Finish Strong® Podcast Series The journey to excellence is not a simple one, nor does it follow a straight line. This podcast series addresses issues important to manufactures worldwide. Becky's insights include commentary on global, strategic, and tactical issues, as well as observations on current challenges and opportunities in manufacturing businesses. Feel free to suggest topics of interest to you; no doubt Becky will have something to say that will make you think.

Instead of Innovation

As fast as the world turns these days, it is not easy to stay abreast of the latest concepts and management trends. While it is important that you not let the world pass you by, it is also valuable to leverage some tried-and-true tools.

TWI (Training Within Industry) and the Coaching and Improvement Katas are behavioral tools that can increase the effectiveness of your entire team quickly and safely.

If you’ve ever taken a martial arts class, you’ve been introduced to the concept of kata. The term itself refers to a process repeated reliably to enhance mastery. The same is true for the coaching and improvement katas.

While deceptively simple, as with any of the martial arts, detailed regular practice under the watchful eye of an expert is integral to proficiency. Both of these katas share the same thinking, but the detailed steps are different. That’s the same as the katas for two varieties of the martial arts.

TWI is a tool developed by the US federal government at the early stages of WW2 to get the new female workforce productive quickly and safely. The men experienced in manufacturing had gone to war, and women had to step into those roles. Rosie the Riveter was born.

There are multiple aspects of TWI, each consistent with the other and each designed for specific purpose. Again, conceptually, this is similar to kata. It is worth investing some time watching a few YouTube videos and reading summaries of the distinct purpose of each form of TWI.

While TWI is fully in the public domain, reading the original government documentation is not fun nor particularly helpful. That’s why I recommend searching for more modern overviews.

Other than training, neither TWI nor Kata requires a financial investment. Both can rapidly enhance the safety and quality of your workforce as they work to master and improve your business operations.

Yes, innovation is crucial to success. But, no, that does not mean jettisoning the already-existing and proven tools.

Two Levels of Operational Effectiveness

You’ve all heard that great strategy with poor execution is no better than poor strategy with great execution. Operational effectiveness requires excellence at both levels.

My writings and podcasts have long focused on the strategic aspects of operations, specifically how to build a manufacturing business that endures. This episode reminds the listener of the laws of math and physics that impact near term execution.

The book Factory Physics was written about 30 years ago, and updated several times since. Its primary intent continues to be for undergraduate and graduate students in Operations Management.

To overlook its value for production leaders, plant managers, and financial leaders in manufacturing operations is a mistake.

Most of you are likely familiar with multiple order quantity formulas, from EOQ to Kanban, even if you’ve only seen them as options in your ERP system. Any order quantity formula impacts operational effectiveness, as it is designed to determine inventory levels and scheduling.

It can be overwhelming, and seem to require great judgement, to determine what to do next on what machine or with which supplier. The more inventory you see the uglier it gets.

There are laws of math and physics that are true whether or not recognized. Those fundamentals can help you make better decisions, lowering costs and increasing throughput and on-time delivery.

Batch size, equipment utilization, and work-in-progress inventory are all integrated. When the boss insists on high utilization because he wants to absorb overhead, he may not understand the secondary impacts on inventory, throughput and lead-time.

You should. And a good boss does as well.

As someone who worked her way up through shop floor operations to plant and divisional operations, I’ve found understanding the details required by operational execution to be of great value in setting strategy. No, I can’t write out most of the equations without help anymore, but I know the concepts and what drives them.

If you want to enhance the quality of your operations strategy thinking, don’t turn your back on Factory Physics.

Partnerships and Unilateral Changes

Partner. Relationship business. It all sounds so good. But then reality slaps you up the side of the head.

In a true partnership, can one company unilaterally change the terms of the contract?

Well, no. But then few espoused partnerships are true partnerships.

The larger company always has more money for lawyers, if it comes to that. The money they use to pay those lawyers may well be yours, which only makes it worse. The smaller company can also have a finger on the trigger. While meeting at high noon in front of the saloon is never the intention, it can happen. That’s why fact-finding and intention-testing up front is a fundamental first step to enabling a trusting relationship to develop.

Automotive has a bad reputation for harming small suppliers because the OEMs feel free to make unilateral demands and contract changes with abandon. Toyota and Honda are well-known exceptions to that and Hyundai has a history of being pretty honorable also. But the “big 3?” Keep your hand on your wallet.

Those are hardly the only companies and automotive is hardly the only industry where the voiced commitment to a partnership that reflects a commitment to relationship is Vanilla Ice.

But small suppliers or customers do not need to be as vulnerable as they often choose to believe and act.

Don’t get sucked in by the allure of business-altering volumes, because they may well alter your business in ways you don’t intend.

Before signing a contract, discuss with the potential supply chain partner scenarios that range from somewhat likely to probable. Ask how they have behaved in the past when those situations have arisen, and then talk with their other partners to see how well the two descriptions match.

You, too, must open the kimono, and share what scenarios have challenged you to comply with your commitments and how you’ve handled those scenarios.

If your large company potential partner has a track record of using its “relationships” to finance its cash flow, or to reduce its cost of goods sold by whatever number its CFO demands by pushing that responsibility down to you, there’s trouble in River City. And that’s trouble with a capital T. Teamwork starts with a very different T.

Every business runs into challenges, sometimes severe. Pretending it won’t happen is silly. Developing a common understanding of how you will treat one another, what kind of actions you’ll each be willing to take if needed to help the other, being transparent about how you each define integrity and ethics — those conversations are fundamental to any opportunity to build a true partnership.

The fear of laying cards on the table indicates a problem from the beginning. Maybe you’ll both be served well by a few short term purchase orders — and yes that can impact costs for both of you — before making the long term agreement.

As Ronald Reagan said about Russia, “trust, but verify.”

Your Career in Operations

I’ve invested the vast majority of my long career in operations. I find it fascinating.

Regardless of industry, operations includes the technologies, processes, materials, and procedures that delivering value on each order involves. Many would look at those words and see no similarities between making mac and cheese for millions of consumers and making aerospace parts for a limited number of engines.

Yet my transition from operations of the first to the second was fast and easier than you might imagine.

I am NOT a technologist. Making frozen prepared foods I worked with food scientists. Making aerospace parts I worked with metallurgists and ceramicists.

I AM a business and operations expert. Both food and aerospace industries, and I could give many more examples, must obtain and keep customers, must know what materials are needed when, what critical steps are involved in converting those materials to the end product sold to the customer, and must comply with regulations while delivering cost effective quality reliably.

The choreography of information, materials, equipment and decisions is one giant puzzle to be solved. The production system is what solves that puzzle.

Many manufacturing businesses see the complications and distinctions that can make their operations difficult. The better ones focus on the similarities, simplifications, and apply lessons from everyone in their improvement processes.

Both leaders and shop floor employees of the majority of, for example, tool and die companies believe that they are job shops, that every order is unique, and that because of those two facts there is no production system that makes delivery times reliable. Internal scheduling for them is one reaction to the last customer call after another.

That thinking is simply wrong, and contributed heavily to outsourcing tool and die production to cheap labor markets.

While the intricate details of the metal removed from the block of steel to create the specific shape required by the customer do differ, that is a very small part of the program that controls cutting.

The production systems of tool and die shops are basically buy metal, write program(s) for the specific equipment that will cut the metal to shape, set up the machine, run the program, perhaps do a few secondary operations, and get it to the customer.

I have helped many job shops, including tool and die, incorporate visual factory concepts and simple scheduling easy to follow, resulting in 50% reductions in lead-times and doubling of on-time delivery to customers. And of course profits skyrocketed.

How? By seeing the similarities and not being controlled by the distinctions.

Restaurants, hair salons, and tool and die shops are all job shops. All of them do the same things over and over, with the intricate details changing but not the overall production systems.

As someone in operations, it is crucial that you understand the questions the system must answer, the challenges it must overcome, and the repetitive nature of the vast majority of both. The 80/20 rule is powerful, especially when we learn widely from the 80% that you share with the rest of the world.

If you like putting together a puzzle, designing beautiful choreography that is easy for all the dancers to follow, or generally making it easy for others to do their jobs well, operations is for you. Don’t let the varieties of production systems in existence become confusing. Take the best from each and create operations in your business that are the best you can make them, as of now.

Tomorrow is a new and better today if we respect important differences, while we focus on similarities and learning.

Manufacturing Outputs For Your Future

We manufacturers know that we are responsible for the outputs of cost, quality, product performance and delivery; we also know that many others in our organization impact those as much as we do.

Being outstanding in those four outputs is necessary but not sufficient for our futures.

In recent years we’ve come to realize that the definition of outstanding for each of those outputs is more demanding than previously. And yet, they are still not enough.

The three additional outputs of your operations to consider today are flexibility, innovativeness, and resilience.

Flexibility does not mean jump through hoops to respond to the latest customer call. It no longer is limited to volume and mix changes in order patterns. It means your production and operational systems are designed to be flexible in meeting market needs and expectations.

Consider the flexibility those who shifted from making airplane parts to ventilator parts in a matter of days.

Innovativeness does not mean bringing more products to market each year than your competitor does. It means a culture that exudes problem solving mastery in every aspect of the business. After all, innovation is, at its core, problem solving for the future.

Resilience does not mean reactionary. It means identifying and preparing for the risks that matter most and being positioned throughout the organization to rebound from whatever happens.

Each of these three outputs requires systemic thinking, processes designed to deliver them, and a culture that does not question their importance or the changes they require.

We’ve all heard “raise the bar.” That isn’t limited to raising required scores on what you’ve always measured.

Sometimes it means changing the bar entirely.

Seven Levers to Shape Your Manufacturing Business

Why are some manufacturing businesses a hot mess, while others are a great place to work as you provide exciting value to the market?

A business is a living organism, and as such, understanding what makes them healthy and what makes them sick is instrumental to success.

Here are seven levers that apply within all manufacturers; each is addressed as part of the operations strategy, which is in place to execute the business strategy. The business is impacted by each, both individually and collectively.

The first is Human Resources. What is the strategy for how many, what backgrounds, what key characteristics? An effective HR strategy is not reactive, but rather reflects the quality of the organization you are building.

A second lever is organizational structure and role clarity. While we’re all familiar with the one box at the top, with a few under it and a handful under each of those, going on down, that is hardly the only potential structure. Even if that is the best one for you right now, that structure unsupported by clarity for each role will fail you. Titles mean different things to different people; providing common understanding of expectations of specific roles and among roles cannot be overlooked.

A third lever is production planning and control; this is the near-term management of inventories and resource utilization, and drives costs, time, and performance.

Sourcing is another impactful lever in your manufacturing business. The decisions to outsource or insource, off-shore or near-shore, leverage supplier expertise or not require strategic guidance.

Both process technology and facilities are structural levers that are often difficult to change, impact cash availability, and can add costs and time that are difficult to assess.

Product design is the 7th lever addressed today. Product design was once a matter of meeting customer specs. The long term impact of that design has been recognized, resulting in design for manufacturing, design for service, design for re-use, and additional DFX.

Those manufacturers that are a hot mess don’t manage or strategize these levers well; they may not even recognized their existence beyond daily headaches.

Outstanding high quality manufacturers think strategically about each of these levers, never considers the position of any of them optimal forever, understands that each has an individual impact, and recognizes that the collective impact of mastering each of these creates the foundation of a high quality business.

No manufacturing business can afford to overlook the consequences of the position of these seven decisive levers.

ChatGPT and Manufacturing

Manufacturing has played a major role over time in advancing automation, computerization, digitization, and more. Our industries are amazingly different now than they were 15 years ago, much less 30.

In December of 2022 the company OpenAI released an online product called ChatGPT. Unless you’re living under a rock, you’ve at least heard of it. You may not understand what it does, and very few understand how it works. It is, however taking the world by storm.

The question for you is, does ChatGPT offer value to manufacturers?

The short answer is: No, at least not yet.

But the longer answer is: The literally awesome advances in Artificial Intelligence (AI) reflected in the technical underpinnings of the product lay the groundwork for a very different future for all of us.

Importantly it should reassure us that parallel efforts building AI capabilities to solve other larger problems are advancing quickly also.

So why do I believe ChatGPT does not help us manufacturers now? Because it suffers from a problem that all AI will need to overcome: What is the truth used as the basis of its advancing logic and reasoning?

A recent LinkedIn post bragged about the great answer received from ChatGPT when asked to distinguish lean from six-sigma. The problem is, the answer was significantly inaccurate.

How can that happen? Alleged experts have to guide the AI tool’s initial learning in understanding what is true and what is not true. As it trains itself on logic/reasoning from that information, it receives continued guidance, though less and less as its training is judged to be high quality.

This product is not just a fancy Google search engine. In fact it relies heavily on the quality of the information it considers, while Google merely spits back links to what it sees as relevant web content.

How does a manufacturing leader, who obviously has a plate full already, consider the ever evolving technologies arising daily?

In larger organizations with better trained technical experts, she can build in regular updates from those people regarding what is happening and why she should care. Reading, asking trusted peers, following respected sources on YouTube or other social media, and attending technical conferences for leaders are a few methods to consider. Smaller company leaders may choose not to invest resources in this research, strategically behaving as “late adopters.”

Any advance others are leveraging to increase competencies should not be a surprise to you, as the leader of your organization. Know terms and a one paragraph summary of definition, and what makes it special, including strengths and limitations.

You can insource or outsource development of that information, but having it is not optional. Well, it is optional, but not for those building companies to endure.

Invest 5 minutes setting up your ChatGPT account, realize that it handles statements or directives better than it does questions, and try it out for a few topics of importance to you.

If you see capabilities that can help you now, invest more resources; if not, move off of this advance for now.

You can’t implement every technology advance, nor should you. Some of the non-tech advances may be of greater value. You may already have all the change you can swallow.

Please don’t be an ostrich, though the temptation may be great.

Becoming Resilient

There are business buzzwords, and then there are important business concepts you cannot afford to ignore. Resilience is one of the latter.

Resilience emanates from effective risk management. If you don’t have a viable and ongoing risk management process, start there.

In risk management, the first steps are always to identify the majority of risks, assign each probability and severity, and through that scoring list them in order from highest to lowest. That guides the priorities of risk management.

Resilience is not about being reactive, but rather about executing plans already in place to mitigate damage and get back on your feet quickly and effectively.

For example, succession planning will make an organization more resilient; replacement planning does not. The distinction? Succession planning is a process to reduce or eliminate significant downside of a key person leaving. Replacement planning means once an employee leaves you tell HR to find someone to take their place.

The former involves effective planning to minimize negative impact in advance of a risk occurring; the latter is a reaction to something that has occurred. The former is evidence of a more resilient organization, the latter of a reactive organization.

Resilience is not a magic elixir. It is easy to observe before it is needed. It is part of running a healthy and enduring business.

For you former Boy or Girl Scouts, it is simply: Be Prepared.

Please Stop Building Inventory!

It was not that long ago that most manufacturers and distributors carried entirely too much inventory. The drag on cash flow was never offset by lower costs or higher performance. When we figured that out, we began to lower inventories.

By adding some technology, whether RFID or barcodes or enhanced ERP software, we made it easier to reduce inventories and increase performance. By beginning to pay attention to some of the concepts of the Toyota Production System we put in visual pull systems that enabled us to continue to reduce costs and increase performance.

But by never truly understanding what we were doing, when significant supply chain disruptions hit world-wide, we blamed our tool (allegedly JIT). We overreacted by issuing mass orders at whatever price the market would charge. There we were. Back more than a decade ago with the same miserable results.

Please stop building inventory!

All of the problems and downsides of large inventories remain. Missing a single part still prevents outstanding performance with your customers. Canceling all the blanket orders you placed for “as many as you can get us” in no way represents operational excellence.

A significant number of industries have replicated the wild pendulum swings of electronics, and now the electronics industry has joined that insanity again. Coupled with tax incentives and a tilt toward nationalism, chip plants are under construction everywhere. It’s not hard to foresee trouble approaching.

Those who truly understand “lean thinking” didn’t react to the supply chain disruptions by jacking up orders for everything and issuing customer delivery promises of “god only knows.”

True supply chain partnerships would have had multi-party conversations about who needed what first to actually ship products, not to just have more inventory of something sitting waiting for something else.

Coopetition based on reasonably accurate inventory data and shared supplier production capacities can get everyone up and running much more quickly than threats will. It is a very rare sub-industry that was willing to execute that.

Trust and transparency facilitate playing nice; without those, it’s every man for himself, which means we all fail.

Please stop building inventory. Invest those resources in actually learning what true operational excellence requires, and making the necessary changes.

It is easy to recognize those who had firmly embedded Delusional Excellence®️ instead of the real thing.

Building Your Strategic Mindset

Strategy is one of those important business concepts that many cannot recognize, develop or implement, yet businesses that endure have mastered.

“Growth” is not a strategy, nor is “increase profits.” Those are goals or objectives. Strategy describes the boundaries, priorities and activities within which those will be achieved.

For example, a growth goal may have a supporting strategy of selling more to current customers, expanding geographically or into adjacent markets, or reliable introduction of new products that deliver more value to the the current market. Or, obviously, many other intentions.

It is common to share goals and objectives throughout the organization, if only in general terms. It is much less common to share strategies. That, my friend, is a trait of failure.

Any viable strategy includes insights from up, down, and across the organization, as well as from all five of the company’s constituencies. Execution of any strategy requires comprehension of its intent and constraints up, down, and across the organization — plus the resources required.

Any employee or business constituent who does not understand the strategy at some level and recognize his role in implementing it successfully cannot be expected to act consistently with it.

If you’re asking “what was he thinking?” chances are he was thinking about how best to do his job with the information at hand. Strategy awareness and comprehension of how his actions and decisions impact its execution is as fundamental to success as is how to enter an order or label a package.

How do you build that strategic mindset throughout your organization?

First, build your own strategic thinking muscles. Titles don’t convey skills. A CEO cannot, by mere acceptance of the title, think strategically. A shipping clerk, by mere acceptance of the title, is not limited in thinking strategically. A strategic mindset takes awareness, practice, development, discipline, and challenge.

Next, as you talk with employees, regularly ask “how does this support the strategy?” Or “how does the strategy impact how you think about that?”

Every act and decision by every employee is implementing the strategy, or not. Strategy is not an enacted by a group of leaders in a conference room. They will certainly discuss it, and challenges and opportunities to it that have arisen, but they cannot implement it alone.

Connecting actions and decisions with the strategy is an ongoing responsibility of leadership. As the strategic mindset muscle is built throughout the organization, that responsibility permeates the entire business.

Do not assume everyone knows or understands the strategy, or how it impacts their work. Do not present a PowerPoint of the strategy at a town hall meeting, and believe everyone knows and understands it and how it impacts their work.

Constant communication up, down, and across is integral to developing your strategic mindset. Communication means both listen and talk, augmented by thinking.

A company that can endure over time will build this muscle and keep it healthy.