Then, one day last month after attending LEI’s Lean Transformation Summit in Orlando, I took a day off to be a big kid at Universal Studios.   And there was it was: Megatron (or facsimile), the object of my son’s earlier admiration.  I joined a long line of persons (most a bit younger than myself) to pose for a picture with this ten-foot Bot warrior who, in principle, could transform in shape, size and function to fit the needs of battle: a universal machine, one moment a robot, the next a sports car, an eighteen-wheeler and then a rocket.   My sojourn reminded me once more of my son’s earlier interpretation of ‘transformers.’  So I needed to have a souvenir photo to take home for him.

For me however, the image of transformation was not about technology or machines, but about the Lean leaders I’d had the pleasure of listening to and speaking with at LEI’s March conference.  These transformers were changing the thinking and behavior of entire organizations, creating environments that, in John Shook’s words “make people before making products.”   Lean transformer Ken Goodson of Herman Miller related, “Things started to change when we began asking our employees ‘what can we do to eliminate your struggles?’”  And from Art Byrne who led the Lean transformation at Wiremold: “People are the only asset that appreciates.”   These Lean transformers required none of the technology that went into Megatron, only an abiding belief that our thinking and behavior can be nurtured in a way that unleashes latent human creativity.  Perhaps this is not even a transformation, but more of an actualization of human and organizational capabilities; a realization of the way things ought to be or would be if that creativity weren’t systematically hammered out of us by autocratic management behavior and policy.

Universal Studios was a whimsical diversion, LEI’s conference an inspiring immersion.   A little of both is a good recipe for recharging your batteries.

O.L.D.

BTW:  Speaking of Lean Transformers, there’s still time to register for the Shingo Prize 25^th Annual International Conference in Provo, Utah.  May 6-10, 2013.  I’ll be there for a ‘recharge’ and hope to see you too.

“Stayed the same,” I said, but jokingly added, “Actually, I’m ahead of the game because yesterday I skipped the ice cream and cake at the Easter dinner.”

“So what?” Howie asked.  “Is that an improvement?”

“Not exactly”, I quipped, “but I’d call it “weight avoidance.”

Howie laughed, “Who are you kidding?”

In Howie’s lean world, the one from which the Lean analogy is drawn, to make improvement you have to lift weight and lose weight.    Neither is supposed to occur in a blitz, just a little bit every day.  “If you want to be an old lean dude you have to stop concocting pretend improvements to avoid real improvement,” Howie admonished.

“I understand,” I replied.

In my work, I encounter Lean avoiders all the time.  In fact, “cost avoidance” is one of the most often chosen bogeys for improvement. While there can be real opportunities to collaborate with suppliers to stave off cost increases to both supplier and consumer, cost avoidance, as I observe it in practice, is almost always the outcome of leveraging and hedging.

A purchasing manager at Hospital A, for example, asserts that she has avoided a price increase on consumable goods by committing to larger deliveries.  “Less receipts and inspections,” she says, “less invoices to pay also — and we can still hold the line on a price increase this year.”

“You just received three months worth of material purchased on speculation,” I respond. “Isn’t that over-production and cash out the door?”

“Not to worry,” she replies, “if our usage slows down, we’ll just schedule out later deliveries.”

“But didn’t you make a commitment to purchase these quantities in order to hold the price?” I ask.

She smiles at me.  ‘That’s the game,” she says.

Listening to my story, Howie comments,  “That’s a losing game.  If I ran my gym like that with pretend savings based on cheating suppliers or buying stuff I don’t need to hold a price, they’d be pad-locking my doors in short order.  How can they call that cost avoidance?  Seems to me more like improvement avoidance.”

How does your organization handle cost avoidance?  Is it a win-win for you and your supplier or just a funny number on your improvement bogeys for the year?  Let me hear from you.

O.L.D.

By the way, we cover this topic in more detail in our Lean Training DVD “Supplier Kaizen – Engaging the Extended Value Stream“. Check it out.

I answered my son’s question: “Value engineering,” I said with private sarcasm.

Value engineering is a concept that’s been a concern to me over the years. In engineering-speak, Value, as defined, is the ratio of function to functional cost. Value can therefore be increased either by holding cost constant while increasing function, or by reducing the functional cost without diminishing the function. However, in nearly every encounter I’ve ever had with VE the emphasis has been on reducing cost to meet price targets, with considerable license given to engineers regarding the ‘diminishing function’ decisions. In the case of the copper clad cookware, an innovative product from an earlier era, the decision to reduce the mass of the pan was clearly an attempt to reduce costs. A later VE step for this company moved the manufacture to Indonesia, an action that may have further reduced the functional cost of the product (as opposed to the total cost), but did not unfortunately save the manufacturer from bankruptcy.

There was a point in time shortly after 1975 that companies could no longer raise prices to cover cost increases, a condition described by the cost subtraction principle:

Profit = Price – Cost

Since, the customer was now setting the price, the only way to stay profitable was to reduce costs. At this point, I think, the emphasis of VE shifted away from providing value to the customer and towards retaining profits for the provider.

“What is value engineering?” Ben pursued.

“It’s a process that’s supposed to provide greater value to the customer, but has been mostly relegated to cost cutting,” I answered.

I’ve been a party to similar attempts at value engineering in which assumptions regarding value are made by engineers on behalf of the customer: “This or that particular material or dimension or specification doesn’t affect the function of the product.” Perhaps an aluminum part would be substituted for steel, or an operation, like machining, would be out-sourced to reduce labor costs. Or, if the crystal ball prophesied enough market potential for this value-engineered product, we’d buy a new machine to cut production cycle times. Strictly speaking, that method reduced the functional cost for a specific customer order. But the view from the factory floor was that these actions substantially increased part and process variety and product complexity, not a VE consideration.

Never did these projects arise from an intent to provide greater value to the customer. They always seemed to be taking something away, subtracting rather than adding value. So I’ve redubbed the process “Valu Ngineering”, kind of a contraction of the original term to connote taking value away from the customer in the name of adding it.

Are you value engineering or Valu Ngineering? Share a thought.

O.L.D.

BTW: Public Law 104-106 mandates Valu Ngineering in all federal agencies. : )

In the world of lean transformation there are early bloomers too, persons who for one reason or another take a risk at an early stage to participate.   Sometimes that participation arises from dissatisfaction with old ways, but other times from a sense of idealism about being part of something new.  Whatever the reason, I’m grateful for early adopters.  They bloom in the frost and require very little care and feeding.   And they pave the way for later bloomers.  Shigeo Shingo noted that caution over new ideas is normal.  Early adopters are supernormal in that respect, but like the Witch Hazel they are a distinct minority and risk the fate of being either unnoticed or alternately martyred as sellouts to the ‘establishment.’

Too often the early adopters become the “A-team.”   Because they are the first to buy in to new thinking, we overload them with projects rather than leveraging their participation to encourage later adopters.  One the best improvement persons I ever worked with, Harvey C., was at first an outspoken skeptic. He had worked as a supervisor for over thirty years and had seen many improvement schemes come and go. Harvey watched the early adopters carefully and kept a journal for several months, recording the results of various JIT experiments that were running in the factory.   When he could not disprove the impacts of TPS, Harvey became an incredible leader for change.  Skeptics, by definition, are persons who are disinclined to accept ideas without rigorous testing.  More so than early adopters, these skeptics are critical thinkers whose actions are guided by science as much as passion.   Had I dismissed Harvey’s cautionary behavior, I would have probably lost one of improvement’s strongest allies.   I’m grateful for later adopters too.  They bring direction and legitimacy to the Lean transformation, creating an environment that favors broader participation.

Finally, there are the trailing adopters.   Unlike the earlier bloomers, they may require the security of a friendlier climate in order to blossom.  They require a bit more “cultivation,” but they are found in large numbers that create a momentum for improvement, sometimes referred to as “culture.”    The ideal condition, as we say at GBMP, is “everybody, everyday,” but this is never the starting point for improvement, and it will not occur unless lean leaders respect and nurture every individual according to his or her proclivity to learn and develop.

Where is your organization on this seasonal curve?  Share a story.

O.L.D.

BTW:  Only 21 days until spring and 68 days until the 25^th International Shingo Conference in Provo.  I’ll be speaking and hope to see you there.

There should be a corollary to Murphy’s Law to describe this problem:  “All upstream operations can and will out-produce their downstream customers.”  A few years back, I witnessed this at a sporting goods manufacturer.  The first operation, a rubber mixing process, could easily bury its customer who molded the rubber.   “Why do you produce so much?” I asked a third shift supervisor.  “Efficiency,” he replied.  “My boss tells me, that if I run out of work orders, just keep running our standard product until the sun comes up.”

At another factory, I watched a hardware bagging line fed by an automated forming process.  There were thirteen packers on the line functioning in a manner reminiscent of Lucy in the Chocolate Factory.  An industrial engineer in the plant explained to me, “We run the line only two days per week because volumes have dropped off and we don’t want to overproduce.”  When I asked him if producing too soon might not also be considered overproduction, he shrugged adding this response, “This is the most efficient way to produce.”   Later I asked the production manager for the product line, “What do you do with employees for this line for the remainder of the week?”  He replied “I find work for them in other departments when its there, or send them to the rework area.”

“I think if we tried an experiment,” I said, “to run the line at a pace equal to actual demand, we could demonstrate system efficiency rather than just machine efficiency.”   The manager agreed to a pilot project, which slowed the line to a pace that could produce a week’s worth of material in one week, using only five employees.  Quality improved, machine jams plummeted, and eight employees were available for full-time reassignment.  “Victory!” I thought.

Six weeks later when I revisited the plant however, I noticed that thirteen employees were back on the line.  “What happened?”  I asked the production manager.  ‘Our efficiency dropped,” he replied,  “at least the way we measure it, so our President told me to go back to the old way.”

Regrettably, what I am describing is the norm almost everywhere I go.  Lucy in the Chocolate Factory is baked into the psyche of our management thinking, killing us part by part.   A statement made about ten years ago by a friend and mentor, Russ Scaffede, sums up the local efficiency dilemma.  Russ had been a senior manager at General Motors, but had later moved to Toyota.  Speaking at a Shingo Prize conference**, Russ reflected humorously on his time at General Motors: “We liked to say at GM that all the divisions were profitable; it was only the corporation that was losing its shirt.”

Is your local efficiency killing you slowly?  Share a story.

O.L.D.

**BTW: The 25^th Annual Shingo Conference is coming up quickly in Provo, Utah – May 6-10.  I’ll be speaking this year at the conference, and hope to see you there.

The product was housed in a die-cast cylindrical enclosure with a  threaded cover.  Design requirements stipulated eleven threads, which translated to many turns, a repetitive motion problem at several points on the factory floor.

Compounding this problem was the fact that covers were not truly interchangeable between enclosure bases, requiring care to avoid mis-matches and jamming. (Separating jammed covers from bases was not easy.)   The enclosure was sole-sourced with a die-caster who claimed the problem was ‘unavoidable’ and could be managed only by sorting and carefully matching the threads of cover and base.  The possibility to retool the casting at a more responsive supplier was, at least on paper, not viable.

As is often the case with these unavoidable problems, production sucked it up and sought workarounds.

First, an application of lubricant to the cover reduced the amount of  torque to affix or remove it; but the motion waste remained. Then an assembly employee submitted an idea to use a low speed nut driver  to screw and unscrew the cover.  This improvement transferred the motion from person to machine – superficial – but at least eliminated the manual strain.  Next, a further superficial improvement was made to mount the nut driver to the bench,  eliminating the hand-as-holding- fixture problem.

Adding insult to injury,  the cover was removed and re-affixed four different times as it traveled through a functionally organized factory, requiring multiple iterations of superficial improvement.  Repetitive human motion was replaced by the repetitive machine motion. From subassembly to final assembly to test and finally to labeling and packing, the cover was screwed off and on, off and on.

After a few years on the Lean journey, the four separate functions merged to a single cell, the first ‘real’ improvement, which reduced the motion waste by about 80%.  As a result of one-by-one production with operations in close proximity, operators could maintain visual control of cover and enclosure without worrying about mixing parts – fewer off-and-on’s.  But workers were still not satisfied.

“Why doesn’t the supplier just ship us covers and enclosures separately?” an employee asked.  “The supplier screws the cover on to ship to us, then we unscrew it and rescrew it to ship to the customer, and then the first thing the customer does is unscrew it again to wire the product!”

“I agree,” I said, “it’s maddening.  But we’ve done what we can do for now, and we’ll keep working on it.”

Some time later, when the old dies needed replacing, interchangeability of cover and base became a “must have” feature, a little challenging as it turned out, but absolutely avoidable.  Bases were delivered to the beginning of the cell, and covers to the end.  Only once was the cover now screwed on, the last step before packing. We rationalized this to be work, because customers had asked that the cover be affixed before shipment.

Sometimes seemingly simple problems take years to remedy, but if we persist, we prevail.    After multiple years, this particular repetitive madness was cured.

Do you have an ‘unavoidable’ problem that you’re working on?  Or maybe a superficial improvement?   Please share a story.

O.L.D.

With the best of intentions however, many organizations make what they think are improvements when they are actually just automating a waste.  In an earlier post, for example, I described a high bay automatic storage and retrieval system installed at my company in 1980 to automate our stockroom.  In fact, it simply automated the waste of storage while at the same time promoting batch kitting.  Fact is, we just had way too much inventory, and the ASRS hid it away from sight.  By the time Shigeo Shingo visited my factory in 1989, we had removed the ASRS, and placed inventory back in plain site on the floor.  He complemented us on that, but then pointed to my knees and said through an interpreter, “Mr. Materials Manager, don’t be satisfied until the piles of inventory are below your knees. That will be the real improvement.”  Shingo was the one to coin the phrase “superficial improvement” to connote automation of a waste in the name of improvement.  I think he was pleased at least that we understood the concept of superficial versus real improvement.

More recently, a large factory in my area installed AGV’s  (automatic guided vehicles) to transport materials around a very poorly laid out, functionally organized plant.  Shingo would have pointed out to this organization that the parts were traveling just as far on the AGV’s as they had previously on fork lifts, so I made the point for him to the plant manager.  The plant manager responded to me incredulously that they had eliminated so many conveyance jobs and now had ‘complaint free conveyance that didn’t charge for overtime.’  As we continued the factory tour (dodging AVG’s) we passed highly automated production processes feeding ultimately into an ASRS that dwarfed the puny six bay unit that had once been in my factory.  The manager reported to me that their improvements for the coming year included an expanded ASRS.    “A superficial resolution,” I thought to myself.  “He’s automated just about every waste from motion to conveyance, and has overproduced to such an extent that he needs more automation to store his finished goods.”

“What are your inventory turns?”,  I asked the manager.  “Marketing owns the inventory” he responded.

So where do you stand with real versus superficial improvements in your organization?   Have you resolved to do more in 2013 with the resources you already have, or are your resolutions superficial?   Chime in.

Happy New Year

O.L.D.

With TSSC’s help we analyzed current set-up activities in detail, breaking minutes down to seconds.  Simple preparation steps like bringing material to the machine and gathering tools had a big payback. These were the steps that companies often refer to as the “low-hanging fruit.”  Soon, set-ups were under 40 minutes.  We dropped lot sizes proportionately and, most importantly, on-time delivery for this machine shot up.  A machine that had always been behind, now had extra time available.  For the operators, who had been roundly criticized for an inability to get parts to assembly, this was a big deal — something that spurred them on.  We were like a football team that, after years of losing seasons, was now going to the super bowl!   When our teacher, Mr. Ohba, visited, he was pleased with our progress, but reminded us of the eight-minute goal, and challenged our operators to use their knowledge and creativity to find many small improvements.  Seconds mattered.

Three more weeks passed with operators chipping away at time wasters. Each time a set-up was made there were more ideas.  One operator suggested that tool holders, which were each mounted by four bolts to the turret, could in fact be secured with just two.  The remaining two holes were replaced with guide pins to make it easier to position the tool blocks.  We tried it; it worked. (The equipment manufacturer, incidentally, said it wouldn’t work.)  In the process of pushing the envelope on set-up reduction, we began to realize the possibilities for improvement were much greater than we had initially supposed.

By the time of Mr. Ohba’s next visit, set-up times were under 20 minutes with high reliability.  About this time, operators decided to expand the pilot project to an adjacent lathe, replicating many of the lessons they had learned on the BNC.  This seemed like a good idea to me also.  Why not deploy what we had learned?

On the day of Mr. Ohba’s visit I greeted him enthusiastically in our company lobby with the words, “Things are going well.  Set-ups for the BNC are now below 20 minutes and we’ve expanded the pilot to include our LN22.” The words had barely left my mouth when Mr. Ohba turned on his heels and headed out the front door.  “Good luck.” he said.  “You won’t be needing our (TSSC’s) help any longer.”  Flabbergasted, I followed him to the parking lot.  I could see that I’d made a fatal mistake, but had not yet figured it out.  “I’m sorry,” I blurted out.  “What have we done wrong?”

Mr. Ohba stopped, turned to me and heaved a sigh.  “You’ll never be better than 20 minutes,” he said. In an instant I reflected on the miraculous change that had occurred in our machine shop over the preceding weeks and realized that I’d inadvertently short-circuited that process.  I apologized once more, apparently with enough anguish that he reconsidered and followed me back into the factory.

Had my mistake not been brought to my attention, I might very well have never understood the problem – and we would never have gotten to the eight minute changeover – which we achieved several months later.  The moral of this story is that managers like me can become mesmerized by early results – or sometimes intermediate results – and lose sight of the environment that makes these possible.   I was ‘too happy, too soon’, a behavior that plateaus individual and organizational development.

How about your organization?  Have you had a similar experience?   Have you ever been too happy too soon?

O.L.D.

In 1986, as I had just been promoted to vice president of manufacturing, a copy of The Goal was serendipitously dropped in my lap by a visiting consultant.  I liked the book so much that I ordered four more copies for my managers.  They liked it too, mostly because they identified with the fictional plight of the story’s protagonist, Alex Rogo, a poor slob trying unsuccessfully to please the customer.   We all felt like Alex.

The next thing I did caused a few persons to question my sanity.  I purchased several hundred more copies of The Goal to distribute to every employee in manufacturing.  I thought to myself, “Here’s a story that articulates many of the problems we have, and recommends a path out of those problems.”  I wrote a short note to employees asking them to read the book and enclosed it with the book in the weekly paychecks.  “It’s an easy read,” I thought naively “that will align everyone’s thinking around continuous improvement.”  On Thursday afternoon, books and paychecks were distributed.

As left the building on Thursday, I noticed several dozen copies of the book strewn in the parking lot.   My first emotions were anger and betrayal.  What had I done to deserve this?  Didn’t employees want to learn?  Didn’t they want to do a better job?   I scooped up copies from the parking lot as if I was erasing graffiti, and, like Alex Rogo, went home to stew about my problems.

The next morning I pulled together a quick meeting of managers and supervisors to get their reaction to the book trashing.   There were several I-told-you-so’s: “You should’ve known those folks would not read a book.”   But Evie, a production supervisor offered diplomatically, “Perhaps you insulted some employees because they can’t speak English.”   Suddenly I felt stupid.  It should have been obvious to me that communication in our plant was severely limited by lack of a common language. In fact, there were at least seven different languages spoken in our factory.  Many factory workers were bi-lingual, but their second language was French, not English.

Shortly thereafter, Evie submitted an employee suggestion that employees in her department be taught English.  Our HR manager ran with the idea, identifying an organization like JVS to provide ESOL (English for Speakers of Other Languages) training to any interested non-English speaking employees.  He also found state funding to pay for the training.   To the surprise of many, fifty employees signed up!

More surprising still was the change in thinking within the factory.  The company had invested in people, not just machines.  And the ROI was seen in more problem solving, better teamwork and more ideas.  The final irony was that the ESOL students were learning Japanese words as well, like Kaizen and Kanban and Poka-Yoke, as part of their English curriculum, in many cases better than our native English-speaking employees.

Are you investing in your employees?   The payback is huge.  Share a story.

O.L.D.

• The product was a temperature sensor with three Teflon-coated leadwires.  The leadwires were, in turn, covered with a protective copper overbraid.
• The defect involved a small nick in the Teflon insulation on one of the wires.   We knew the nick was caused by a stripping operation that removed a section of the copper overbraid from the sensor.

By the time of our meeting with Bob, we had made many adjustments to the process including involvement of the wire stripper OEM who advised that, given the eccentricity of the three wires, the stripping process would never be defect-free.  Undaunted by that assessment we persisted to make adjustments to the machine settings.  We’d heard those kinds of no-can-do comments from equipment suppliers before, and were determined to prove him wrong.  Unfortunately, on this occasion the supplier was probably right.  None of our experiments to fix the problem were 100% successful.  As designed, the sensor would be prone to defects.

Next, we appealed to ABC Company to ask if modifications could be made to the design.  The request was fielded first by a buyer at ABC who, quoting the strict specifications from ABC’s drawing, denied our request saying any modifications would require a design change on their side, and would obsolete sensor inventory they already had.   She indicated also that she had forwarded our request to their quality department who also had, after reviewing the part specifications, concluded that a design change might compromise their product’s quality.  In effect, they were saying, “Don’t bother us, you figure it out.”

Back at the problem-solving team meeting with our guest, Bob, we explained that our only countermeasure at that point was excessive inspection.  Bob listened to our reports from the customer and then offered this question: “Why do they need the overbraid?”  We reiterated the responses we’d received from ABC.   Bob retorted, “I know where this sensor goes on their product and I don’t see why the overbraid is needed.”  Members of our team were surprised.  “Are you sure?” I asked.  Bob replied, “Only one way to find out: Road trip.”

Two weeks later, Bob and I visited the customer together.  Bob asked for a meeting with managers from ABC’s engineering, quality, production and purchasing departments.  The meeting was polite, but there was a consensus from all at ABC that the sensor design could not be changed.  Bob persisted: “Can we go to the floor and see where the sensor is installed.”   Reluctantly, the production manager agreed to the tour.

On ABC’s floor we were able to watch an assembler snake the braided sensor wire through a serpentine path.  I commented to the team member, “That assembly looks tricky.”

“Tricky?” he responded, “It’s ridiculous!   This braided sensor was used on another product where no snaking was required, and then they got the bright idea to standardize on it for both products.  It takes me three times as long now to assemble it, and it cramps my fingers!”  He wasn’t finished: “And you know what?” he continued, “The product that it was really designed for, we don’t sell anymore!”

Bob seized the moment to address the assembler and his production manager: “You know, we could very easily remove that copper braid which would not only make your job easier, but would significantly reduced the cost of the sensor.”

And that was what we did.  The defect was eliminated, the cost was reduced, our profit on the product increased, and Muri at both ends of pipeline was eradicated – all because a field salesman had been to his Gemba.

Field salespeople can “go see” in places where the rest of us usually can’t.   Are your salespeople a part of your continuous improvement effort?  Let me hear from you.

O.L.D.