I pointed out in my previous paper that going lean is not just as simple as following the steps in a cookbook. One has to consider different factors for the program to be successful.

The article pointed out business strategies, leadership’s commitment, culture and having the right people in the right position as critical factors in which the 74% of the companies who are not successful in going lean failed to look into.

Reducing the cost of production is indeed good for a company; it adds to profit. But reducing production costs may not be aligned to the goals or market positioning of the company. Maybe it’s positioning is not centered on offering the cheapest product but instead it’s focused on improving the quality of its product in terms of innovation and usefulness to customer. In which case, focusing on reducing production costs might mislead the management away from their real goal. In this case, the management has to define what quality is to get a clearer view of what they really need to do and focus on. Maybe focusing their efforts in going lean should not be a priority.

It’s also important for the leaders in a company to be committed to the program. Half-heartedness will only push one to nowhere. This happens because managers are afraid of changes and changing and feel safe to stick to the status quo. But I believe status quo exists to be challenged. There’s always room for improvement and it’s foolish to just watch that opportunity leave you. This reminds me of the story “Who Moved my Cheese?” by Spencer Johnson where the character lost his cheese after being complacent and believing that he’ll never lose it, so in the end he lost it. The world is rapidly changing. If we miss out to go with the flow, it might be the end for us. This is why being not afraid to change to cope with this constantly shifting business environment is important. This does not only apply to managers but also to the whole firm as well. With this comes the importance of changing the whole culture within a firm to further the success of the lean program. It’s useless if you target getting lean when your employees don’t even care about improving the quality of their production. As a manager, one needs to create a chain effect that will affect the whole. And one can achieve this through changing the culture, if necessary, in favor of that goal.

Strategic goals, leadership’s commitment and culture, these are but few factors one has to consider. But the main point is we should always strive to improve. The world is changing and it’s inevitable. If we remain complacent and chose to stay in the temporary comforts of status quo, we might just lose our cheese.

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Customers are the lifeblood of any other business and they want value for their money, especially in today’s setting where prices are skyrocketing. So it’s banal for companies to strive to satisfy their customers.

Satisfying a customer starts from taking their order to the delivery of the product, as identified in the reading, after-purchase customer service included. The buzzword is total quality management. One way to achieve total quality is through lean management. It focuses on removing wastes and wasteful activities that doesn’t add value or is unproductive. By waste we don’t only think of defects but also waiting time, overproduction and conveyance risks to name some of the seven. These wastes can occur anywhere in the process. This is why mapping the value chain is utterly important. This gives the people in the firm an overview where they could identify problem areas and areas for improvement and eventually be able to plan and do something to improve quality. Sounds easy but these are not steps in a cookbook (the succeeding paragraph will tell you why).

To be successful in improving total quality, one has to create a firm culture that values quality work and customer satisfaction. Personnel in all jobs must understand what quality means and how it is important to the firm. And this should be also true to employees who do not have direct customer contact. As the name goes, quality management is not something done only by the QC people but by everyone in every process from the production to the delivery of the product. Quality management is a firm-wide effort, aiming to give customers the best of what they could give or do in each process. We can view the whole production process as a chain that a slight movement in one segment affects the others. Each employee contributes to quality. All members (should) participate in improving the processes in an organization and be committed to improving quality and customer satisfaction. These firm-wide efforts will then be reflected in the finished product. Of course, this whole culture-creation job can be best achieved through the managers setting good examples themselves, as one line in an article reads, “Total company commitment begins at the top.” Another important ingredient is communication. Since quality management, as we’ve identified earlier, is not just the work of QC personnel rather a firm-wide effort, communication plays another important role. It links every segment or department so as to enable all departments to work as one. Communication is not only limited to communicating progress but also includes communicating problems areas where they and the other departments can improve on. And lastly, one should always challenge the status quo. Having done huge improvements in total quality does not mean that one can stop. Quality improvement is a continuous process. There’s is always room for improvement, as a cliché would put it. Today’s market is continuously improving, the customer’s needs never stop evolving and competition is growing tighter, stressing further the need for a firm to continually improve in total quality management.

Achieving (total) quality is indeed not as easy as any recipe you’ll find in a cookbook.

July 11

Shock Value

To break the monotony, I’ll start this paper with an anecdote of an acquaintance of of my cousin who just graduated from Mapua Institute of Technology with a degree on industrial design.

In his thesis defense, the panel was not impressed by his product – benches in the atrium of their building that are not different from a normal flat bench you’ll normally see in parks on the first look but when you pull up the top you’ll have a 3-seat bench with back support. Honestly, the first time you see the product, you’ll find it lame or even hilarious. But a few months later, when we went back to his college one of the members of the panel who judged his thesis remarked, “akala niyo lang walang kwenta yung thesis ni Egay, ayan o, ginagawang tulugan ng mga estudyante.”

It’s maybe comical to have that old idea used in his thesis, but it worked. His benches were sought by many busy students who didn’t have enough sleep due to their killer subjects. What really made those once lame, hilarious benches useful or sought by many? Though he never intended those benches to become makeshift beds for sleepy students, we can get from this example that for a product to have its own niche in the market what it offers has to be aligned with the needs and wants of the end-users. When there is an existing need, consumers, given enough resources on their part, will do something to satisfy that need. And why include wants? Basically, this is due to the other expectations underlying a certain need. Just like in the case of Egay’s benches, the students are aware of their need to sleep whenever possible and for something to sleep on to besides the cold and dusty floor or the backbone-racking chairs that will really make your limbs numb if you pushed yourself to sleep on it and so they saw the flat feet-long benches as graces sent by God. Aside from this, there’s this underlying preference to have those (makeshift beds) inside the building and much better if they are near their classrooms (I presume no one wants to sleep outside exposed to every passerby Mapuan or not), and so the location of the benches added value to it. To illustrate this in a more business-toned manner, let’s take the example of Taser. Managers of Taser knew there’s this existing need to protect oneself from any possible danger with the society getting more dangerous. And yes, people want a better solution than firing or at least aiming a gun towards someone. And so using stun guns and escape danger leaving the attacker stunned to unconsciousness and alive is a better option. But to expect ordinary civilians to carry bulky or gun-shaped stun guns whenever they go out for a walk is foolish, especially to the ladies. And the awkwardness one can get from carrying a tool that looks like those used by goons or fighting freaks from action movies defeats the purpose of the product itself, rendering it useless and unwanted. From this we can infer that there is this underlying need for some sleek (or stylish) harmless-looking stun guns that everyone will feel comfortable carrying outside. It is brilliant for Taser to come up with their stylish line of stun guns and they were able to their market (from law enforces to include ordinary civilians) as a prize.

So what are in these for us, managers in training? First, we have to be sensitive to the needs existing in the society, because from these needs arise opportunities. Second, the inquiry doesn’t stop in identifying the need; it is equally important to identify what they (consumers) want more, what they expect or how they want their need to be satisfied. And lastly, to develop the product to satisfy such needs and wants and to continually develop the product to adapt to the usually changing needs of consumers.

July 04

Going Green Translates to Good Business

Learning from the article that companies in the US are in an investing spree on this so called “green revolution,” I ended up thinking of reasons how these actions add up to the main goal of any corporation, that is to increase owners’ wealth. And this investing spree is not in the US alone. In our country, there’s Downy’s Isang Banlaw, energy efficiency ads from makers of compact fluorescent lamps, SM’s recycling depot and green bags and the advent of green cars (Prius by Toyota and Accord ’08 of Honda). The La Mesa Watershed was reforested with the help of several companies like Shell. And a lot of companies are sponsoring environmental awareness campaigns and projects. It sure is expensive to put up a wind turbine and generate your own electricity, to finance a reforestation, to design and run recycling programs or to renovate stores to refurbish their efficiency in terms of energy usage, yet a lot of companies are willing to invest money in these nonprofit endeavors. Maybe there’s (really) a lot more to sustainability than just selling products or even selling green products. But what is this “more?”

Corporate citizenship has been a popular concept in the business world. It argues that companies can pursue their long-term interests along with contributing to the development of the society and environmental sustainability. The pressure generally comes from expectant stakeholders. Customers expect companies to fulfill their social responsibilities as a survey shows that 9 out of 10 customers expect companies to be supporting and acting on social issues. Another study tells that 86% of the consumers are willing to shift to a brand associated with a cause. They are increasingly making decisions according to the social reputation of the brand or company, to quote Bradley K. Googins of Boston College Center for Corporate Citizenship. To establish a more concrete basis, let’s take the example of BT, a British telecommunication giant. Its caused-related activities comprise 25% of its customer satisfaction rating. Moreover, the research also shows that stopping the said activities would reduce customer satisfaction by 10% which translates to a 20%-30% reduction in revenues. Another good example is Whirlpool. Whirlpool has been donating refrigerators to every Habitat home built in US; then sales shot up by 47% and web site hits rose dramatically. Personally, I’d rather buy a product from a company which is involved in charitable acts even if it’s more expensive than the other brands available in the market. It’s like hitting two birds with one stone – I’m getting the product that I want and I get to help the company in its altruistic goals. I’m sure you think the same way as well. As mere humans, especially with the kind of value system we have as Filipinos and the current social and environmental crises we are experiencing, as much as possible, we don’t want to allow someone/or the environment to suffer at our expense and we’d be delighted to contribute anything we can to the betterment of the society and environment, so in turn we see socially and environmentally responsible companies as channels. As for the companies, the challenge is how to incorporate this growing consumer behavior to their operations to their advantage.

From these we can say that corporate citizenship has the power to influence consumer and employee behavior. There’s indeed a lot more to sustainability than just selling products. It’s good to earn a lot of money by selling your products well and by making your products sellable, but it’s also important not to forget that the intangibles (reputation, per se) are keys to long term sustainability in an era that holds rising expectations on business’ role in the society. Corporate citizenship, when exercised tactically, translates to good business.

Many say that an organization’s most important asset is its workforce – its people – that some businesses like Citibank would pay a skilled employee higher than other employers to keep them in their company. This is really important that field for human resource management has become so vast, with the competition growing tight and fierce. I interviewed a manager who handles blue collar workers in a handicraft factory. She’s Jullie Anne Mendonez, my cousin, and currently handles the operations of a family owned handicraft exporting business in Albay. “Maybe the most common motivational problems occur in a factory with low-salaried workers who do generally monotonous jobs,” she told me. Some would opt to chat with their co-workers during work to alleviate boredom. Unwilling to work, some would simply not show up for work – which is the biggest problem for a factory with so many bulk orders to be delivered on time. Although money is a major motivator for this class of workers, the business cannot afford to pay someone more than what they could get from him in the form of labor – any company would definitely not do it either. In turn they implemented some non-monetary rewards such as recognition for a job well done. They would award an outstanding employee the “employee of the month” award or the like. “Even if there is no monetary benefit, people also long for recognition even in the smallest possible way,” she told me. I, myself, can say that this is true. People need things other than what money can buy, and those things include recognition that gives them the sense of fulfillment. “And it [giving non-monetary rewards] really is effective,” she added. It is also helpful to develop the relationship between the manager and the workers, according to Ms. Mendonez. She does this through having a Christmas party, even a simple one will do, and allot some effort to give the workers personalized gifts. Through these the workers will feel that they are valued and they are seen not just as workers in the factory but as important parts of it. “Minsan, aabot sa punto na ang personal na problema nila ay problema mo na rin,” she mentioned. That was the second time I heard that line from an operations manager. There was a case about a worker who skips work frequently. She had a talk with him and found out that the money he’s making for a day’s work is not enough that he would usually have no money to pay for the transportation to the factory the next day. In their talk they agreed to increase the pay provided that he would produce this amount of goods for the day. And surprisingly, the worker came the next day with a greater motivation to work. This is just one of the many problems she has to deal with. “I sometimes [Ms. Mendonez] feel like I am the Ate of everyone there in the factory,” she said with a chuckle. To her, her work is not just meeting the production deadlines. It’s also taking care of those workers who rely on the company for their living. “It’s very fulfilling to see the workers work with smiles on their faces — hearing laughter from time to time during work — and see them grow with us, and these, in turn, motivate me to continue working [with them]” my cousin ended the interview with this line.