Kaizen 2009 and Beyond: How to Make Things Better?

Kevin Meyer over at Evolving Excellence brought a Factory Tour to our attention: Leatherman Tools.

These are really great, high quality products, although I've always wondered why these things were so darn expensive. Some may say price gouging for desirable products, or greed, etc.

It is clear from this video that the incredible overhead needed to support the current business plan is huge!

I have to say that the coolest thing I saw was the "finger socks" on the woman's fingers as she sorted out parts. While sorting and inspecting after parts are made is a waste, I'm sure the relief a worker gets by not having sweaty gloves on all day is much appreciated. I think Mr. Leatherman could start there on his continuous improvement journey. The first improvement was making the job more tolerable. Now we have to ask if the worker "likes" sorting parts, what is the purpose of sorting parts, etc.

According to Mr. Leatherman, in his 25th anniversary letter, Leatherman Co. sold 1,000,000 units in 1993. I didn't catch the amount on the YouTube video, but on an updated video at the Leatherman website, 12,000 units are hand assembled per day. That is roughly 2.5M units per year. I don't know about you, but I wouldn't want my employees going home to tell their kids that their job for 15 years is looking for blemishes and nicks on millions of can openers. And, by the way kids, you can look forward to this job when there are millions more to sort! It is no wonder kids don't want to move towards manufacturing today! Can you imagine what goes through their mind when parents tell their children about their day?

Isn't this the heart of continuous improvement? Getting people to be proud and dignified in their work? Moving forward in 2009, we need to think about how to achieve this higher level of business performance. The people working at Leatherman can't work any faster than the competition in developing Asian countries. Well maybe they can, but what is the point in that - is that a business strategy? There are a few things we can do to help the U.S. compete:

1) Move towards a consumed income tax that is one time at one rate for both individuals and businesses. This is in stark contrast to the current progressive tax. While we are at it, let's eliminate capital gains. This will provide long term financial incentives to develop people rather than hold them hostage to current business models where they are required to simply work as fast and hard as they can. We all know what this leads to - people working hard (sorry, sorting parts) everyday, paying income tax, and then paying the corporate taxes passed onto us through higher prices. A Fairtax study suggests that the average price of goods would fall by 20% if income and capital gains taxes were eliminated. In other words, more people would buy more Leathermans and their profit margin would not change. Win-win.

2) Expensing. Allow business to expense the full amount of purchases immediately vs. holding them hostage to the additional taxes incurred through depreciation. This will encourage investment in new equipment. Judging from the video, Leatherman would likely invest in metal forming and assembly technologies that free people from being bound to machinery that is over 40 years old. On the other hand, in the new video, he is paying additional tax on that nice Trumpf laser system for ten years due to depreciation rules. Again, Asian companies have the same, or more up-to-date equipment than seen in this video. From a technology perspective we are on a level playing field, so the labor and tax advantage goes to the competition.

3) Adopt and adapt continuous improvement principles to each enterprise value stream. The need here is to use the financial leverage gained through lower taxes to invest in developing people in order to make the business better. If people were developed to be their own CI consultants, the company would be better off. If there were financial incentives to develop people because the business growth demands it, this would attract better employees. Who wants to sort parts? I thought so. Who wants to think of better ways to clean the parts? That's better.

TWI Roadshow with Don Dinero

Looks like folks in Indiana get a chance to spend some quality face time with a great TWI master, Don Dinero. Many TWI Blog readers know that Don trained me in Job Instruction and Job Methods a few years ago. I've met few people that have a deep understanding about TWI like Don does, he doesn't feel that this is just another Lean training program, but a way to get people to think and behave Lean.

Don takes TWI program standardization to the next level - his TWI J programs are very standardized, but like anything else in this world, a teacher that is passionate about teaching serves his students well and knows how to adapt to different industries and situations while improving the overall program.

Don brings his life and Lean work experiences into the training, so that students can see how easy it is to apply the J-skills accordingly. An optional "deep dive" lunch is on the itinerary as well; this is no surprise as Don can't stop thinking TWI!

If you get a chance to attend this great opportunity, I highly recommend you do so with Don.

Here We Go!! Let the Lean Madness Begin!

Toyota projects their first loss in 71 Years.

Now all of the ones that told us Leansters, "told-ya-so" can start thumbing their noses.

What is Human Relations? 1948 vs. 2008

This excerpt from January 1948 Harvard Business Review is intriguing, if not wordy. The author, F.J. Roethlisberger of the Harvard Business School, was also an advisor to the TWI Service during WWII. He amusingly titled this article, “Human Relations: Rare, Medium or Well-Done?” Roethlisberger made three points in the state of human relations: 1) What does it include, 2) Is it a science, and 3) Has it principles? When I read his three points on human relations, I am reminded of the current debate today regarding human relations, lean or other fields of management that are under a constant state of change and intense debate on “how to do it”. A search on Amazon using “human relations” yields 93,345 results – opening the following question:

“Is there any sense to how we as a nation are trying to achieve our organizational and individual goals, or are we changing for change’s sake - constantly reinventing (and spinning) our wheels?”

Excerpt from “Human Relations: Rare, Medium or Well-Done?”, HBR, 1948

“First, what does it include? To the growing body of data that is resulting from the study of concrete situations of human beings at work, to the point of view and methods characteristic of such study, and to the results obtained therefore, both in terms of more explicit skills and of better theoretical formulations for adjusting to and administering change, I give the name of ‘human relations’. Some of the problems with which it is concerned are: (1) general problems of communication and understanding between individuals, between individuals and groups, and between groups under different conditions and varying relationships, (2) general problems of securing action and cooperation under different conditions and in varying formal organizations, and (3) general problems of maintaining individual and organizational equilibrium through change. Its methods both from the point of view of research and of taking action are clinical and diagnostic.

“Second, is it a science? Depending upon our understanding of the things to which the word ‘science’ refers, or answer can vary. Human relations is certainly not a science as we think of the more exact sciences in the sense of: (1) a body of techniques or (2) a body of definitive knowledge about people at work contained in well-articulated theories, laws and principles. Certainly it is too young for that. Perhaps – and this is my personal opinion at the present – it will never attain that stature. However, it is a ‘science’ in the following senses: (1) it has a method and a useful point of reference for looking at a particular class of phenomena in order to seek for simple uniformities among the facts in that class of phenomena. (2) It can ask simple and clear questions in order to direct its observations. (3) It can seek for those clusters of things which recurrently tend to appear together in experience – like a ‘syndrome’ in medicine, a clinical entity (e.g. the measles) which people who have an intuitive familiarity with the facts in a given area learn to recognize. (4) It can develop simple ‘theories’ and ‘hypotheses’ which it has derived from its observations in order to seek for new observations and to illuminate practice.

“Third, has it principles? Words being what they are, perhaps many readers will be shocked to learn that human relations has no ‘principles’; but that is my opinion of the matter…principles are merely useful ways of synthesizing facts, of picturing facts, of summarizing facts and theories…they are merely convenient tools of synthesis – useful for certain purposes and under certain limits. In this latter sense, then, it is not strange but obvious that human relations, being such a new field and having yet too few facts and well-established theories, should have few, if any ‘principles’. What is needed is more practice of human relations skills and less talk about verbal principles. The former might help to integrate the world; the latter, as history seems to show, has only succeeded in dividing it.”

Measuring Lean Results - Re-coupling HR & Production

In lean, we are used to measuring tangible things: distance traveled, inventory, number of steps, defects and suggestions. I often get questions about how HR can apply lean thinking to their job.

A simple example comes from the TWI Job Relations program:

"Wonder what the people who say JR benefits are intangible, will think of this: 'We were able to reduce the frequency of our greivances by at least 25% and the severity by 90%. We have applied the term frequency to the number of grievances which reached Step 2 of our grievance procedure, and severity to those which reached Step 4 of our greivance procedure. Following the introduction of JR, we experienced a period of six months without one greivance coming to Step 4."

And another from the TWI Job Instruction program:

As to training through JI, "50% production increases, cost reduction of 20%, reaching of production efficiency in from 10% to 75% less time"

Toyota - Who's Going to Play with Me?

From CNN Money online: Why Toyota wants GM to be saved.

This article is fairly predictable, but gives you some idea that makes you wonder: has Toyota thought about the problem of not having competition? The whole DNA of the company is geared around looking for problems and then doing everything they can to not let those problems arise through preventative countermeasures. If GM is out of the picture - what problems will this pose?

Surely, a downturn in the economy is affecting them but with less effect due to their strategy to free up cash for the long haul. But with your biggest competitor gone? To start, capacity will be way off...the remaining competitors will either need to scramble to pick it up or hold off depending on economic conditions.

The U.S. market is the largest for the "Other Three", Toyota, Honda and Nissan. It stands to reason that they do not want the economy to slow down any further as well, which will undoubtedly happen if GM and Chrysler can't pick themselves up or get a bailout from us. I imagine the sensitivity of their systems will be amplified and large changes will need to occur within the "Other Three". I can imagine some further capacity shifts, similar to moving the Tundra capacity and filling it with Prius production earlier this year. Any other ideas out there?

Seasons Greeetings from the TWI Blog

“It is more blessed to give than to receive.”

As individuals we all believe this, but as groups we take the defensive. As individuals we give everything we have to those few nearest to us, but as the circle widens we become possessive and belligerent. As individuals we are courageous and stand for what we think is right, without hesitation. As members of a group we fight to preserve the group though it destroys the individuals who built it.

With Christ the dignity of the individual was born, but the struggle still goes on to recognize the individual within the group.

Once again, on Christmas Day we face this age-old problem with confidence that some day, notwithstanding centuries of struggle, groups of individuals will learn the importance of the dignity and true worth of every individual soul, for whom the very existence of any group is but to serve.

The TWI - Job Relations card says, “People must be treated as individuals.” This is both good Job Relations and the Christian way of life.

May all our Christmas gifts, given and received, remind us of the parts we play as individuals within the group that giving will be the rule some day among organized groups, industry, labor and nations, as it is and always has been among individuals.

C.R. Dooley,

Director, TWI Foundation

Taken from the TWI News Letter, December 16, 1944

Finally - a “Right” Answer to the UAW-Big Three Question

A December 1 issue of BusinessWeek featured and interview with Carlos Ghosn, CEO of Renault and Nissan, conducted by Maria Bartiromo. The interview centered on his thoughts about Detroit and the future of the auto business. Ghosn was neutral on the bailout option but firm that no buyout of Chrysler by Nissan/Renault was in the future. Perhaps Maria Bartiromo is a broker for Chrysler; she was very persistent:


Bartiromo: “Would you consider buying Chrysler outright?”


Ghosn: “No. It’s out of the question.”


Bartiromo: “Can you envision any combination with Chrysler?”


Ghosn: “You’re going to need to line up cash; [ ] for buying assets, working capital and investment. We’re still in an economy where credit and financing are hectic and unpredictable. Some people tell you it’s getting more normal [ ]. But frankly, we are very far from normal financing conditions. I don’t think you’re going to see anybody taking any initiatives.”


Ghosn predictably defends his American counterparts in the face of our judge-and-blame culture:


Bartiromo: “Isn’t part of the problem in Detroit management-related, and hasn’t there been a failure of imagination by U.S. carmakers?”


Ghosn: “I don’t think so—no. I’m on different boards, and I talk to my fellow CEOs in energy, utilities, commodities, etc. Everybody is facing the financial drought. A lot of people are cutting back investments even though they are in very healthy industries because they are scared they won’t find the financing.”


Perhaps Ghosn’s wisdom is best realized in his “don’t judge, don’t blame” response to the following question:


Bartiromo: “Are unions killing the American auto business?”


Ghosn: “Frankly, I don’t think the question is unions. The question is: Do you have the flexibility to operate and be competitive? If a union helps you be flexible, then the union is an asset. If the union forbids or handicaps this flexibility to operate, then you have a problem. We have unions in France and Japan. If you can reach an agreement by which unions help you be flexible and [respond] to the market, in a certain way they become an asset.”


This answer seems to me to be a great example of lean thinking: what problems are being solved or prevented by the presence, structure, philosophy and behavior of the unions? If they are not solving a problem, we need to understand the purpose of the union. Another important question to ask here, perhaps not of Ghosn, but of ourselves is how much hidden involvement from the government complicates management-labor relations?


In a recent post, I offered up a video about Ford’s advanced auto manufacturing plant in Brazil. Proponents suggest that the lack of militant U.S. unions are the key to success in this plant along with a pro-business government. Some friends of the TWI blog, after having seen the video, have suggested that we can’t say this plant is lean because we would really need to put our feet on the floor to gain a better understanding of the Ford/Brazil situation. This is true, but in the video, you see suppliers working on their sub assemblies in the Ford plant. This is more or less a foreign concept to us in the U.S. and demonstrates that Ford management is capable of creating new innovative production ideas in management. Whether or not Ford/Brazil is profitable with this model is an open question here at the TWI Blog, if anyone has some insight to this question, it would be nice of your to share.

Ford's Most Advanced Factory - NOT in the U.S. - WHY?

My friend Don Dinero sent this link to me with the following comments:

"I found this video very interesting and informative given the current auto crisis. I always wondered why Detroit seemed to be unable to pick up Lean. As it turns out, they can. Just not in the USA. Makes you wonder what the future holds."

Ford's Most Advanced Assembly Plant is in Rural Brazil

Six Sigma Stigma in the Way Back Machine: September 1995 vs. 2008

Funny how times have changed. The Avery Point Group (National Recruiting Firm) reports that Lean talent demand now exceeds Six Sigma demand based on their annual study.

Avery Point Lean Sigma Talent Study 2008 Results

The study also found, for those companies seeking Six Sigma or Lean talent, fully 50 percent are looking for practitioners to have both skill sets. Well it took them long enough to figure that out. Lean is often billed as an "observation" based improvement program in stark contrast to a Sigma "data-driven" improvement program. Practitioners of both camps could use a little help from each other and become multi-skilled. We ask people in a workcell to cross train; what's good for the goose is good for the gander!

Back to this perceived decoupling of Lean and Sigma. Lean requires us to deal with the facts, but that doesn't mean we should think of them as lacking data- like attributes. One of my first projects in lean, about 10 years ago was dealing with a complaint from the GM about people traveling back and forth from the floor to the offices. After observing the symptoms for some time, I found that the travel was due to inconsistencies in the build package assembled by the engineers. Assemblers were traveling back and forth to get corrections.

The problem was difficult to convey to people: non-standardized approaches to the job of building engineering packages was causing errors, thereby causing the travel needed to get the corrections made. The assemblers saw it as a step necessary to get their job done. The engineers saw it necessary in order to get the correction made and not have the errors arise embarrassingly in morning meetings.

It wasn't until I observed the problem, figured an average travel time for correction and created a "toll booth" - that people began to take notice. Each trip was equal to about $7. Directions were simple: every time you go through the toll booth - check the sheet under the reason for your toll - a simple pareto in disguise.

Within a couple of days we had several hundred "dollars" on the tool booth check sheet posted next to the office door. After two weeks, it was easy for the engineers to justify the effort to standardize their process. No convincing was needed, they convinced themselves just by "paying" the toll. (joke of the day: a friend used to tell me he was so poor he couldn't afford to pay attention.)

Today, I've learned that part of Lean is about snooping out problems with your intuition based on observation but your plan for improvement and actions MUST be grounded in facts and conclusions derived from those observations. Check your facts and test your assumptions. This approach will lead to find more problems. Simple examples like that above can be done by anyone, but this is the problem isn't it? Not everyone is encouraged to think this way. We need to recouple this fact based thinking with our observation and common sense. i.e. Sigma+Lean.

A need for the statistical quality skills of six sigma needs to then be transferred to the shop floor where they become useful everywhere to tackle the many problems found. Stop sweating, we don't need people figuring Cp or sigma quality levels, I'm talking about simple quality tools; tick sheets, paretos, time studies, process maps. The idea here is that when you can tie the facts around the problems and solutions to human behavior & ultimately to the management systems that WE have created and maintain...you are at the next level. The best place to do this is on the shop floor where we can see the actual behavior.

But that isn't good enough for us consultants, engineers and managers. Nope, we've got to categorize and specialize and pigeon hole people. YOU are a Lean guy and SHE is the Sigma gal. This older article from fast company gives us a hint of how we look for the next best thing without fully understanding the basics.

Read on...Six Sigma Stigma - Summary: Toyota doesn't use statistics in their analysis? ;)

Suggestions for Cutting Costs at the Big Three

“We must eliminate every unnecessary cost in every aspect of our business,” Chrysler’s chairman, Robert L. Nardelli, told employees by e-mail on Friday.

In my experience, the devil is in the details. Chrysler has shut down some plant cafeterias and their executive restaurants. (I don't even know what to say to that) GM is shutting down elevators early, but their sales execs are working till 8:00 pm and can't walk the 39 flights of stairs when they are ready to leave. Maintenance and training budgets are being scaled back. What is bailout prone exec to do?!

These are not real cost reductions. In lean thinking, ideally, cost reductions are permanent and can be passed along or shared by all stakeholders. Eventually, Chrysler will open their cafe. Someday, those elevators need to be turned back on. A machine WILL break down. Parts will need to be replaced. These are NOT cost reductions in the context of long term continuous improvement.

I think the first step to understanding is to ask: what does cost reduction mean and how do we make it permanent then? In my opinion, it doesn't mean grabbing a red pen and slashing your way through the budget to make the bottom line look black for a given period; that is a profitability approach and doesn't address the long term. Real cost reduction means involving each and every person in the company, asking and encouraging them to put forth the effort to rethink how they do things everyday - so that the result is better in terms of cost, quality, safety and so on.

So, its your turn. If you were to advise Mr. Nardelli and his counterparts at GM and Ford on this matter: What would you suggest they consider cutting? Keep in mind that everything is on the table: "eliminate every unnecessary cost in every aspect of their business"

Any suggestions? I'll start. How about the time and resources required to purchase a vehicle? Do I need three salespeople working on my sale? Do I really need to resort to bringing my toddler in to the showroom so I can put him and his muddy shoes in the convertible so I can move things along more quickly? Why the unnecessary costs and aggravation? By the way, this was at a Nissan Dealership. We are talking culture here folks! Can we possibly rethink the method of selling cars and weigh it against the actual customer satisfaction index and perceived value of said method that customers are forced to endure?

Your suggestions for Mr. Nardelli, Mullaly and Wagoner, please!

Special Norman Bodek & LeanBlog Charity Auction

Mark Graban of the Lean Blog has a real special event happening this week and will end this Friday, December 19:

Norm Bodek Charity Auction

Proceeds will go to the Josie King Foundation, seeking to prevent medical errors which are the fourth leading cause of death in the U.S.

Thanks to Mark and Norm for bringing this awareness to the Lean Community!

Grasp the Economic Situation - The Grandfather Economic Report

History has a funny way of repeating itself. I ask all of you to take a look at the following website with a compelling and exhaustive data that may help Americans grasp the economic situation we face.

The Grandfather Economic Report

You will not get through this in one sitting. Bookmark it. I'm putting up a permanent link on both my websites.

Picture Speaks a Thousand Words

Literally.



The image above is created for free at Wordle.net. Thanks to Dwayne Butcher of Lean Accounting Summit for bringing this cool visual tool to our attention...it's easy and you can customize the layout and colors of your creations. Perhaps use this for Lean Promotion posters and presentations around your organization or on your internal web?

Quote of the Day, Year or Decade?

Don't expect to get any more "quotes of the day" (QOTD) from me...there are a gazillion websites out there serving that purpose. With out further delay, here is quite possibly the TWI Blog Quote of the Next Three to Five Years (QOT3Y), or until I find another one that catches my eye:

"If you can't serve as a good example you should at least serve as a terrible warning."

I like this quote. Someone sent it to me regarding bad leadership, but I think you could apply this to most anything. I'm in a bit of a stormy mood with the weather up here in the Northeast: -5 F for the past two days and 45F this morning...I refuse to watch the weather reports up here this time of year so I have had no warning of this 50 F swing...so as I turn off the thermostat this quote is sitting well with me this morning. ;-( <----cantankerous Vermonter

This quote reminds me of a way I think about Standard Work or a Job Breakdown Sheet although I admit it, in an odd sort of way. If the JBS isn't a good example of best practice, then it should serve as an indicator of terrible problems in the future. For example: Often times when writing breakdown sheets, or if you are watching them do the job, it is obvious that people know how to get the job done. When asked why it is done that way, the person may say, "I don't know, I just have to do it that way." This type of answer should be our indicator that something is wrong and could (no, will) fail in the future - a terrible warning.

If I've learned anything from key points in standard work it is this: they don't always burn you, but you will get burned. Remember that key points are quality, safety and best practices. A trick that welders use when their mask isn't handy is to close their eyes momentarily - but the weld flash through the eyelids will catch up to them eventually. Key point: wear your mask. This one is obvious. Most are not.

Another key point may be a timing action. I watched a person foul up a control sequence because of other distractions with the machine once while threading some new material, only to have to re-thread after cycle start. Asked when how often that problem happens, the reply was, "once in a while, when things get busy." The result is double the work, double the downtime, extra scrap, frustrated workers and managers. Key points, people.

Key points are the quintessential time bomb, waiting to go off and we are usually ignorant of these little monsters, because we don't take the time to notice them in plain sight. This is the real "Learning to See" waste skill that anyone can use in any situation. There are hundreds of thousands of little QCDSM time bombs in your operation right now, which one is going to blow next?

And don't get me going on how this quote does apply to our current situation of leadership at the business and government levels!!!

Money First - Smart Later

Regarding the Auto Bailout - The Christian Science Monitor gives us some inside scoop on what to expect...politics as usual:

Full Article

Summary:

Outgoing President "saves" them from impending doom by handing over our money...sorry, printed money we borrowed from only God knows who...three months later, Congress and presumably the incoming President will set up the heavy handed regulations on how to spend it.

So, my question is this: what does the auto industry do with this during the first quarter of the New Year? I wonder how financial analysts view this development? Does it instill any confidence that the Big Three are going to shift their thinking about how to do business?

I'm going to go out on a limb here...expect history to repeat itself.

Job Loss Induced by Government Corruption

Yesterday, I chased some rabbits down some side trails and sarcastically picked on the Tribune Co., the hypocrisy of government bailouts, and related job loss. Why not bailout an integral part of mainstream media that tends to hide corruption in the government? They are losing people that protect them!

Well, here is a follow up story related directly to the Tribune Co.

Apparently, the Illinois Governor, Rod Blagojevich, who was recently arrested on corruption charges threatened to withhold state assistance in the sale of the Chicago Cubs from the Tribune Co. unless they fired editorial staff that covered corruption in the Illinois Governor's office.

"A statement by U.S. Attorney Patrick Fitzgerald and FBI Special Agent-in-Charge Robert Grant said Blagojevich and Harris 'allegedly conspired to sell U.S. Senate appointment, engaged in pay-to-play schemes and threatened to withhold state assistance to Tribune Company for Wrigley Field to induce purge of newspaper editorial writers.'

"However, the Tribune was also named in the affidavit because tapes allegedly play Blagojevich directing Harris to inform the newspaper's owners and advisers that "state financial assistance would be withheld unless members of the Chicago Tribune's editorial board were fired, primarily because Blagojevich viewed them as driving discussion of his possible impeachment."

"The Tribune Company, which declared bankruptcy on Monday, owns the Chicago Tribune and the Chicago Cubs, and had explored the possibility of obtaining assistance from the Illinois Finance Authority as part of the effort to sell the Cubs and finance the sale of Wrigley Field."

O.k. sarcasm back on for a moment and I promise this is the last of politics for awhile...I say let's have the Government be in charge of our Healthcare program! It will be so efficient, fair and effective!

Sheesh!

Publishing + Baseball = Bankruptcy and No Value Added

Here is an interesting article...

Tribune Considering Filing for Bankruptcy Protection, WSJ Says

A couple of things come to mind:

1) How many jobs have been shed by this member of the "mainstream media"? It's easy to pick on manufacturing, but this article fails to report on how "Big Media" is crushing the American dream...sorry for the sarcasm.

2) I'm failing to see how ownership of a Major League Baseball team taps into the core competency of a publishing company, or vice versa for that matter. Disclaimer: I don't have an MBA from Harvard.

3) The current credit crisis is preventing auto finance companies to lend. It is also preventing advertising revenue from filling this publisher's coffers. Why not bail them out?

New LIFE Magazine Photo Archive on Google

From time to time, you will see a photo of some really obscure black and white photo from WWII on this site or at the TWI Service.

I was looking for another oddball photo and stumbled across this newly added archive on Google. Thousands of photos from LIFE Magazine archives have been digitally imaged and made available to all.

A tip for searching the archives - in the image search window just add the following phrase after your search term:

source: life

E.g. if you want to find pictures of Elvis from LIFE archives just enter the following into the Google image search bar:

elvis source: life

Enjoy!

Working in the Standard Work Cycle

While on the shop floor I was looking at a scrap trend chart on a QCDS board, a look alike in David Mann’s book – Creating a Lean Culture. I was curious why the trend line seemed to have certain patterns to it, so I asked the team leader some simple questions:

Q: “Hi Mindy, what do you use this sheet for?”
A: “I don’t really use it so much. We are just responsible for filling it out.”

Q: “O.k., can I ask you what do you make of these numbers on here?”
A: “Well that basically tracks scrap that we throw away – and it really only happens in one place on the line.”

Q: “Can you show me where that happens?”
A: “Sure, right over here. See, if this part isn’t aligned correctly, we usually have to rework it. The ones we can’t rework are scrap, that is what we record on the scrap sheet.”

Q: “Why is it that the part is not aligned correctly? Can you show me how this could happen?”
A: “Yes, see how I can do it this way, or this way? Both ways give us a problem.”

Q: “Does everyone know this?”
A: “Well, most everyone figures it out after a couple of tries. It is pretty obvious.”

Q: “Right, but you have a lot of turnover because of temporary labor and demand, correct?”
A: “Yeah, it seems like I’m always retraining people.”

Q: “Do you prefer that they learn this problem during training, or on their own.”
A: “Well, I’d like to show them during the training, but the Job Breakdown Sheet needs to be updated. See? (pulls out the sheet from training book) The key points aren’t clear and the reason why we do this could be clarified as well. I just wing it and explain it as best I can.”

Q: “If your training were better, do you think any other problems could be worked out?”
A: “Actually, this part of the job is one of the slowest because it does require the person to do the alignment. There are guides in place, but if the guides get worn out, as they sometimes do – then it takes a little longer to do the job. So, people are waiting and it is sometimes hard for this person to keep up. I’ve even noticed that we make more mistakes when we try to keep up.”

Q: “Would it be helpful if we figured out what the right key points are here and improved this JBS?”
A: “Yes, let’s do that.”

A simple conversation. The key points to this type of follow up are:

1. Go and See the actual situation.


2. Get the Facts by using a questioning attitude not a judgmental one.


3. Grasp the situation by focusing your questions on the process.


4. Set your expectations. Offer any help you can but make sure the person who owns the process (NOT you) is making the actual improvements.


5. Follow up. Ensure that follow-up training and any adjustments are made standard: in this case, a change was made to the JBS and all people had to be “re-trained” in the process. In reality, for those that know how to do the job, they simply reviewed the changes and the team leader monitors for standardization.\

Last lesson learned: don’t copy things out of a book unless you are actually going to use them. Not to sound too critical, but a lot of resources have been spent updating a trend chart nobody uses. If it doesn’t serve an immediate purpose towards solving problems in the workplace, it is not worth the paper it is printed on.

Note: Many of you are reading this thinking...why didn't you just mistake proof the alignment of the part? Or is the part needed altogether? Good questions. In the past, I would have jumped directly to this action as well. How do you think this would affect the thoughts and behaviors of the team leader and her people working in the area?

My last question to readers is this: once I establish the mindset of standardization with this team leader, what do you think my next step will be?

Toyota Production System on Fox News

Newt Gingrich weighs in with a comment on TPS:

http://www.foxnews.com/video-search/m/21595953/big_three_plea.htm?pageid=23039

The Industry Standard in Officiating

A colleague of mine forwarded this great article to me today. It is titled, “Set a Standard” and can be found in the December issue of Referee magazine. In this article, we see a lot of parallels to the case for setting standards in manufacturing: expectations, accountability, evaluation and improvement.

What I found most interesting about this article was how the NHL’s vice president and director of officials Stephen Walkom handled the difficult task of creating the standards in the first place. His particular challenge was different: 67 officials make up the NHL officiating staff and ALL of them want to ref in the Finals.

Walkom found that “no two officials enforced the rules and interacted with the players and coaches the same. It seemed like all of them had their own well-intentioned style that left the players and coaches guessing.”

Funny, but in every single Job Instruction session I conduct, I find that no two people do the same job the same way. In fact, the number of people in the room often equals the number of different methods to do the same job. To compound that problem, most people insist that it is up to the individual to figure out their own best way. The way I handle this is to let the group work out the best way while working within the boundaries of QCDS requirements set by the company. The result is always an agreed upon standard that the workers themselves, those most familiar with the job, created and now own.

Walkom employed the same approach with his officials in a workshop. Read an example from the article and you may see how powerful this technique really is in creating a firm standard:
“They did a workshop,” he explains, “and from that workshop they broke it down in three simple categories because I believe simple is best.

Within those three categories we said, “OK, let’s define what each of those three categories are and do you need all of them? Do you need full adherence to all of them to be great at officiating, to achieve excellence?’ And the answer from the room was, ‘Yes, you do.’ Then the next step was, ‘OK, if that’s the case, now we will observe you to those standards.’

They defined each one of them, and although it’s not a lot of words, it say an awful lot. A guy would say, ‘Well, I’m not a strong forward skater.’ Then you’re not at the NHL standard, because you said as a group collectively that you need to be a strong forward skater to be able to work in the National Hockey League. ‘Well, my judgment is great. I have awesome presence.’ Yes, you do, and you might survive the game, but to be great – to be great consistently – your team said that you needed all of these three components, and you needed them working in unison.

“We took the feedback from those guys who really know what’s going on on the ice, and that’s how we judge our group coming up as well,” says Walkom. “Our whole scouting system is based on those three components, and that way we believe that we won’t hire and hope; we’ll know.”

This last comment really hit home with me when relating to standard work and job instruction. From the JI training we learn: "Don't let training happen by accident."

I think many people feel that standards take a lot of control or at least freedom from their job. But when we talk about control, what we are talking about is knowing the process is in control, not hoping that it is in control. Walkom has shown us a fairly simple of way to know things are in control: involve the people who know the job the best.

Of course, there is the follow up element of this program and apparently this is working so well for the NHL that Walkom can mike up his refs, record clips of a pair of refs in a game and use those clips as training aids for review of the standards with veteran refs and those coming up through the system.

There are some troubling things about Walkom’s approach from a manufacturing perspective, particularly the judging part. But the referee’s reputation depends on both physical ability, judgment and interpersonal skills on the ice. He must create the value, nobody or nothing else will, so Walkom’s group must have clear standards to judge him against.

So, don’t get all excited out there, you command and control managers. You know who you are! I’m not advocating an approach to take control of people through standardization. The outcome is a little different in this example than something we are used to. What is interesting here though is that the practice of having people that do the work take control of the standards ultimately brings better control to the system as a whole.

Can Lean Grow Your Business?

Here is a source discussing this very question: Market Watch

I find this to be article and the opinions of the consultants to be on target. For example, if flexibility is built into the process here domestically, this gives your business a distinct advantage over Chinese competitors.

Example: Natural disaster areas in the U.S. In preparing for events, homeowners need many essential materials - tools, tarps, plywood, nails, flashlights, batteries, etc.

Being able to respond to a spike in demand due to disaster in under one week is a huge advantage over a +4 week on-the-water time from Chinese suppliers.

In order to do so, your manufacturing house needs to be in order. Processes need to be stable, standard work in place, low WIP inventories, etc. We often get the selling part down cold - but the areas that businesses typically fail in is regarding the commitment to JIT and standard work.

Job Instruction is extremely helpful in getting people to quickly establish a standardized work routine that creates stability in the JIT process. Remember, in this market your sales people are selling more than just a low price product. It's all about quick turnaround, high quality and flexibility. So, your process better be able to deliver.

Lean Book - Factory Man - Relevant to today's Big Three woes

Jim Harbour, founder of The Harbour Report and auto industry insider is releasing a book in February, published by SME. Members get a discounted price for $26.

I've pre-ordered mine and will share my book review here in February!

Factory Man Press Release

Next week, I hope to have finished Lean Hospitals by my blogging friend Mark Graban, of LeanBlog and will post my review for that here as well.

UAW starting to accept "shared sacrifice"?

Rumors are abound in Detroit that the infamous (at least outside of the UAW) Job Banks could be eliminated as an effort to revive the auto industry during the credit crisis.

A full elimination of the Job Banks would not only increase productivity but actually be a positive sign of management-labor relations. The Big Three and the UAW should move forward with this effort to begin really squeezing out waste in the system. After all the Job Banks program is over 40 years old now and the reason for its creation is now obsolete.

See full article here.

Big Three Plans - Crisis is beyond Operations and Labor Relations

If you have the patience to read through them, I’ve provided the links to the Big Three bailout plans provided to Congress yesterday. The bottom line is that Ford is asking for 9 billion, GM 12 billion and Chrysler 7 billion.

I have focused a lot of criticism on the production and design side of the efforts made by the Big Three – especially in the light of providing what the customer wants – and have done this exclusively in the context of comparing them to Toyota. I’ve also been critical of the legacy costs induced by a less than amicable history between the unions and management. I don’t think this is unreasonable, but I have to remember that there is always more to the picture.

Like I said, we Leanies tend to (not exclusively – but are biased towards) focus on production and value added design – giving the customer what they want. How often do us Leaners talk about actually getting the cars into the owners’ driveway? I’m talking about dealerships. According to the NADA, the National Auto Dealers Association, there are 20,000 franchised automobile dealers in the U.S. So let’s take a look at the Big Three’s plans regarding their vast dealership networks:

Excerpts from Ford’s Plan:

“By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets.”

After reading through Ford’s plan, they look profitable in 2011, but that means 9 billion in aid. That also comes at a cost to the dealers, suppliers, white-and-blue collar workers alike. In short, Ford may come out of this with some battle scars, but they will probably be best poised of the three to compete with foreign competition.

GM is less optimistic. Their financing arm, GMAC takes center stage in their report linking the effect on their 6,450 dealerships directly to their bailout plans. In fact, GMAC is seeking a path towards becoming a “full service, FDIC insured bank.” Of course, getting there will require bailout money according to GM.

From GM’s Plan:

“GM’s financing arm, GMAC, cannot effectively access the secondary markets today. One year ago, GMAC was able to provide either installment or lease financing for nearly half of GM retail sales. That number has fallen to 6% today. In addition, GMAC is no longer able to buy contracts for customers with a credit score under 700, which excludes roughly half the buying population."

"If GMAC is approved as a BHC, GMAC Bank would have an increased retail deposit focus, which is expected to provide a more stable and lower cost funding source to GMAC. As a BHC, GMAC would also have the ability, at the discretion of the Treasury, to participate in recent Government-sponsored liquidity and capital programs.”

GM also plans on reducing the number of dealers by 1,750 in the U.S. by 2012. This will give GM a total network size of 4,700 dealers.

So, GM’s plan is to reduce production capacity, increase productivity, reduce the burden dealers are putting on production and inject bailout cash into a newly created banking arm of GM in order to finance new sales. It makes sense, but will it solve problems in the long run? It sounds like it will get them through this credit crunch, but who knows? Shouldn't the Big Three have been trying to do these things all along?

From Chrysler’s Plan:

"At Chrysler, 75 percent of our dealers rely on Chrysler Financial to finance their business, and 50 percent of all customers finance their vehicle purchases through Chrysler Financial. With credit markets frozen, our customers – average working Americans – do not have access to competitive financing to purchase or lease vehicles…our dealers do not have access to market competitive funding to place wholesale orders for new vehicles…resulting in the constriction of cash inflows to the Chrysler."

Like GM, the center of Chrysler’s plan is around unfreezing credit, but their plan is a bit more digital in nature – either bailout us out or we will need to liquidate everything, production facilities, design centers, everything - including the 3,300 dealerships -through bankruptcy.

Bankruptcy

Despite requesting 9 billion in aid, Ford is far from discussing bankruptcy. GM and Chrysler have quite a bit to say about this option in their plan:

“Chrysler believes that the amount of DIP financing that it would need to remain viable even during a relatively short bankruptcy (just one year) would approximate $12 to $15 billion. And, even that estimate presumes that financing remains available for the company’s dealers and customers, which cannot be counted on given current market conditions.

“If financing for its dealers is unavailable from traditional sources during its Chapter 11 process (as Chrysler must assume would be the case), then Chrysler would need at least $5 billion of additional DIP financing just to support its dealers, pushing the expected total size of the year-one DIP financing need approximately $17 to $20 billion.”

Chrysler is asking for about USD 7 billion in its bailout plan. The company makes a good case that a bailout will cost less than bankruptcy. I don’t believe we will hear this bankruptcy financing fact in the mainstream media. If we do, many people will contend that the cost of bankruptcy is on Chrysler and not the customers. Just keep in mind that in our economy – ALL costs are ultimately passed on to the customer. Or, in the case of a bailout, the taxpayer.
Regarding bankruptcy, both GM and Chrysler are very concerned that a stigma will be attached to their products, they back this up with a study, rather than conjecture which the mainstream media specializes in (if you want a really sophomoronic article to read, check out Time’s article - they seem to be more worried if the Big Three are “sincere” [Chrysler predicts market penetration of 500K electric vehicles by 2013] about hybrid’s and if their private jets are being sold or not.)

“According to very recent market research (conducted by CNW Marketing Research), more than 30% of consumers who considered a GM vehicle and purchased a competitive product instead cited the possibility of GM bankruptcy as the top reason for not buying a GM product.”

So, this whole ball of yarn just keeps getting harder to unknot. The biggest problem at this point seems to be balancing demand with future production levels in order to compete with foreign competition – which is not out of reach - but in order to do so, the credit markets need to unfreeze.

It seems that thawing the credit market right now may provide a different short term outlook for the Big Three’s financing and dealership network. At the very least it will free up the credit needed for dealers to work with customers and perhaps stop the downward sales trend. But the bailouts do not seem to be slowing and with bailouts being thrown into the crowd like strings of beads at Mardi Gras, one has to wonder if there is any incentive to lend?

Sources:

NADA before Congress

Ford Plan

GM Plan

Chrysler Plan

Genba, Genbutsu, Genjitsu in Plain English

O.k., I'm tired of playing translator. And I don't speak Japanese!

The three Japanese "G's" are:

Genba
Genbutsu
Genjitsu or Genshou

Genba means the actual place
Genbutsu means the real thing, the actual thing
Genjitsu or Genshou means the actual situation

A lot of people I know cling to the Japanese words for a very simple reason: it is easy to remember the 3G's this way. Another, more cynical, reason is that the Japanese words lend an air of supremacy to the Lean guru at the front of the room who is trying to wow his client.

The drawbacks are you can lose a few people just by pretending that this stuff is more than exercising our common sense - and whether we like it or not, many workers don't like to be told that the Japanese are eating our lunch because of a few simple, easy to remember words. Our workers know the reason we are losing and it isn't because of translation problems!

So here you go: the 3G's in English. Anyone can remember it, anyone can do it:

Go and see
Get the facts
Grasp the situation

I'm still working on the the 3M's!! Give me a break!