OpEx Solutions, Inc.

'There is nothing so useless as doing efficiently
that which should not be done at all'.

—Peter F. Drucker.

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Is the 80-20 Rule Still Valid?

by Gary Johnson, P.E., OpEx Solutions

 

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It never ceases to amaze me how the “80-20 Rule” applies in all aspects of business and life. 

I love to fish, and when I go with my neighbor — we are usually successful. A few weeks ago, the two of us were nearing our limit of 25 crappie (white perch) each and I looked around to see nine other jealous fishermen close by not catching anything. One of them shouted at me: "I want your spot when you leave!" — to which I replied, “Why? They are all under your boat as well!” What we knew, that he didn’t, was that the fish were at least four feet deeper than most of them were fishing. Of course, they moved in on our spot like piranhas when we left, but I doubt they caught more than a few fish the rest of the day.

I see the same thing all the time in business where folks are not focused on the really important issues. They spend a lot of time running around doing unimportant stuff, like fishing at the wrong depth, that adds few fish to their catch — never optimizing their opportunities.

Hidden capacity is prevalent throughout industry and is there for the taking — if we know how to capture it. Successful companies identify their critical 20% opportunities, using simple Pareto charting, and sponsor Focused-Improvement Teams to go after those opportunities. So many times, I have seen Focused-Improvement Teams pulled off truly great work to get distracted on new “Program-of-the-Year” or “Flavor-of-the-Month” activities. How discouraging for the team members to know they are so close to real success but now must go do what the CEO or another manager has seen to be a popular tool or buzz-word. Japanese words have caused a fair share of distraction over the last three decades and now what’s next? Is it time for Indian or Chinese distractions?

It is these distractions, looking outward to see what others are doing rather than analyzing their own fishing area, that have left significant opportunities on the table or caused them to fail by introducing the wrong focus.

Unfortunately, we no longer have time in most companies for focusing on the 20%. We see 10% of problems causing the most significant impact. The focus should be on that 10% causing the biggest problems or presenting the biggest opportunities for our businesses.
How does this relate to our day-to-day activity focus?

  • 10% of equipment critical to operations
  • 10% of materials and suppliers
  • 10% of costs
  • 10% of sales
  • 10% of customers who account for a majority of your business
  • 10% of people issues
“The only projects that count are the ones that are completed and unfortunately most companies are focused on too many projects and don’t accomplish much of anything.”

  — Ken McClymonds, P.E., Principal Consultant — OpEx Solutions, Inc.

For example, in two case studies, companies were trying to bite off 20% initiatives in their strategic plan. Going through 20% caused them to delay finalizing their strategic plan between April and May, two months in which activities had to occur. How much better would it have been to bite off only 10% of the significant few and be ready to go by January, or even February, instead of half way through the year? How much greater chance would there have been of executing the initiative successfully with a running start rather than losing five whole months of execution?

Too many initiatives and frequent leadership changes cause more and more never-ending changes resulting in a downward spiral.

The success cycle is taking the significant few initiatives (10%) which leads to realistic and timely planning, thus enabling high probability of execution which then leads to success. Team morale is excellent when team members are actually able to accomplish their mission without being diverted or spread too thin.

In summary, while the 80-20 Rule is useful — the 10% Rule is more effective in today’s world.


   
People Engagement through Asset Reliability Management & TPM 

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The condition of equipment plays a vital role in providing water for over 1 million customers in a 540 square mile area — Austin Water's mandate. This organization has been successful for over 100 years and prides itself in the knowledge that the water released from its wastewater treatment plants is much cleaner than what is in its natural state in the rivers and lakes.
Austin Water hosted a benchmarking event May 16, 2018 at their South Austin Regional Wastewater Treatment Plant for the CenTex OpEx Consortium focusing on their Employee Engagement Asset Reliability Management and Total Productive Maintenance programs. The tour was a testament to their dedication to continuous improvement through a strong TPM/AM program.
 
Austin Water credits keeping capital expenditure under control to keep their costs low and their equipment up and running — they run 24/7 365 days a year.

What was clearly evident during the even was Austin Water's strong  commitment to asset management from all levels of the organization to keep their equipment in the best shape possible,  cutting down on costs, downtime, and enabling them to nip minor issues in the bud before they become major ones. Operators are strongly dedicated to autonomous maintenance and supervisors and top management support their efforts to the point of participating in cleaning and tagging equipment.
 
Salient points emphasized by Austin Water of the lessons learned along the way included: 
  • Identify the correct equipment
  • Start the program where you have strong champion respected by employees
  • Leadership participation in the initial cleaning demonstrated support and that there is one team
  • It's a two steps forward, 1 step backwards kind of a deal
  • Don't bite off more than you can chew
  • Realize it's a journey and having a good guide is critical
  • Keep your sense of humor

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Some of the key takeaways of the group included aligning resources, setting firm project priorities, and identifying potential gaps that can lead to failing to execute the strategic plan.

 

 
 

OpEx Solutions is an organization that helps identify strategic areas for improvement and provides effective high-value, low-cost solutions, training, and project management to drive significant productivity improvement through the use of operational excellence tools and systems in most manufacturing and service industries.


With a variety of offerings to choose from, we're confident of working with your organization to find and define your own way through:

  • Executive Coaching
  • World-class Training
  • Dedicated Workshops
  • Knowledge Network
  • Project Management

If you have any questions or comments, please feel free to contact us.

Find out more About Us, then look at our Stategy to make your possibilities a reality.

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OpEx Solutions' PMI Registered Education Provider ID Number is 3510.

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