For years conventional wisdom has been that while North American manufacturing may migrate overseas at least R&D will never leave. Unfortunately, this is a short-sighted view that is already proving to be wishful thinking. One significant reason for this can be summarized in a recent quote from Paul Otellini, CEO of Intel:
"I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States."
While this is sobering to those involved in manufacturing it should be equally as alarming for people in other areas of business.
It is becoming increasingly clear that the physical location of production facilities is a leading indicator for the rest of the organization. As production moves overseas the pressure to relocate planning, materials, and sustaining engineering quickly becomes apparent. But more and more companies are also recognizing the integral relationship between manufacturing and product development.
World class development organizations leverage production experience for competitive advantage. These companies are continuously asking themselves:
- What improvement ideas are being generated from the manufacturing organization?
- How can R&D and manufacturing work more collaboratively to reduce the new product introduction cycle?
- What new manufacturing technologies can result in cost effective new products?
- Where are quality problems occurring most often and how can they be eliminated?
- What products can we produce at the lowest cost?
On one hand, video conferencing and other high-tech capabilities have made it easier to communicate between separate production and development facilities. But nothing can substitute for actually observing production in action and face-to-face discussion as the way to link development and manufacturing. So as more production moves offshore the pressure grows to move development as well.
Read the rest of the article at "Lean Product Development and Manufacturing".
Readers of the previous Operational Excellence Insights “Are You Improving or Counting” most likely saw an error immediately upon reading the headline. (The letter “n” was substituted for “m” in the word “Improving”.) After all, it wasn’t too difficult to notice the misspelled word. Seeing this, initial thoughts were probably along the lines of:
How could these process excellence professionals do this? Don’t they proofread? That must be embarrassing. I wonder if anyone else noticed. Don’t they use spell check? I wonder how that happened. Who’s at fault? I’m curious if they’ll identify and eliminate root cause(s).
As readers of Operational Excellence Insights, each of you is a customer of these articles and as such our offering last week failed to meet your requirements (or ours). In our never-ending pursuit of excellence this provided a valuable opportunity to investigate the process, implement improvements, and most importantly, practice what we preach as Lean Six Sigma consultants.
It is unlikely that many people would consider the question in the list above addressing root cause. Normally, the initial reaction is more focused on “who’s at fault.” Being customers of products and services throughout our business and personal lives, we frequently encounter defects or levels of quality that are less than desired.
When such situations arise, we typically are content with receiving credit or some other allowance, none of which has anything to do with getting to the root cause and eliminating it.
Read the full article "Who Is Responsible?"
Has a measure of success of your Lean Six Sigma initiative become the number of Kaizen events?
Steve Engelman explains why it may be a big mistake to focus on quantity rather than results:
As a reader of Operational Excellence Insights, there is a high probability your organization, or at least one you are familiar with, has launched one or more initiatives focused on achieving perfection, delighting customers and reducing costs.
Whether known as Lean, Six Sigma, Total Quality Management, Business Process Reengineering, Cycle Time Reduction, or some other philosophy, each is built on a common foundation - continuous improvement
Continuous improvement should be just that…ongoing, incremental, consistent and never-ending change for the better, supporting your organization’s goals and objectives. Of course, these goals and objectives need to be driven by the desire to improve safety, quality, cost, and delivery. Improvement of these key metrics will result in enhanced customer satisfaction, employee engagement and financial performance.
Translated, the commonly referred to Japanese term kaizen provides a simple philosophy of changing for the better. This philosophy, in many instances, has evolved from a concept of daily continuous improvement to a specific team activity. As Lean Six Sigma consultants we frequently hear of organizations that are going to “do” a kaizen event (or “blast” or “blitz”) this week.
Ideally, these kaizen events will be laser-focused on achieving organizational goals and objectives with an emphasis on fundamentally changing the way business is performed. Furthermore, they should link to well-defined, high level organizational objectives. Unfortunately, and in too many instances, performance measures impede progress, and thus, real improvement.
It is no secret that people perform how they’re measured. In traditional organizations a buyer rewarded for achieving favorable purchase price variances is incentivized to order, and subsequently retain in inventory, larger quantities. A production supervisor rewarded for maximizing utilization, efficiency and productivity is biased towards producing the largest lots possible. All of this is done with the best of intentions but without consideration for providing what the customer (internal or external) wants, when they want it, and with minimal resources.
Similarly, we have experienced organizations measuring continuous improvement by tracking the number of kaizen events conducted. This type of metric ensures a most predictable reaction by those responsible…the quantity of events increases but the quality usually decreases.
Such an approach seldom sustains organization-wide improvements and typically leads to the demise of cultural change initiatives. This results in a significant amount of resources being consumed without providing a return on investment. Quite honestly, we have seen numerous Lean transformations fail for this very reason.
How can you overcome and avoid such obstacles...
Read the full article: Are You Improving or Counting?
This week our Blog deals with a probing question from a client...
An executive at a company working to reinvigorate its Lean Six Sigma efforts recently asked a very perceptive question. After explaining that many Lean Consultants had been telling him about the critical need for management commitment, he was interested in some deeper insight. “I understand that commitment is essential to succeed,” he said,” but what specifically will make us fail
His question caused me to pause. In the past, our firm has been askedto pick up the pieces after some ineffective attempts to implement Lean Six Sigma. As a result, we certainly can point to some case studies of what not to do. But it is thought-provoking to find the underlying themes in these “worst practice” examples. Here are our top three candidates:
One more “rock in the pack”. If you are not familiar with the rock in the pack analogy, it originates from a story about an unmotivated manager who felt that his job was to handle an endless series of problems. Since nothing was ever completely resolved his work felt like carrying a load of meaningless rocks. Another assignment became just one more rock in the pack.
If Lean Six Sigma simply becomes an additional assignment to middle managers, without displacing something else, it can become a rock. Too often the message is “you need to improve safety, quality, costs, market share, efficiency and customer satisfaction – oh, and by the way, fully implement Lean Six Sigma”. In this situation it is easy to know which of those assignments will get the least attention. It would have been much simpler to say “here’s another rock”.
Allowing Lean Six Sigma to become just one more task is almost a guaranteed way to fail. On the other hand, the successful approach is for Lean to become the method to accomplish business objectives. This also positions Lean properly within the organization. After all, no company has (or should have) the mission statement to achieve Lean Six Sigma excellence. An appropriate mission is some combination of serving customers, providing innovative and quality products, satisfying stakeholders, making a profit and so forth. The rightful role of Lean Six Sigma is as the system to accomplish this.
Using this logic the message to managers is not to simply add Lean onto the list of things to do – but to utilize Lean methods to achieve the measurable business objectives.
Focus on the mechanics. Many of the Lean tools and techniques can be taught fairly quickly - but using those tools to actually transform the business is much, much harder. A good example is Value Stream Maps. A team can be taught the mechanics of VSMs in a few hours and can create one in a day or less of effort. However, using the current state VSM as a starting point and then actually driving improvement is much more difficult.
Click here to read the full article "How Do We Fail?"
In this difficult economy, our weekly blog tackles a sensitive subject: adding employees as the business outlook finally shows some hesitant signs of recovery.
Before tackling the main topic of this article, a couple of disclaimers are in order:
First, with U.S. unemployment hovering in the high 9% range, it seems rather heartless to talk about why not to hire employees. While we are sympathetic to all the people who have lost jobs due to the economy, the suggestion that companies simply hire in proportion to sales volume would violate logical business principles – Lean or traditional. An organization that fails to stay efficient and effective does no favors to its employees. In fact, that approach puts everyone’s job at risk to a more efficient competitor. The only exception is the government which… Oops, see the next disclaimer.
Second, politicians are already bickering about whose policies will lead to a recovery in employment and how fast it will happen. Also, pundits are engaged in quite a debate about the role of government versus the private sector. As a result, it would be easy for this to turn into a political argument. Although it’s quite tempting to take some potshots, we will carefully tiptoe around those subjects.
However, as Lean Consultants we can’t help but notice how many companies have the objective of recovering their former level of sales but doing so with fewer employees. We unabashedly support this approach for a variety of reasons.
Read the rest of the article here
Are you asking the right questions to drive Operational Excellence? Are you asking them in the right way?
This week Steve Engelman, Senior VP, tackles these topics and more in his Operational Excellence Insight posting:
Lean Consulting Tips - A Question for You
A few months ago we discussed the "World’s Best Follow-Up Question" in Operational Excellence Insights. This week we have a related topic for your consideration. Specifically, “Why don’t you ask better questions?”
If you think about it, most of us are born with a high level of inquisitiveness and the need for a deeper understanding of the world around us. Any time spent with young children reinforces this observation as their constantly asking “why” can change from being cute to being downright annoying.
So, what happened? Why were we so good at asking probing questions when younger and now we accept so many things as they are or shrug them off as “that’s how we’ve always done it?” Could it be we are expected to possess more answers as our knowledge base grows? Or, have difficult economic times made it more personally justifiable to keep one’s head down while not challenging the status quo?
This inaction quickly stifles continuous improvement opportunities and is contrary to one of Dr. Deming’s fourteen principles which states organizations must “Drive out fear, so that everyone may work effectively for the company.”
How can organizations drive out fear, especially fear that affects improvement, customer satisfaction and financial performance? By focusing on processes, not people. Obviously, people are integral to any process yet initial questions should not be founded on “who”, but rather, “why” as in “why is process flow being impeded?”
Where can you begin this quest for better process understanding? By getting to gemba, or the actual place where value is being created. Doing so allows for asking questions such as:
Read the full article "Lean Consulting Tips - A Question for You" and please add your experience or comments below
A recent Operational Excellence Insight on the topic of Four Dreaded Words... "but we are unique" raised some interesting comments from readers. Several people wrote with questions about their particular business or products and the difficulties in applying established Lean tools.
Predictably, the discussions eventually turned to determining Takt time. Since Takt time is a fundamental factor in many of the formulas and tools used in applying Lean this was not a surprise
As a quick review, Takt time is the customer demand expressed in a time target. As a result, it becomes the "rhythm" of a Lean line. In a perfect Lean line, every operation (labor or machine) would take place in exactly one Takt time. Regardless of the number of operations, one finished product would be completed each and every Takt time. Unfortunately, the real world seldom cooperates
- Some operations stubbornly remain batch
- Variation exists in the ability of different people to do the same task...
Read the complete article "Lean Consulting Tips - Takt time"
A number of news services have reported this week that China will overtake the United States as the leader in production of manufactured goods.
As Lean Manufacturing Consultants to worldwide companies we are not so naive or xenophobic to believe that every product should be made in the US or even North America. There are many valid reasons for worldwide manufacturing including:
- Products with substantial foreign markets are often most efficiently served by local or regional production facilities.
- Certain parts of the world have unique economic advantages due to the proximity of raw materials, specialized skills and developed infrastructure.
- Products with short shelf lives or some that are make to order cannot tolerate long lead times that result from complicated transportation networks.
- Sometimes other countries just plain out-produce the United States. (Despite all the structural problems with the French economic system, they still manage to set the standard for fine wine.)
- There is a moral argument that companies which want to sell products in a country have some level of responsibility to provide jobs so the population can afford to buy. This is not unlike Henry Ford's approach that if he was going to build a car for the middle class, there needed to be a middle class able to afford them. As a result, he paid rather generous wages for his era.
- And, of course there is the 300 pound gorilla in the room: Whether we like it or not, the substantial difference in wages makes it uneconomical to manufacture many labor intensive products in the US. Although wage rates in developing countries such as China are growing quickly, it will take many years or decades to equalize with the west.
As a result, we encourage world-wide operations when they are established for valid reasons. Certainly, as Lean consultants we have seen outstanding manufacturing facilities in many countries and we respect well run operations wherever they are found.
But there are also many poor reasons for manufacturing to leave North America. Read the Full Article
Steve Engelman is a Lean Six Sigma consultant and also a Gulf Coast resident. As a result, he has some interesting thoughts on whether the FMEA process works for projects that have the scope of deep sea oil exploration:
It is difficult to fathom how many terabytes of data concerning the BP oil spill will accumulate by the time this disaster eventually comes to a close, or how many lives and livelihoods are being affected by the decisions, or lack of decisions, made by the oil industry experts.
As lean six sigma consultants and practitioners, there are numerous proven tools and techniques available to us for analyzing and improving processes with an emphasis on being preventive and proactive rather than reactive. Each time a catastrophic event occurs we question why this wasn't prevented and did any of the so-called experts even anticipate this. The Toyota accelerator issue and countless other product recalls also fit into this category.
Among improvement tools is the "Failure Mode and Effects Analysis", or FMEA, which is designed for anticipating all possible types of failure in product and process designs. Inherent in the FMEA are three elements used to assess risks associated with the problem including severity, probability of occurrence, and likelihood of detection. Each element is scored on a scale of 1 to 10 and the three elements are then multiplied resulting in a product of 1 to 1,000. This total, known as a Risk Priority Number (RPN), allows for prioritizing problem solving tasks and implementing preventive actions.
Assuming someone within the BP organization, or any other oil company, conducted an FMEA on the problem of a deep water oil leak it would be easy to see why minimal concern may have existed. Although the severity of such a situation would most likely score a 10 due to its catastrophic nature, the probability of occurrence and detection would be rated low when considering there are thousands of offshore oil wells operating globally without failure and oil leaks are quite noticeable. The resulting RPN could be easy to dismiss...
Read the full article here.
Do you have any thoughts to add to the discussion? Please post them below.
Don't let the title fool you - this is not a puff piece about our services.
We are often asked about how to evaluate different consulting proposals. In response, we've tried to impartially provide some tips about objectively ranking various consulting approaches:
This Week's Topic:
Lean Consulting - (No, this is not a commercial!)
Wait, we know what you are thinking - an article written by a Lean Six Sigma consulting firm about how to choose between Lean manufacturing consultants sounds suspiciously self-serving. It recalls the old saying, "Never ask a barber if you need a haircut".
To put your concerns to rest, we actually have a pretty good track record of not taking ourselves too seriously. To prove we do have a sense of humor about Lean consultants take a quick detour to read our tongue-firmly-in-cheek article "A Lean Holiday Tradition"
But selecting a Lean consultant is a serious subject so - remembering the promise not to make this a commercial - let's address some of the common questions that we hear.
Question: Does our company even need a Lean Six Sigma consultant? Can't we do it ourselves?
Answer: It is definitely possible to learn and implement Lean independently. After all, the first companies to adopt Lean did so before Lean consultants were even invented. And there is some validity to the idea that a 100% internal program will best fit the culture of the organization. When evaluating the home-grown option, three important points to consider are:
Read the entire article