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Short-term and Long-Term Successes Using Reasoning Backwards Techniques

Case studies are available from a wide variety of industries and hundreds of different applications. Select titles from the following list to read brief summaries of several past successes.

Select from these Opportunity Analysis examples.

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Turnaround of an Electronics Plant

The Philips Electronics N. V. plant in Dendermonde, Belgium, employed about 800 people and generated about $100 million per year in sales, but was losing money. Management terminated over 300 workers to cut costs, but the plant was still losing $15 million per year. The company considered shutting down the operation.

In one last effort to improve performance, plant management introduced a few of the Reasoning Backwards Tools to 40 of the technical staff, who began using them on three projects immediately. These were successful, so they quickly started 12 more projects, and then 30 more after that.

At this point, plant management decided to begin teaching this approach to line workers, who formed their own problem solving teams, with supervisors serving as facilitators. Momentum built until 75% of the line workers were trained and working on problems. The line workers solved 70% of all the problems they addressed all by themselves, using just three tools. Engineers were freed up to develop new products that contributed to top line growth.

Quality improvement ranged from 2:1 to 100:1. (50-99% defect reduction) The median was 15:1, and the average was 28:1. (94% and 97% defect reduction, respectively, well beyond the range of improvement that their traditional techniques achieved.)

Bottom line impact: in less than two years, this plant went from a 15% loss as a percent of sales revenue, to 4% profit, a swing of $20 million per year to the bottom line!

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Spray-on Thermal Insulation for Hot Equipment

A small contracting company sprays a ceramic coating that acts as thermal insulation for hot equipment in manufacturing plants. The material costs over $150 per gallon, so yield losses have a major impact on profitability. Sometimes the company achieves high yields, and jobs are profitable. Sometimes the yields are low, and losses occur. The contractor had experienced intermittent performance for years.

The problem took only 15 minutes to solve. The contractor compared the conditions on one profitable job with high yields to the conditions on another job with low yields where he lost money. He observed that the ceramic material in the coating is abrasive, and it wears away the sprayer tips. As the tips wore out, overspray increased and yields dropped. The solution was for work crews to automatically install new sprayer tips every Monday morning. The low yields have disappeared.

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Connection Yoke in an Automotive Application

A large automotive supplier makes the components for a mechanical device in one location and assembles them in another plant. One component, a connection yoke, is a metal casting with 6 machined surfaces used to make different types of connections. The company's manufacturing operation had experienced a 5% defect rate for several years, as measured by the assembly operation. The defective parts are only discovered during assembly, when the defective parts do not fit well enough to make all the required connections. The defective yokes are set aside to be re-worked by an outside supplier. This arrangement left the company unable to identify the causes of the defects because of poor communication between assembly and yoke manufacturing.

The re-work company applied one of the Reasoning Backwards Tools to the problem. They observed that over 90% of the defective yokes were flawed on just one of the six machined surfaces. (The other 10% of defects came from a variety of handling problems.) This tool enabled people who had never seen the yoke manufacturing operation to identify the one critical machining step that was responsible for 90% of all rejected parts. Total savings from elimination of rework, extra handling, and wasted manufacturing labor and the resulting capacity increase totaled over $250,000 per year.

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Injection Molding of Plastic Parts for Toy Manufacturing

A plastics molding company had a chronic defect rate >20%, due to short shots in multi-cavity molds. (A short shot occurs when the molten plastic is unable to completely fill the mold before it solidifies, creating some defective pieces.) The defective pieces were ground up and re-used. The largest cost of this problem was the waste in machine time, effectively a 20% reduction in operating capacity.

One simple experiment quickly revealed four critical process parameters. All four had incorrect Target Values and Operating Tolerances. That experiment also suggested what would be improved Target Values and Tolerances for each parameter. Resetting these parameters immediately lowered the defect rate to well below 10%. Subsequent experiments further lowered the short shot rate to near 0%.

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Air Bubbles in Glass Sheet

This plant had a chronic problem with unacceptable bubbles forming in glass sheet as it was being made. The long-term defect rate was 13%. A Taguchi factorial experiment had reduced the defect rate to 6% on average, but results were intermittent. Sometimes the defect rate was 0%, and other times it was well over 10%.

The company studied the operation for just one week using one Reasoning Backwards tool. By comparing processing conditions when bubbles formed with conditions when they didn't form, the company quickly identified two critical factors. They selected new Target Values and tighter Operating Tolerances for these two factors, and the defect rate immediately dropped to 0.4%. Then, they ran one further optimization experiment, and now the bubble problem has completely disappeared.

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Heat Sealed Bags of Lettuce for Fast Food Restaurants

A company heat sealed chopped lettuce in plastic bags for one large fast food client. The customer's specification required a two week shelf life for the lettuce. The company was experiencing a 12% defect rate of bags that leaked, resulting in the lettuce getting stale in just one day. The entire business with this customer was at risk.

The company conducted a series of three experiments that identified, verified, and optimized the critical factors, and the defect rate dropped to near zero. The company saved $350,000 per year, and more importantly, they saved the business.

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Warped, Out-of-Square Barbeque Grills

This problem occurred in a Mexican manufacturing plant where the workers barely speak English. They had made wire grills for cooking surfaces for seven years, and they have intermittently made unacceptable, out-of-square, warped grills the entire time. The workers start with large spools of wire. They straighten the wire, cut it to length, bend it to shape, and weld into the rectangular grills. Usually the grills are flat and square, but sometimes they aren't and must be scrapped. The company's engineers had studied the problem for 7 years but had been unable to identify the cause of the warpage.

The direct labor crews received one day's training (in English) on one of the Reasoning Backwards Tools, and they solved the problem in just one week. They compared very good finished grills to very bad ones and identified the several consistent differences between them. Most of the differences related to straightness. This led them to conclude that the curvature of the wire on the spools was the ultimate source of the warpage. When the tightly curved wire from the end of a spool was straightened, it retained a slight bit of curve. The cut pieces were stored in bins, so the company lost track of straightness as a possible cause. The workers learned that they had to straighten pieces twice at the end of a spool to get truly straight pieces. When they made this change, the defect rate dropped to zero, and has stayed there ever since. Everyone, not just engineers or specialists, can successfully use these simple-but-powerful Reasoning Backwards methods.

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Leaking Foam in a Freezer Door

The urethane foaming operation that injects foam insulation into freezer doors leaked periodically. The defect rate had been running 8% for several months. The cost to rework the doors was $120,000 per year.

The project team used one of the Reasoning Backwards Tools to quickly discover defect patterns that suggested the root cause of the problem. It took the team just two weeks to solve the problem after the initial screening experiment. The solution simply required a computer controller to be reprogrammed. The defect rate dropped to zero and has stayed there, eliminating the $120,000 per year cost of rework.

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Machining of Rotor Shafts for Electric Motors

The machining operation at a motor manufacturer was unable to hold rotor shafts within acceptable tolerance. The diameter of the shaft had a Target Value of 0.250" +/- 0.001", for an Operating Tolerance of 0.002". The existing equipment was only holding a tolerance of 0.0025", 25% wider than the allowable window. The company was considering buying a new lathe for $70,000 to eliminate the problem.

Before spending that much money, the machinists tried one of the Reasoning Backwards Tools to look for the root cause(s) of the excessive variation. This one experiment took just 1/2 day to complete, and it used just 15 samples. It identified three causes of the observed variation, all of which were easy to correct. The cost to repair the lathe was just $200, including labor. The new range of variation is 0.0003", just 15% of the allowable window. The defect rate is now 0%, and they saved $70,000.

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Billing Errors

A hospital had average Accounts Receivables in excess of 65 days, and over 30% of their invoices had errors. To discover the causes of the errors, they looked for consistencies among invoices with long days outstanding. This evaluation uncovered one hospital policy (lab tests that were not covered by insurance carriers) that created most of the errors and caused the longest delays.

The hospital revised those policies, and within one year the average days outstanding had dropped to 45 days and continues to decline. A second hospital had a similar experience, dropping receivables from 45 days to 28 days in six months and generating an additional $1.2 million in annual revenue.

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Hotel Customer Service

A large metropolitan hotel had been experiencing declining occupancy rates. They had their management staff interview guests to compare multiple factors that they thought might be issues contributing to customer satisfaction and dissatisfaction.

The interviews identified several dissatisfiers, and the staff took action to correct them. More importantly, they were able to identify some unexpected items that excited guests, creating customer delight. They instituted new policies that reversed the declining trend as repeat stays increased and total occupancy rates returned to their former satisfactory levels.

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High Employee Turnover

Several different organizations have used the Reasoning Backwards Tools to study the high turnover rates of new employees, both permanent and temporary. They compared a number of factors for a group of employees who turned over quickly and for a group who did not leave.

They discovered several common factors among the high turnover personnel which were different from the employees who stayed. Some were internal factors that the companies could control, and others were external factors that were beyond their control, but which could potentially be helpful in hiring. For example, new hires with much more education than the job required, or who lived a long way from work left at a much higher rate than those with adequate education and those who did not have to travel as far to get to work. They also identified several positive and negative internal factors that affected retention and addressed them as well. These included work environments and management practices in several departments that had particularly high turnover rates. In one company the initial turnover rate was 39%, and it dropped to 29% just 6 months later, and it continues to drop as the company continues to make changes.

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Defective Dome Tweeters in Automotive Sound Systems

40% of the dome tweeters produced by one company required rework to achieve the specified distortion-free performance at a particular volume and frequency. This defect rate had not changed since the line started operation a few years earlier. The plant was losing money and needed to improve this operation or lose the business.

A team conducted a series of experiments to solve the problem. The first experiment quickly identified which component in the tweeter was the problem. The second experiment isolated the variables in the component assembly process that varied excessively and were related to the unacceptable performance. Better control of the gluing operation (both positioning and the amount of glue) was critical to improving performance. The team switched to an automated gluing process instead of the traditional manual operation, and this established a new standard of acoustic performance that had never been achieved before, one that was beyond the customer's current requirements, and what was available from any other supplier. The annual cost savings exceeded $100,000, but beyond that, this supplier became the preferred vendor, increasing sales volume by 4.5-fold as the customer dropped five other suppliers, going from seven to two.

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Sources of Bacterial Contamination

A company that makes cleaning and antiseptic chemicals for dairy farms had some customers who experienced higher bacterial counts than others. While all the milk produced was within the acceptable limits, it was of concern to the farmers with higher contamination levels because their customers, the coops, paid on scale based on contamination level, so higher contamination levels cost them money. Some of the dairy farmers blamed the chemical supplier. The supplier was determined to identify the cause of the problem.

The supplier used one Reasoning Backwards tool to compare several farms with consistently good performance vs. several farms that consistently had higher bacteria counts. By comparing the bacteria counts at a number of different points in the milking and processing operations, they found several that were consistently different. This enabled the supplier to show the farmers which steps were critical to improving milk quality. Furthermore, it enabled them to develop a quality audit service for farmers who bought their chemicals, which became a significant competitive advantage, and they increased market share by 60%. This same technique is applicable wherever infection or contamination is a critical issue.

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Analysis of Competitive Automotive Body Panel Technologies

Regulatory and competitive pressure to improve motor vehicle fuel economy during the 1980's led the domestic automobile OEMs to evaluate every possible method of reducing vehicle weight. One of the methods under consideration was the use of plastic body panels to replace steel. All the major plastics companies were involved in fierce head-to-head competition to develop winning materials.

One supplier who was already involved in all three of the competitive plastics technologies applied the Opportunity Analysis to understand the true needs of the OEMs and consumers, and to clarify the relative cost positions of all the competing technologies, including domestic and foreign (Japanese) steel stamping operations. The study revealed several qualitative and quantitative issues that the conventional wisdom of the day had overlooked, issues that would determine the eventual outcome.

All the plastics suppliers believed steel was doomed, that the only issue was which plastic would win. OA revealed the critical unspoken issue that everyone was ignoring was energy management. Steel bodies protect the vehicle's occupants 10 times better than any plastic - replacing steel with plastic meant people would die in collisions who would otherwise live. No OEM was willing to incur that kind of liability. The OA study also revealed a very different economic picture because the plastics suppliers were only comparing to the inefficient domestic steel stamping process, and ignoring the true state-of-the-art steel stamping operations practiced in Japan.

The OA study enabled the company to accurately predict that steel would remain the body panel material of choice for years to come, and that all the flurry of plastics development activity would result in a few test vehicles, but nothing more. In this case, a successful OA project meant redeploying resources away from a project doomed to failure, and concentrating on non-structural applications inside the vehicle where plastics substitution was the winning solution.

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Market Development of Patented Technology

A major chemical and plastics company developed and patented new catalyst technology for making plastic polymers with performance properties never before achieved. The company conducted an Opportunity Analysis project to determine what was the value of the technology and the resulting polymers.

The OA study revealed that the uniqueness was of great value. Customers could make products with properties they could not achieve any other way, which enabled entirely new markets to develop. The study further determined that the other polymer manufacturers would soon be forced to convert their manufacturing processes because the inventing company would not be able to supply the entire market. The company began using new technology and created a joint venture company to license the technology throughout the industry. The joint venture company had a valuation over $2 billion at formation.

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