Feb 5 2012
Should Governments Subsidize Manufacturing Consultants?
Since 1988, the federal government of the United States has been subsidizing consulting firms through a program called Manufacturing Extension Partnership (MEP) out of the National Institute of Standards and Technology (NIST). The MEP has existed through five presidencies of both parties and now supports 1,300 consultants who provide cut-rate services to small and medium-size manufacturing companies, effectively shutting out other consultants from this market segment.
This raises the question of what qualifies an agency set up to calibrate measurement instruments to pick winners among consultants in areas like technology acceleration, supplier development, sustainability, workforce and continuous improvement. Clearly, the leaders of the MEP must have an extensive experience of manufacturing to make such calls.
Director Roger Kilmer just posted an article entitled A Blueprint for America: American Manufacturing on the NIST MEP blog. According to his official biography, the director of the MEP has been with NIST since 1974 and has never worked in manufacturing. On the same page, you can see that some members of the MEP management team have logged a few years in the private sector, in electric utilities, nuclear power, and IT services. None mention anything like 20 years in auto parts or frozen foods.
I agree with Roger Kilmer that manufacturing is essential to the growth of the U.S. economy, and even that government should help. All over the world, particularly at the local level, governments provide all sorts of incentives for companies to build plants in their jurisdiction. But is it proper for a government to directly subsidize service providers? The alternative is that whatever help is given go directly to manufacturing companies, for them to pay market rates for services from providers they choose.
In addition, the most effective help is not necessarily a subsidy. Hearing the CEO of a small, French manufacturing company uncharacteristically praise then finance minister Christine Lagarde, I asked what she had done to deserve it. “In 2009,” he said, “banks were denying credit to everybody. We were going bust. She decreed that bankers had to explain why for each case to her ministry. That was enough to pry the money loose.” It was done with a light touch, didn’t cost any money, and worked.
Feb 7 2012
Takt times and falling sales: How to Respond?
Question from Jean-Baptiste Bouthillon on The Lean Edge:
My response:
You question implies that takt time is only a function of customer demand. It is not. When you calculate it, you divide your production time by the demand, which means that it is as much a function of how long you decide to work as of how much you have to produce. Without any change in customer demand, you double the takt time by working two shifts instead of one.
The takt time of a production line is the time that elapses between two consecutive unit completions when the line runs. It is not the rate at which customer orders arrive.
So how do you respond to falling sales?
You have to distinguish between fluctuations in sales, for which you should not change the pace of production, and major changes, for which you should.
Once you have set up a large assembly line to work at a takt time of 57 seconds, changing it to 60 seconds is a major effort, involving the balancing of tasks among stations and adjustments in part supplies. In car assembly, unless you are hit by something like the Fukushima earthquake, you don’t do it more than once in four months, even if you are Toyota. During this period, you use heijunka to respond to fluctuations in mix, and adjust overtime for fluctuations in total volume.
If you have a major downturn, you have to reduce production, and the challenge then is to do it without going bankrupt while retaining the work force you spent so much time and effort developing.
It is in such times that having your money tied up in inventory can bankrupt you. When the recession hit in 2008, management in manufacturing companies suddenly took an interest in working capital, but it was too late. Downturns come brutally, and it is when they occur that you must be ready.
Keeping your work force intact and prepared for the next upturn is just as essential. So you stop using temps, cut all overtime, go on four-day weeks, or three-day weeks, and use the available time to solve nagging engineering problems, experiment with new technology, etc. I remember an auto parts plant in Japan, in which recession time had been used by a team to build in-house a pick-to-light system with their own AGV out of Creform. Even though they did not explain it, you could tell that they would know exactly what to require from vendors and how to deploy this technology when the upturn came.
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By Michel Baudin • Technology • 9 • Tags: Lean assembly, Lean Logistics, Lean manufacturing, Takt