14.4 Running Pilot Projects Across the Supply Chain

Pilot projects can be used to promote lean six sigma across the supply chain. Honda, for example, proactively uses lean six sigma as part of its supplier development program. Honda’s philosophy is simple: “When we select suppliers, we expect to be with them for years. . . . To score big with suppliers, you have to win their hearts.” To win suppliers’ hearts, Honda “lends” them a process development team for a 13-week, carefully charted program designed to teach suppliers’ workers how to engage in a process improvement project. Honda’s goal: Help suppliers learn the skills to become more competitive and self-reliant. The 13-week time horizon gives suppliers time to transform a production process. Besides, as Teruyuki Maruo, the father of the process, warns, “If you have seen no changes after three months, it is not going to work.”

Honda’s process follows Deming’s widely used four-stage Plan Do Check Act (PDCA) model shown in Figure 14.4. Let’s look at what Honda does in each of the four stages.

Plan

To begin, Honda identifies the right supplier development opportunities. Honda uses a Supplier Selection Matrix to quantify opportunities. Selection criteria include total spend, quality level, delivery performance, and cost competitiveness. Honda considers issues like long-term commodity strategy, projected program life of supplied parts, and past working relationships.

Once a viable opportunity is discovered, the Honda team visits with the supplier to share an overview of the improvement process. Critically, the team describes the level—type and amount—of supplier commitment required for success. Why does Honda do this on-site at the supplier? Being present gives the Honda team a final opportunity to assess the supplier’s cultural readiness to succeed. If the “go” decision is made, the supplier must provide a full-time project manager, set up a dedicated War Room to manage the project, agree to share savings 50/50, and build out a project schedule.

Do

The 13-week clock begins with a detailed situation analysis at Honda’s assembly facility. Honda engineers spend two to three days learning everything they can—e.g., cost, quality, and delivery history—about the supplier’s parts and how they are used.

Having done its homework, the Honda team leads a day-long training seminar to teach the supplier’s team Honda’s continuous improvement philosophy. Specific tools and techniques are introduced. Next, the Honda leadership team conducts an orientation meeting with the supplier’s workforce to communicate the goals of the improvement project.

With introductions made, a joint supplier-Honda team identifies a specific project—a production line, a process, or an entire department. Each opportunity is meticulously analyzed to find the “ideal project.” The joint leadership team then meets with line workers in an hour-long meeting. Honda knows that meaningful improvement depends on the people who do the day-to-day work. Questions are answered, concerns are listened to, and the workers are asked for their suggestions. Next, Honda tries to earn workers’ trust. Honda’s former purchasing guru Dave Nelson explains,

The real work is just beginning. It is now time to document the “model line’s” baseline performance. Remember, if you don’t have real numbers for the “before” performance, you will never really know how much you have improved. You won’t be able to tell a compelling “after” story.

The team then analyzes the “model line” thoroughly using the 3A’s—go to the Actual place, study the Actual parts, and understand the Actual situation. Process maps and Pareto charts make sense of the data. Now, goals can be set and improvement ideas generated. Honda’s team always has many ideas. However, real success depends on engaging the line workers to identify improvement opportunities.

The ideas that workers share are posted on a wall. Everyone can see them. Priorities are set. Importantly, workers’ names are written next to their ideas, making it possible for them to track the implementation and contribution of their ideas. Action plans are brainstormed. Everyone—the workers, the supplier’s engineering and maintenance staff, and the BP team—go to work to implement the plan.

Check

Once the redesigned line is up and running, performance data is collected. The “after” metrics are calculated in the same precise way as the “before” measures. Remember, you need to make a direct comparison to quantify improvements. The improvement process concludes with the line workers presenting the results to senior managers from both the supplier and Honda. Because Honda wants to make sure that improvement is contagious, results are always celebrated.

Act

If targeted goals are not obtained, plans are made and resources allocated to reach them. If goals are obtained, the supplier repeats the process on other lines. After all, on average, suppliers improve quality by 30% and labor productivity by almost 50%—rather amazing results. Even better, because the supplier’s employees are deeply immersed in the process, they are ready—and excited—to test drive Honda’s continuous improvement approach on other processes. Simply put, Honda’s use of pilot projects at suppliers initiates a quest for continuous improvement that often extends upstream to the supplier’s suppliers!