GA 266 | The True Value of Cost Reduction with Amery Williams

You know, companies have to find better ways to do more with less. For obvious reasons, they have to stay in business.

Today, I'm excited to welcome Amerie Williams to the show. Now, as you'll hear, Amerie serves businesses as an experienced operations expert, where she leverages more than 10 years of experience. On today's show, we spend most of our time talking about ways to reduce costs. Amerie walks us through the process she uses before offering some specific advice on how you can seek out cost reduction opportunities in your business. A show notes for this episode, which will include links to everything we talk about, can be found over@gembapodcast.com just look for episode 266. Again, gembapodcast.com and look for episode 266. Okay, enough from me. Let's get to the show. Amerie, welcome to the show. How are you?

Awesome.

Awesome.

Thanks so much for having me.

Oh, you're welcome. Yeah, I'm really excited to chat with you. So, yeah, I'm really interested to dig into this topic. I'm not sure we've had this topic on the podcast before, so that's always fun. Kind of exploring a new angle here. But before we get into the topic, Amerie, and get you to introduce yourself, we like to kind of begin with our guest sharing a favorite quote or two. Sometimes people have three or four, but at least one or two. Do you have one?

Yes, absolutely. So my favorite quote is by Brian Tracy, and this comes from the psychology of selling. So his quote is, every action a person takes is motivated by improvement. And I really love that quote because as you think about just the reasons why people do anything, regardless if it's buying something or a change at their workstation, it's always because they're wanting to improve. So that really helps me in my world, regardless if I'm trying to sell something or make a change on a manufacturing floor, I understand where the mindset is before I try to really present that change to a person.

I love that, you know, it's kind of my mantra. You know, what I tell our sales team here is like, just stop trying to sell so much and just help people. You know, and the more we help people, the more the sales will come. Right. But when you go into it with the mind of helping and adding value versus selling and making money, you know, it all seems to work out. So. Yeah. Great. Great. All right, well, Amerie, why don't you tell us a little bit about your background. Tell us how you first got introduced to continuous improvement, what you're up to these days and I happened to be kind of stalking you a little bit on LinkedIn and saw you might be at Nitly lion or something like that. It's like, oh boy, oh boy, we're having fun with this. I'm from Ohio, so let's just leave it at that.

Oh, no.

Okay.

Okay. So my background, so how I got started with Lean. So for me, I think a lot of people may have this story in terms of really understanding what lean is before you actually heard the term lean. So for me, maybe a bit of a different way I got into this, but I came from really humble beginnings. So in terms of just the thought of thinking about how you can do more with less has always been a part of my journey. So after I went to college, graduated and got a job with General Electric, really that was the first time I was actually introduced to the concept of Lean. So I'm like, okay, people are really doing this for a living. So throughout that journey with General Electric, got introduced to the more textbook version of, you know, this is the way that you go about one, identifying waste in a process as well as removing that waste. So fell in love with the concept because like I said, that was something that, like I always thought for years now, in terms of the way you live is something that you should be thinking about as well as in your business. So just getting into that concept was really fun. So through my journey with General Electric, got a chance to get certified and then I went on to another company called Accor International where they were really new to Lean at that time. And I got a chance to be a part of the team that really expanded that thought in that method and that roadmap throughout the company.

Very good. And what are you up to these days?

So these days I am running a company called Kaizen Collab. So we focus on building video based work instruction. So actually started out with Lean Consulting and as I was working with these companies and I saw this in my background doing lean for other companies as well. But there's a lot of the root causes that were coming up in terms of quality issues, safety issues, cost issues, really stem back to the fact that companies didn't have really good standards and if they did, they were in 70 page binders that no one really looked at. We really started this journey of basically building video based work instructions where we record video of the actual process and then we place those videos on a tablet so workers have those at their fingertips. That's what I'm up to now.

Well, we're Big fans of video obviously here. So good for you. All right, well. Hey, Amari. So I guess really the topic of the day is, is, I don't know, cost improvements, if you will. When we think about our cost savings, maybe another way of saying it within the continuous improvement world and you know, coming from, I'm sure there at ge, you guys probably had pretty, pretty hardcore, you know, goals or whatever it might have been. Like you got to save as much money per black belt project and all that kind of stuff. And sometimes it can get a little bit of a bad rep within the lean world and sometimes for a good reason, you know, because, you know, it can, it can drive bad behavior, especially whack the bottom 10%. I don't care. You know, this is obviously not a good way to run a company. I think all lean thinkers would agree with that. But at the end of the day, most companies are trying to turn a profit, right? They are trying to, you know, make things better and be more effective, be more efficient. And being able to save cost is always a good thing. But how you go about it obviously is a different thing. So maybe let's just start with what is your just general thought on cost savings? Just at a high meta level.

Yeah, no, I think you hit the nail on the head. The fact that companies have to find better ways to do more with less for obvious reasons, they have to stay in business. And by taking a stance of focusing on the way that they're spending money, I think is a really important topic. But to your point, it gets a bad rep because the way we go about it isn't always the best way. And it loses, really decreases the morale of the employees when you're so focused on cost and now everyone's scared that they're going to lose their job because when you even say cost savings, a lot of employees immediately think about headcount production. So the way that I think about it is that for one, it's absolutely very important to focus on cost savings. But two, the other thing that I look at, which may be a little different than how others view this, is that there are a lot of hidden costs in terms of your operations that you can be paying more attention to. And sometimes the headcount reduction may not be the best way to go just because now you're sacrificing, sacrificing your safety and quality. And we all know that those things add to the cost as well. So as you're building out your cost improvement plan, I think it's very important to do a really, really good analysis of how much these things are really costing you before you start to make decisions on reducing headcount immediately.

Mm. Yeah. And obviously if you start reducing headcount, you know, you. What did Mr. Womack say a long time ago that's not lean manufacturing, that's mean manufacturing? I think he said. Right. And I've always remembered that. Right. And so how do you normally go about identifying these cost improvements then?

Yeah, so for me, before I answer that, just more on like where this came from in terms of, you know, why this is a huge focus on for me with cost improvement. I've been around manufacturing for a while now and I've been a part of some manufacturing plants that really got shut down because they weren't able to turn a profit. So going back to the reason why cost improvement is really important is because that business has to have really has to stay afloat and this is going to really help people keep their jobs. So again, that's why I think it's really important to really start on this topic. But as I go into manufacturing or distribution facilities, one way that I go about that is really taking a look at their P and L statements. Right. So I particularly look in three categories, and that's man machine material. And of course that came from the fishbone diagram. But I've noticed that those three categories, man machine material, is really where we spend the majority of our money. Right. So typically I start in those three categories, but then I also just take a deep dive in each one of those. So, for example, the man. Right. So we're talking about headcount. But the other thing I'm looking at is really something like your retention rates, because the fact that you may not be able to keep people in your facility, that's going to add to the cost because now you have to go recruit, you have to train these people. And again, safety can become an issue when you're having new hires. So I'm calculating that cost to see exactly how much you're actually spending on headcount versus just surface level numbers.

Got it. So when we think about costs, and you've mentioned this already a little bit, but if we're not careful, we really will impact quality in a negative way. You know, like you said, if you lay off, you know, the brains and hands, you know, that have been doing this work for 10, 15 years and now the hands that are left are just perhaps are overburdened or whatever it might be, quality can start to suffer. So how do you kind of balance.

Those two yeah, no, I always tell people that's that's not even an option. If your goal and your job is to provide a quality product for your customer, anything that you're changing within your process, if it's negatively impacting that, that's going to hurt your customer and ultimately going to hurt your profit margins and your revenue. So the fact that we're looking at costs doesn't negate the fact that we have to also keep quality first. So with that standard in mind, as long as leadership really buys into that motion, then we can take a step back and start to look at the process. And again, I think it's really important to put the data out in front of them because sometimes saying this come to Jesus speech isn't enough. Sometimes you have to really show them like, hey, you have X amount of customer complaints already, or you've already lost whatever customer due to quality, or you've had a lot of returns that we have to pay for because of horrible quality. So as much as you can put that data in front of them, then they can get on board to say, okay, you're right, let's focus, make sure that quality is always the priority. And now we can talk about how we can take the waste and remove the waste outside of these processes.

You know, back when we were all learning our Six Sigma back in the day, we were all, the cost of poor quality was kind of pounded into our heads. But I remember always thinking, yeah, that sounds great, but like, how do I calculate that again? You know, like, so what do you think about cost of poor quality? Like, what's a good way of trying to quantify that?

Oh, that's a great question. It really depends on, really on the process at hand, I think. You know, of course you can calculate something like defects. That's a pretty straightforward forward metric. But you can also take a look at the fact of the rework that you're having to do, because sometimes people take that number out and they only look at the number of products that they actually scrap versus the ones that they actually had to rework. So that's something that you can do as well. And then also just making sure that you're getting that feedback from that customer. And again estimating how much you're actually losing in sales because of quality. Sometimes sales is always is down the line. So a lot of people don't pay attention to it really impacting the cost. So the more that you can bring that into the calculation, the better.

Yeah, I remember back in a prior life I worked at a company and we used to bring in these, these big parts from different part of the world. And let's just say that the quality of these parts was, was not good. And they were cheap, I'll tell you that. And cheaper if you bought a bunch of them. Right. And, and I remember this company, they had a full time crew of, I believe it was 20 welders and their full time job, I'm talking 40 hours a week. All they did was repair this product that would come in that was like, they just, it was like part of their process. Almost like they're creating a value stream map. It is like repair the parts and then let's start to do something with them. And it was just shocking to me how, you know, they're just so lost. So many companies are just so lost when it comes to low cost sourcing and the cost that that's really bringing to the organization. And at the end of the day, some of those parts, they really even couldn't be salvaged, you know, so they ended up just throwing them away. You know, meanwhile the poor guy tried and welded on it for five hours and then gave up. You know, and what a defeating way of running a business, right?

Absolutely, absolutely. And that process is normally baked into so many of our manufacturing or distribution processes that we, you know, it's the norm, so we overlook it. So, and that's just, we're just talking about, you know, the parts themselves. But if you go into different categories like the equipment, you know, sometimes we don't want to spend the money on different parts or new equipment, but we forget to calculate the fact that, you know, this equipment isn't giving us the throughput that we needed or we're spending a lot of money on maintenance or these parts we still have to replenish because they're wearing out so fast. So that's another quality aspect that you have to look at. Just basically calculate the difference. What's going to happen if I was to basically buy more, maybe expensive parts. But how does that calculation really run out for the company? Yeah, because sometimes it's actually cheaper.

Yeah. Well then back to your point, sales can sell it, you know, customers are going to trust it and yeah, good stuff. So when we talk about kind of lean tools, what do you find to be most helpful as you're, as you're trying to, you know, identify these cost savings opportunities?

So definitely the fishbone diagram, that's one of my tried and true methods, I think. I love that tool because it really breaks out all of the categories that you have in a problem, just period. And by doing that, you're able to just analyze everything in a separate way. But it gives you really that deep dive that you need. So I really love the fishbone diagram because that really stature is already set up for you. So that's one, and then two is standard work. Like I said said earlier, a lot of times when I've done these cost assessments for companies, it always boils down to lack of standards or poor training while we're missing the mark on something. So being able to standardize your process as much as possible and really train your employees with quality, the more that you will have efficient processes, which ultimately helps improve the cause of that operation.

So, Amerie, let's say someone's listening to this right now and they're nodding their head and they're like, that sounds good. I agree. We need to kind of try to take cost out of our business. We need to try to find, you know, that cost of poor quality and whatnot. Are there any kind of practical tips that you can throw out to those folks that are listening right now, like that they could do like today or this week, you know, as they're listening to kind of take action and see what they can, what they can discover within their own business?

Oh, absolutely. So step one would be to look at your profit and loss statements. Like, start there, because now you can. You have the categories in front in front of you that tells you where the majority of your money is going. It could be maintenance, it could be materials, it could be, you know, machinery. Whatever those categories are, that statement is going to show you. So from there, you want to make sure that whatever category that you choose, you also have good data behind really a breakout of this topic. So, for example, if it's machines, what am I actually spending my money on? Is it parts? Am I replacing parts all the time? Is it bringing in service people to do work on this equipment? And then from there, that would allow you to. To at least have a pinpointed area of where you can focus. And now we can talk about different ways to reduce the cost in that particular category.

So there you there might whip out your fishbone again then, right? You know, at that point.

Yeah, exactly.

Talk about the. I don't want to just some folks might not be familiar with that tool. And I know it's hard to do over podcasts. You know, it'd be much easier to draw it up on a wall. But we gotta, we gotta use our voice here. So talk a little bit about that tool and how you go about it like, do you prefer to draw it up on a big piece of butcher paper or use software or what's your preferred style for a fishbone?

Yeah, I like the tried and true. Put it on a board or a flip chart so everyone could visually be a part of it. So the categories, when I'm talking about cost savings, like I said, I try to stick to those three categories. The man, machine material. But of course you have your methods, your environment that you can put inside of a fishbone diagram as well.

Bad measurement system sometimes, right?

Yep, exactly. Exactly. So for this sake, for cost savings, those three categories is usually the ones that I start with. And then from there, like I said, we just take a deep dive and go into the categories to figure out where that cost or those expenses are going. And then from there, like, once we've identified the quantity that's going in there, and I try to use real numbers as much as possible. That's why, you know, we pulled the P and L statements, we put the numbers on the board and then we just, you know, pull out our priority matrix to say, you know, is this A1, something that's easy to do or easy to fix and it'll have a high impact, or is it a 4 or something that, you know, may be a little bit hard to do and have has a lower impact. And then as we basically identify what category we want to put those findings in, that's what helps us really prioritize what we focus on.

Yeah, good stuff, good stuff. Hey, talk a little bit about, as we kind of wrap up the episode, talk a little bit more about your, your video standard work. Because that sounds really interesting and I'm sure a lot of people, you know, whether they use your services or not, but there's something powerful about, you know, a short video of someone doing something right, like, like maybe talk a little bit about more how people could even practice that on their own. What advice would you have for them?

Oh, absolutely. So first of all, video work instructions, that's really something I'm trying to push regardless if you guys decide to go with us or do it on your own. Because the way that people learn now is just so different. We're living in a YouTube society where you can go online, watch a four minute video and you're good. You understand completely how the process is supposed to go. And the other good thing about video is you're able to rewind and watch it again. As I'm saying it, I'm thinking about some of the Gamba Academy Videos. Like, I've been using your. Your products for a while, and when I wanted to learn something, like, I looked at the video, but I rewind to say, hey, now what did he say? So I can, you know, thoroughly engage. So what we're trying to do is just bring the whole video work instructions to the manufacturing floor. Again, you can build these videos yourself as long as they are very thorough. It's almost as you're thinking about standard work. It really is the same concept. Like, does it. Do you have a process that someone can really understand and that's teachable, and you build that into a video work instruction and then put it at their fingertips and now they have what they need.

Yeah, no, I love it. I love that idea. I mean, I'm especially intrigued. You know, we're big fans of, like, TWI and job instruction and whatnot. Like, thinking about the kind of the one best way and then, you know, and as someone figures out a better way, well, it's easy enough. Whip out your iPhone or whatever it is and record the new way. Right. And then upload that. So, yeah, really, really good stuff. So. All right, well, Amory, thank you for. For taking time to. To come onto the show. Why don't we wrap things up with you telling folks how they can best connect with you over social media, your website, anything like that.

Okay, absolutely. So I'm very active on LinkedIn, so you can find me on there at Amerie Williams. And it's a M E R Y. And then Our website is www.kaizencollab.com and.

Collab is C O, L, L A B.

Correct.

Yeah. Okay, good. And it's. It's Amerie, people, not Amory. Amerie. Right?

Yes.

I'm so proud. I nailed it. Quick story for everybody else listening to probably what I was like last time when I first met Amerie, I was like, hey, how do you say your name? Is it Amerie or Amerie?

Right. And you nailed it, so I appreciate it.

All right, well, thanks again and I'm sure we'll see you around at some conferences and whatnot and keep up with the good work and appreciate you coming onto the show.

Thanks so much for having me. Glad to be here.

Bye. Bye. Thanks for listening to the Gemba Academy podcast podcasts. Now we invite you to take a no strings attached, fully functional Test drive of Gemba Academy.com gain immediate access to more than a thousand Lean and Six Sigma learning resources, all free of charge at GembaAcademy.com.