots on a sticky note that said, “Two month wait for government testing.” Intrigued, I asked for an explanation. They told me the Chinese government must qualify and approve the first ceiling tile produced by the plant before they were allowed to produce more and sell to customers.  It took two months from the time a test was requested to the time a tile could be submitted for testing, and then another week to get results. The team wouldn’t produce tiles that weren’t officially approved, so they were going to wait those two months for approval before starting full production. The plant had scheduled production of the first acceptable tile around April 1st, 15 days before the original start-up date commitment, and then would have to wait two more months before gaining approval to produce tiles for sale, thus creating a two-month delay. It was then I knew there was an answer, but the team had to come to the right conclusion. It was time to ask some questions and facilitate them to an answer.

Question one was, “How much does it cost to submit a tile for a test with the Chinese government?” The answer was $10,000.

Question two was, “How long does it take from the time a test is requested until test results or approval is given?” The answer was two months.

Question three was, “When do you believe you will be able to produce tiles?” The answer was around April 1st.

Question four was, “What is the cost of the plant starting up after April 15?” The answer was $60,000 per day, as defined in the original project investment request.

Question five was, “Do you currently believe that the tiles you will produce on or about April 1st will meet the Chinese government requirements?” The answer through internal testing and quality control was “highly probable”.

Question six was, “Are you willing to risk $10,000 by submitting a test request to the government two months in advance of producing your first production tile, in order to save $60,000 per day for the next two months?”

At that point, the team knew what it had to do. The rest of the Kaizen was spent developing plans to ensure a successful test by the Chinese government on April 1, two weeks ahead of schedule. In the end, the plant started up on March 28, and the team saved over $2.5 million for the company. The lesson here is that when you frame a problem on a financial or factual level, rather than an emotional level, the answer becomes obvious.