3rd Annual Survey of US-Based Manufacturing Executives | BCG

“BCG’s latest manufacturing survey finds decision makers at large manufacturers expect the U.S. share of their production to rise an average of 7 percent in five years; half expect to boost U.S. factory jobs by 5 percent or more.”

Source: www.slideshare.net

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“Studies show…” or do they?

Various organization put out studies that, for example, purport to “identify performances and practices in place among U.S. manufacturers.”  The reports contain tables and charts, with narratives about “significant gaps” — without stating any level of significance — or “exponential growth” — as if there were no other kind. They borrow the vocabulary of statistics or data science, but don’t actually use the science; they just use the words to support sweeping statements about what manufacturers should do for the future.

At the bottom of the reports, there usually is a paragraph about the study methodology, explaining that the data was collected as answers to questionnaires mailed to manufacturers and made available on line, with the incentive for recipients to participate  being a free copy of the report. The participants are asked, for example, to rate “the importance of process improvement to their organization’s success over the next five years” on a scale of 1 to 5.

The results are a compilation of subjective answers from a self-selected sample. In marketing, this kind of surveys makes sense. You throw out a questionnaire about a product or a service. The sheer proportion of respondents gives you information about the level of interest in what you are offering, and the responses may further tell you about popular features and shortcomings.

But it is not an effective approach to gauge the state of an industry. For this purpose, you need objective data, either on all companies involved or on a representative sample that you select. Government bodies like the Census Bureau or the Bureau of Labor Statistics collect useful global statistics like value-added per employee or the ratio indirect to direct labor by industry, but they are just a starting point.

Going beyond is so difficult that I don’t know of any successful case. Any serious assessment of a company or factory requires visiting it, interviewing its leaders in person, and reviewing its data. It takes time, money, know-how, and a willing target. It means that the sample has to be small, but there is a clash between the objective of having a representative sample and the constraint of having a sample of the willing.

For these reasons, benchmarking is a more realistic approach, and I know of at least two successful benchmarking studies in manufacturing, both of which, I believe, were funded by the Sloan Foundation:

  • The first was the International Assembly Plant Study, conducted in the late 1980s about the car industry, whose findings were summarized in The Machine That Changed The World in 1990. The goal was not to identify the distribution of manufacturing practices worldwide but to compare the approaches followed in specific plants of specific companies, for the purpose of learning. Among other things, the use of the term “Lean” came out of this study.
  • The second is the Competitive Semiconductor Manufacturing Program, which started in the early 1990s with a benchmarking study of wafer fabrication facilities worldwide. It did not have the public impact of the car assembly plant study, but it did provide valuable information to industry participants.

The car study was conducted out of MIT; the semiconductor study, out of UC Berkeley. Leadership from prestigious academic organizations helped in convincing companies to participate and provided students to collect and analyze the data. Consulting firms might have had better expertise, but could not have been perceived as neutral with respect to the approaches used by the different participants.

The bottom line is that studies based on subjective answers from a self-selected sample are not worth the disk space you can download them onto.

Dispelling myths about manufacturing | James Manyika and Katy George

See on Scoop.itlean manufacturing

Myth 1. All manufacturing companies need the same things — low-cost labor, access to raw materials and markets, and a favorable business environment.

Myth 2. Trade and offshoring drove the decline in manufacturing in the U.S.

Myth 3. Manufacturing employment means assembly line work.

Myth 4. Manufacturing employment can someday return to historic peak levels.”
See on www.washingtonpost.com

The Putin Production System

In an earlier post we saw a message from Stalin to a factory manager that showed his way of motivating employees. Now Youtube has the following video illustrating Vladimir Putin’s approach to manufacturing:

The video was first posted on Youtube on 2/17/2012, when Putin was Prime Minister and running for President in the election that took place on 3/4/2012. The event took place three years earlier, and was reported in the New York Times on June 4, 2009. It happened at the Baselcement factory, which makes alumina, in Pikalevo, 150 miles East of Saint-Petersburg. The video was obviously not taken with a hidden camera; it was a deliberately staged event.

Putin comes to this cement factory, berates the managers for being unprepared, and “running around like cockroaches when I said I was coming.” He tells the owners that they are “unprofessional and greedy,” and then that this factory, which we didn’t know was closed, would be restarted “one way or another,” and without the owners if they didn’t cooperate.

One of the owners in the room is Oleg Deripaska, a rich businessman and political ally of Putin. Putin has an agreement in hand, that is apparently missing Deripaska’s signature, which he demands. The last touch, after Deripaska signs is Putin demanding his pen back, which seems intended as a counterpoint to the White House signing ceremonies where the US President gives away pens.

Seeing the confidence with which Putin passed judgement on manufacturing issues, I assumed it was based on his own extensive experience. The wikipedia article on him, however, only mentions 16 years in the KGB prior to entering politics.

BeripaskaIn the video, we see what appears to be a cheap nerd watch on billionaire Deripaska’s wrist. The same watch is prominent on his home page, and has to be there on purpose. If Deripaska has a Rolex, he keeps it out of the public eye.

Is it Lean’s Fault or the Old Management System’s? | Mark Graban

See on Scoop.itlean manufacturing
Blog post at Lean Blog :

“[…]The problem is the culture doesn’t change overnight. Leaders have years or decades of old habits (bad habits) that run counter to Lean thinking. They might be (might!) be trying to change, but people will still fall back into old habits, especially when under pressure.

I hear complaints (in recent cases) coming from different provinces in Canada that say things like:

Lean is causing hospitals to be “de-skilled” by replacing nurses with aides. Lean drives a focus on cost and cost cutting, including layoffs or being understaffedLean is stressing out managers by asking them to do more and taking nothing off their plateNurses hate Lean because they aren’t being involved in changes[…]”

Michel Baudin‘s comments:

In this post, Mark Graban explains how the leadership in Canadian hospitals is slapping the “Lean” label on ancient and counterproductive “cost-cutting” methods, and how the victims of these practices unfairly blame Lean.

This is definitely L.A.M.E., Mark’s apt term for “Lean As Misguidedly Executed,” and is found in Manufacturing as well as Health Care. Much of the article — and of the discussion that follows — is about what I call yoyo staffing: you hire more than you should in boom times, and lay off in recessions.

Of course, it isn’t what Toyota did, and churning your work force in this fashion not only disrupts people’s lives but is bad business. Hiring, training and firing repeatedly prevents your organization from accumulating the knowledge and skills it needs.

Mark makes the case that Lean should not be blamed for mistakes that have nothing to do with it. Other than raising consciousness, however, the post does not propose solutions to keep this from happening.

While there have been studies published on Toyota’s approach to Human Resources (HR), I don’t recall seeing much in the American Lean literature on topics like career planning for production operators.

In his comments, Bob Emiliani paints the current generation of leaders as “a lost cause,” and places his hopes on the next. He seems to suggest that the solution is to wait out or fire the current, baby-boomer leadership and replace it with millenials. I don’t buy it and, deep down, neither does Bob, because he ends by saying “While one always hopes the “next generation will do better”, it could turn out to be a false hope.”

Like everything in HR, generational change has to be planned carefully. The people who rose to leadership positions presumably did so not just because of bad habits but because they also had something of value to offer. And the way the baton is passed is also a message to the incoming leaders: it tells them what to expect when their turn comes.

See on www.leanblog.org

Working for Anonymous Funds | Bill Waddell

See on Scoop.itlean manufacturing
Vancouver island“There is a company I know well that will remain nameless that has about 300 employees, and they manufacture stuff on Vancouver Island – Just outside of Victoria, British Columbia.  The major markets for their products are gradually shifting from the Northwestern USA and western Canada to the Southeastern USA.  That puts them about 2,400 miles as the crow flies from more and more of their customers, but since crows can’t take their products to market it is actually a lot farther than that.

Closing their plant has never been an option.  They simply accept the fact that manufacturing on an island is never good, and being that far from their customers is a huge disadvantage, so they have no choice (at least no choice they are willing to consider) but to tighten their chinstraps and do that much better to overcome their geographic problems….”

See on www.idatix.com

What to Expect from Lean Manufacturing Consultants

How to select and use consultants is awkward for consultants to discuss, but it came up in a discussion started by Rey Elbo in the TPS Principles and Practice group on LinkedIn. On this topic, we can always quote third parties and, some years ago, I found the following strip in the pages of the Japanese monthly Kojo Kanri (工場管理, or “Factory Management”):

How to choose and use lean consultants

I understand that some of these recommendations may be surprising, and here are a few explanations from the body of the article:

  1. Do not hire cheap consultants, anymore than you would a cheap surgeon or a cheap lawyer.
  2. Use consultants who talk drills and wrenches and drills  rather than bar and pie charts. There is room in lean manufacturing for analysis resulting in charts, but mostly upfront, in setting a plan with top management, but 95% of the work involves the nitty-gritty details of shop floor life.
  3. Treat the consultant like a god. Follow recommendations rigorously and without challenging them.Defensiveness is self-defeating. If you don’t trust a consultant, replace him or her.
  4. The consultants should not do anything. For skills to take root in the organization, the work needs to be done by in-house personnel. This is the distinction between consulting and engineering services, and the idea is that Lean skills need to be permanently in the company.
  5. Get everything you can from the consultant in terms of ideas and recommendations. Pick the consultant’s brain relentlessly. If it takes being on the shop floor during the night shift, so be it.

Manufacturing is Making Things — Service isn’t

With services being the dominant source of employment in advanced economies, more and more consultants are turning to this area as the next frontier for Lean, and engaging in debates as to which of Manufacturing or Service has the greatest variability. The level of variability, however, does not strike me as the fundamental difference between the two.

It is more obvious: Manufacturing is about making things, while Service is not. In manufacturing, a physical object is the output. In service, if there is a physical output, it is only an information support, a licence, a boarding pass, a stamped form, a prescription, or a report.

High volume/Low mix and Low volume/High mix activities exist on both sides. In manufacturing, you have plants making 1 million identical electricity meters per year while others make 200 custom-designed machines and fixtures. In service, you have organizations that issue drivers’ licences all day, every day, and others that provide advice on interior design that is custom for each home and occupant.

Manufacturing needs the appropriate technology and management to make things, including expensive facilities, often with large, noisy, dirty, and even dangerous machines, and a  support structure for logistics, maintenance, quality, etc.  It attracts some people and not others, and the experience of working together in production creates a level of camaraderie that is rarely found in service… I could go on and on.

The consequence is that improving Service is a different challenge from improving Manufacturing. I never bought the notion that a system like TPS, developed to make cars, could be a panacea for all business activities, and this is why I remained focused on Manufacturing.

Whether Lean is an expanded or watered down version of TPS, I consider that it has to prove itself in every new domain, even in Manufacturing. In Service, it seems to help in hospital operations, and the crossover value of industrial engineering in this field has been established since Frank Gilbreth redesigned  operating room procedures 100 years ago.

Would it help in the organization of distribution centers for eCommerce? Perhaps, but it is not a foregone conclusion. Does Amazon use Lean? The closest I could find to a positive answer is one sentence by Jeff Bezos in an Harvard Business Review interview quoted by Pete Abilla on Shmula:

“I literally learned a bunch of techniques, like Six Sigma and lean manufacturing and other incredibly useful approaches.”

Amazon fulfillment center shown on Shmula

Amazon fulfillment center shown on Shmula

Unlike other Shmula readers, I can’t jump from this to the conclusion that Amazon are based on Six Sigma or Lean. Instead, what I hear Bezos saying is “We studied what’s out there, and went our own way.” And that way is a game changer in retail worldwide, worthy of study in its own right.

If You’re Going to Change Your Culture, Do It Quickly | HBR Blog Network | Brad Power

See on Scoop.itlean manufacturing

“The conventional wisdom is that it takes years to change a culture, defined as the assumed beliefs and norms that govern ‘the way we do things around here.’ And few organizations explicitly use culture as a way to drive business performance, or even believe it could make sense to do so.The logic usually works the other way — make specific changes in processes, and then hope that, gradually, the culture will change.

Yet some leading organizations are turning this conventional wisdom on its head. Consider Trane, the $8 billion subsidiary of Ingersoll Rand that provides heating, ventilating, air conditioning and building management systems. By focusing first on changing their culture, Trane has been driving results — and quickly.”

Michel Baudin‘s insight:

The article is supposed to be about any business organization, but the example presented is only about sales offices.

What do sales offices do? They communicate and negotiate with prospects to turn them into customers. They nurture relationships; attitude and teamwork are key to success at it. In sales, working on the “targeted behaviors of associates” is working on the process.

Manufacturing is a different. It is about production, not persuasion, and I don’t know of any successful change in manufacturing that would have been driven at the cultural level. When attempted, it quickly degenerates into the kind of exhortation and sloganeering that Deming denounced so vehemently.

I don’t know any manufacturing people who would be swayed by it. Instead, they need tangible, physical changes to the way work is being done, implemented with their input and diligently. Only the experience of improvement will change their perception of the work and the organization. Talk therapy won’t.

See on blogs.hbr.org

Manufacturing in America Infographic | U.S. Census Bureau

See on Scoop.itlean manufacturing
“Manufacturing plays a major role in our economy. According to the Census Bureau’s latest County Business Patterns, the manufacturing sector includes almost 300,000 establishments with 11 million employees producing goods that we consume domestically or export abroad. The nation relies on several key Census Bureau programs to track America’s manufacturing. The most recent year’s data from some of these programs are highlighted below.”

Michel Baudin‘s insight:

These are the official numbers about the place of Manufacturing in the economy, in terms of employment, geographical distribution, materials consumption, energy consumption, capital investment, value of shipments, and contribution to exports.

In the US, we are lucky to have government agencies that compile unbiased economic statistics, and make much of the raw data available on line.

If you want to know the valued added per employee of an industry, or its ratio of indirect to direct employees, you can get the numbers from the Bureau of Labor Statistics and the Economic Census.

As one would expect, the value added per employee is higher in semiconductors than in aluminum foundries. But the industry on the West Coast that, in aggregate, produces the most value added is computer assembly, and that, I didn’t expect.

See on www.census.gov