1. Quality Digest/October 2004 25
I
n the August edition of Quality Digest, I suggested a 12-step
process for transforming businesses by using a combination
of lean and Six Sigma philosophies and tools (“Six Sigma and
Supply Chain Excellence”). Through the six lessons discussed in
this article, I’ll provide insights into how smaller companies can
apply these techniques.
The figure on the following page shows a rather simple
view of transforming a corporate life cycle value stream. Sim-
plicity notwithstanding, the model suggests numerous opportu-
nities for finding and eliminating waste, joining social and
technical interactions, and ensuring value to stakeholders. With
their limited infrastructures, small companies face additional
challenges related to scope, cost and resources. Accordingly,
we’ll examine some of the socio-technical lessons learned from
applying the 12 steps, particularly how a small company can
prosper using a large company’s customer-intimate techniques—
without the infrastructure costs and political pressures incum-
bent in bigger corporations.
Lesson No. 1: Do you understand your
true business?
Often, organizations think their mission is to deliver a specific
product or service. For example, a company that provides
calibration services might believe its business involves repair-
ing, measuring, and/or adjusting specific electrical or mechanical
parameters of a specific device. Understanding a company’s
true purpose, however, goes well beyond that. One must analyze
the expected values demanded by customers, the processes
within the company and between itself and its customers, and the
channels available to deliver those values. Without the necessary
infrastructure and overhead to perform this analysis, smaller com-
panies often lack such a social-technical intimacy.
Given these parameters for determining a company’s “true”
business, isn’t it more logical for the calibration company cited
above to define its mission as delivering process readiness to its
customers? In other words, performing the service is the means
to the end, not the end itself. Smaller companies must not think
in terms of strategy and tactics, but in terms of relationships. The
calibration company would want to analyze the specific actions
valued by its customers and expand its portfolio to include those
products or services that would ensure the readiness of those
actions. Calibration ensures that a customer’s equipment is func-
tioning nominally when compared to an acceptable standard.
However, a customer might also want to ensure that the equipment
is available at the point of use in its facility, and that contingen-
cies are prepared in the event of failure (e.g., an exchangeable unit,
spare or on-demand repair service). Perhaps the customer also
wants to measure the equipment’s effectiveness and thus requires
process metrics or statistical data generated by the equipment in
a usable format.
A company that limits itself to a specific product or service
loses the flexibility needed for potential change or expansion in
its work scope. It also loses the traction needed to ensure repeat
business.
by Derrell S. James

2. 26 Quality Digest/October 2004
Lesson No. 2: Have you
identified the friction points
between staff and
customers?
Where’s the rub? This is a simple ques-
tion that most small companies tend to
overlook, especially when working with
larger customers. One-to-one relation-
ships aren’t always possible, and this intro-
duces a level of friction that can keep a
company from delivering the best value to
its customer—and best profits to itself. A
thoughtfully developed value-stream map
can identify the interactions of the process’
stakeholders. This is called social-stream
mapping and ensures that potential causes
for friction are analyzed prior to initiating
the relationship.
Interviews between customer and sup-
plier are necessary to ensure all required
data, analysis, follow-up and corrective
action processes are identified—and all
derived from effective decision making.
Using cause-and-effect diagrams helps
identify the potential friction between per-
sonnel, processes, parts and performance.
It doesn’t take a long time or extensive
resources to perform this analysis. Done
properly, it ensures that potential problems
are identified and pre-emptive counter-
measures prepared.
Lesson No. 3: Have you
identified all wastes?
Using standard value-stream mapping,
it’s easy to pinpoint waste in material and
information flows. However, unless they’re
specifically analyzed, it’s not as easy to
evaluate potential wastes in a customer’s or
supplier’s psyche. By that I mean the per-
sonality of the contract and the interactions
of the people producing, delivering and
servicing it. Particularly true for small
companies, nothing is more important
than understanding this combination of
performance and relationships. The con-
tract, after all, is what ensures a com-
pany’s longevity and growth.
To identify these types of wastes, other
social analysis techniques will prove effec-
tive. To a customer, value doesn’t mean
simply demonstrating that your products
or services are worth purchasing. You
must also analyze workforce issues that
might inhibit the installation, effectiveness
and readiness of the customer’s processes.
In the first lesson, we used the example of
a company whose true business is process
readiness. If that company neglects to
review every aspect of how that readi-
ness is realized, wastes will creep in and
fester, thereby reducing the chances of a
long-lasting relationship with a satisfied
customer.
Your company should evaluate the
state of your customer’s workforce. Does
it have special requirements? Have there
been recent layoffs? Have job responsibil-
ities shifted that might place your company
Value-Stream Mapping Flowchart
Customers
Suppliers
Employees External
Influences
STAKEHOLDERS
1. Define the business
life cycle.
2. Define and analyze touch
points with suppliers and
customers.
3. Construct top-level current
state map, including production,
information, service, time
and money.
4. Expand top-level current
state with detail from all
stakeholders.
12. Manage progress, set
regular cadence for
accountability. Repeat
process to refine.
5. Validate all current state
flows and interrelationships,
highlight success criteria.
11. Create and
implement actions to
achieve future state.
6. Capture current state data
and conduct assessments of
behaviors.
10. Create balanced set of
metrics and confirm
behaviors/analyze
potential gaps.
9. Create future state map
based on success criteria,
including behavioral
requirements.
8. Create ideal state map
to drive breakthrough
thinking.
7. Analyze waste, risks,
and other inhibitors
to success.
Feedback validation loop
Feedbackloop
Feedback loop if gaps discovered

3. 27RS No. 14 or visit www.qualitydigest.com
in an adversarial light? Within your own
company, the people who install your
product or deliver your service will prob-
ably meet face-to-face with those who
actually use the product or service. Make
the most of this golden risk-management
opportunity by addressing any potential
risks for “psychic waste.”
Lesson No. 4: Does every
employee know how to think
and act for success?
Similar to understanding a customer’s
psyche, small companies must make a
critical assessment of their own abilities to
think and act in customer-acceptable terms.
Because every customer is different, every
solution must be tailored to that customer’s
specific needs. This means your com-
pany’s products and services must be flex-
ible enough to adapt.
Once a small company has identified its
customer’s success criteria, it can then
create the work instructions, metrics and
management techniques that will generate
that success. For example, with our process
readiness company, the people interacting
with customers will do so based on a spe-
cific description of acceptable behaviors
and actions, approved by the customer and
discussed at regular performance review
meetings. These reviews must be estab-
lished to ensure that behaviors match cus-
tomer expectations. For a small company,
this is essential to ensure longevity, oppor-
tunities for growth and expansion, and to
create strong references to help capture
future orders with other customers.
Lesson No. 5: Do your metrics
and requirements drive the
right behaviors?
For a large company, reputation is a
heavy coat: warm, comfortable, consistent
and protective against difficult environ-
ments. For the small company, reputa-
tion is more like a diaphanous veil: thin,
transparent and ineffective against the
demands of a larger customer. However,
customer skepticism isn’t necessarily due
to a company’s size but rather to its lack
of advanced process management caused
by a limited staff or budget.
How can a small company overcome
this disadvantage? First, the company must
embrace the axiom that “all things meas-
ured improve.” With input from its cus-
tomer, it must create a balanced scorecard
of metrics to drive the processes necessary
for successfully executing the contract.
The scorecard’s “balanced” qualifier
requires the company to create and ana-
lyze definitions of success—keeping in
mind while doing so that human nature
will always default to the minimum effort
necessary to ward off trouble.
For example, a common metric in con-
tracts is average turnaround time, also
The scorecard’s
“balanced” qualifier
requires the company
to create and analyze
definitions of success

4. 28 RS No. 21 or visit www.qualitydigest.com
known as delivery cycle time. By
implementing a balancing metric to
reduce the variation of turnaround
time—for example, percent of units
shipped within three days—you can
reduce the prospect that an unhappy
customer will receive your product
at haphazard and unpredictable
delivery times. Remember, averages
without a balancing, variation-
reducing requirement will not only
create waste but also those friction
points discussed in lesson two.
Lesson No. 6: Are your
processes and workforce
mature?
Most companies will state with
pride that they employ the best people in the industry and claim
that their world-class processes ensure total customer satisfaction.
If both of these statements were true, those companies not
only would dominate the market, but also monopolize it. Let’s be
honest: No company is perfect, no relationship is perfect and no
product or service performs perfectly.
A mature company recognizes that its true goal is the drive
toward perfection. Actually achieving this perfect state is impos-
sible. This final lesson is basic to James P. Womack and Daniel
T. Jones’ theory of lean thinking. Maturity isn’t the culmination
of 100 years of existence, a workforce with an average of 30 years’
experience or the highest investment in research and development.
Rather, it’s a characteristic that can’t be bought or sold; it can only
be achieved through a thoughtful orchestration of relationships,
goals and metrics. Regardless of whether it implements lean, Six
Sigma or another continuous improvement methodology, a small
company is most likely to succeed if it stays focused on a quick
ascent toward maturity. Keeping these six lessons in mind along
the way will speed the journey and ensure success at the end.
About the author
Derrell S. James is the general manager of Sypris Test and
Measurement’s calibration division. He has 15 years of experi-
ence in operations leadership and business development in high-
technology manufacturing and service industries. James is a
frequent speaker and writer on leadership, lean and continuous
improvement, and operational effectiveness.
Sypris Test and Measurement is a leading provider of calibra-
tion services, test and measurement services, and specialty prod-
ucts to major corporations and government agencies. Sypris’
nationwide network of state-of-the-art fixed and mobile calibra-
tion laboratories are certified by A2LA for ISO/IEC 17025 and
are also ISO 9001-registered. Visit www.calibration.com or
www.sypris.com for more information.
Comments
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your comments to comments@qualitydigest.com. qd
A small
company is
most likely
to succeed if
it stays
focused on
a quick
ascent
toward
maturity