(Web Wood Works! - Manufacturing Newsletter July 2003)
“Honk if you believe in Lean Manufacturing !”
or
Where did they lose their way?
Have you seen the new General Motors ads?
“The longest road in the world is the road to redemption. Thirty years ago GM quality was the best in the world. Twenty years ago, it wasn’t. The story of our long road back.”
Such a touching story! U.S. carmakers screwed the customer on quality and delivery while they had no real competition, building up huge cash reserves so that they could live off the fat for many years. Now that they finally woke up out of their long Rip Van Winkle type naps can they really compete? How many other companies have the cash reserves to survive more than a quarter of a century of twiddling their thumbs? (The government won’t bail you out like they did Chrysler!)
(Of course, I’m particularly bitter at their twenty year ago low water mark as I was dumb enough to buy their products including a Chevy that had to be rolled downhill into the dealership for a premature trade-in and the ultimate “Monday Morning Assembly” Oldsmobile wagon in whose least troubling problem was that the faux wood grain paneling on one side was Olds cherry and the other Pontiac walnut.)
GM’s ad goes on to say that the decision to change was easy but accomplishing it was another story “The hardest part meant breaking out of our own bureaucratic gridlock. Learning some humbling lessons from our competitors. And instilling a true culture of quality…” A good sign is that nowhere in their ads are the fallback on slogans such as Zero Defects, Lean Manufacturing, Just in Time, ISO certified, etc. They tried these and failed miserably because they linked mean to lean. They looked at them as a free ride on their vendor’s backs (please improve quality and reduce lead time while reducing your prices) and as a short term diet rather than a change in life style. These are all viable concepts but when used as buzzwords are just window dressing. You don’t need a slogan – how difficult is it to make everyone understand that if the customer doesn’t get exactly what he expected there won’t be any repeat business!
While GM was in denial they lost market share to Toyota and other Japanese manufacturers because of lower prices combined with realistic quality. In the early seventies Toyota’s team effort led by Taiicho Ohno, (realizing that Japan would lose their price advantage after the Yen was revalued against the dollar) focused on all phases of manufacturing practices. He later explained his “Waste Elimination Philosophy”:
“…. above all, one of our most important purposes was increased productivity and reduced cost. …. We put our emphasis on eliminating all kinds of unnecessary functions in the factories… and to devise methods for their solution, often by trial and error.” His team understood and implemented classical manufacturing theories without interference from corporate management and added their own insights based on their experience with the Japanese manufacturing culture.
One idea adopted worldwide was Toyota’s emphasis on visual signaling (Kanban cards, etc.). It was a perfect solution for social interaction – rather than hollering at the next fork lift driver “Yo! Get me a skid.” with all its class inferences, the one-on-one presentation of a Kanban card made delivery of material the fulfillment of a management directive: a simple, accurate and timely solution. A good system, but really intended only for production environments where priorities don’t constantly change.
From who did they learn? Henry Ford, of course. Ford was the master of Continuous Flow, Production Leveling and Pull-through Planning. In Taiichi Ohno’s classic “Toyota Production System – Beyond Large Scale Manufacturing” he expresses his debt to the father of mass production: “I, for one, am in awe of Ford’s greatness.”
To celebrate the 100th anniversary of Ford, Henry Ford’s 1926 classic “chest-thumper” Today and Tomorrow has been re-issued. Lots of great ideas but its just too full of Henry honking his own horn. Not worth buying, but if a copy lands on your desk definitely read it! He achieved the ultimate lean manufacturing goal - eighty hours from iron ore to car. Other concepts included:
His understanding of the second industrial revolution. (The first focused on machinery served by people as typified by the mill towns of New England.) He realized that workers had to interact with machines and for them to do their best job they had to be motivated by adequate pay, reasonable hours and a community relationship. His early plants grew into huge entities but later he tried to create as many small factories as possible.
Final assembly should be close to the consumer to reduce freight costs and delivery time. (Japanese automakers built U.S. factories not for politics but because of this.)
His shock at the inefficiencies of the woodworking industry “the tradition of lumbering is of waste – that is why wages are so low and the prices of lumber so high”. He couldn’t change the ways of suppliers so while he moved away from wood parts as fast as possible he set up his own mills and implemented advanced practices like bandsawing green lumber to pattern prior to kiln drying
Have nothing to salvage! Ford understood that labor waste was much more important than material waste and that the labor expended added no value to his product.
Vertical integration. He started in 1903 as an assembler and built his own supply factories not because he was a control freak, but because his management and engineering teams could ensure the quality and delivery he needed.
Times changed and perhaps they were saying “Henry, who?” at the same time GM went to sleep. Ford also really lost their way. In Henry’s time, it took Ford 6 days to ship a car to the dealer and finished inventory was all in transit. As bureaucracy took control delivery took a decided turn for the worse. In recent years transit time increased to fifteen days and no one knew exactly where the cars were Finally a “bright light” realized that if UPS knows where every package is all the time maybe they could help Ford. They did; and in-transit time is now down to nine days. A bitter pill to swallow for the in-house programmers, but out-sourcing this inventory management system saves hundreds of millions of dollars while increasing customer satisfaction with quicker deliveries and accurate information.
Looking back through the rear view mirror, GM offered to fix the lemon they sold me but excused the problems as "Monday Morning Workers". It was beyond their comprehension that management had a responsibility to provide their workforce with clear instructions, discipline and motivation as well as to stop bad products before the factory door. It reminded me of the good old days when the U.S. was the dominant force in furniture manufacturing. At a major company the policy was that "if we don't get 2 percent in field repair claims we are spending too much on packaging and quality control". We created an industry of furniture repairers, who hopefully have been retired by the surviving domestic manufacturers that now try to build and deliver defect-free furniture to the same standards as the importers. (I'm not saying that there isn't imported junk in the market place but most importers understand the economics of shipping furniture that is hassle free for both the dealer and the consumer.)
Buck Bureaucracy! You don’t have the luxury of going slow, but be careful as fad concepts almost always sustain management's status quo. Effective manufacturing is an every day management responsibility.