Jan 31, 2011 | Branding, Lean, Operations
I’ve written a bit over time about the value of a unifying business purpose, the way it can unify and motivate the stakeholders of an enterprise, often beyond the boundaries of just employees.
It is all easy to say, but apparently very hard to do, as the number of mission statements, and articulation of business purpose that are around that are no more than a bunch of cliches written on a whiteboard in some strategy session simply because it is on the agenda of things to get through.
Tom Fishburne again nails the notion of business purpose as a cliché in this cartoon, one picture tells the story of most efforts.
The video embedded in the copy around the cartoon is worth a look, it articulates via the story of Raleigh jeans the value of a real purpose as opposed to a confected one. The video also addresses the notion of manufacturing being brought closer to the geographic source of the business purpose, another hobby horse, as I see the beginnings of supply chains contracting around local capabilities, rather than being outsourced for apparent short term cost benefits, without understanding the long term implications.
Jan 27, 2011 | Change, Collaboration, Customers, Lean, OE, Operations
Lean is at its core a management system, a holistic way of looking at the way an enterprise manages itself through a culture tuned to improvement, group and personal responsability, while six sigma is a quantitative process of managing in quality by getting it right first time.
Six sigma quality requires 99.997% perfect, or 3.4 defects/million. When you are manufacturing and supplying to customers even simple products, this is a very high bar indeed.
Motorola was the first US company to recognise and articulate the challenge in the face of Japanese competition in the 80’s, and they boomed, becoming the gold standard for western manufacturing, and inspiring thousands of others to lift their performance, from which we have all benefited. The article that first bought Motorola to public attention is this Fortune article from 1989, and it started a revolution.
Now the revolution appears to be over as Motorola is broken up into two separate listed companies after almost 2 decades of failing to build on the foundations built in the eighties. The leadership that followed those that built the foundation did not recognise the importance of the management systems necessary to support the continued improvement and Motorola fell back into the trap of conventional management accounting where inventory is an asset, cycle time and flow ignored as core metrics, functional management over-rides bottom up innovation, and all the other stuff that makes a lean environment work, got squeezed out.
As I work with clients on improvement initiatives that usually start with marketing and strategy, my patch, the necessity to improve operational processes to support those that engage with the customer is always a major driver, and the failure of Motorola after being the icon it was simply drives home the difficulty of not just improving current performance, but in the process, building the management and leadership processes that make the performance improvement process self sustaining.
Jan 20, 2011 | Demand chains, Management, OE, Operations, Strategy
Some time ago I mused that perhaps the worm was slowing if not turning, in relation to local manufacturing, rather than buying in from China as the default option.
The crisis in the US, far worse than anything in this country, had to lead to structural change in the US economy, as the sort of structural change necessary usually only ever occurs when there is little option but to change, as continuing on is simply not an option.
It seems the swallows are appearing in the US, the early trendsetters are thinking twice about the downside of “offshoring”. Loss of IP control, sovereign risk, long and inflexible supply chains, transaction costs in the supply chain and management, and so on.
It makes economic and social sense to manufacture amongst the network of services and capabilities required to be sustainably successful, rather than taking the short term apparent cost reduction that really ends up costing more.
With China suffering increased inflationary pressure, their western export markets tightening wallets, an undervalued currency, and increasing domestic pressures around human rights, pollution, and the distribution of the new wealth, something has to break, somewhere. Wise businesses appear to be weighing the costs and benefits of offshoring, Vs building local capability, considering the long term benefits of development of clusters of innovation and service providers, and lean operations including shortened supply chains, and coming to the conclusion that some things are better done locally.
It will take a long time for the tide to turn, and it will turn very selectively, as many commodity, low value, low technology items will always be cheaper from a low cost environment, but the manufacturing that adds real value will start to trickle home.
Dec 21, 2010 | Change, Leadership, Management, Marketing, Operations, Social Media, Strategy
It is that time of year, when we look back and try and understand the forces that have driven our decisions and behavior in the past year, and that will continue to have a potentially disruptive influence in the coming year.
In the spirit of the time, following is my list of the emergent forces that are shaping our world, in no particular order.
- Touchy-feely. Suddenly, the electronic devices we became used to using with keyboards became touchy! The iphone started it, followed by everything “I” and all its imitators. I cannot but wonder if this is an electronic substitute for the human contact, the physicality of it, that we have lost. The fact that it makes all this stuff easier is a side benefit.
- Global retailing becomes more than a cliché. For years we have been talking about the retail revolution driven by the globalisation of retailers, and the “e-retail” phenomenon stated by Amazon, and pushed by E-bay and now thousands of others. Suddenly in this Christmas retail season, the box retailers have woken up to the impact of e-retailing in categories other than music and books, as consumers buy clothing and footwear, electronic devices, furniture, white goods, and huge ranges of knick-knacks over the net, overseas, avoiding the distribution margins and tax collection function of the box retailers. This has all been facilitated by the advances in supply chain management driven by product codes and GPS powered by the net, and increasing confidence in net security and integrity of e-tailers.
- Net advertising rules. Advertising on the net will have overtaken TV as the biggest type of advertising by the middle of 2011. Broadcast advertising replaced by tightly targeted, 2 way communication with the capacity to evolve based on the immediacy of the interaction response and potential to engage on a personal level will continue to profoundly change the way we interact with brands and their marketers.
- Social media comes of age. No longer is social media the province of the under 20’s, it has become mainstream as grandparents connect to face book to see their scattered grandchildren, professionals connect via linked-in, twitter takes over as the first source of news of interest, then goes on to follow where the news leads rather than becoming chip wrapper the following day. Whilst this phenomenon appears to continue to grow exponentially, it does bother me a bit that it appears to be a substitute for the humanity of individual contact for many, and what we surrender in privacy and the richness of relationships with the few in favor of being “friends” with the many we will only know with the benefit of hindsight.
- The cloud rolled in. Over the course of 2010, the newest iteration of web 2.0 in the shape of cloud computing appears to have rolled in. Enterprise computing has suddenly evolved from servers inside a business with all the attendant costs and investment requirements, to having the potential to put all that stuff on the web have somebody else manage the IT whilst you just pay for the service, and improve productivity of those using the applications. I think we are just at the beginning of the revolutions that the cloud will bring.
- Data mining. The huge pools of data that are being accumulated by businesses, organisations and institutions offer the opportunity to be mined for all sorts of information about us, our behavior, frustrations, successes, and locations in ways not previously considered possible. This mining is starting, our ability to understand and predict outcomes across a wide range of situations and simulations of behavior and outcomes are becoming more accurate, based on the huge amounts of data being collected and analysed using emerging applications and technology capabilities.
- Crowdsourcing. Again, web 2.0 has enabled a revolution in the way we go about accumulating and leveraging information to serve an objective. In the past, R&D occurred in the confines of the labs and commercial departments of businesses, but R&D is rapidly being replaced by “E&S “, Experiment and Scale. If you have an idea, a problem, a hypothesis, it can be put to the crowd for comment, ideas and unconsidered alternatives. Linux started the trend, but in the last short period, it has been picked up by many who are seeking to push the boundaries quickly, and worry less about the IP involved, simply because IP is really pretty “sticky” in the sense that it does not necessarily work outside its environment.
- Two speed Australia. It really bothers me that around the traps I see all the symptoms of a recession in the trading activity, whilst the official numbers tell us that not only is all well, but it is booming. The non economist in me says that the cash in the joint is a result of digging up stuff and selling it to China, reaping short term rewards as demand has outstripped supply, surely the economic equivalent of a one trick pony!. Supply of mined commodities will increase dramatically over the next few years from Africa and South America, and then the prices we get will come back to the historical trend line, and meanwhile, we will have pissed away the benefits from mining, and when the crunch comes, when the super-cash injections of mining prosperity are over, it will become nasty indeed, before the official figures suggest to the superannuated pollies and bureaucrats that something in their beloved economic models is stuffed.
- Climate change is a reality, prepare to deal with it. Typically, the political responses will be way behind the commercial ones, so there is both opportunity and risk for all, and the only certainty is increased costs. What is unknown is how much costs will increase, how will that compare to our international competitors, how will they react to the changes, and when .
- All of the above urging re-regulation. Certainty in our lives has been removed by all this new stuff, then along comes the disturbing visions of long term food and water security around the world, followed by the GFC, and suddenly we want some certainty back, so there is a groundswell in favor of re-regulation of the things that delivered us prosperity after their de-regulation in the 70’s and 80’s. When you consider at the same time the economic and social impact of the rise of China and India, the picture gets cloudier. China is not about to de-regulate any time soon, keeping its ability to direct resources without the political concerns of re-election, the huge bureaucracy of India fighting a rear guard action to maintain its power, and we have the elements of some considerable disruption and conflict emerging as the “developed economies” struggle with the debt incurred supporting recurrent expenditure .
To the few dedicated readers of my blog, I wish you a great Christmas, and a prosperous 2011. I hope that my ravings have given you some food for thought, a contrarian view, and an occasional smirk amongst the urge to have me certified. Thanks for your support, feedback, and honesty.
Allen Roberts.
Dec 20, 2010 | Demand chains, Leadership, Lean, OE, Operations, Strategy
The next time you hear an argument that justifies moving Australian manufacturing to a low cost country in order to compete, refer to this post on the Evolving Excellence blog describing the work practices in a Toyota’s Kyushu plant.
Labor is much more than a pair of hands doing a repetitive job, it is an opportunity to improve processes and identify and solve problems before they can impact on the customer, or even the next bay in the production line.
It may be hard to get to this point in Australia, but you will have no chance of making the changes necessary in a contract manufacturers plant in a “low cost” country. The accountants will generate their numbers, which can be pretty persuasive until you recognise that they do not account for the things that make a difference in the market, or count the wasted time, emotion and energy in their “productivity” calculations.
When an abundant country like Australia becomes a net importer of food, we have a real structural and strategic challenges in our demand chains that urgently need to be met, and the sooner we recognise the scale of it, and do a bit more than just mouth platitudes, the better.
Dec 15, 2010 | Lean, OE, Operations
Applying a band-aid to a problem, a measure to counter the impact of a problem is often an attractive short term option, particularly to a management measured in the traditional way on output, to whom stopping a line is heresy. Superficially it may hide/solve or move the problem, and it is easier in the short term than doing the hard yards to identify the source of the problem, and eliminating it.
However, counter-measures are rarely solutions, and they almost always come back to bite, usually at the worst time possible.
Years ago in a plant I was running, we suddenly had trouble with a carton erector at the end of a high speed line, and whilst we kept the thing running with numerous counter-measures of various types, the impact was obvious when you looked at the overall line productivity numbers.
We eventually took a hard look at the problem, formed a team of people who had a range of specific skills we thought relevant to the problem, and went through a process of what would be now called “root cause analysis” using the “5 why” tool , but then was a little less defined, at least to our early but evolving understanding of the principals of lean.
Below is a summary of our steps through the 5 why process :
Why did the case packer crash?
- The sensors failed to “find” the edges of the flat cartons
Why did the sensors fail to find the edges?
- The edges were a bit more “ragged” than was usual
Why were the edges “ragged”
– The suppliers knife used to cut the cartons became blunt with use, producing a ragged edge
Why was the supplier not replacing or sharpening the knife more often?
- We had changed suppliers to get a small cost reduction, and there was nothing in our specifications about the tolerances required by the sensors to pick the edge of the carton, state of the edges or knife maintenance.
Got to the answer in 4, but it took a while, and was a bit messy, but once we understood the root causes were the performance measures imposed on the Purchasing Manager, and the lack of cross functional communication and complete specifications, the solutions were blindingly obvious, and nothing like any of the counter measures that had been used to date.
