A young executive named Horatio Goodheart was offered a job as a vice-president at Fly-By-Night Enterprises (FBN on the New York Stock Exchange). FBN was a manufacturing company that made several different models of WidgetsÒ to serve a variety of industries. Horatio researched the company and found that it had been fairly successful, and that there was a lot of room for expansion in the widget market. “Perfect,” he thought, “This is a great move for me, and I will be able to contribute to growing this business.” So he took the job as Vice-president of Quality Control.

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During the first few weeks, he got to know his staff, the other VPs, and his boss, President I.M. Theman. President Theman had started the company 20 years ago machining WidgetsÒ in his garage, and through hard work and vision, grew the company into the multi-million dollar leader in widget manufacturing. Horatio was quite happy with the choice he had made, and buckled down to work.

Horatio was a very clever VP, and it didn't take long for him to see that all was not perfect at FBN.

He spent time on the factory floor learning the machining and assembly of WidgetsÒ, and found that things were different there than what he had been told. The hourly people told him that some of the WidgetsÒ models were very difficult to make, while others that were easy to make had lower quality requirements. One widget, Model 666, was always giving them trouble, and no one believed FBN could be making money on it. The supervisors were telling the hourly workers that productivity was too low, and that they had to make more parts. Privately, the supervisors told Horatio that those darn hourly workers didn't care about doing anything other than goofing off and going to union meetings on company time.

Now this was a very different story than what Horatio had heard from the other VPs, his staff, and President Theman. They had told him that in general things were going well, that FBN was making a good profit on everything it made, and that the company philosophy, from way back when Theman was working in his garage, was “All The WidgetsÒ you buy will perform flawlessly.” Not that there wasn’t room for improvement, but the impression at the top was that everyone was happily turning out lots of quality WidgetsÒ. President Theman told Horatio to just fix any of the small problems he did manage to find.

Horatio knew that the only way to reconcile these two visions of how the business was doing was to take a look at some numbers. The company had a process data collection system, but no one really looked at the data except for accounting, and they were looking at a small subset of the data collected. Horatio realized that no one knew how the company was doing. This overwhelmed him, and, still reeling, he went to the gym to try to clear his head.

Once there, he met his usual workout partner, Harry Beards, a high-level executive with a Fortune 500 company. Horatio mumbled a bit about the situation while bench pressing, and Harry suggested that he contact Luftig & Warren International (who did you expect?), a consulting firm that Harry had worked with great results.

“Well, I don’t know, Harry. I’ve worked with consultants before, and I’ve never been impressed with them. Mostly they come in and tell you what you already know is wrong and tell you Mom and apple pie generalities intended to make it better, then try to sell you more weeks of the same. I need to figure out a way to get things done!”

“Yeah, I’ve had the same experiences Horatio. But these guys not only work at whatever levels they need to fix the problem, they help track the money saved due to work associated with their consulting. I really think they are what you need to get your arms around your problems.”

Horatio said he would think about it, and next set, made a personal record for his bench press. Flushed and relaxed, he headed home.

Once there, he pulled up the web address that Harry had given him ( http://www.luftigwarren.com). He decided to give them a call tomorrow, and see what they could do for him. He didn’t have much hope, but maybe he would be surprised. For some strange reason, he slept better that night than he had in the past few weeks.

The next morning, he called Luftig & Warren International (LWI). After talking with the Chief Operating Officer, Horatio was impressed with their list of customers, and with their ability to show how much money they had saved clients in the past. He told him that what they liked to do was send in a consultant for one or two days to perform a Needs Assessment. The purpose of the Needs Assessment was to take a look at the plant and determine if there were any opportunities there that LWI could help with. The Chief Operating Officer went on to tell him the different ways he could pay for this. They usually sent a consultant in at the regular rate plus travel expenses for one to two days to perform the Needs Assessment, which would result in a report and proposal which showed the opportunities, along with financial impact if available, and a plan to get the work done. The alternative was to pay travel expenses only and to receive instead a proposal with potential cost savings but none of the detailed approaches to get them done. Horatio knew he liked detailed plans and decided to invest in the more comprehensive proposal. Horatio talked with the consultant they were sending out and with his input created a schedule for the two days planned for the evaluation. Horatio let everybody know the consultant was coming, when they would be needed, and what type of data the consultant would need.

The consultant arrived the next Monday, and spent a couple of days talking to people from President Theman to hourly workers on the line. Horatio acted as the liaison with the consultant, providing introductions, data, and the ever-important Bigwig Backup (and sometimes jelly donuts). The consultant found about the same situations as he had, plus some issues with their suppliers and maintenance he had not yet seen.

As the consultant was compiling the data for his presentation, he told him, “I know most of this stuff isn’t news to you, but maybe putting these issues in terms of dollars will help you prioritize what to work on. Also, I will provide an action plan to show you how we can help you start working on these problems.”

Horatio liked the idea of actually planning how to attack the issues. The consultant completed the data analyses and used them and his observations to list the issues.

“Here is a table with the big issues as you and your people related them to me. Next to them is the strategy we can use to attack, and lastly, based on the data and assumptions you have given me, the dollar impact.”

The consultant went on to say, “Now, this is just the first step. We will present this to Mr. Theman and the rest of the VP’s in a proposal. At that point you can decide if you want to try to tackle the issues on your own, or use our help. Based on what we have here, there is a good case to be made for bringing us in. There are quite a number of big-impact projects and a lot of different tools which we can provide to get the most return on your investment in our services.”

Horatio asked him to explain the terms above.

“We analyzed the customer return data and found not only a huge potential improvement if we can decrease the returns, but that through time the returns have been increasing and nobody was tracking it to notice this. The Quality Improvement Strategy is a process where you identify what aspect of quality you want to improve, and then systematically go about it step by step. The end result is more conforming product through less variation.”

The consultant continued, "We also found that there different products make different profits and follow different flowpaths. By combining Total Asset Utilization and Activity Based Costing, you can make decisions on which products you really make money on, and which manufacturing flowpaths are really the best ones for a given product. It has been my experience that when you finally put these numbers together, you will be amazed at which model really makes you the most money when you consider all the factors, and which ones you are losing money on. Sometimes the biggest surprises at the end of this analysis will make you massive amounts of money.

“After talking with the people on the floor, Model 6666 seems to be difficult to make, and considering that that is the majority of your product mix, it probably makes sense to put together a Problem Solving Strategy team to eliminate the problem you have in assembly.

“One of the biggest issues for the supervisors was the amount of ‘firefighting’ they do. One supervisor told me that he didn’t even have time to put out the fires, just the time to say, ‘Yep, that’s a fire’ and move on with the next one. After talking to a few of the supervisors, it became clear that they were all working on different little problems and were consumed with the immediate. Daily Management is a strategy that makes sure that everyone is monitoring the right numbers at the level where they are controlled, and that the short-term firefighting issues are handled, prioritized, assigned, and stamped out in an organized way. This is a particularly powerful system for safety and production."

“Another frustration on top of the tactical firefighting is that longer-term strategic projects are passed down from above with equal priority and no concern for what the supervisors and area managers are already working on, sometimes the projects are even contradictory! This is handled through Strategic Planning and Policy Deployment which is a method to achieve agreement between management levels on what Quality Improvement, Problem Solving, and Strategic Projects will be worked on, and which ones just have to fall off of the plate."

“A common frustration with the floor workers is that they are being told to make a certain number of units per day, but their machinery keeps breaking down, and so they miss out on bonuses. An analysis of the breakdowns shows that you spend far more time performing unplanned downtime than you do on planned downtime. By putting a Daily Management system in place and using a Quality Improvement Strategy to reduce these unexpected downtime occurrences, productive capacity will be increased – perhaps even enough to put off that new line you are considering putting in.”

“Speaking of the new line, if you do decide that you need the additional capacity, even with improvements in output from the other areas, we will propose that you use a Statistical Start-Up strategy. This is a way to do work before, during, and after installation that will improve your efficiency and quality of new or even existing equipment. Through the use of tools like FMEAs, Standard Operating Procedures, qualification runs, experimental design, and process control systems (among many others), the new line will come on quicker, produce better quality product faster, and be easily maintained once the vendor leaves. One good thing about this is that the cost of a Statistical Start-Up can be made part of the capital budget, and thus depreciated for tax purposes.”

“We also found some evidence that your raw material suppliers have some quality issues which in turn affect your processes. Through the use of Supplier Quality Assurance techniques, you can identify the best suppliers and institute a supplier certification program to help all of your suppliers improve.”

Horatio nodded and said, “Now my friend Harry said something about how you track the financial improvements. How does that work?”

“Well, what you receive when you purchase our services is a certain number of weeks of our time here at the plant. We have found the most efficient way of using this time is to have our consultants act as facilitators for teams made up from your personnel. This way each consultant can organize and monitor a number of different teams and your peoples’ expertise is tapped while using the tools and strategies we have available. One of the things that each consultant will talk about with each team is how to measure the financial and non-financial benefit of the work they are doing. When that is decided, the team itself will monitor the improvements. You have got every right as a manager to see that your investment in your peoples’ time and our fee is paying you back. We suggest a quarterly report from teams to the highest level of management. This gives the teams an opportunity to show Mr. Theman and his staff the work and improvements they are responsible for. We have seen how this charges up the team and upper level management, and keeps both looking ahead for more money savings.”

Horatio found himself getting a bit uptight and said, “Now wait a minute, I can’t just drag these people off of their normal jobs and put them to work on this stuff full-time you know!”

The consultant agreed, “Exactly. Although there may be certain major issues that might draw people off like that, most of the work is meshed in with their day-to-day jobs. We know that there is more up-front work in setting up these systems, but we have seen how this work needs to be done one way or the other, and you either plan how you are going to do it, or you do it on the fly and get what you get. Once these systems are in place, the time, effort, and money saved make it well worthwhile. Typically, each team meets once a week to plan out the next week’s tasks. Some of these tasks are done in the meeting as a workshop, others can be performed by people during the course of their jobs. The consultant spends time with the team leader so that he or she understands the strategy they are using and how everything fits together, aids in keeping the teams effective, and is there to teach the team tools to get their mission accomplished. The consultant also has significant experience in the practical applications of industrial statistics, so he or she can set up and analyze Gauge studies, experiments, SPC charts, and other control methods. We have many seminars to teach these tools to your people so that you can do much of this on your own eventually.”

"You mean that you will teach us how to do what you do? That doesn’t seem like a good way to stick around here and consult for ten or twenty years."

The consultant laughed, “Well, I guess not. Our consulting strategy is pretty different from most firms. Our goal is to come in and teach you as much as you want about the tools, so that you feel comfortable using them in your business. To teach you how to fish, rather than giving you handouts, if you will. To be sure, there is stuff we do that is complex and you may find that you are comfortable bringing us in whenever you need something like that done, but ideally our consulting time diminishes through time as you establish self-sustaining systems and learn the tools. We have found that the new business brought in by an ecstatic client more than makes up for having a client dependent on us.”

“So how does this work on a daily basis?”

“Depending on the scope of the work and the size of the plant, we will recommend a number of weeks over the next year. If these weeks are something that could be handled by a single consultant, we will set it up that way. If it is a bigger job, we will work with you to try to schedule the best coverage across all of the consultants at your site. We have a well-defined structure throughout your company to insure progress continues to be made, and that when a team’s objectives are met, we celebrate the achievement and decommission the team. There will be a client contact, perhaps yourself, and a site manager from LWI who both receive weekly updates on the projects each consultant is working on, and use these and other inputs to monitor how the efforts are going and break through any high-level roadblocks the teams might encounter. Team or area level roadblocks should be handled by the team leader or team sponsor. Since the consultants are outside of your organization, they bring a unique perspective on these roadblocks and will offer solutions or explanations as needed. Sometimes there is a resistance to change, and our consultants have seen about every form that can take, and won’t let that get in the way of achieving the goals.”

Horatio snorted in sympathy. “Yeah, I’ve seen that before too. Anyway, I’m not hiring you to be their psychoanalysts, I’m hiring you for results.”

The consultant laughed again, “Well, we all are pretty personable people, but we know who we work for and what the expectations are. Now, I don’t want to leave you the impression that we only work with people on the floor. If it is appropriate, we work at any level of management needed to make you money. In the case of Strategic Planning and Policy Deployment, we would work with Mr. Theman on down to set up a system to make sure that people are working on the right things.”

“Did you know you use the word ‘system’ a lot?”

The consultant smiled, “Yeah, we’re pretty big on systematizing what we do. You know, anybody can come in and say, ‘If you do this, things will be better,’ and maybe it even works for a bit, but without a self-sustaining system to keep it going, someone gets promoted, or something needs to be changed, and the solution disappears after a while. This is why so many companies find themselves fixing the same problems as they thought they fixed a few years ago – they didn’t use a systemic approach. Everybody has been a victim of this pattern, and so the second to last step of every team is to set up and turn over to the appropriate owner a self-sustaining system to make sure that the fix or the process or whatever is constantly reinforced and upgraded as time goes by.”

“O.K., I’ll bite. What is the last step.”

“To celebrate and decommission the team, freeing those people up for other team work or to go back to ‘normal’ as appropriate. We like teams to have criteria so that they know when they are done and can turn over the work to a system.”

“You have teams that get decommissioned? I think we still have a team put together in the 80’s to investigate the feasibility of buying the engineers personal computers for work. Say, one thing I would like to have as my legacy is to get us QS 9000 compliant. Does any of what you are talking about conflict with that?”

“Actually, if you want to get a financial benefit from becoming QS 9000 compliant, you are going to have to do something like what we have been talking about anyway. Even the ISO 9000:2000 standard requires much more in the way of proving that your quality system is doing what it should be than the previous versions. We view ISO 9000 and QS 9000 compliance as the result of good quality system engineering, which is exactly what we have been talking about. We can help you not only be compliant with these specs, but measure the benefits you are getting from certification!”

“Wow! Well, I sure think that you could help us out and make us more money. I’m sold!”

“Great! I’ll get the report and proposal to you and we’ll get going on this.”

Horatio thanked the consultant, and went home exhausted but exhilarated. This might make his job fun again!

A couple of years later, when old I.M. Theman retired, they had a huge retirement party to which the whole plant came. President Theman talked about all the improvements in the last couple of years, the improved profitability, better safety, and higher morale. The IPO had gone flawlessly, and Wall Street was very happy with the high returns. “And its due to one man! Horatio, come on up here!”

President Horatio ascended the stage, smiling all the while, and said, “I won’t take credit for it, Mr. Theman. It took the hard work of all these people to put those systems in place. There isn’t a person in here who didn’t have something to do with it. In commemoration of your retirement, we are renaming the company Theman Widgets!”

The consultant winked from the back row and left them to their party. He had an appointment with another potential client soon. He smiled to himself and thought, “Boy, I love my job!”

Note that the results fictitiously represented above are indeed typical. 
Most Luftig & Warren International clients have made 

greater than 500% return on consulting investment. 
Data and case studies are available for your perusal.