Monitoring quality at Takata

The last few years have been rather rough on Takata. Once the firm could accurately have been described as a fairly anonymous auto parts supplier. Your car may have contained some components made by Takata, but you were likely unaware of just what they were. That has changed rather significantly has it has come to light that the firm has produced a large number of defective airbags. Defective in the sense that they explode and send shrapnel into the car as opposed to inflating. To date, numerous automakers have recalled over 24 million vehicles in the US. To put that number in perspective, total car sales in the US set a record at 17.5 million last year.

As you might expect, the firm has been involved in the requisite activities of apologizing and ass-covering. As part of the latter, they commissioned a committee led by a former transportation secretary to review how the firm has managed. The resulting report doesn’t pick a particularly nice picture (Takata Lacks Processes for Tackling Air-Bag Defects, Panel Says, Wall St. Journal, Feb 2).

Takata Corp., the supplier behind defective air bags in millions of recalled vehicles, lacks clear processes for tackling potential safety defects and needs improved manufacturing methods, an outside panel the company commissioned found.

Takata employees tasked with raising safety concerns don’t have well-defined roles and rely on reports from auto makers about quality problems instead of ferreting out problems themselves, according to the report from the panel led by Samuel Skinner, the former transportation secretary under President George H.W. Bush.

The report found Takata lacked its own program for spotting defects in air bags once they’re installed in vehicles that now typically stay on U.S. roads for more than a decade.

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The challenges of network reliability

It’s been a rough week for some IT guys. United Airlines, the New York Stock Exchange, and TD Ameritrade all had very public network failures. So far, no one has claimed that anything nefarious was going on. That is, these shortcomings were not the result of any cyber attacks or hacking attempts. Rather, they appear to have been the result of failure in standard operating procedures.

How can such a thing happen?

To some degree, such failures are not so much a question of if, but of when. No system is perfect and problems of one sort or another are inevitable. The question is what is an acceptable rate of failure. That is, if the NYSE cannot be guaranteed to be always working perfectly, what is an acceptable rate at which to have disruptions?

The Wall Street Journal had an article that somewhat relates to this point (What We Learned From the NYSE, United Airlines Tech Outages, Jul 9). The article notes that old-fashion land line telephones had an uptime of 99.999% — that is, Ma Bell would leave you without a working phone only about five minutes out of every year. Of course, old school phone systems were regulated and nudge to that level of reliability by their overseers. Unregulated, private networks aren’t held quite to the same standard. The article claims that firms are generally unwilling to invest to the level that would raise their reliability to the level of a land line. It also notes that there are other things going on.

Today’s problems with reliability are more fundamental, a reflection of the complexity of contemporary networks, the volume of data, the pace of change, insufficient organizational and cultural practices, and a legacy of arcane and poorly written business software that traditionally put little emphasis on usability or customer experience.

Outages persist because of the interdependency of computer systems, fueled by the rise of digital services across all industries, particularly those with customer-facing software such as mobile apps, according to former NYSE Euronext CIO Paul Cassell, now CIO of Pico Quantitative Trading LLC.

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Process improvement in the operating room

Check out these number from the Wall Street Journal (How to Make Surgery Safer, Feb 16).

A little disconcerting, eh? Now there are obviously a lot of surgeries taking place every day in the US, so on a percentage basis having just 20 procedure in which the surgeon operates on the wrong site is very low. Still, that is not very helpful t the person who has a stitches on the wrong side of their body.

So what can be done to make surgery safer and more reliable?

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Managing quality risk in the auto industry

Here is an interesting factoid for you: 24% of all the vehicles manufactured right now are built on just ten platforms. What’s more, by the end of the decade that number is expected to grow to 30%. The number comes from an Automotive News article that looks at some of the consequences of the trend (With the push for standard parts, quality is key, Aug 6).

First, why automakers are trying to move in this direction is clear. Being able to build multiple model off one basic platform saves a ton of money in product development as well as tooling and build manufacturing facilities. Further, they benefit from a bit of risk pooling; if one model is not selling particularly well, that may be offset by another that can be built at the same plant. Thus, even if a model slumps, all that expensive capacity is till being used. (See this post from last fall on how Ford is cutting its number of platforms from 15 to 9.) Globalization also plays a part in this. What kinds of vehicles sell well might vary across different continents, but if European, Asian and North American models can all be built on the same platforms, manufacturers with a global footprint can be ever more cost competitive.

But what about suppliers? With purchased components making up a significant chunk of the cost of a vehicle, car makers would like standardization there. In a perfect world, you would have the same break system on every model built on a platform, but that brings challenges.

“The requirement that we face is clearly to develop products from the outset in such a way that they can be used in all the platform derivatives without the expense of making changes,” said Sabine Woytowicz, regional quality director at Valeo in Germany.

But with mass standardization, a part with a quality problem can now be supplied to millions of vehicles. That puts a premium on quality. …

Martin Thier, director of corporate quality management at the Mahle Group, said: “When obtaining an order, we check its feasibility for both product development and manufacturing even more closely.”

It comes down to “knowing precisely what you do, what you can do and how good you are at it.”

For example, he said, there is now a more intense interest in investigating how an inconsequential error in one part would produce an effect in a different component.

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Potholes!

It was a bad winter in Chicago and, frankly, pretty much everywhere in the Northern part of the country. If April showers bring May flowers, then January snows bring February potholes. Or at least that is the conventional thinking, but is Mother Nature really the only cause of potholes?

That is the question asked by an OR/MS Today¹ article. And is there anyway not to be intrigued by the headline “Pothole Analytics“?

The article is written by Lucius Riccio who, among other things, is a past Commissioner of NYC’s Department of Transportation. His contention is that the formation of potholes is not independent of how a city treats it roads and that Gotham may just have been asking for a ton of potholes. Here’s the punchline to the article.

Clearly, fixing potholes is an essential and commendable thing to do. And to do so efficiently is a worthy management objective. Of course, it is not how many you fill but how many you don’t fill. Or put another way, how long do they remain in the street breaking axles and blowing out tires? But in addition, I think the fixation (pun intended) with potholes is the wrong approach.

A high number of potholes is indicative of a failure to maintain the streets. Fixing potholes means the smart thing hasn’t been done, which is to do the work that prevents them in the first place. Potholes are emblematic of a failed strategy.

How does he get to this conclusion? Data!

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How to prevent cancelled flights

Which is worse, having your flight delayed two hours or having your flight cancelled and being rebooked on a flight two hours later? According to Delta Airlines, customers generally prefer a simple delay to a cancellation and rebooking. That has led to Delta working hard to minimize the number of cancelled flights. According to the Wall Street Journal’s Middle Seat column, last year Delta cancelled just 0.3% of its flights — well below the industry average of 1.7% — and at one point went 72 straight days without canceling a single flight (A World Where Flights Aren’t Canceled, Apr 2). As the graphic above and the video below demonstrate, this has taken a lot of operational refinements.

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Managing growth and quality in the bourbon industry

This blog has covered many different topics over the years. We have talked about everything from managing hospital emergency departments to supply chain risk to baseball. But we have so far ignored hard liquor. That ends today. We are going to talk about bourbon. Corn whiskey has been an industry in the US for a long, long time (remember the Whiskey Rebellion?) but, as Fortune tells it, the industry is incredibly hot right now (The billion-dollar bourbon boom, Feb 6).

In absolute numbers, the bourbon industry’s $8 billion in global sales is relatively modest. (The Coca-Cola company alone has 16 drink brands with annual sales above $1 billion.) What’s extraordinary is the growth—and the fact that bourbon’s popularity appears to have come out of nowhere. According to Euromonitor, domestic whiskey sales have soared by 40% in the past five years—NASCAR-fast numbers in a sector where good growth often means 2% or 3% a year, and a revolution for a spirit whose sales declined almost without a break for 30 years. Things are even better abroad. In 2002, American distillers exported just $376 million in whiskey; by 2013 that number had almost tripled, to $1 billion, according to numbers released this month by the Distilled Spirits Council of the United States.

Growth is particularly strong in the so-called super-premium category—that is, the brands that cost about $30 or more, like Maker’s Mark—where sales were up 14.4% in 2012 alone, according to the Distilled Spirits Council. “We have trouble keeping bourbon in stock that’s over $50,” says David Othenin-Girard, a spirits buyer for California’s K&L Wines. “It’s just flying off the shelves.”

Just what is behind the growth is open to speculation. Don Draper knocking back Manhattans on Mad Men helps as does marketing that emphasizes an “authentic” American product. However, there is a problem. Producers cannot simply flip a switch and produce more.

Whiskey is unlike most spirits—or most any consumer good, for that matter—in that production cycles are measured in years, not days or weeks. No matter how efficiently a distillery mills its grain or ferments its mash, a four-year-old bourbon has to sit in a barrel for at least four years. That means production levels are based on projections far into the future. …

“We only have as much [10-year-old bourbon] available as we made 10 years ago,” says Comstock. “We’ll continue to make more, but it won’t help today.”

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Why do more passengers complain about United than Southwest even when the service is the same?

Check out this graphic that combines how Southwest and United Airlines do in handling (more specifically, losing) passenger bags (the lines) with how those passengers complain to the Feds about those airlines mishandling their luggage (the bars).

To give credit where it is due, the graph comes from a working paper by MIT researcher Michael D. Wittman (Are low-cost carrier passengers less likely to complain about service quality?) which is also discussed in a BusinessWeek post (Why Discount Airlines Draw Fewer Complaints (Hint: It’s Not Better Service), Feb 6). I find this a pretty interesting piece of eye candy. It seems to suggest that Southwest is the Teflon airline — nothing sticks to it even when their operational performance is as mediocre as other airlines.

Wittman’s work has a couple of interesting facets to it. First, Southwest isn’t alone in having relatively low complain rates. JetBlue and Alaska also have much lower rates than big “legacy” carriers such as United, American, and USAir. (However, it should be noted that it ain’t just about being a traditional network carrier that drives up complaints. Delta has the fourth lowest complaint rate in the data set.) Second, this is not just about bags. It’s about multiple dimensions of performance. As the BusinessWeek article notes, JetBlue runs a lot of flights from delay prone JFK and so has the lowest on-time performance of the groups but it still has a low complaint rate.

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Why has the number of auto recalls increased?

The National Highway Traffic Safety Administration maintains a website that lets users track how many motor vehicle recalls there have been this month. As I am writing this, there have already been 17 in November. As the graphs below show, there have been an increasing number of recalls in recent years affecting an increasing number of vehicles. Those graphs come from an Automotive News article (Despite quality improvements, costly safety issues continue to dog automakers, Oct 28) that gets to an interesting question: If the general quality of cars has improved, why are there so many more recalls? 

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Baskets and brushes made in America

At first glance, simple products like metal baskets or paint brushes should not be made in America. These should be simple to make, the product should be standard, so production should go to a low-cost location. But that ain’t necessarily so. A pair of recent articles discusses how some small US manufacturers are managing to compete in seemingly staid, boring industries.

The first story is from Fast Company and focuses on Marlin Steel, a firm that once focused on wire baskets for bagel shops (The Road To Resilience: How Unscientific Innovation Saved Marlin Steel, Jul/Aug). That’s a business that eventually went to hell as cheap imports came into the market. The fortunes of the company changed with an order from Boeing.

The job that rescued Marlin Steel was small–20 baskets, a $500 order. Greenblatt was handling sales in 2003, so he took the call himself. “It was an engineer from Boeing,” he says. “He didn’t think I was in the bagel-basket business. He just needed custom wire baskets.” The Boeing engineer, who had seen a Marlin ad in the Thomas Register, a pre-Internet manufacturing directory, wanted baskets to hold airplane parts and move them around the factory. He wanted them fast. And he wanted them made in a way Marlin wasn’t used to–with astonishing precision. For bagel stores, says Greenblatt, “if the bagel didn’t fall out between the wires, the quality was perfect.” The Boeing engineer needed the basket’s size to be within a sixty-fourth of an inch of his specifications. “I told him, ‘I’ll have to charge you $24 a basket,'” says Greenblatt. “He said, ‘Yeah, yeah, whatever. No problem. When are you going to ship them?'”

It turns out that the guy from Boeing was not alone in wanting custom baskets for use in a factory. Further, lots of other buyers were much more concerned with getting just the right basket really soon than with whether the price was as cheap has possible. The image above is something used in a GM factory to hold pump housings when they are being cleaned.

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