Is manufacturing an endangered species? Has North America lost its edge when it comes to the global marketplace? Unfortunately, unless companies change the way they organize and run their businesses, days for manufacturing are numbered in North America.
A few companies, however, are embracing the change and are winning. How? The use of Lean management techniques can streamline a company’s structure and help inspire workers because it gives them control of the company. A drastic shift from our usual top-down management structure, Lean is the only way that manufacturing companies, and all companies in general, are going to survive in a global market.
Change is Necessary
It’s never easy to change. We all get set in our ways. We figure out a way to do something and then stick to it. We master our technique and think we have it all figured out until someone comes along with a new and better way to do it. Then we find ourselves obsolete. And unless we change, we run the risk of becoming the next dodo bird – manufacturus extinctus. But it does not have to be.
This is the challenge facing today’s North American manufacturers. People elsewhere around the globe are currently doing things better, faster and for less money than we can. Complain all you want. Blame the government, or the cheap labor market in China or India; but the real blame lies with us. We’ve become lazy and complacent.
When Toyota came along with its Lean ideas over 25 years ago, Detroit responded with a wink and a nudge. “Yeah, the Japanese have a nice way of doing things, but really, do we need to run an operation where the inmates run the asylum? How can a company function properly when the workers on the floor are empowered to run their own processes?”
Well, as we have seen, Detroit’s allergy to change has knocked the Big Three from their collective pedestal. GM is sweating bullets and scrambling to avoid bankruptcy, while Toyota is poised to become the world’s largest automaker.
How did it come to all of this? Can North American manufacturing be saved, or in 10 years is everything going to be made in China? Manufacturers are the front line of the global battle for well-paying jobs, and the only ammunition that will help us win this war is acceptance and the embrace of change. To be victorious, our companies need to offer substance and value to their customers. This can only be accomplished by accepting change – now and in the future.
The good news is many organizations are finally getting it. We’re being forced to look at the waste that exists in our organizations. In the last few years, many companies have started to look at themselves under the Lean microscope and are finding ways to cut costs, reduce waste, increase productivity, and deliver more value to their customers. Unfortunately, the elimination of waste is just a small part of the puzzle.
Lean is About People
The people side of Lean is the missing link and is still an alien concept to most manufacturers here in North America. In order to compete globally, we need to develop the culture of respect and accountability to harvest all the ideas that exist in the heads of our employees. However, most companies still cling to an antiquated top-down “command and control” management model that fosters contempt, hides mistakes and stifles creative ideas.
The sad part is employees seem to understand what managers do not. Why do you think that nearly 63,000 people applied for some 2,000 production line jobs at a new Toyota plant in Texas in just two weeks? Workers realize that Toyota offers the right environment for them to grow. They have grown tired of the lack of respect offered by most North American companies.
We can’t ignore that the world around us has changed and we need to adapt to meet that challenge. Our best customers are only one computer click away from finding a better supplier. It’s enough to make you wake up in a cold sweat – and many do.
To become competitive, we need to look at what we do, redo our processes and drive the waste out. We need to challenge, involve and support our people to contribute and make change happen. Furthermore, we must listen to the workers’ suggestions as we change the way we lead and manage.
Necessary Steps
If you’re serious about surviving the change, here are three short “must dos” that you need to embrace quickly. It’ll take years to perfect them, but the first steps are the most important:
1. Develop a crystal clear vision that focuses on your customers’ success. For customers, the issues of price point, time-to-market, cycle time, lead time, quality or any of those buzz phrases have value, but what they really want is your commitment to make them a winning company.
Many companies have worked on delivering “customer satisfaction,” but satisfaction is only part of the puzzle. In our new world, suppliers must listen like never before, and figure out what value they bring to the table and how that value can be improved as they help their customer succeed. Those who focus on customer satisfaction put their companies at risk. As a customer with too many suppliers, would you eliminate those who satisfy you, or those who work tirelessly to make you successful?
2. Drive the waste out of all of your processes. Imagine you’re at the bottom of a flight of stairs that goes up 50 feet. As you climb the first few steps, you can start to see the surface of steps higher up that you couldn’t see from the ground. This is how Lean works. As you climb, you’ll start to see new things and recognize new levels of waste. Toyota has been at it for years and still thinks it has only eliminated a small percent of its waste. It’s a nonstop battle but one you must start today by changing your thinking.
3. Grow your people. You need to surround your “value-adders” with the leadership and environment needed to harvest and improve every single idea and improvement they have. Your mission should be to grow your people; status quo won’t cut it. To achieve the task will require vision, leadership, coaching and, yes, actually caring about the people who spend more time with you during the day than waking hours at home.
The urgency is there, and it’s real. Five years ago, there were loud whispers about what was looming on the horizon, but few took action. In fact, most manufacturers just paid lip service to the problem. According to leaders within the Association for Manufacturing Excellence, some 80 percent of the nearly 495,000 North American manufacturers with five or more employees have yet to make a commitment to mount a credible attack on waste in their organization. Moreover, even within that 20 percent that has done something, some 70 percent of them have done nothing more than implement something they call Lean but is little more than the implementation of some Lean tools. If companies want to survive, they need to change their culture of thinking – and ultimately their culture. Period.
Future Outlook
There is movement. Thankfully, in the last five years I’ve heard more about culture change than in my last three decades in manufacturing. Our Association for Manufacturing Excellence national conferences are beginning to sell out because companies are recognizing the need to implement culture change. CEOs and VPs are getting to the point where they’ve tried everything “traditional” and nothing has worked at the level needed to win. There is a new, fresh and urgent willingness to work together to lever each other’s human and material resources. The emerging name for such “consortia” is the Leveraged Learning Network, coined in the 1998 summer issue of MIT’s Sloan Management Review.
Quality guru Dr. W. Edwards Deming once said, “It is not necessary to change. Survival is not mandatory.” Funny how the more things change, the more they stay the same. Deming’s message still rings loud and clear, but this time survival is even more tenuous for North American manufacturers.
It’s time for companies to learn to not only survive the culture of change but also thrive in it. The tools and methods are there. We need a vision that inspires, that aligns us and that’s coupled to a cultural commitment that strives to make our customers the most successful customers on the planet – both now and in the future.
David Hogg is president of the High Performance Manufacturing Consortium in Kitchener, Ontario, and was the marketing chair for the Association for Manufacturing Excellence 2006 International Conference. For more information on future conferences, visit www.ame.org. Readers may contact Hogg by phone at (519) 893-6260 or e-mail at info@hpmconsortium.com.
