Evolving Excellence

The Last 100 Feet of Walmart's Supply Chain

By Kevin Meyer

I've written a lot about Walmart, in particular their supposedly glorious supply chain.  To be honest, they execute a traditional supply chain exceptionally well.  They source from cheap labor countries, put it on big ships, and distribute it to thousands of stores incredibly efficiently.  For a traditional supply chain.  They still run into issues with too much inventory floating on slow-moving ships, arriving after that particular style has lost favor.  And they beat the crap out of their suppliers to get every last penny of margin out of them, and then claim they deliver that to their customers.

If they actually get the product to their customers.  Something Walmart is apparently forgetting is that the supply chain is not complete until the product is in the hands of their customers.  That last hundred feet from the store's big back room to the shelves has become an issue.

During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics.  The cosmetics section “looked like someone raided it,” said Hancock, 63. “If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go."

As I mentioned, it's only a hundred feet away.  If that.

It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers.A thinly spread workforce has other consequences: Longer check-out lines, less help with electronics and jewelry and more disorganized stores, according to Hancock, other shoppers and store workers.

At the Kenosha, Wisconsin, Wal-Mart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room -- an area so full that “no passable aisles” remain, she said. Meanwhile, the front of the store is increasingly barren, Tifft said. That landscape has worsened over the past several years as workers who leave aren’t replaced, she said.

Of course Walmart has a different perspective...

“Our in stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country,” Brooke Buchanan, a Wal-Mart spokeswoman, said in an e-mailed statement.

A lot of good that does you if you can't get it onto the shelves.  Perhaps that spokeswoman should talk to some Walmart execs.

Last month, Bloomberg News reported that Wal-Mart was “getting worse” at stocking shelves, according to minutes of an officers’ meeting. An executive vice president had been appointed to work on the restocking issue, according to the document.

Ouch.

“When times were good and people were still shopping, the lack of excellence was OK,” said Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management in Cambridge, Massachusetts. “Their view has been that they have the lowest prices so customers keep coming anyway. You don’t see that so much anymore.”

Shoppers are “so sick of this,” said Ton, whose research, published in Harvard Business Review, examines how retailers benefit from offering good wages and benefits to all employees. “They’re mad about the way they were treated or how much time they wasted looking for items that aren’t there.”

In Walmart's eyes it's apparently those pesky workers again.  What a "cost"...

Retailers consider labor -- usually their largest controllable expense -- an easy cost-cutting target, Ton said. That’s what happened at Home Depot in the early 2000s, when Robert Nardelli, then chief executive officer, cut staffing levels and increased the percentage of part-time workers to trim expenses and boost profit. Eventually, customer service and customer satisfaction deteriorated and same-store sales growth dropped, Ton said.  “When you tell retailers they have to invest in people, the typical response is: ‘It’s just too expensive,’” Ton said.

Wal-Mart is entangled in what Ton calls the “vicious cycle” of under-staffing. Too few workers leads to operational problems. Those problems lead to poor store sales, which lead to lower labor budgets. “It requires a wake-up call at a higher level,” she said of the decision to hire more workers.

As opposed to the cost - and not just in sales - of empty shelves.

Like the rest of us, even Walmart is only as good as the last 100 feet of its supply chain.  Sometimes all it takes is the "cost" of another human or two.

Data, Facts, and Truth

By Kevin Meyer

I've been observing the growing love affair with "big data" with increasing skepticism, and perhaps even worry.  Long-time readers know I've always been this way; in fact, one of my first posts - seven years ago - was on the mis-use or over-use of data and algorithms: The False God of the Almighty Algorithm.  Later posts demonstrated how a simple white board can sometimes analyze and plan a situation - such as a factory floor - better than software.  Years later I believe that more than ever.

Recently Dr. Art Langer of Columbia University has written a couple of articles that align with my concerns over an obsession with big data.  In CIOs Shouldn't Let Big Data Rule Their Decision-Making he discusses how data can sometimes lead to the wrong conclusions.

Once you rely on big data, it tends to become omnipotent in the decision-making process.

We must remember that our markets are constantly changing and the variables that dominate decision-making are extremely complex—and there are many great decisions that are made by people that go on intuition and “gut-feel.” And there are many CEOs that consistently state that many of their decisions have little to do with logic.

 CIOs beware—don’t forget the power of the human factors.

Data is a tool, like many others.  Dr. Langer's most recent article, It's Not Just the Data, Stupid, expounds on this a bit more.

We are being overwhelmed with the use of digital data to make decisions. You can’t read much these days without immediately seeing buzzwords like “Big Data,” “Business Analytics,” or “Business Intelligence.” Discussing process issues is passé; how to deal with data is the “in” thing for business discussions, especially at board meetings.

More and more, I’m seeing other ways in which we’ve become increasingly reliant on data testing.

And once again we are losing sight of the context and perspective.  Dr. Langer quotes Ron Sentz, VP of EMSI:

“The biggest limit to big data is our ability to interpret it. People need to understand why they are using data. What is the end goal?” Sentz said. “Data is also like an assembly of facts, which aren’t necessary the same thing as truth. If facts are poorly interpreted, it could lead to the wrong conclusions.”

That last sentence needs to be repeated: Data is also like an assembly of facts, which aren't necessarily the same thing as truth.

We see that in so many areas.  Politics, climate change, marketing, and even when trying to schedule a complex factory floor.  We get so sucked into data that we assume it is fact.  We get so sucked into facts that we assume it is truth.

Our LeanBlog friend, Mark Graban, wrote about this a couple years ago, referencing a great photo from FailBlog.

Mark also references two quotes that I've both enjoyed and been troubled by:

"In God we trust, all others bring data." - Dr. W. Edwards Deming

"Data is of course important in manufacturing, but I place the greatest emphasis on facts." - Taiichi Ohno

The problems I see with people and organizations caught in big data, or just plain old data, are two-fold:

The desire if not requirement that data must be used with every decision creates paralysis.  In the lean world we are taught to seek perfection, but sometimes we forget that the one thing more important than perfection is simply progress.  I've been part of situations where the data is never quite good enough, the analysis of data never quite complete, the conclusions from analyses never quite solid.  So nothing happens.

Equally dangerous is an overconfidence on data, and subsequent analyses and conclusions.  Data becomes facts becomes truth.  In the two articles I referenced by Dr. Langer there are several examples where this is not the case.

Because truth requires perspective, context, reference, and understanding.  Knowing when outliers are relevant or irrelevant, when the dataset is complete or incomplete, and how to make the correct, or necessary, conclusions when data is incomplete or inappropriate.  Experience and intuition create relevance.  The ability to create relevance is a core component of leadership.

Facts are not just data.  Truth is not just facts.  Don't forget the human factors.

Disruption, Mission, Measurement, and Families

By Kevin Meyer

It's time for a smorgasborg to clear out a few articles I've been meaning to write about, so prepare to bounce a little all over the place!

First off, with a hat tip to Jason Yip, is an article on how disruption could destroy Apple, Tesla, VCs, and academia.

The problem with Apple:

Successful innovative products like the iPhone are usually based on proprietary technology because that is how the dominant business carves out, protects and builds its top market position. But at some point as they get better and better, they start to exceed what people actually need or are willing to pay extra for.

And Tesla:

“Who knows whether they will be successful or not,” he said. “They have come up with cars that in fact compete reasonably well and they cost $100,000 and god bless them.”

“But if you really want to make a big product market instead of a niche product market, the kind of question you want to ask for electric vehicles is, I wonder if there is a market out there for customers who would just love to have a product that won’t go very far or go very fast. The answer is obvious.

And VCs:

“Venture capital is always wanting to go up market. It’s like the Rime of the Ancient Mariner. 'Water, water everywhere and not a drop to drink.' People in private equity complain that they have so much capital and so few places to invest. But you have lots of entrepreneurs trying to raise money at the low end and find that they can’t get funding because of this mismatch. I think that there is an opportunity there.”

And finally, academia:

“Right now, Harvard Business School is investing millions of dollars in online learning, but it is being developed to be used in our existing business model, and we’ll sell it to other universities to use in their existing business models.

“But there is a different business model that is disrupting this in addition to online learning. It’s on-the-job education. This model of learning is you come in for a week and we’ll teach you about strategy and you go off and develop a strategy. Come back later for two weeks on product development. You learn it and you use it. These are very different business models and that’s what’s killing us.”

“Fifteen years from now more than half of the universities will be in bankruptcy, including the state schools. In the end, I am excited to see that happen.”

And that's why some of us are so excited about the likes of Gemba Academy.  Watch a few of the over 440 lean and six sigma video training modules, and try the concept.  Then come back for more.  As often as you want, for one price.

This weekend The Wall Street Journal ran an article on agile and lean guys that are bringing those concepts home, and using them to improve how their families run.  Some of us have dared do such a thing, with sometimes interesting results.

A new generation of parents is now taking solutions from the workplace and transferring them home. From accountability checklists to family branding sessions, from time-shifting meals to more efficient conflict resolution, families are finally reaping the benefits of decades of groundbreaking research into group dynamics.

When my wife and I adopted the agile blueprint in our own home, weekly family meetings with our then-5-year-old twin daughters quickly became the centerpiece around which we organized our family. The meetings transformed our relationships with our kids—and each other. And they took up less than 20 minutes a week.

Ok admit it.  How many of you have applied 5S to your garage and kanban to your pantry?

Dan Rockwell penned a post quoting our friend Karen Martin's recent book, The Outstanding Organization. 

“I think there’s so much time and effort wasted on setting forth mission statements and vision statements…” Karen Martin, author of, The Outstanding Organization.”

Compelling vision doesn’t cure sick organizations. Martin said, “Many organizations have these lofty visions and they can’t even deliver product to customers…”

I've never been a fan of vision and mission statements.  They are either too vague and therefore useless, or too specific and therefore constraining.  And don't get me started about organizations that claim "employees are our greatest asset."  Right before they whack a few.  Instead figure out some core principles, and live them.

Bill Gates penned an op ed for The Wall Street Journal on the importance of finding good measurements in order to tackle the world's problems.

In the past year, I have been struck by how important measurement is to improving the human condition. You can achieve incredible progress if you set a clear goal and find a measure that will drive progress toward that goal—in a feedback loop similar to the one Mr. Rosen describes.

This may seem basic, but it is amazing how often it is not done and how hard it is to get right. Historically, foreign aid has been measured in terms of the total amount of money invested—and during the Cold War, by whether a country stayed on our side—but not by how well it performed in actually helping people. Closer to home, despite innovation in measuring teacher performance world-wide, more than 90% of educators in the U.S. still get zero feedback on how to improve.

Bill goes on to describe how developing new measurement methods, leading to improved goals, led to health care improvements in Ethiopia, very recent efforts to finally eradicate polio, and education.

Speaking of measurement, and along the lines of our Fun With Statistics series,The Wall Street Journal recently published an article describing how inconsistencies in measurement methods sometimes lead to the wrong conclusions.  The author referred specifically to a widely-publicized study that seemed to indicate that health care outcomes in the U.S. were falling behind the rest of the world.  But when you dig deeper you discover that even the study's authors suggested the opposite.

As the report points out, the U.S. has the highest infant-mortality rate among high-income countries. Again, this isn't a good indicator of the quality of the American health-care system. The elevated U.S. rate is a function of both the technological advancement of American hospitals and discrepancies in how different countries define a live birth.

Doctors in the U.S. are much more aggressive than foreign counterparts about trying to save premature babies. Thousands of babies that would have been declared stillborn in other countries and never given a chance at life are saved in the U.S. As a result, the percentage of preterm births in America is exceptionally high—65% higher than in Britain, and about double the rates in Finland and Greece.

Unfortunately, some of the premature babies that American hospitals try to save don't make it. Their deaths inflate the overall infant mortality rate. But most premature babies are saved, largely because America's medical research community is exceptionally innovative.

Thanks to such technologies, the U.S. neonatal mortality rate has dropped to just 5% today from 95% in the 1960s. The Institute of Medicine report ignores one of America's chief health-care assets: the country's superiority in medical innovation.

But of course you have to dig a bit to discover those nuances, and in the meantime the simple headline is the news.  Think about where else that could be happening...

And speaking of babies, many probably haven't noticed how the birth rate in developing countries, including the U.S., has declined over the last few decades.  The impact can and perhaps will be significant.

Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate.

The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1. If the average woman has more children than that, population grows. Fewer, and it contracts. Today, America's total fertility rate is 1.93, according to the latest figures from the Centers for Disease Control and Prevention; it hasn't been above the replacement rate in a sustained way since the early 1970s.

America's middle class fertility rate is 1.6.  And China, with it's one child policy?  1.5.  Who needs a policy when you do it to yourself?

For two generations we've been lectured about the dangers of overpopulation. But the conventional wisdom on this issue is wrong, twice. First, global population growth is slowing to a halt and will begin to shrink within 60 years. Second, as the work of economists Esther Boserups and Julian Simon demonstrated, growing populations lead to increased innovation and conservation. Think about it: Since 1970, commodity prices have continued to fall and America's environment has become much cleaner and more sustainable—even though our population has increased by more than 50%. Human ingenuity, it turns out, is the most precious resource.

The impact?

Low-fertility societies don't innovate because their incentives for consumption tilt overwhelmingly toward health care. They don't invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don't have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces.

The solution?

Conservatives like to think that if we could just provide the right tax incentives for childbearing, then Americans might go back to having children the way they did 40 years ago. Liberals like to think that if we would just be more like France—offer state-run day care and other programs so women wouldn't have to choose between working and motherhood—it would solve the problem. But the evidence suggests that neither path offers more than marginal gains. France, for example, hasn't been able to stay at the replacement rate, even with all its day-care spending.

Which leaves us with outsourcing our fertility. We've received a massive influx of immigrants from south of the border since the late 1970s. Immigration has kept America from careening over the demographic cliff. Today, there are roughly 38 million people in the U.S. who were born elsewhere. (Two-thirds of them are here legally.) To put that in perspective, consider that just four million babies are born annually in the U.S.  If you strip these immigrants—and their relatively high fertility rates—from our population profile, America suddenly looks an awful lot like continental Europe, which has a fertility rate of 1.5., if not quite as demographically terminal as Japan.

Sort of changes the immigration debate, doesn't it?  Dig deeper.  You might learn something that flies in the face of the headline.

2012 Management Improvement Blog Review

By Kevin Meyer

Once again I'm honored to participate in John Hunter's annual Curious Cat Management Improvement Blog Review.  Check out the link to read reviews of some of the best management blogs and posts from the past year.  As a more frequent compilation, check out the biweekly Management Improvement Carnival.

This year I chose three blogs that I read without fail, although one of the blokes might be a bit surprised by that.  Matthew May's Edit Innovation and Dan Markovitz's TimeBack Management blogs take lean out of manufacturing and into personal productivity, which is also a passion of mine.  And as I'm exploring new frontiers, Tim McMahon's A Lean Journey provides an almost daily recalibration back to the core.  It's been a good balance.

So on to what I consider to be the three or so best posts from each of those blogs over the past year.

Edit Innovation by Matthew May.  I first came across Matt years ago when I read one of his first books, In Pursuit of Elegance.  The concept of elegant simplicity really resonated with me.  Just a few months later I read his short business novel, The Shibumi Strategy, and that book literally changed me.  It linked lean and zen concepts to personal leadership transformation, which was exactly what I was beginning to explore in response to some stressful situations.  Just two months ago his latest book, The Laws of Subtraction, was published.  This book brings it all home, and includes supporting stories from yours truly as well as several other lean-oriented bloggers you'll recognize.  Highly recommended.

Some of my favorite posts from the past year:

• The Power of Reflection. Matt tells the story of how the Los Angeles Police Department uses a formal process to review important evens, with one of the most critical components being the AAR - After Action Report - which was originally developed by the US Army.  The AAR asks three simple questions: what was supposed to happen, what actually happened, and what accounts for the differences.  As Matt points out, this is very similar to the lean and Japanese concept of hansei - reflection.
• The "Less is Best" Approach to Innovation. As you might guess from his focus on subtraction, Matt enjoys pointing out areas where less is actually more.  The same goes for the innovation process.  Matt describes how successful products "often achieved the maximum effect with an elegant, minimalist approach."  Three components of that concept: a lean feature set, loose reigns with a flatter organizational structure, and quiet minds where innovators meditate and are self-aware to stimulate the personal creative process.
• The Greatest Day of Your Life. Are you so focused on your professional life that you are letting your personal life suffer?  Do you even know what you want your personal life to be like?  I was there once, and I bet I'm not alone.  Matt describes the work of Rich Horwath (built upon that of Clayton Christensen) the helps apply the language of business strategy to achieving personal goals.  There are two questions: what would be the greatest day of my life, and how would I get there.

TimeBack Management by Dan Markovitz.  Similar to Matthew May, I came across Dan's blog years ago while exploring how lean could apply to personal leadership processes.  Dan was coming from a different direction - while exploring how personal leadership processes could be improved he happened upon lean.  We've since been in close contact and have realized we are of like minds.  So much so that John Hunter mentioned that when we were selecting blogs to review, unknowingly we both chose each other's and we both chose Matthew May's.  Fortunately I got to call dibs on Matt's, and here's Dan's review of Evolving Excellence.  Earlier this year Dan's book, A Factory of One, was published.  I highly recommend this book if you would like to apply lean to personal leadership.

Some of my favorite posts from the past year:

• First, Identify the Value.  So what is the "deliverable" of your position - or the positions of the people that work for and with you?  Or meetings or basically any other business activity?  Dan points out that the deliverable is often unrelated to the value that is desired - from the customer's perspective or otherwise.  Is the deliverable or value an "open door policy" or increased sharing and communication?  Are there other, perhaps more efficient, ways to accomplish that?
• What Will You Be Judged On?  Dan relays a story from Tony Blair that reinforces how important taking time for thinking, just thinking, is.  We often get so consumed by tactically crisis management that we lose our grip on long-term strategy.  How appropriate for this time of the year when many of us look up and ask where the year has gone.
• That's Just Our Culture and We Can't Change It.  We relentlessly attack defects and manufacturing process problems, but we seem to just want to accept analogous issues with personal effectiveness.  Why is that?  It's not any company's culture to accept a 25% product reject rate, so why is it ok to simply accept a 25% reduction in personal productivity because of poor leadership and say "it's just our culture?"

A Lean Journey by Tim McMahon.  Unlike Matt and Dan, I don't know Tim very well, but we've both come up through manufacturing and we've both volunteered with The Association for Manufacturing Excellence.  What I really like about Tim's posts - which he somehow finds the time to do almost daily - is that they create some grounding for my ruminations about lean in strange places.  Through his Lean Quotes and Lean Tips series he brings back the core.

Some of my favorite posts from the past year:

• The Key to Success is Customer Focus.  Without the customer you don't have a product, a company, or a job.  So why wouldn't everything revolve and align with creating value for the customer.  Sometimes we kid ourselves that shareholders and employees are just as or even more important.
• Don't Let Lean Myths Stand In Your Way.  Tim nails it with this list, and I really wish it would be required reading for journalists before they use the unfortunate term "lean and mean."  Lean is not about cost reduction, it does not make employees feel like robots, it is not about tools, to name a few.
• Debunking Six Common Misconceptions of Standardized Work.  Standard or standardized work is critical to the lean environment as it creates the platform from which kaizen, or change, can occur.  But the concept of "standardized" can often be misinterpreted as rigid.  It is not - it is simply a documented starting point for change.  How can you improve if you don't know where you are?

You're Good When You Think You're Bad

By Kevin Meyer

Over a decade ago I created my first lean enterprise assessment, just as a tool to help me understand gaps in my organization.  I'm generally loath to use such tools as they are generally misinterpreted, gamed, or whatnot - but so be it.  It's a tool and just a tool.  Coincidentally that first assessment tried to measure the use of lean tools, which lead us down the toolhead path - and smack into a wall.  We learned our lesson, and began asking "why" and then "how" before choosing the appropriate tool for the problem.

That assessment morphed into something that tries to measure behaviors and perspectives, not tools.  It's fairly lengthy, but still well-received.  And scary, as it is virtually impossible to receive a high score unless you have implemented lean from your suppliers through to your customers.  Here's the assessment, free to download.  It is now a small part of the Lean Enterprise Strategy Kit that takes an organization through a combined traditional and lean enterprise strategy development, communication, execution, and review process.

But my point isn't to pander those tools.  Along the way, both in my organization and in the hundred or so others that have used the tool, I noticed a common trend:

• First assessment: high score
• Second assessment (generally 1 to 2 years later): much lower score
• Third assessment: static to even lower score

Most people wouldn't consider that to be progress.  How can you get worse?  But think about what's happening.  And that's fundamentally why the assessment is just a tool - it helps you prioritize areas to work on.  Nothing more.

Before starting down the lean journey, most organizations think they're pretty good.  Inventory?  Helps buffer issues obviously caused by suppliers and anyone except themselves.  Obviously.  Waste?  Comes with the territory because our products and processes are more complex, different, inherently unstable, etc. (pick one).  People?  Can't be trusted.

So they look at the assessment, especially the first one that didn't try to point out such fallacious fantasies (!), and skew it higher.  In their own minds.

Then, if they have a solid lean leader, they start to learn.  And visit other real lean organizations.  And attend seminars, workshops, and training programs by the likes of AME and Gemba Academy.  And they start to realize how far down the totem pole they are.  That's fine, as long as they start to improve.

As they learn, they discover even more areas for improvement.  As they drain the inventory swamp they uncover more problems.  As they train their people - and learn to respect their brains - more opportunities arise.  And they feel even worse.

They try a lot of tools.  Perhaps judiciously, but probably without a lot of forethought.  Many of those tools fail - but they were tried.  And over time as appropriate problems and opportunities present themselves, they remember and apply them again with success.

Nearly a decade later the organization sometimes feels horrible - almost like a failure.  There are so many issues, so many problems, so many opportunities.  So many tools have been tried and abandoned.  But let me tell you about that organization - and I know because it is mine, and I'm damn proud of those people.

That organization trains on lean, has a solid 5S program, uses manual and visual systems to manage production across three facilities instead of shop floor MRP, has reduced lead times by 90%, has morning standup meetings in all key departments, is rated best-in-class for quality by it's major customers, and outcompetes its "low cost country" competitors - on price and quality - from the not-so-cheap state of California.  TWI is used extensively, autonomous teams have been deployed, ridiculous budgeting processes have been eliminated.  It hosts tours and workshops by AME, local and state business groups, and in all cases there's a big "wow!"  It was even successful enough that it built a new 120,000 sq ft facility - in California no less - that leverages massive reconfigurability concepts.

But in their minds, they have so, so far to go.  The journey seems to get longer and longer.  They don't want to apply for Shingo Prizes or AME Excellence Awards - there just isn't the time because there are so many issues to work on.  Certifications?  A rainbow of belts?  Nowhere.

The more you learn and the more you improve, the more you understand how far away perfection really is.  The depression of excellence?  Until you remember those days long ago, when you smugly thought you were great.

The Lean Value of Coffee

By Kevin Meyer

Now that I can reliably see again, I have something of a pent-up list of topics I'd like to write on.  But it's the weekend, so let's start with something a bit more fun - and perhaps closer to home.

So how many of you have already run down to the nearest Starbucks to get your coffee?  Or how many cranked up the Keurig or (gasp!) made a full pot at home?  For those of you that made a pot, how much will be left in the pot in a couple hours?  Come on, admit it - you end up dumping out most of the pot.  Think about that.

Apparently many consumers are, which is why those single serving machines are all the rage.  I know I made the switch from the morning Starbucks stop to a Keurig about two years ago.  Paid for itself in less than three months.  I had previously switched from the traditional pot to the Starbucks run simply because I was the only coffee drinker in the house, and dumping a several scoops of ground coffee into the basket to make a pot for just little ole me didn't make sense.

Wasting coffee didn't make sense, paying a fat markup to Starbucks didn't make sense, but paying a little extra for a single use K-Cup did.  Waste reduction, and value from many perspectives besides just price.

Which is how the article describes it as well.

Having already replaced the office coffee pot, single-cup coffee systems now want to conquer households. Already, 24% of U.S. homes are equipped with a single-cup coffee machine, making it second only to standard drip makers in terms of household penetration, according to market research firm Mintel.

The rise of single-cup brewing begs shoppers to do the math. Using one of the new single-cup machines to brew a serving of regular coffee costs anywhere from 55 cents to 80 cents, depending on the machine and the coffee. That compares with $1.65 or more for a "tall" coffee at a Starbucks shop.

Yep, that was the three month payback for one-cup-a-day me.

By far, the most cost-effective option remains to brew a whole pot of coffee at home using a traditional method, at a cost of anywhere from a dime to a quarter per serving. But that assumes you drink the whole pot. The more-common scenario, as any coffee lover knows, is to brew a pot of coffee but only drink one or two cups, significantly raising the per-serving cost.

The real-world realization of that common misperception of mass production.  Waste happens, if not tied directly to demand.  Whether it's extra coffee in the pot, or cars sitting on a sales lot.

One indisputable advantage of single-cup brewers is that they are fast. At dinner parties they can efficiently accommodate the varying demands of a crowd. Many hosts find the machine provides a welcome post-dinner activity, as guests select and concoct their own drinks before dessert is served.

Velocity of flow.  Quick changeover leading to mass customization.  Increased value - through time and price and desire matched to demand - to the customer.

Lean right in front of you in the kitchen.

Thanks.

By Kevin Meyer

Sorry about the absence from Evolving Excellence.  Over the last few weeks I've been working through a vision issue that has now been corrected with some successful eye muscle surgery.  In fact, yesterday was the first time I was able to drive.  All is good, and I should be back to normal in a couple weeks.

Two weeks ago I was in the pre-op room, waiting to be put under for a couple hours of surgery, and I had a brief chat with the young woman next to me.  Turns out that she had been in Iraq and was having some more metal IED fragments removed from her eyes.  She was the lucky one on that particular mission.

So I'm in that room because I was complaining about double vision in my lower left quadrant that made it a little difficult to read.  And she's having bomb fragments removed.  Just a little humbling.

That experience pretty much made this Veterans Day all the more real to me.

Thank you.

A Veteran is someone, who at one point in their life, wrote a blank check payable to the USA for an amount up to, & including, their life.

A Failure of Markets and Other Observations from Asia

By Kevin Meyer

I’m currently winging my way back home after two weeks in Thailand and Laos.  Sort of a last minute vacation for my wife and I to recenter and reconnect after a very difficult September that ultimately resulted in the unexpected passing of my mother in-law.  I’ve been to Asia, including Thailand, many times, but this was a first for Laos.  I’m very glad we got to see the remarkable city of Luang Prabang before it becomes overrun and changed by tourists – being called the #1 tourist destination in the world by The New York Times can cause that.

Technology is sometimes far more visible in Asia than in the western world.  Everyone, including tuk-tuk drivers working for a few bucks a day, are on cell phones.  Even monks, including this one in a remote Laos village only accessible via the Mekong River.  That village happens to be known for its whiskey distillery.  Yes, good people with good monks.  I’ll admit I am sort of proud of the [entirely accidental] composition of this photo.

What really strikes me with each visit to Asia, especially the more remote areas, are the markets.  These daily markets have stalls for everything, from clothes to hardware to raw meat.  Refrigeration is obviously overrated and perhaps even a waste.

But it’s not the market itself – that’s beautiful capitalism in action, the value of efficiently distributing goods to where they are needed in exchange for some profit – even in communist countries like the People’s Supposedly Democratic Republic of Laos.  It’s that there are multiple stalls selling the exact same thing, in the exact same part of the market, that drives the business guy in me nuts. 

How does that work?  What is the differentiator that causes someone to purchase from one stall vs. the identical one next to it… or any of the other 30 for that matter?  For local foodstuffs there’s probably a trust and quality component.  Perhaps one stall is known for having fewer flies in the cow parts.  That makes sense.  I bet someone could make a mint putting a cow parts stall next to a veggie stall so shoppers didn’t have to walk as far.

But what about at the touristy nick nack side of things?  The night markets of Luang Prabang, Chiang Mai, or even Bangkok?  Stall after stall selling the exact same (and I mean EXACT) figurines, silk scarves, or paintings.  A 200-stall market could truly be reduced to about five and you’d have the exact same selection.    Is a stall near the edge of the market an advantage because it’s the first one a tourist sees?  Or is one near the middle best as the tourist is thinking “boy I’ve seen fifty of this cheesy t-shirt – maybe I should buy one?”  I don’t get it.

Of course my wife and I don’t buy that kind of crap – or any crap for that matter – so perhaps we simply don’t understand.  I know one potential differentiator is whether or not the person in the stall is sleeping.  We saw that several times, and I’m guessing it has an impact on sales.  Apparently when selling one rinky-dink potential Christmas tree ornament can create a day’s wages, pushing the sale isn’t a high priority.

Observing how capitalism is thriving in supposedly communist countries is interesting.  China is an easy example, and many argue that capitalism is now more vibrant in China than in the U.S..  I thought Laos would be different, but it’s not.  Markets thrive (even when shopkeepers are asleep) and entrepreneurial folks are setting up new shops and services to get tourists to part with their dough. 

Even in the boonies there are stories.  Such as the tiny Hmong village downriver from Luang Prabang.  A collection of thatched one-room huts with dirt floors… each with a TV.  TV?  Power?  The government didn’t bring power to the outlying villages.  An entrepreneur came up with a way to pay for the infrastructure, deliver power to people with no money but with rice to barter, and make a profit.  The “people’s” government frowns but tolerates it.  Now those happy folks in one room huts get to learn about the unhappy Real Housewives of Beverly Hills in their mansions.  I bet they're still happy after watching it, too.

The people of both Thailand and Laos are remarkably knowledgeable about the political process in the U.S., and I had several interesting conversations with waiters, tuk-tuk drivers, tour guides, and $5/hour masseuses.  Even a monk I sat next to on a park bench while patiently waiting for the wife to closely examine fifty shops selling the exact same thing.

As a common theme they were wondering why Americans were allowing their government to dismantle the greatest economic engine the world has ever seen – just as they were opening the wealth-creating floodgates in their own economies.  At the same time they were surprised that Americans were slowing and in some cases reversing trends toward social liberalization – again just as they were becoming more liberal themselves by accepting, embracing, and even relishing their differences.  Yes in that regard Asia is a bit different than the Mideast.

I couldn’t really argue – it’s the quandary that many of us in the sociopolitical center experience every day.  And perhaps a reason why, once again, in this election I don’t think I can even hold my nose and vote for either major party candidate.  On one hand we have a guy so obviously in over his head it’s mindboggling and scary what he’s doing to the global competitive ability of U.S..  You would have thought that the recent China threat to dump Japan’s bonds, effectively economic warfare, would have woken us up to the perils of going more into debt to a country like that.  As an alternative we have a guy beholden to conservative social extremes that in my opinion cross the line into the realm of hate.  Sharia law, American style?  Well, maybe an extreme.  Barely.  One party wants the government involved in everything… except women’s bodies and bedroom behavior.  The other wants government out of everything… except women’s bodies and bedroom behavior.  Ridiculous hypocrisy on both sides.

Ce la vie.  Maybe the emerging economies of Asia are the place to be.  Nah... we can still work it out.  I hope.  Although I did take a liking to pad thai and tom yum soup.  If they only had good wine…

Just Observing, Sir.

By Kevin Meyer

I'm a fairly simple and frugal guy, but there are three, maybe four, luxuries that I do indulge in.  When I travel on business I just need a clean bed and I love Marriott's Courtyard chain.  When I travel on vacation I want more - and that's why regular readers know I'm a Four Seasons junkie.  If they have a hotel anywhere close to where I'm going, I'm there.

That's because the "more" that I want while on vacation is actually less.  I don't want to wonder if the hotel will be clean, if the bed will be comfy, if breakfast will be tasty, if the hotel will be in the right part of town, if the internet will be reliable, if I can get something to eat at 3am when recovering from jet lag, and especially if the room will be quiet.  Four Seasons does this - everything is perfect, and perfectly consistent, every time.  In years I have yet to have a single complaint.

And yes, like with most top tier hotels, I could tell you stories that would amaze you, even if they don't necessarily add any intrinsic value.  Such as being met by Four Seasons at the gate (INSIDE security) at the Hong Kong airport, whisked through a special immigration line while your fellow travellers are asking what rock band my wife and I must belong to, and out a side door to their limo so we're at the hotel before most people have cleared customs.  Or arriving at their Singapore hotel, checking in in the room (like at most Four Seasons), going straight down to the bar and having the waiter greet you by name - literally 5 minutes after check in.  At their Costa Rica resort last April a pool boy greeted me by name and told me how one of the medical products my company makes has helped his daughter.  I learned the staff reviews Linked In profiles of guests while on the bus into work.  Value?  Maybe not.  But still pretty cool.

For that perfection I do pay more - sometimes double or even triple.  But while on vacation it's worth it to me... to think less.  There's compensating value to me.  As a bonus I also almost always learn something about service - or even about lean - so I'm tempted to write off part of the bill as a business expense. Note to IRS auditors reading this: I've never actually done this.

Finally to the real story of this post.  I'm having a quiet breakfast this morning at the Four Seasons in Bangkok after arriving late the previous evening after a long day of traveling from the US.  My table is at the side of the open atrium so I get to watch the staff in action.  I've always been amazed by how the staff at their hotels - whether at the restaurants or elsewhere - will be at your side exactly the instant you need them, but are also never annoyingly intrusive.  Now I know.

Amidst the flurry of wait staff running around, I noticed that there was always at least one person just standing - and watching.  Not always the same person, but there was always one.  Just looking around the room at all the customers - and the rest of the staff.  If a customer looked up and looked around indicating they needed something, instantly that wait person went over and another person took over the watching and looking.  If a line started to form (ie, more than one person) at the front of the restaurant, the person would head over and help with the seating.  And someone else would take over the watching.

Someone was always standing, observing, and watching.

So I looked up and to the side, and instantly a waiter was at my side.  I asked what he was watching for, and his response?  "Just observing, sir."  Yes, "just" observing.  That "just" has become one key to their exceptional customer service.  I wanted to ask if process improvements were identified and acted on, but that's when the language barrier kicked in.

Taiichi Ohno would be proud.

Lean types know of the "Ohno circle" concept.  Go to the gemba, and "just" stand and observe.  15, 30, 60 minutes - whatever it takes.  In fact, he would tell people that if they haven't observed something that needed to be improved, they should go out and stand longer.  How often do you, and your team, take the time to simply observe?  How often do you go out to your shop floor and just stand and watch the process?

When you rush around focused on firefighting and fixing things, you miss the nuance of the process.  Or, in the case of Four Seasons, a tiny shift of a customer's eyes that indicate they might need something.

Take some time to "just" observe.  Better yet, make it part of the ongoing routine of you and your staff.

Not Even the TSA Can Inspect In Quality - or Control

By Kevin Meyer

So there I am this afternoon, sitting with my wife on the last plane flight of the day, returning from a two week long trip to deal with a difficult situation with her family.  Perhaps more on that at a later date, but for now let's just say Hospice is one incredible organization.  Wearily I go to stuff the boarding passes back into my backpack when something jumps out at me.

"Kitts"

Uh, wait a minute.  We're both Meyers, at least we have been for fourteen years.  Why is her maiden name on her boarding pass?  Momentary panic.  I must have been so wrapped up in the issues on her side of the family that when I made the one-way return reservation yesterday I used her maiden name.  At least that's what I surmised after reviewing the boarding passes from the previous two flights that showed the same incongruity.

Then it hits me.  The drivers license she uses as ID says Meyer, not Kitts.  And that ID was used when we checked in at United, went through TSA, and then right before this final flight went through an unusual US Air gate check that also required ID.  In fact, she went through TSA twice as she forgot to remove an item from her backpack that couldn't be carried on and went back out of security to go to the gift shop to mail it back to herself.

A United ID check, two TSA ID checks, and a US Air ID check.  Four checks, and not one of them noticed the glaring discrepancy in last names.  Her first boarding pass even had the check marks next to the various things they check - flight, date, first name, and last name.  So much time was spent looking for holograms, hidden lines, microprint, or whatever that the glaring problem was missed.  At least by the TSA.  I'll give the United and USAir agents a pass because, well, nevermind.

Should I be relieved that my tired mistake didn't create havoc on our trip, or worried about security?

Those of us in the manufacturing world, or at least the slightly evolved manufacturing world, know that inspected-in quality isn't real quality.  Quality has to be built in.  Once you get to the point that you need a final inspection it is too late, and if that is a human-based inspection it is basically meaningless.  How often do you do a "re-inspection" before you realize you re-inspect for one thing and find another, and so on?

Inspection, especially human-based inspection, simply isn't effective, even if you kid yourselves with AQL levels and other statistical nonsense.  You still have the human factor.  A factor that can overpower robots with creativity and improvement ideas, but still has the potential for incredible, erratic, variation in performance.

The same concept applies to inspecting in control.  As the TSA did today.  Twice.