Bristol, TN and The Baldridge Award

Bristol Tennessee Essential Services is an electricity and fiber services utility company that serves 33,000 customers with only 68 employees. It offers the fastest internet available in the United States at 10 Gigabits per second, has implemented efficiencies that saved its customers approximately $70 million over the last 40 years, and has customer satisfaction levels approaching 100 percent on many products and performance measures.


Highlights

  • Reliability is a key performance measure and a key success factor for BTES. With new technologies and innovations, BTES continues to decrease outage minutes with a strenuous goal of fewer than 60 minutes per customer per year, which it has exceeded for the past three years. This benchmark far outperforms the industry, regional, and best-in-class averages (all 90-100 minutes). With the use of its innovative Automated Switching System, BTES saved its customers an additional 46 minutes per customer of outage time in 2016.
  • Results for the Average Service Availability Index (ASAI), a key measure of BTES’s preparedness, have outperformed all utility, region, and class comparisons, achieving a rate of 99.99 percent from 2014 through 2016.
  • BTES has continuously saved money for its customers, enabling them to keep approximately $70 million in their pockets over the last 40 years. The organization considers this measure a key financial success factor.
  • The company’s employee retention rate has increased to 100 percent, while the industry benchmark is 91 percent and the national industry average is 82 percent.

Operational Excellence

  • Service reliability, as measured by reducing electrical outages and by the national System Average Interruption Duration Index (SAIDI)—or the total number of minutes in which a customer’s service is interrupted divided by the total number of customers served by the utility company over the same period of time—has continuously improved and has outperformed the annual goal of less than 60 minutes, far outperforming industry, regional, and best-in-class averages (all 90–100 minutes).
  • BTES has not had a lost workday in over a year, and over the last 35 years, only two safety-related incidents have resulted in lost work days for the company.
  • BTES works to prevent outages through several preventative actions, and a database with causes of outages is maintained and discussed by employees at daily and weekly outage meetings. The company’s results for the Average Service Availability Index (ASAI), a key measure of BTES’s preparedness, have outperformed all utility, region, and class comparisons, achieving a rate of 99.99 percent from 2014 through 2016.
  • BTES’s operating and maintenance expenses have consistently remained below those of other area power companies and other comparable sources. During the timeframe of 2012–2016, BTES operating and maintenance expenses per customer were favorably lower than other Tennessee Valley Authority (TVA) local power companies and all municipal average comparisons.

Customer Satisfaction and Engagement

  • Due to efficiencies such as integration of the fiber optic system, energy-efficient home improvement loans, training at in-house seminars and trade shows, energy-efficient lighting and equipment, and continuous cost evaluation and control, BTES has saved money for its customers, enabling them to keep approximately $70 million in their pockets over the last 40 years. BTES considers its ability “to maintain the amount of money in customers’ pockets” to be a key financial success factor.
  • To measure customer satisfaction, BTES uses the Customer Average Interruption Duration Index (CAIDI) data maintained by the American Public Power Association. From 2013 through 2016, BTES’s results for this index exceeded all utility, region, and class comparisons. Customer satisfaction levels with all BTES product lines (especially Internet, television, and electricity products) as well as customer service, the help desk, average outage time per customer, Internet performance, and cable television have been sustained over many years, with many levels approaching 100 percent and exceeding competitor, industry benchmarks, and best-in-class comparison levels.
  • All customer feedback, both positive and negative, is tracked and reviewed weekly by the company, with all senior leaders involved, during the formal Continuous Improvement Team meeting. The feedback is analyzed for potential gaps, trends, and improvement opportunities. Improvement opportunities are identified, root causes are determined, and actions are taken to address customer concerns.

A Valued Workforce

  • Employee engagement is measured through performance appraisals, retention, and attendance. The percentage of employees with perfect attendance is about 75 percent, far exceeding the industry average of just under 20 percent. Employee retention has increased to 100 percent, while the industry benchmark is 91 percent and the national industry average is 82 percent.
  • Striving to provide the “best place to work” in the region, BTES demonstrates a commitment to building an effective workforce environment and to engaging and empowering the workforce. For example, BTES provides on-site exercise equipment for employees and retirees, access to information on healthy lifestyles and well-being, flu shots, and educational and advancement opportunities. BTES’s commercial-grade kitchen, which is brought online during extended area power outages and inclement weather, enables its support staff and leadership to produce meals for crews who are engaged in restoring power, further reducing the outage time experienced by customers.
  • BTES uses its SMART (System Management and Resource Training) system, an online training portal, to communicate process standards, standard operating procedures, and process changes and improvements. Employees are expected to complete all assigned modules every quarter, and 100 percent of BTES’s workforce annually participates in workforce development opportunities.

Leadership Fostering a Culture for Success

  • BTES’s family-oriented management team has shared accountability and is consistently focused on the organization’s vision “to be the best electric, Internet, telephone, and cable television provider.” Senior leaders operate with a high level of mutual trust and collectively hold each other accountable for achieving strategic objectives, action plans, and high performance in the organization’s key success factors of safety, reliability, and finance.
  • BTES has built a culture of continuous improvement, which is fully deployed throughout the organization and is effective at identifying and rapidly improving performance. For example, the CAP-DO process (Check, Act, Plan, Do) encourages employees and teams to rapidly improve processes. Through the use of its Improvement Initiative Process (IIP), BTES treats all customer- and employee-related inputs as either an “OFI” (opportunity for improvement) or a “positive,” which provides consistency and rigor in data gathering from all departments and processes throughout the organization.

Superior Financial and Marketplace Results

  • In its service area, BTES holds market shares of 100 percent for electrical services, 75 percent for Internet services, 60 percent for telephone services, and 70 percent for cable services. Those percentages for fiber-related services (Internet, telephone, and cable) have increased relative to the company’s competition.
  • Bad debts have consistently remained under 0.1 percent for BTES, far outperforming the regional average of 0.17 percent.
  • BTES has steadily increased its annual revenue to approximately $112 million and has consistently produced a positive net income for more than 40 years

posted:http://www.nist.gov

The Service Industry Meets Six Sigma

ron palinkas lean six sigma
Once used only to improve manufacturing processes, Six Sigma is stepping out. Now companies are using it for everything from reengineering environmental health services to making accounts receivable more efficient. But it doesn’t work for all businesses. Here are four things to consider before unleashing Six Sigma throughout your organization.

But Six Sigma is not just for nuts and bolts anymore. Companies are using it to shape up such nonmanufacturing processes as accounts receivable, sales, and R&D. Dow Chemical, for example, estimates that the application of Six Sigma to environmental health, and safety services have saved the company $130 million in the past two years; other initiatives are under way for corporate R&D, finance, information systems, legal, marketing, public affairs, and human resources processes. Not surprisingly, financial institutions, consumer products companies, and health care firms are all jumping on the Six Sigma bandwagon.Six Sigma was originally developed at Motorola in the 1980s for production processes because of the high volume and the high degree of standardization that define such activities. Its goal is to eliminate waste by achieving near-perfect results (Six Sigma-level quality means no more than 3.4 defects per million). General Electric, AlliedSignal, and other well-known manufacturers credit Six Sigma with billions of dollars in savings.

“But every customer is different,” some bankers, lawyers, and doctors may quickly counter, warning that standardizing processes will result in inferior service.

Their concerns have some merit. Six Sigma won’t work for every service process, and adjustments may be required for it to suit even those processes for which it does apply. Nevertheless, many of the lessons learned from the production lines are relevant to service processes. What’s more, you’d be surprised by how many highly personalized services have standardized component processes—for example, filling out forms or obtaining follow-up information that, when streamlined, can improve the level of service that the customer experiences.

Financial institutions, consumer products companies, and health care firms are all jumping on the Six Sigma bandwagon.
— Jim Biolos

Besides, Six Sigma’s off-the-shop-floor successes are too significant to ignore. The issue is no longer whether Six Sigma should be considered; it’s when and how. Below, some advice about how to adapt Six Sigma methods to service processes.

1. Determine which parts of your service processes are the best candidates.Look at each process that goes into the service you provide and identify it as either highly customized, mass-customized, or standardized.

Highly customized processes, such as complex IT systems implementation, have a high variability of tasks and are used in many different situations. The cost of applying Six Sigma to such processes often exceeds the benefits.

Mass-customized processes are good candidates for Six Sigma campaigns if the volume of activity is high enough or if greater efficiency will result in significant cost savings, as is often the case with, say, media buys.

Standardized services, such as credit card account services or fast-food service, can yield substantial benefits from a Six Sigma campaign. Within a company, accounts payable or payroll and benefits processing services are often the most likely candidates.

Within any given industry sector, highly customized, mass-customized, and standardized processes can exist, each category presenting a different opportunity for applying Six Sigma.

Just look at Web site development. Highly customized Web site developers are likely to achieve benefits from Six Sigma in project administration: client set-up, billing and collection, and, perhaps, in project status reporting. Mass-customized Web developers can apply Six Sigma to hone their core service. Standardized services have the greatest Six Sigma potential because they use software or Web sites to take clients through the entire process. A human gets involved only to answer a question.

2. Define what you mean by a service defect and how you intend to measure it. Keep in mind the advice of the late quality guru W. Edwards Deming, whose management theories are the foundation of Six Sigma: People don’t cause defects, systems do. In other words, employees typically try to do things the right way, but their actions are strongly influenced by the way the system is set up. So a defect is more likely a sign that the system needs reworking than it is an indication that an individual needs reprimanding.

That said, defining a service defect—where there are no products to return, nothing to inspect, and highly variable processes—is one of the most challenging aspects of applying Six Sigma to service-delivery systems. Until you reach agreement on what constitutes a service defect, says Edward Baker, former director of quality at Ford Motor Company and author of Scoring a Whole in One, your Six Sigma effort will likely disappoint.

It is application of the technique that matters.
— Edward Baker,
author of Scoring a Hole in One

When former General Electric Chairman Jack Welch complained that his frontline managers had “their face towards the CEO and their ass towards the customers,” he was emphasizing the core value of Six Sigma: The customer defines quality. Granted employees define quality at each point in the process, but it is the customer who remains the final arbiter of the results. Accordingly, most Six Sigma programs for services define a defect as a flaw in a process that results in a lower level of customer satisfaction or a lost customer. In short, a service defect means your processes are not delivering on your promise to customers.

When Citibank launched its Six Sigma program for banking services in 1996, it defined a defect as any customer rating below the two highest responses on a satisfaction survey. Based on that definition and survey feedback from customers, Citibank identified seven service process defects in its account opening process, its customer statement process, and five other processes.

Three measures stand out for service businesses, primarily because they are easily quantified:

  • Service defections (that is, lost customers). Harvard Business School professor W. Earl Sasser, Jr., and Bain & Company director Frederick F. Reichheld’s seminal article, “Zero Defections: Quality Comes to Services” (Harvard Business Review, September-October 1990), showed how defects in service quality lead to lost customers. Simply meeting customer expectations was not enough, the authors concluded—customers who aren’t completely satisfied are likely to switch to another service provider. Of course, not all lost customers are the result of a service defect, but this measure serves as a good proxy for defects.
  • Customer satisfaction ratings. In another article, “Putting the Service-Profit Chain to Work” (Harvard Business Review, March-April 1994), Sasser and his coauthors pioneered the notion that customer satisfaction drives loyalty and long-term profitability. When you can articulate and measure how your customers define value—and build your internal processes around delivering that value—the result is often greater customer loyalty and longer-term company profitability. In addition to counting how many customers you lose, you should also measure where your service fails to meet or exceed customer expectations.
  • Service turnaround times. Citibank identified a global standard of service for its account opening process. Most banks opened new customer accounts within three days of receiving the customer application. Analyzing its own processes, Citibank found it took, on average, six days to open a new customer account.

Measuring defects requires skilled researchers and service representatives who can pose the right questions and glean meaningful responses from customers. It’s easy to tabulate customers’ “very satisfied” and “satisfied” responses on a survey form, but it’s much more difficult to get a feel for the highly variable standards they use or to fully understand the cause of their dissatisfaction. So building a certain amount of flexibility into the measurement systems makes sense, as GE learned when it used Six Sigma to streamline its corporate legal services.

How precisely can you measure the cost of the time a GE line executive spends with company attorneys on the preparation of a lawsuit? How well can you calculate what it should have been? Because of the difficulty of quantifying expected results and actual outcomes, GE realized that it couldn’t rely solely on hard numbers to evaluate its Six Sigma program’s success.

3. Probe relentlessly for root causes. Once you’ve identified and measured specific service defects, the one question you must keep asking over and over is “Why is that?” This question embodies the search for the underlying reasons for customer dissatisfaction and/or defection. Typically, there isn’t one single reason; in fact, you’ll often find a half-dozen or more root causes that all contribute to the service defect. Once you’ve identified the chief contributors, you can build systems that better serve your customers.

When an insurance company realized that its commission checks to agents were frequently inaccurate, it drilled down further to uncover several root causes of the defect. Among them: complex commission rules, a check-processing staff that wasn’t knowledgeable about them, and confusing procedures for processing checks. Once these root causes had been laid bare, it was easy for the insurer to streamline rules and procedures and improve the training of its check-processing staff.

4. Remember, this is a long-term commitment. Although GE, Motorola, and others boast of training 100,000 employees in Six Sigma, Baker advises managers “not to use as their measure of success how many people have been trained or the levels of belts that have been achieved. It is the application of the techniques that matter.” That application often takes a while to bear fruit, and you can never put the initiative on autopilot. Subir Chowdhury, executive vice president of the American Supplier Institute (Livonia, Michigan, and author of Design for Six Sigma, has found that many Six Sigma efforts fail because the leadership fails to ensure that everybody “gets it” and that the initiative remains a top priority. A successful Six Sigma effort requires relentless communication and reinforcement—well beyond what most leaders assume is enough. Here are a few pointers to help ensure success over the long haul:

  • Scope your projects well. Don’t take on too much at once. Start with processes that are self-contained within a unit or processes that do not rely on a change in another process.
  • Monitor your organizational culture. If your Six Sigma initiative is to maintain its momentum, you have to do a certain amount of “cultural planning,” says George Eckes, a Colorado-based Six Sigma consultant and author of Making Six Sigma Last. Develop specific cultural objectives for your Six Sigma initiative—for example, ensure that management decisions are based on fact instead of anecdote. And it goes without saying that your incentive program has to be aligned with your Six Sigma objectives. “If the system of promotion and compensation encourages individual performance over collaborative work, then any knowledge gained from Six Sigma training will not reap many benefits for the firm,” says Baker.

 

Jim Biolos is president of Launch Publishing in Riverdale, N.Y.

“Six Sigma Meets the Service Economy,” Harvard Management Update, Vol. 7, No. 11, November 2002

Six Sigma programs have traditionally been prescriptions for quality improvement in manufacturing industries. But today service firms—and service functions within almost every sector—are also using Six Sigma methods to boost performance.

Veteran Deals for Veteran’s Day

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Normally I would try and post my own list, but I found an article that was so exhaustive and complete, I decided to just post the link.  The list includes free meals, free services, and discounts for veterans on Veteran’s Day (Saturday, November 11.)  Try and take advantage of one of these, if only to remember your service to our country as well as your brothers and sisters.   https://www.thebalance.com/veterans-day-free-meals-1357348

 

The Four Agreements

Specifically, I want to write a book by Don Miguel Ruiz, The Four Agreements: A Practical Guide to Personal Freedom, a Toltec Wisdom Book. A very long title for a very short book (138 5″x7″ pages)! Despite the claim that the ideas in this book represent insights possessed by the Toltecs in what is now Mexico a thousand years ago, most of these ideas are highly similar to concepts used by modern humanistic psychologists, transactional analysts, and cognitive-behavioral psychologists. For example, Ruiz says that all children are born perfectly loving, playful, and genuine. However, parents teach their children what Carl Rogers called conditions of worth–standards of behavior the children must follow to receive love and avoid criticism. Eventually, these standards become internalized into what Eric Berne called a life script–an unconscious set of instructions for living life. According to Ruiz, most of these unconscious beliefs are perfectly arbitrary or downright false. Many of them are irrational and unnecessarily limiting. The key to freedom–pace cognitive therapists such as Albert Ellis and Aaron Beck–is to become aware of our irrational and limiting thoughts so that we can replace them with healthy thoughts. In short, this book could be a primer for cognitive-behavioral therapy.

Ruiz says that children do not know any better than to agree with the adult realities into which they are indoctrinated. Children do not argue with the meanings of words or grammar as they are learning the language. If my parents tell me I am smart and handsome, I believe them. If they tell me I am stupid and ugly, I believe them. Children have no choice but to agree. They are like Plato’s prisoners in the cave, shackled and forced into believing that shadows of artificial objects are real. But as we mature, we can become warriors, breaking free from the shackles of agreements with our implanted, false ideas. We can accept healthier agreements. Ruiz presents four such healthier agreements in his book. Below is a Reader’s Digest version; I have written more extensively on the agreements elsewhere.

1. Be impeccable with your word. In a sense, social constructivists are correct about words creating reality. We act on what we tell ourselves is real. Albert Ellis encouraged us to screen our self-talk for negative, irrational chatter. So, what kinds of words to you use when you describe reality? Do you lie and say hurtful and poisonous things about yourself and others? Not healthy! To be impeccable with your word is to be truthful and to say things that have a positive influence on yourself and others.

2. Don’t take anything personally. The first agreement suggests that we avoid treating others hurtfully. The second agreement provides us with a way of dealing with potentially hurtful treatment from others. Because each person sees the world in a unique way, the way that others treat us says as much about them as it does about us. To not take anything personally is to acknowledge the unique identities of other people. We respect their subjective realities, realizing that their views do not necessarily describe us accurately.

3. Don’t make assumptions. Assuming that you know what other people are thinking or feeling about you is a limiting thought that Aaron Beck called Mind Reading. Obviously, none of us can read minds. When we try to engage in mind reading we will often be wrong, leading to undesirable consequences. The antidote to mind reading is to ask for evidence before concluding what people are thinking.

Do these four agreements actually derive from ancient Toltec wisdom? I will bet that many hard-nosed skeptics would have serious doubts about that. I am a skeptic myself. But to my fellow skeptics, I might mention that Ruiz’s next book, The Fifth Agreement, suggests the following agreement: “Be skeptical but learn to listen.”

 

Posted by: John A. Johnson Ph.D., Bio

The Service Side of Manufacturing

According to a recent McKinsey Report, service inputs (everything from logistics to advertising) make up an increasing amount of manufacturing activity. In 2012, they determined that in the United States, every dollar of manufacturing output requires 20 cents of services. Today, this is closer to 25 cents on average, and in some manufacturing industries, more than half of all employees work in service roles, such as R&D engineers and office-support staff.

So why do manufacturers and manufacturing organizations continue to focus on the production side of the business?

Anyone who knows manufacturing understands the complex operations, supply chain and cost implications of “leaning” or streamlining your production. Identifying where to outsource. Knowing what to keep in-house. How to keep the cost per part down. It’s crystal clear. But when it comes to the “service” side of the business, everything falls into a big bucket of “sunk costs”. The “cost of doing business” so it’s been coined.

Manufacturing, to effectively compete and grow in today’s economy, needs to examine the service side of their business – from a cost perspective, from a differentiation perspective, and from a revenue perspective. The way to win in our competitive environment isn’t simply through product innovations. The new job of manufacturing is embracing the service aspect of the business.

But why should we care about that? Organizations don’t buy our people, they buy our products, right?

That’s not exactly true. The service part of your business (i.e. people and processes) touch your customers and prospects every day, from sales, marketing, and customer service, to tech support, billing, R&D and logistics. None of these areas are the “meat and potatoes” products you sell, but they are integral to what it means to do business with you – and that can either be good or bad.

The service side of your business isn’t simply administrative paper-pushing. “Service” can be a big differentiator, even in manufacturing. And if you haven’t examined and modernized the service side of your business in many years, you are weakening your ability to compete in today’s market on a variety of fronts:

1) Recruitment – How can you effectively recruit and retain top talent, when your organization is working with outdated systems and processes? If you’re still using 20-year old custom software platforms to run your business, it shows that “we do it the way we’ve always done it” and aren’t open to change. If you’re seeking new talent to help grow your business and innovate, this lack of forward-progress sends the message that you are stuck in the stone age and there’s not much of a future in sight.

2) Culture – Do you have people in your organization that hold certain processes, systems, and information hostage? Many companies that haven’t advanced the service side of their business are tied to individuals who are “the only ones that know how to use this system” or “have tribal knowledge” which they hold under lock and key. Because the service side of the company has not lived through continual change and advancement, these folks build their value by holding tightly to aspects of the business that secure their role, but hold back or even stunt growth.

3) Profitability – Are your service side operations complex, slow, and highly manual? Does it take a dozen people to create a report or process an order? If you’re not leveraging software and systems to simplify these operations, as your company grows, so will your overhead. The ability to do more with less, and allowing people to expand their skill sets not only reduces expenses but helps you function more efficiently. Using new technology can also provide insights on sales opportunities and cost reduction areas never before seen.

4) Customer Engagement – Is it hard to do business with you? Does a customer have to call and talk with 4 or 5 people before an issue is resolved? Or always have to send an email when they need a copy of an invoice? Customer engagement is about the customer. Using platforms and tools can make their experience working with you simpler and easier, in addition to helping them reduce their own cost of doing business. Modernizing your operations provides more information transparency to your customer, and the opportunity to create new service avenues, such as virtual customer service and auto-reordering of wear parts, to name a few.

5) Brand – You might have the “best quality” products on the market, but if your service operations are outdated, it reflects on your organization as a whole. Are you still sending invoices by fax? What message does that send to a purchasing agent? If you can’t do business communications and engagements through modern means, there will be little confidence that your products will be any less outdated, both in design and production processes, limiting long-term growth and brand perception in the marketplace.

6) Competitive Advantage – Since many mid-market manufacturers don’t spend much time on the service side of the business, this can be a huge competitive advantage to those that do. Are you in a highly-competitive market but struggle to differentiate your product? Then differentiate through service. Use the service side to give customers and prospects insights about where their order is in production, instead of the industry standard “2-4 week delivery” line. Integrate with their purchasing systems to free up administrative time on your end and theirs. These types of differentiators are also typically difficult and time consuming for your competition to replicate.

Manufacturing is not about simply making widgets – manufacturing is a business. Every aspect of your business needs to advance and grow as markets change, customers change, and competitors change. Focusing only on production leaves out half of your operation to stagnate and drag the rest down with it.

About the Author:

Andrea’s 19-year, field-tested background provides unique, applicable approaches to creating leaner, more effective, technology-driven, industrial organizations. A 4-time ADDY® award-winner, she began her career at a tech start-up and led the strategic marketing efforts at two global industrial manufacturers.

In addition to writing, consulting and coaching, Andrea speaks to leaders and industry organizations around the world on how to craft an effective customer-facing operational strategies to discover new sources of revenues and savings. Connect with Andrea to access information on her book, workshops, keynote speeches, training or consulting. More information is also available on www.pragmadik.com and www.nodisruptions.com.

Pick up a copy of her new book, “No Disruptions: The New Future for Mid-Market Manufacturing”, available on Amazon.com in Paperback or Kindle.

https://www.amazon.com/No-Disruptions-Future-Mid-Market-Manufacturing/dp/1530913675/ref=sr_1_1?s=books&ie=UTF8&qid=1473650346&sr=1-1&keywords=no+disruptions