NC State of Business

The holiday season makes us think of others rather than ourselves. The feeling is summed up in the Golden Rule, “Do unto others as you would have them do unto you.” The corollary in manufacturing might be stated as, “Do yourself what you want your suppliers to do.”

I visited a medium sized manufacturing facility this week as part of a study tour to learn and experience first hand the problems and concerns of supply chain managers. I like to tour the plant and see the operation first hand and then listen to the supply chain manager explain his/her concerns about supplier quality, cost and delivery.

The manufacturing floor did not look like an organized and well lighted home improvement store or supermarket – it was a dark maze of boxes and work stations. It takes about five seconds after walking out on the factory floor to make a pretty good guess about the relative level of the quality, cost and delivery of the manufacturing plant. I guessed poor quality, higher costs and late deliveries.

Later in the office, the supply chain manager explained his concerns; poor and inconsistent product quality, increasing costs and extremely unreliable delivery from his suppliers. This he explained resulted in the manufacturing plant having to rework products, carry large inventories which in turn reduced his profits.

In the holiday spirit I made a simple suggestion; model in your manufacturing facility what you want from your suppliers. Does your manufacturing floor look and operate the way you want your suppliers to look and operate? Is your quality, cost and delivery the model of what you want your suppliers' to be?

This holiday season your manufacturing business might consider making a New Year’s resolution around the spirit of the manufacturing golden rule – “We will improve our own quality, cost and delivery to demonstrate to our suppliers what we expect from them.”

I have been sort of immersed lately in work to align our extension mission with the modern day concerns of energy. When fuel prices were more than double just a few weeks ago, many were ready to take to the streets. Demands were loud for any vehicle that did not use a fossil fuel derivative. Businesses had begun to send streams of workers out the door with pink slips. The end was near.

Where are we today? Gasoline prices approaching $1.50 per gallon…levels not seen in 5 years. And businesses? Well, let’s just say that we are still hearing the word “bailout” across multiple industries. I am searching the major news network headlines right now for an energy story without success.

We have now retreated back to our comfortable “sustainable future” energy discussions. Happy words like “green” and “clean” are now back in vogue. However, initial jobless claims are still at recessionary levels with no relief in sight. So I would say in business right now, the term “sustainability” is back to a more traditional meaning…the ability to sustain… in the absence of “green” dollars.

I guess I should get to a point. I believe that sustainability in business is more about a basis of operating efficiency and quality management than is accepted in green discussion circles. Productivity gains and continuous improvement programs protect the earth just as much as green roofs and use of bio-fuels. Lean manufacturing applications lead to less waste associated with production activities. Lower inventories result in less energy used to overproduce items not immediately needed by the customer. Cellular process flows reduce energy used in moving unfinished goods to stations in remote areas of a business. Quality management programs reduce errors due to inconsistency. Accurate order fulfillment processes reduce energy used in returned goods. Superior training programs reduce the energy needed to rework or reproduce bad parts due to careless mistakes.

Sustainable business strategies should include fundamental commitment to industry best practices as a foundation. It is not just use of green technologies that reduce environmental impact and save our planet. Bottom-line improvement methods are readily available and contribute tremendously to energy conservation. Give them a try and measure the effects on your carbon footprint.

What a mess, and who knows how long this economic struggle will last or just how bad it will be. We are seeing things that remind some Americans of the Great Depression, and there are no shortages of opinions as to why and what we should do to correct this. To some extent this reminds me of my old high school basketball coach. I know that may seem strange, but let me explain. Coach Brooks was not a man that used finesse and his coaching methods were really not very complicated or advanced. He did have a way however of getting the most out of the kids he coached, and was very successful in his coaching career. I remember during my first year playing for him, going into his office and seeing two signs that I have remembered and tried to live by for all these many years. Directly behind his desk and high on his back wall were the following notes:" Winners Never Quit, and Quitters Never Win";" When the Going Gets Tough, the Tough Get Going". So, what can that possibly mean in real terms for these "tough times"?

Well, for the businesses and industries that are trying hard to survive I hope it means that when the negative trends hit home, they react in a constructive and proactive way,or the "Tough get Going". Lean concepts and tools can be a major help in putting a survival plan in place. Almost everyone in these situations will do something and quickly. If they know lean, one of those things will be a hard look at the reduction and elimination of Wastes. We know that waste exists in all processes and that it comes in 8 forms and that is is present in good times and bad times. The impact during a economic downturn like our current state can be even greater and have much more serious effects. True waste elimination will have a quick and immediate impact on revenue in a positive way.

The Lean Delivery Team at IES, with more than 250+ years of Lean experience is a great resource to help our clients be among the survivors of this recession. There are no absolutes or guarantees, but quitting or not getting tough with the situation should not be options either.

Even in a Recession there will be Winners and Losers; lets be tough enough to be among the Winners!

At Thanksgiving time, in addition to the people and things that we appreciate in life, our thoughts turn to turkey, and of course, football.

Football has a strong connection to Lean Thinking. Alright, maybe “lean” is not a word that comes to mind when you think of the linemen battling each other in the trenches, but there are many aspects of Lean associated with the sport. Here are a few examples:

Visual Controls: Can you imagine a football stadium without a scoreboard, down-and-distance information, the game clock, and the play clock? How would progress be measured without a lined-off field (lines and labels) or the measuring chains (go-no gauge on 4th down)?

Value Stream: When you think about it, how much of a 3-hour long game is value-added (something occurring to change the outcome) vs. non-value-added? At best, 33% (60 minutes of playing time), but more likely, we would agree that there is much less value-added time to you as the “customer” (unless you consider the time between plays, halftime, and commercial timeouts, and lest we forget, coaches’ challenges, as valuable to you).

PDCA (Plan-Do-Check-Act): The coaching staff develops a game plan beforehand (plan). The players execute it on game day (do). The coaches measure progress against the plan during play – taking into account factors such as the score, game statistics, key injuries, etc. (check) and make adjustments as necessary throughout the game and especially at halftime (act). They grasp the situation by being where the action occurs (on the field, as opposed to the locker room – the “office”).

Setup Reduction/Quick Changeover: A few NFL stadiums are still home to both baseball and football teams (e.g., Oakland, Minnesota, Miami). During September, the field needs to be converted back to a baseball diamond after the game.

Safety: Often called the “6th S” in business, safety is paramount to football operations. Helmets with high-tech padding material, facemasks, chin straps, and all sorts of body padding are employed as “personal protective equipment” to reduce the likelihood and impact of serious injuries that can occur in such a violent, fast-paced environment. Just like in other workplaces, football teams can’t afford to have many injuries, or their ability to execute their game plan will be seriously hindered. Just ask any team that has lost their star quarterback!

Along with your turkey, make good use of North Carolina’s official state vegetable by enjoying a nice sweet potato casserole. Then sit back and enjoy some football with a side helping of Lean Thinking.

I recently performed an experiment for an excellent manufacturing company in North Carolina that I will call the “model” plant. In the model plant sales were 14 percent higher than in the previous year, and delivery times are down to days from eight weeks. Savings from improved business processes have meant that in spite of rapidly-increasing prices for materials and services they did not increase prices for four years.

This excellent business performance is the result of years of building, growing and refining a “thinking production system” where employees are active problem solvers and daily contributors to the continuous improvement of the internal operations.

As an experiment of how IES might assist the model plant improve even further, I independently visited three of the model plant's critical suppliers. The three suppliers were selected using the non-scientific criteria of, “if these suppliers burned down tonight, our company (the model plant) would shut down tomorrow.”

I was shocked by what I saw. The model plant was world class but its suppliers were "stone age" manufacturers. The three critical suppliers were meeting the needs and requirements of their customer. But what I saw and experienced at the suppliers was the old “leave your brain at the door” production systems with high inventory, significant rework, paternalistic or domineering management and little to no apparent continuous improvement. In other words the suppliers worked very hard to provide the quality, cost and delivery to their customer, but at great cost and high risk. Any employee from the model plant would have been horrified at the working conditions that their supplier brothers and sisters employees suffer.

The moral of my story is that North Carolina manufacturers are just becoming aware of their extended value stream, which includes their suppliers. The success of your business depends on the systems in your suppliers. In our challenging economy the winning manufacturers will be those that view their suppliers as part of their production system. Leaving one part of the system in the “stone age” is a business risk that must be addressed.

The story has a happy ending as the model plant recognized this risk and is working with their suppliers to help them understand and implement their own “thinking production system.”