Solving the Common Core Problem
I walked into this client over 28 years ago as a result of a fax generated lead. He listened to what I had to say and signed up. He had a business that he had started from scratch and, like a true entrepreneur, he had no idea what he had gotten into. He had dropped out of high school in his sophomore year and took a job where he learned how to repair alternators and generators. But being the bright guy that he was, he figured he could do it just as well and with higher quality results than his employer produced and make more money at the same time.
He knew nothing about running a business but by the time I got to him, he had been in business 10 years and had 30 employees. He was making some money, usually just enough to pay himself, his bills and live for another week. We all know this kind of struggling business. He knew he needed to improve his business performance, but didn’t know how. He had no real management structure in place to hold people accountable for performance. And his place of business was both a fiscal and physical mess. Chaos and disorganization was the order of the day. So my job was to help him organize his business, bring some structure where there was none, and to figure out a way to improve his business and its profits.
This was not what 5/67 Problem Solving terms a Wicked Problem Rather, it was just a very difficult problem. And so I used a training program that I called the War on Waste to bring some problem solving skills to his employees. Very soon our teams figured out that we could create a number of work cells for the most common cores. These cells would tear down and reassemble
the alternators, generators and starters. The design of these cells was created in conjunction with input from all employees and we had the factory producing at 3 times previous production by end of the 2nd month. We got the cells of these common cores into full production and
productivity increased to a consistent 10 times the original numbers. We were really excited about this. We had addressed the common core business and had it humming along. After we got the cells operating, we collected the following report that we call a World Record Report:
This was an amazing result. It showed that the team was producing 134 units to start (after we had created the work cells) and over the next 30 working days, they ended up with a World Record of 296 units. From where they were when we started on Day 1, around 30 units a day, we grew production to almost 300 per day. This report, was used both as a monitoring report of daily production and became a driver to optimized production by a workforce that thrived in the continuous improvement environment.
Interestingly, what we learned in short order was that this was not a re-manufacturing business but a common core optimization business. The core was the physical, non-working unit that was removed from the car. When it was turned in by a customer or mechanic, a replacement unit was supplied to replace it. So for the common cores, the 5% of the products that generated 67% of the business, it looked like a remanufacturing business. The cells managed the common core business and the owner’s job became focused on optimization of this inventory because the production process was taking care of itself. We trained him to think “different.” And he learned very well. It made sense to him. His focus was on what mattered most.
While we were working at this business, we identified another very profitable opportunity. The cores that comprise the 95% of the parts that only generate 33% of the company revenue, could become an opportunity to generate a highly profitable business niche. And that was a real test of our problem solving skills. We’ll cover that in another article.
Dealing with the common cores was a major achievement. There was no other remanufacturing business that operated in this way in the United States. It turned the business into a very profitable operation which the owner sold 4 years later. We focused on the process and figured out a way to use a number of problem solving tools that we never figured to use before we got started on this project.
You can read more about the 5/67 Problem Solving in my recent book with Craig Humphreys with the same name: 5/67 Problem Solving: How to Solve Wicked Problems…correctly. To buy the book: https://www.createspace.com/7576878.