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Process Improvement for Small Business

I’ve written previously about my two years of hard time working at the Amazon fulfillment center in Coffeyville from 2001 to 2003. Back then, it wasn’t the biggest retailer in the world owned by the richest man in the world. In fact, at that time, there were still plenty of people, from rank-and-file employees to highfalutin Wall Street analysts, who didn’t think Amazon would survive. Although it was a hard two years, I learned a lot and one of the highlights was being selected to go through Amazon’s own version of Six Sigma Blackbelt program consisting of four consecutive weeks of training in Lexington Kentucky at the Amazon facility. One of the highlights of the training didn’t have anything to do with Amazon. Usually, we flew home at the end of each week, but one time we stayed over the weekend and went to the 1,032-acre Kentucky Horse Park and witnessed my first and, so far, only steeplechase horse race. During this race, competitors are also required to jump over diverse fence and ditch obstacles. It was quite an experience, with blue grass bands playing in various spots in a Kentucky version of tailgating. Seeing the thoroughbred horses up close and then running the race was really something.

The next day, Monday, it was back to training. Six Sigma is a sophisticated method of identifying, analyzing and fixing defects in business processes. The defects in any business process cause failures in serving customers and drive up the cost of doing business. Amazon’s goal was to provide the world’s greatest selection at the world’s best prices. To make any money accomplishing both at the same time would require an ongoing effort to continuously improve processes making customer fulfillment and business operations more efficient.

The Amazon Six Sigma process requires extensive defining, measuring, and analyzing process defects so the processes can be improved and the new methods replacing the old. I found the formal process to be interesting, even though I felt the sophisticated statistics they taught us were a little over the top, providing much more detail than necessary to improve most processes.

Full Blown Six Sigma is Complicated and Expensive

While I believe that formal Six Sigma is too complicated and expensive for most small businesses, continuous process improvement should be part of any small business not only to remain competitive in today’s marketplace, but also to improve the value of the business when it comes time to sell the business: the elusive successful business succession planning.

Here is my small business interpretation of the five steps of Six Sigma. I know there are a few Six Sigma aficionados in our area who might see this interpretation and cringe so my apologies to you, but I think this modified version could benefit many small businesses. Every business has processes that fail. Something may happen that causes a customer order to be messed up. Or a mistake happens that takes a lot of time and money to correct to keep from messing up a customer order. Most of the time steps can be taken to minimize or eliminate the mistake from happening again, making more money for the business now and making the business worth more later. That’s continuous improvement and it should go on for the life of the business.

Define and Measure Defects

Businesses perform many processes in customer fulfillment and internal operations and all of them contain defects. Usually, five to ten processes most prone to defects (aka mistakes) can be listed by the business owner and employees. Sometimes knowing how to prioritize the list to eliminate the most waste is intuitive. Sometimes with a bit of measuring, the costs of the defects in each process can be estimated and the prioritized list can be developed by ranking the defect cost.

Analyze Defects

Once the mistakes and defects in a process have been identified, there should be a deep dive into the root cause of each. One way to try to get to the root cause is to ask the five why’s. In a kind of one thing leads to another logic, you can usually get to the real root cause by about the fourth or fifth why.

Taiichi Ohno, father of the Toyota Production System used a malfunctioning welding robot as an example:

  1. “Why did the robot stop?”
    The circuit has overloaded, causing a fuse to blow.

  2. “Why is the circuit overloaded?”
    There was insufficient lubrication on the bearings, so they locked up.

  3. “Why was there insufficient lubrication on the bearings?”
    The oil pump on the robot is not circulating sufficient oil.

  4. “Why is the pump not circulating sufficient oil?”
    The pump intake is clogged with metal shavings.

  5. “Why is the intake clogged with metal shavings?”
    Because there is no filter on the pump.


Improve the Process

In the example above, improving the process is as simple as installing a filter on the oil pump so it will flow properly. This is an example of a problem with a simple technical fix. Many problems have to do with people making mistakes and many times that is a result of them not having the right information in front of them at the right time to do the thing that needs done. So, fixing human element problems can usually be solved by figuring out how to get the right information in front of each person in the process so they have a clear understanding of what they need to do as related to the process.

Control the Process

Controlling the process has to do with making the solutions discovered in process improvement efforts part of the ongoing way of doing business. The best managed companies have standard operating procedures (SOP’s) that provide the instructions and information needed to carry out the work of the company or organization. Sometimes these are in a physical operation manual, but web based manuals provide a bit more flexibility not only in making information accessible for employees, but updating is much easier than having to replace pages in a bunch of physical notebooks.

Whether or not a small company uses a semi-formal process for improvement or not, the very act of taking some time, with all involved in a process, to look for ways of improvement can yield big dividends in improving customer service while also lowering the cost of doing business.


Jim Correll can be reached at (620) 252-5349 or by email at jcorrell@indycc.edu. The views and opinions expressed in this column are those of the author and do not necessarily reflect the policy or position of Fab Lab ICC or Independence Community College. Archive columns and podcasts at www.fablabicc.org.



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