Best Practices on Cost Reduction

Best Practices on Cost Reduction using Lean Six Sigma Guest was Deron Ertel of Embarq Corporation

Business901 Podcast Transcript

Embarq Corporation’s General Manager of Process Excellence, Deron Ertel, was my guest on the Business901 Podcast. We discussed Embarq’s business process improvement initiatives and how they differed from other companies Lean Six Sigma initiatives. Particular attention was paid to the relevancy of Lean, Six Sigma and business process improvement in a down economy.

Deron will be presenting “Best Practices on Cost Reduction using Lean Six Sigma” at The Global Lean, Six Sigma and Business Improvement Summit. This summit represents the largest gathering of leading experts and senior executives across various industries who are passionate about achieving process and business excellence. It is held October 13-16, 2009 in Orlando, FL. Embarq Corporation is NYSE-listed company has approximately 18,000 employees and operates in 18 states offering voice, data, high speed internet, wireless, and entertainment services to over 5 million customers. In his position, Ertel is responsible for business process improvement, business process management, and process governance. Prior to joining EMBARQ, Ertel held a number of leadership roles at General Electric, most recently leading Six Sigma initiatives as Master Black Belt in GE Insurance Solutions. Ertel holds a bachelor’s degree in Business Administration from Hanover College and a Masters of Business Administration from Regis University.

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Joe Dager: Thanks everyone for joining us. This is Joe Dager, the host of the Business901 podcast. And participating in the program today is Deron Ertel, the General Manager of Operational Excellence for Embarq Corporation. Deron, I would like to have you just give a brief overview of Embarq and what your position entails.

Deron Ertel: Thanks a lot. I appreciate the opportunity to talk to you here today. Let me give you a little bit of background around Embarq and a little bit of background about myself and the organization and so forth.

So Embarq, we recently, as of July one of this year, merged with CenturyTel, and we created the company called Century Link. In working at Embarq and with the merger of Century Link, we are about a $10 billion company in terms of annual revenues. We're the fourth largest telecommunications provider in the local market, so providing basically your home phone service, your Internet, and in some markets we also offer video through our own solution. And then we also are a reseller of DirecTV in certain markets, and Dish Network as well.

So in terms of myself, my background, I've worked in a little bit of everything. Sales, operations, and then most recently in business process improvement, and as you mentioned, I'm the General Manager of Business Process Improvement, or was the General Manager of Business Process Improvement at Embarq when we were a stand-alone entity. The primary focus of our organization then was on driving operational excellence across the franchise.

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Joe: Do you use Lean Six Sigma as your primary initiatives?

Deron: In terms of the methodology and approach that we utilized, certainly Lean and Six Sigma, those are some of the core sets of our toolkit. The approach that we've taken at Embarq though is a little bit different in terms of when you say the word initiative.

When we talk about initiative, we talk about it in terms of starting with the premise of driving process excellence, insuring that we're operating efficiently as an organization.

That's really kind of the core way that we look at things in terms of process excellence.

In terms of initiative, then, the initiative really kind of starts with the business. The financial aspects of the business, the customer service aspects of the business. That's our initiative. Some of the tools that we utilize in that are Lean Six Sigma, heavy Kaizen approach to the way that we do things. But the way that we actually start is we start with the business and the Lean Six Sigma, Kaizen, and so forth, those are tools that we utilize in order to get to those.

Joe: Do you look at Lean Six Sigma as two separate entities?

Deron: Not necessarily. What we try to do in terms of utilizing the toolkit is integrate the tools as best we can. In terms of working through a project, or a process improvement initiative, we'll utilize whatever the right tool is at the time in order to drive that process improvement. Early on in a project or a process improvement, we may utilize a Kaizen type methodology as an accelerator if you will, utilize more of a Six Sigma methodology then as we continue through a project, and then as we get into the improvements and so forth, then we'll utilize something a Kaizen, utilize some of the parts of the Lean toolkit then on the back end as well. So we really try to take an integrated approach in terms of toolkit. We utilize the tools that are most appropriate for where we're at.

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Joe: Are there other methodologies that you use besides Lean Six Sigma? Do you use like TRIZ or anything like that?

Deron: We've explored different opportunities. We haven't integrated those into our toolkit. In terms of Lean again, I kind of go back to, I mentioned Kaizen as being one of the primary tools that we utilize. From Lean, from that toolkit, we use kind of a 5S-type approach, but haven't really ventured outside that core toolkit. What's interesting is, in our industry, a lot of the types of things that you're talking about that would be more TRIZ related and so forth, we actually look to our vendors quite a bit, and lean heavily on our vendors to come up with those innovative solutions and so forth. It hasn't been as relevant for us.

Joe: In October you're going to be presenting at the Global Lean Six Sigma and Business Improvement Summit. What's the topic you're going to be discussing there?

Deron: The topic I'm going to be talking about there is a couple things. One is really how we've utilized the Lean Six Sigma toolkit here at Embarq to drive us forward. Going back to what I talked about earlier, we take a little bit different perspective on the initiative.

Oftentimes, within the Lean Six Sigma realm, organizations start with the toolkit and drive that into the business. We, actually, take just the opposite approach. That is, we start with the business, and then, we identify what are the appropriate tools to use in order to get to that?

So, for instance, let me just give an example of something that's just top of mind. It's something that we're just talking about not 30 minutes ago, and that is prioritization. So, basically, we've got a series of initiatives, and so forth, that we're looking to take forward.

The discussion was around, "How are we going to prioritize those things coming out?"

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Obviously, there are things that we can draw upon that toolkit to help us do the prioritization, and so forth.

Those are the types of things that I’m planning on presenting are: How we're starting with the business, identifying what the business problems are, and then, taking that into the sphere of, "OK, now, what do I do?" What are the right tools to use? How are we utilizing that toolkit in order to get to those business initiatives?

Joe: Actually, you became a Black Belt when you were at GE, right?

Deron: That's correct, yes. My background...I came over here to Embarq... One thing I didn't mention earlier was Embarq was a spinoff of Sprint. I actually came over to Sprint, roughly, about four years ago. So, I was a Master Black Belt at GE prior to coming over.

Joe: Where are you seeing the Six Sigma and Lean Six Sigma initiatives going in recent times? Since you've left GE, you had to be in like the old - I don't want to say the old school Six Sigma - but some of their earlier training, you had to be around.

Deron: Yes, I was there. During a lot of my tenure, we were still under the Jack Welch era. I think that that's really kind of where I seen the migration of Lean and Six Sigma going. I think that you'll find that to be the case even at GE. It goes back in time. A lot of the focus was starting with the tools, and that was the case at GE as well. "Hey, let's start with the tools and let's shoehorn in the DMAIC methodologies, and so forth associated with Six Sigma. Let's start with those methodologies, and then, let's apply that into the business initiatives." I think the direction that you're seeing things head is we have a great toolkit, and so forth, at our disposal. What we need to focus on is really: What are the business imperatives we're trying to get to? So, it's not so much a shoehorn type effect, it's really driving, what I was just talking about there. How do we drive the biggest Best Practices on Cost Reduction using Lean Six Sigma

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business value utilizing the tools that we have at our disposal? I think that's really where you're seeing things head.

I think one of the big differentiators that happened in the last several years has been that integration of the Lean and Six Sigma Toolkit. If you really look at it, we were doing it all along. We were utilizing a lot of the tools; we just weren't calling them those. Also, we were able to take some key learning that some peer companies - the Toyotas of the world, and so forth - were utilizing and integrating that into the toolkit as well.

Joe: I think one of things that I’ve noticed is that Six Sigma and Lean was, all in the 90’s and in the earlier part of the century; it was all about saving money. Now, it's more about winning and retaining your customer and of course, quality. As a result of it, you have to save money because you're doing things more efficiently. Really, it's not all driven by cost so much anymore. That's a by-product of it.

Deron: Yeah. I would tend to agree with that. It goes to: What it is you're trying to do as a business? I think that as companies are in the different life cycles, if you're in an industry that's growing substantially, it's about, "How do we win new customers?" If you're in a business that is at the peak or at that influx point, if you will, it's really about retaining your customers. If you're in a business that is on the downside of that curve, then it's heavily driven towards cost reduction. So, I think, a lot of that is dependent upon, not only the company itself, but also the industries in which the companies are in.

But I think the important point there, though, is the tools give the opportunity to bend that curve a little bit. So, even if you're in a declining industry, or you're in an industry that's reaching an influx point, utilizing things such as design for Six Sigma, integrating it heavily into your product development portfolio, and so forth. I think there are opportunities out there to bend the curve, if you will.

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Joe: In a down economy, the business process improvement initiatives, is there more emphasis in that area?

Deron: I can tell you that in 2009, this was one of our key things that we did as a business: was kind of working on our business process improvement initiatives within our business, within Embarq. That was one of the key things that were driven all the way from the top of the company down, throughout. We had a core set of projects that we're working on, that were looked upon as differentiators for the business. I think that as companies, as peer companies out there are looking at the down economy and so forth, I think that this is really the time when these kind of initiatives, if companies aren't doing them, they're making a huge mistake.

Joe: You think of Embarq as a communications or leading edge type company. Is it really?

Is the technology that is out there, is it something cutting edge all the time that you're dealing with?

Deron: I would say the answer to that...speaking in terms of what I've been working on with regards to process improvement and so forth. Not necessarily. At times we'll work on things that are working on making our technology better and so forth. There are various aspects of the business all the way from the supply chain side all the way through to the technology side. There are various components of the business. A lot of what we work in really isn't any different than what other business process improvement initiatives would work on. Our initiatives kind of span various parts of the organization.

Joe: Where do you think things are heading with business process improvement? Is it going to be more and more technology involved in improving processes?

Deron: I would say there are portions of it that are. But I think that most companies that I see out there... I think a lot of companies still need to work on their basic blocking and Best Practices on Cost Reduction using Lean Six Sigma

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tackling. That's anywhere from reducing the cycle time of their supply chain to speeding up their customer implementation. So from the time that an order's placed through to making sure that whatever the customer's services are, and I'm speaking in general terms here, companies I think as a general rule of thumb have the opportunity to really shore up the basic blocking and tackling.

Now, with that said, technology is a heavy component into that. It plays heavily into that. Basically, in doing so, in shoring up supply chain and cycle time and improving the customer implementation cycle times and so forth, what the opportunity is then is how to better integrate the technology into that process.

In doing so, really what I think the companies have... Kind of the general thing that I'm hearing out there is, technology is an enabler, but at the end of the day you've got people often times working in that process. How do you drive some consistency in the way that you do that so you can see consistent results?

And in instances where the results are consistently bad, it's identifying what are the things that work and don't work in that. So technology: I see technology I see as an enabler, but not the sole direction of where you're seeing things happen with regards to process improvement.

Joe: Is there something specific you would like to mention about the best practices that Embarq that I didn't really cover?

Deron: I think we fairly well covered them all. I think the differentiator for us within the process improvement realm has been heavily geared towards aligning the business strategy with the tools that we utilize to identify what is it we're going after and what are the initiatives that we're going to go after as an organization. It's as simple as that, the way that I've driven out the organizational process improvement.

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Joe: The website Embarq.com, do I use that to find out if there's an Embark store close to them?

Deon: Embarq.com or CenturyLink.com for the new organization, but Embarq.com for the legacy, that's where you'd find us.

Joe: And you're going to be presenting I believe on day two of the Global Lean Six Sigma and Business Improvement Summit conference. I encourage people to go ahead and go to your session to follow up on more of a conversation that we've had here. I'm very intrigued by the method of reviewing the business improvement side, then going back to look at the tools. As you said, “I'm not a Lean Six Sigma company, but I'm an Embark company using process initiatives.�

Thanks again very much.

Deon: Thanks for your time, Joe.

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Joseph T. Dager Lean Six Sigma Black Belt

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Joe Dager is President of Business901, a progressive company providing direction in areas such as Lean Marketing, Product Marketing, Product Launches and Re-Launches. As a Lean Six Sigma Black Belt and a certified coach of the Duct Tape Marketing organization, Business901 provides and implements marketing, project and performance planning methodologies in small businesses. The simplicity of a single flexible model will create clarity for your staff and as a result better execution. My goal is to allow you spend your time on the need versus the plan.

An example of how we may work: Business901 could start with a consulting style utilizing an individual from your organization or a virtual assistance that is well versed in our principles. We have capabilities to plug virtually any marketing function into your process immediately. As proficiencies develop, Business901 moves into a coach’s role supporting the process as needed. The goal of implementing a system is that the processes will become a habit and not an event. Part of your marketing strategy is to learn and implement these tools.

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