Out of the Crisis.Org

[Louis Altazan]

When it comes to poor managers, I feel uniquely qualified to speak, having been one myself for a very long time. There was once a time when I looked at mis-diagnosis as a technician problem. My solution at that time was to reward proper diagnosis and punish improper. I felt flat-rate pay was perfect for this. If the tech got it right they got paid, if they didn't, they did not. A few mis-diagnosis and they would either quit or I'd save them the trouble.

There was only a few problems

No Money,
No Techs and No
Clients.

When Dr. Deming first told me the problem was me, I sort of nodded, but didn't really buy in. Over the years I have come to realize he was right. Looking at the chart in the practical applications forum, only a handful of factors even concern the tech. Even those that do are management's responsibility.

I think the time has long past when management can sit idly by and blame the workers. There’s one big problem, IT JUST DOESN'T WORK. The company will go out of business, just the same as a company with no excuses at all.

NEED MORE PROFIT?
NEED SATISFIED CLIENTS?
WANT TO STOP PUTTING OUT FIRES?

This is how it can be done. Isolate the causes and work to address each. Test probable solutions with PDSA. Track results with statistical process control and repeat. No shooting from the hip and hoping, rather statistics and the scientific method are stacking the odds greatly in our favor.

Too much Work?

This is child's play compared to the amount of work currently being repeated daily as a result of mistakes, and that continues on and on. Certainly such a problem cannot be solved overnight. It did not develop overnight, but it can be addressed. Please take a look at the fishbone diagram on mis-diagnosis and add your thoughts.

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[Bud]

It looks like the service department of the Honda dealership that is losing over 350 customers every month. So many causes that can be pinned on management...but they have no accountability except the vague, murky financial statements.

Here's one example. I noticed many techs removing batteries from vehicles with engines running. Vehicles loaded with electronics, GPS, DVDs, tons of expensive electronics. Sheeesh, what the heck is this I asked?

The answer was that factory warranty doesn't pay a fair time to replace a battery. So to save time and not lose security codes and audio system settings the techs simply leave the engines running while they replace batteries. Everybody in management sees the practice, from the shop foremen on up. But they are paid on hours billed, just as the techs are.

They also have tons of warranty electronic repairs, many likely caused by this practice. It is an escalating problem, one action causes a more severe, expensive result later on.

So, while not a misdiagnoses, I think it fits the fishbone method of analyzing a complex problem. Warranty expense, and customer inconvenience and dissatisfaction, can be traced backward to causes that can easily be eliminated.

[Bud]

In my last answer I reverted to my mechanic mode. Let me take another pass at this:

Most people don't know Louis' and AGCO's story. I do, because I drove 500 miles to ask Louis what happened to turn his busines around. I found his repair shop had a one to three week backlog of work, had for years, and that 9-11-01 didn't stop that at all. All that despite the recession Louisiana, AGCO's home State, had been in since the first gas crises of 1974.

His techs had been working there from 10 to 20 years and were earning more in pay and benefits on 'salary' than most techs ever do on flat rate. The wealth the place generates for all connected to it was amayzing. It was the happiest group of people I had ever met in a repair shop.

Yet Louis only charges customers for the time his techs actually work on their cars. Since each tech specializes in one or two areas they work extremely fast, efficiently and diagnose very quickly and accurately.

So if a transmission gets exchanged in 1.5 hours, the customemr pays only that; amayzing. Plus a road test and clean up time, I suppose would be a reasonable charge. Nonetheless, wow.

Plus, Louis doesn't charge as much for parts as many other shops do. As explained elsewhere on this site, there are no fancy equations or 'marketing formulas' to set AGCO's prices. Competition is ignored.

So in this example, the customer gets a factory rebuilt transmission installed for, say, 2.0 hours of labor and pays less than list price for the part.

Impossible to make money like that? Rather than do one transmission a month as many general repair shops do, he does 3 a day.

Now, going back to what Louis explained after I drove 500 miles to get there, he met and learned from Dr. Deming. Deming had taught the Japanese how to study their operations, especially their mistakes, how to analyze them properly and how learn from them. All that learning would lower their cost over time, the cost of materials and of production labor.

That way, they would eventually produce a product that was ever increasing in quality, but selling at lower prices because their mistakes and costs were gradually becoming smaller. In free competition they would be the winners.

Japan did study for decades and learned Deming was right. Every tech here knows why people shun American cars and buy Japanese.

Louis doesn't like to tell his story and draw attention to it, but doesn't object too much if I tell bits and pieces of it. Here is the bit that amayzed me, 500 miles from home. Deming advised louis to finish his education. Taking that advice, Louis sold his body shop, and then downsized his repair shop to just one tech, himself. He went from big, two locations, to small. He returned to college, earned a masters in mathematics and a Phd in Physchology, fixing cars as he had time and studying at his shop when he could.

If you know Deming's teachings, those are two of the four areas of knowledge a manager needs.

After graduating and returning to fixing cars full time, Louis applied what he had learned. The business grew. What Louis had learned he began teaching his techs and service adviser. They all studied the business and gradually lowered their costs of time in diagnosing, repair and of mistakes, and as a result increased the quality of their work.

No threats, no firings, no financial incentives to lower comebcaks, no bonuses or spiffs; nothing of the sort. As a result they produce the highest quality repairs possible, while selling at the lowest prices possible, and prosper they do. Think about how the customers feel. Great repairs at reasonable prices.

All from what Deming taught about management. 500 miles was a short drive to learn that. I had previously been taught Deming in business school, but had never seen it applied in a repair shop, or seen the money that comes from it. Wow.