Volvo GM Heavy Truck Corporation: Focused on Quality and Cycle Time Reduction Ó Copyright 1996 by Organizational Dynamics, Inc. About two years ago the VGHT sent a team to look in Memphis at the possibilities for relocation. As part of the Memphis Regional Chamber, Dr. Fisher met with this group. The reason Memphis appealed to VGHT as the city of choice is because their business is "after market sales" and provides repair parts for trucks that need to be sent out very fast. They saw a competitive advantage in Memphis where Federal Express Corporation is headquartered. They wanted to be close to FedEx so they could ship these parts overnight. VGHT saw themselves as a quality organization but were lacking in total integration of key processes and did not consistently document these processes across the board. Richard Wells, VGHT's Vice President and General Counsel, hired Dr. Fisher to do a national assessment based on the Malcolm Baldrige National Quality Award criteria. The plan was to look in seven areas at their assembly and distribution sites: the management staff, supervisory staff, their data network, strategic planning, human resource development, and customer focus and satisfaction. Dr. Fisher looked at VGHT's quality control, since they were a major distribution house. He looked at how VGHT was manufacturing and building their trucks as well as keeping the trucks supplied and on the road with good parts. Dr. also looked at the quality of results. Did VGHT measure results? What was the likelihood VGHT could be a world class quality organization? How did VGHT satisfy the dealer networks and their customers? Dr. Fisher discovered VGHT did not have the strategic thrust to be the quality company they perceived themselves to be. Six months later Richard Wells invited Dr. Fisher to meet with Per Lindquist, President and CEO of VGHT North America. Dr. Fisher met with them for a day and explained what he could do for them in the assessment area using Baldrige. Volvo International in Sweden used Baldrige as a measuring toot and it was coincidental the Swedish operation was putting a lot of pressure on the U.S. group to also use Baldrige as a measuring tool. The timing was right. Dr. Fisher had authored a book called Measuring Up To The Baldrige whose title had become the slogan of Volvo International. Per Lindquist was impressed with the book and with Dr. Fisher's references from work completed with Cigna Corporation, Federal Express, and other major companies. Donn was invited to visit their sites in Orrville, Ohio, Dublin, Ohio, and Greensboro, North Carolina. He interviewed about 200-300 key managers and supervisors as well as union representatives. He asked 91 questions based on his assessment process outlined in the book, Measuring Up To The Baldrige. By conducting the Baldrige Assessment, Dr. Fisher discovered many of VGHTs key processes were not totally integrated. VGHT hired a large consulting group out of New York, Price Waterhouse, to redesign many of their marketing, sales, and other key processes. There was no learning loop in place where the people that were actually involved with these processes on a daily basis were connected in a training program. There was no centralized training function and there was no focus on shortening process time of these key processes. Dr. Fisher finished his assessment process over a two month period. In Greensboro, N.C., Dr. Fisher gave the results to the President and all of the Vice Presidents in a conference room and through satellites across the country to all their plant sites. In his report he provided data to show there were opportunities for improvement within VGHTs key assembly and production processes. Price Waterhouse had not addressed these areas. At the same time VGHT was going through the assessment process they were developing a new truck line from Sweden called the 2200 project. It was a secret project for a unique truck line, owned 87% by Volvo of Sweden, and 13% by General Motors Corporation. VGHT was tying to change their image with only 12% of the market share for heavy duty trucks in this country. Their biggest competitor was Freightliner owned by Mercedes. VGHT wanted to move their market share up to 18%. That is why they went through reengineering, were becoming ISO 9000 certified and were trying to integrate all their processes together. Timing was right for Dr. Fisher to go through his assessment process. When Dr. Fisher first went to VGHT to present a proposal to conduct the Baldrige assessment he explained the scoring - the maximum score for any company is 1000 points. The President told Dr. Fisher they should be in the 600-700 range. Even though they fell below that range, they accepted the facts well. Within a few months Dr. Fisher was hired to come in and train 42 of their key people on how to conduct self assessments using Baldrige criteria. Dr. Fisher spent three days developing a team of internal assessors inside VGHT. He identified two areas in the manufacturing process that needed attention; first, the documentation process needed to go deeper, and second, there was no learning cycle connected with the reengineering process. In other words, the people were reengineering processes but they were not connected with the way people learned the processes. He explained how the system he developed, called PATS (Process Activated Training System®) would reduce process cycle time and learning cycle time of the key identified processes. PATS is not a system that advocates documenting all processes but only looks for those that are key or critical that would make a difference in various work areas throughout the plant or organization. Dr. Fisher et with management in a half-day session and explained how PATS connected with their ISO 9000 and reengineering initiatives inside the plant. He also explained how PATS would expedite employee learning and how to work in teams to document best practices. Dr. Fisher was then hired to come in and work with the project team assigned to the 2200 Project. This team was given a year and a half, off site at a secret location, to develop the world's safest truck- They chose to use the PATS system at their New River Valley plant in Dublin, VA. Jimmy Poole, an ODI Consulting Partner, along with Dr. Fisher conducted a two-day off site PATS session. They taught 20 people who had reengineered the processes for this new truck line on how to transfer their knowledge of what they had developed over to 66 new people that were moving from the old part of the plant to this new 2200 Project which is VGHT's new way of manufacturing trucks. Some of the VGHT trainers were in this class in order to develop an in-house PATS training session. According to Dr. Fisher, "The unique challenge of this is we have been able to go into the site where this secret 2200 Project has been developed and work with the prototype team. They are going to be transferring their knowledge over to all the other employees throughout the corporation that have always known the old way of manufacturing the truck. Now they're going to learn the new way and the PATS system is going to be used to transfer this knowledge over to them We can bring new people from the old plant over to these new processes and reduce their learning cycle from three weeks to maybe two days." ISO 9000 requires complete documentation of critical processes. The PATS system provides a process to enter all of the key identified processes and sub-processes into a database. Therefore, VGHT was able to identify and document best practices inside their company using PATS. The way they identified what the best practices were was to ask the questions: "What are the processes that we use on a daily basis? Are these processes absolutely necessary? Are. these processes completed correctly the first time to get the product out the door without customer complaints and without high warranty cost to prevent a product from coming back within the first week?" Dr. Fisher explained how the PATS process works. "The first step is to identify a group of people as 'Subject Matter Experts' (SME's). We teach the SME's how to teach core processes to their coworkers who we call the 'Process Activated Learners' (PALS). We write the processes behaviorally in order to measure results and see if behavior is actually changing on site." Seventy (70) key critical processes were documented at VGHT by the 66 people working in teams of three. Each group presented their results to the other groups. These processes can only be 20-25 minutes in length. If a process takes more than 20-25 minutes to teach it needs to be broken down into two processes. SME's can learn to teach these processes on site. One of the criticisms employees had for Dr. Fisher was, "we don't think the management will support us in allowing us to have time at our work site to teach these processes." Dr. Fisher took these employee concerns back to the General Manager of the Dublin plant. He invited Dr. Fisher back to do a one-day session with all of the management staff. Management will spend the last half of the day learning the processes as PAL's from a select group of previously trained SME's. In order to have the Training Department personnel buy-in and support the process, Dr. Fisher gave them a role to set the stage for whenever these two-day sessions with SME's are set. They become coaches to the network of SMEs and aid in their continuous development. "We teach how adults learn, we teach them adult learning theory, we teach them how to handle negative employees, we teach them the whole process of how to transfer this knowledge from one employee to another. The method is teaching one on one or two on one. They don't do it in groups and it's done on site and it's just in time learning. SME's throughout the plant site are empowered to teach these processes just in time so it doesn't continue to be a process problem on line, and that's the unique part. How you deploy the learning throughout the work sites is a very strong feature of this whole system." Ten percent of the workforce are informally SMEs. If there are approximately 4,000 employees in the U.S. for VGHT, there should be 300-400 Subject Matter Experts. The 100 SME's that are learning PATS at Dublin, Ohio, will deploy this knowledge to their plant in Orrville, Ohio. Dr. Fisher is also developing a Lotus Notes database to help them deploy the process to the other sites much faster. VGHT will work with Dr. Fisher to pilot and test the software inside the plant site in Dublin, Ohio. One of the main benefits of using PATS is measurement Each key process within the VGHT plant site has a session plan developed for it and they are numbered. As the SME teaches their coworkers a training voucher is created. After an SME has taught a PAL, the key process has the employee's number in the database, along with the number of the session. The beginning time and the ending time of the teaching process is documented. All of the training vouchers are submitted to a central location (via an electronic transfer, laptop or by hard copy) and they are put in a database and out of this comes five different management reports. These reports document what key processes were taught on a daily basis for each day of the week, 1) they tell how long it took to complete the process, 2) how long it took to teach the process, 3) who taught the process, 4) which SME taught the process, and 5) who the PAL was that learned the process. Individual learning files for each employee are created. Every time a person either learns a process or teaches a process a file is developed for them. Observation reports are available and can be created by the traditional training department that can go on site and look at either an individual or a team to be sure they are practicing the processes that were taught. This can be done in a matter of one to two minutes and scores two things. First, how long does it take an employee to complete the process and second, what is the employee's compliance percentage rate. If an employee completes a process in 10 minutes that should take 15 minutes but they have not done it with 100% conformance, (they might have done it with a 3% conformance), performance is not acceptable. The only acceptable rate with PATS is 100%. These results are published and provide real time data. In most traditional training programs employees are in a conference room and learn new knowledge or best practices maybe once a month or maybe not even that often. With the PATS system it's ongoing learning. It's done between down time. It's done right on site and it's just in time learning, just in time knowledge. At VGHT PATS is keeping up with both the. reengineering of these processes and the documentation as well as ensuring processes are being taught on site so it really helps their ISO 9000 registration. PATS addresses twelve of the twenty ISO 9000 elements. At VGHT they will certify all SME's annually. They don't allow just anyone to teach these processes. SMEs have to prove 1) they are subject matter experts, 2) they understand and know how to document and break apart key processes, and 3) they can teach adult learners. What Dr. Fisher developed at VGHT will result in 300 people who do their job right. VGHT is developing a whole network of people doing their job right the first time with 100% conformance. This really addresses a lot of cycle time issues both reducing the cycle time of the process and reducing the learning cycle time. One very positive result in VGHT is the empowerment for employees. According to Dr. Fisher, "One thing that I noticed in my Baldrige assessment was what the senior management said, 'all of our employees are empowered'." PATS helped to define empowerment and what empowerment is to the employees at VGHT. They can define what best practices are in their own work areas and what are the best steps to take to complete these processes on time in a consistent method. The system is employee driven, not management driven. Another result is the union buy-in. VGHT is a very heavily unionized organization and all the people in the PATS program are union members that are going to be SMEs. Union representation will represent a higher percentage than management representation. The union sees this process as very democratic, opening up many doors for people, growing and developing their union members throughout VGHT. The people that will be looked at for promotion are the ones that have been identified as subject matter experts. The traditional training budget is going to be spent on developing and growing these subject matter experts. The focus will be an ongoing development of these people to be the team leaders. They will understand more about the company than anyone else and become the process champions. In summary, what Dr. Fisher has created within VGHT is going to be a way of life. What they've developed is an internal audit process where their quality assurance people will go in to all the different work groups once a quarter and do an audit against 1) are they documenting their key processes using the PATS system and 2) based on the observation report, what is their compliance percentages. Are they practicing these processes that they've documented or are they having to be retrained a number of times? Is the quality of their product improving on their work site based on this system?. It's going to be a core way of doing work at VGHT within the next year to two years. Any company that is going through ISO 9000 certification, or is looking at a major reengineering process or a candidate for the Baldrige Award or the European Quality Award would want to consider PATS as the tool to help drive them to their goals and successes.