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.

Is Yours a Supply Chain, Or Supply Mush?

As we advanced from craftsmen through the industrial revolution, Henry Ford decided the best way to make automobiles was a 100% vertically integrated business model. In 1917 his River Rouge plant brought in iron ore at one end, and shipped out finished cars at the other.

That’s one type of supply chain, one he found very difficult to execute.

Most of us used the term “purchasing” to describe locating, buying, and bringing in the materials and components required to make our products. Buyer, Senior Buyers, Buyer-Planners, and Purchasing Director jobs became plentiful. And, for the most part, clerical.

In the late 1900s we decide to “upskill” — at least the term — and refer to those people as Supply Chain. The work remained largely unchanged, but the term sounded good.

We described the suppliers involved down one level to infinity as our supply chain. We knew from professional education that “supply chain” spanned from our suppliers’ suppliers to our customer’s customers, but our thinking and behavior changed little.

But with that definition the visual of an actual supply chain, with each company represented by a link, evolved. Surely there was a “weakest link” that we could focus on. But it was never that linear in either direction, unless you were Henry Ford in 1917.

As economies developed and manufacturers grew, business became more complex. Buyers, regardless of current department titles, found suppliers with more regard for price and delivery than for simplicity or mutual advantage. We multi-sourced most items, and our suppliers did as well.

That pretty visual of a supply chain in no way represented the supply mush that evolved.

And now we want our supply chain, make that mush, to accept and design in responsibility for the environment, begetting the conceptual circular supply chain.

The prior reality of each company handing of responsibility for the environment to its customer was simple. Unfortunately, it has left us with a big mess.

So our supply mush has created an environmental mess, and we’ve discovered that we don’t even have a clue about this “supply chain” concept we thought we were managing.

Design for reuse is one concept that a company can use to individually reduce the impact of its product on our world. Accepting responsibility through the entire product life cylce — and I don’t mean cash cow cycle, but rather birth to death — is an important concept, but one publicly held manufacturers are lax to pursue.

Your job is not to create world peace.

As a leader in a manufacturing organization, it is your responsibility to understand your current sourcing and value-delivery structures. Not only in theory, but in practice. Concepts like Total Cost of Ownership have been around for decades, but few actually use them in execution. If that TCO includes environmental impact, reluctance will only grow.

The planet will be just fine. It is the human race that suffers from the short-sighted behaviors of humans and decisions they make as company leaders.

It is time to become responsible adults.

Understand your current material supply infrastructure. Define its success in terms of meeting the mission of your organization compatibly with core values. Determine the strategic supply infrastructure that best accomplishes that, and begin the transition.

If your company is to endure, it cannot leave the world in worse shape than it found it.

Standing as the last man on earth reporting quarterly earnings is not winning.

Why Not Replace Yourself?

These are strange times for the workforce.

Disney, the picture of stability, recently fired the CEO they had groomed for the job, and brought back prior CEO Bob Igor to set the ship straight again.

At the same time, Elon Musk used the power of email to summarily fire 1,000s of employees as he told those who remained that hard work and long hours would be the only way they retain employment. More quit after receiving that threat.

And of course however many employees FTX had found themselves amidst a huge scam and scramble to find new employment.

Yet 100s of thousands of openings remain unfilled, as industries ranging from health care to manufacturing hospitality are unable to hire and retain good workers.

What does that mean for you?

It means, only as a highly visible reminder, that your career is a terrible thing to waste. You spend 1/3 of your life working from the ages of about 20 to about 70. Why waste your talent and why be miserable?

If your replacement walked in the door tomorrow, what would you do?

Why wait for that?

First, if you enjoy your company and industry, you already know many of the improvements you would make to increase the contribution of your role to the organization. Make them. Don’t sit back afraid. Do what you would do if you were your replacement.

If you do not enjoy your company and industry, pursue alternatives. Is your resume current?

Are you always considering other options, choosing to remain where you are?

Your current role and company should be an intentional choice, not a result of laziness. Constantly being aware of your potential and where it can best be reached is a personal responsibility. You can say “no” to anything. Better to do so now than later.

If you’re happy, why not replace yourself?

If you’re not, why not replace someone else with someone better — you!

A Chip is Not a Chip

In 2019 manufacturers were struggling to onboard and retain important workers, to obtain supplies when needed, and to meet the level of performance that customers demand.

And then Covid hit.

“It’s the supply chain” became the phrase to indicate the problems are out of our control. It meant “don’t expect a good answer from us” and “don’t expect on-time in-full deliveries.”

Packaging, whether plastic or metal or even treated cloth, was in short supply. At least in the size and configuration some needed.

We all remember the toilet paper shortage, but how many understand that it due to a shift in demand from industrial to residential? The materials, production processes, packaging and shipping are very different for the two sources of demand.

Chips continue to reflect inadequate supply; at least a few do. But others are in such surplus that major producers like Intel are laying off and putting the brakes on production as customers admit to hording and cancel the huge orders they had on the books.

That industry — the electronic parts industry in general — has long been known for these huge swings. Those historical swings have been for very similar reasons. Rapidly increasing demand that can’t be met; skyrocketing orders; skyrocketing production; and then cancelled over-ordering, and plummeting production. Because capacity cannot be quickly and smoothly adjusted in those industries, wild swings are simply “the way it is.”

While leadership concentrates on the strategic level, execution requires attention to detail.

In conditions of multiple challenges confronting us simultaneously, we tend to simplify by relying on stereotypes, or generalities, that have no real meaning in execution.

“Chips are in short supply” or “plastics are in short supply” has little meaning at the detail level. There, the detail matters greatly. The strategic decisions of suppliers matter greatly.

Leaders can help those involved in execution understand supplier strategies, talk with suppliers to better understand and perhaps shape those strategies, and think more strategically about how to manage any shortages. Expediting is NOT the answer.

For decades manufacturers have maintained excess inventories of most items so they would always be able to produce something, but they have also been short one key component or material regardless. The excess inventories did little to quickly meet customer demand. The current return to “send me all you’ve got” will only take us back to prior conditions.

Bills of material (BOMs) must be considered as a whole to effectively plan production. Analytics and accurate inventories, customer orders and even routings can enable optimization of output and honest communication with suppliers and customers.

Expecting those in charge of near term planning and execution to optimize in their heads is ridiculous. Help them have the information they need, which is beyond mere data. That requires investment in technology far different from simple MRP calculations.

Ask operations staff to explain the specific causes of any shortages — geographic, processing, logistics, etc — so you can help them think strategically about how to best leverage limited critical resources.

During Covid, most of our supply chains operated just as they were designed.

Poorly.

Understanding sensitivities, variation in both signal and noise, and risk elements from global to a local bridge closing, is part of supply chain management.

Issuing purchase orders is a task. Expediting is a task. Neither will resolve your current production problems. Motion and results are two entirely different things.

A chip is not a chip.

C’mon Man! Stop Blaming Your Supply Chain

My computer is running slow today. They keep moving things around here. Someone called off so I’m doing it all myself.

And now, it’s the supply chain.

The computer excuse shouldn’t have been accepted since about 2010, the moving things around excuse since hand-held devices, and the someone called off — well, that one will likely be with us for decades to come.

But the supply chain excuse? It’s just like the computer running slowly. It was true at one time, but is rarely the case now. Yet, people still use it.

Prior to Covid and the legitimate supply chain problems that followed, the majority of manufacturers would run out of one part while having too many of another. The quality of data in our systems was, and is, a significant cause. Poor mastery of the basics of operations management was, and is, another.

We’ve had over 2-1/2 years to figure out how to plan for and manage supply challenges; we’ve had decades to improve the quality of our data and our mastery of operations management basics.

Blaming others is much easier than acknowledging internal weaknesses, and saying ‘we’ rather than ‘they’ is much tougher.

Would you rather hear “it’s the supply chain, you know” or “they keep moving things around here?” Both are lame excuses. Both are efforts to minimize internal control and impact over business challenges. And neither does anything to help you.

Do your employees use the term “we” when referring to something within the company’s ecosystem, or “they?” Repeatedly I’ve asked “but aren’t you part of the “they” you refer to?” That kind of accountability is rarely accepted.

If each of us quit blaming unnamed third parties for our woes, we might actually prioritize addressing them.

  • We weren’t staying close enough with some of our key suppliers and were surprised by shifts in their abilities to deliver. We are addressing that now so you will soon be able to trust and believe our promises again.
  • We failed to prioritize usage of short parts and communicate proactively with the customers impacted.
  • We chased the holy grail of cheap labor all around the world and failed to comprehend the increased risk inherent in that.
  • As we moved to supply outside China we failed to fully examine the new risks we were undertaking and continue to experience shortages and poor communication.

Those four example admissions get closer to the real problems, each of which is ours to own and fix. “It’s the supply chain” does nothing to identify or solve real problems.

C’mon Man! Stop blaming your supply chain.

Does Your Excellence Matter?

In manufacturing we constantly talk about continuous improvement to move ever closer to excellence. But if we increase productivity by 5% per year, are we excellent?

That, by itself, cannot answer the question. It says we’re pretty good at reducing labor-related costs, but it tells us nothing about how well we meet the needs of the market.

Most lean activities in most companies are focused on that reduction in labor content. Many also target a reduction in cash invested in inventory and delivery lead time to the customer.

Let’s say progress is made in each of those too. Is that company excellent?

Again, they are making internal improvements that help them, but have they done anything to change how the market views them? Does the market truly need them to continue to grow?

What does excellence mean to you?

What does your market require of you to consider your company excellent?

Do your suppliers consider you excellent?

Do your employees work hard every day because of your passion for excellence that includes helping them live excellent lives?

Does your community believe it is better off because of your existence there? Are you helping the school system become better every day?

By confusing true excellence with cost reduction success, it is easy to self proclaim excellence to the world. But that excellence may not really matter.

Excellence, like thought leader, is a term that is defined externally.

Does your excellence really matter?

Fads, Trends, Seismic Shifts, and The New Normal

The coal industry did not change for decade after decade. Being forced to improve safety demanded exhaust systems, better lighting, and a bit more, but nothing too dramatic. That industry long believed that arguments for cleaner energy were a fad. After a while it became clear that was a trend. But was that enough to require any real change? Would there be a seismic shift?

Yes. The current decade has hosted a seismic shift in the view of non-renewable sources of energy in general, and coal in particular. Yes, China and others continue to develop new coal mines, but China is also leading most of the world in bring renewable energy online. Yes, Europe will increase use of coal this winter due to the Russian war on Ukraine. But that shift is a short term necessity, not a new normal.

So if you owned a coal mine, when would you have shifted your business strategy? In the 2000s? Perhaps not even now.

Major players in oil and gas industries are both reacting to and creating a seismic shift in the supply of energy worldwide. The minor shifts are better management of methane; the major shifts are in creating new renewable capabilities.

It appears that in the 2030s, EVs will be the new normal. The seismic shift is well underway. Some auto companies have been on that train for a long time, focused on battery development; others are quickly moving that direction right now. Combustion engines will be around for a long time, but their time is largely over. Think coal 30-40 years ago.

Pelaton existed before Covid, but sales and service erupted from the ‘work from home’ and ‘stay within your bubble’ lifestyle shifts. That company announced plans to build a significant manufacturing plant in northwest Ohio. Ah, but staying out of gyms was not really the new normal. It was a temporary response to a pandemic. As sales plummeted, plans for new production were scuttled. Spending extensively on a new Pelaton was a trend, never to become a seismic shift.

Where is your business on the continuum of fad to trend to seismic shift to new normal? Do you observe trends, developing products and services to create a seismic shift in the market around those you believe are long lasting? Or do you wait until someone else creates and verifies the shift before investing in market and product development for the new market expectations?

Each of these strategic locations requires different competencies.

Include this positioning in your strategy, clearly define and master the competencies that are required to succeed there, continually verify if your position is best for the longer term, and adjust as needed.

Building an enduring manufacturing business requires commitment to the mission and constantly scanning the market to optimize your positioning strategy.

Building Business Muscle

Maximizing current profits by definition sacrifices the long term investments that attaining your mission requires. My concept of “strategic profits” addresses how to think about profitability in a way that ensures you can always invest in the muscle instrumental toyour organization’s long term success.

First, can you identify those company muscles that are required now, and will be next year, next decade, and likely next century? If not, it’s impossible to build strategic profits. And without strategic profits, your core muscles will get flabby quite quickly.

For some, it may be the ability to forecast and react to the mix of short-shelf life requirements of your business. If you are trying to feed people high quality natural foods at an affordable price, that would make sense as at least one of the muscles you must build and always develop.

For others, it may be the constant state of flux that a dependency on constant new product development requires. Does your mission demand that you continuously create new offerings? Then you cannot afford to forego investment in your NPD processes and capabilities, market and material research, and global challenges threatening your markets regardless of how tough times may be.

Identify those very few muscles that underlie attainment of your mission, and think strategically about profit management to preclude risk to investing in them at all times. No one can afford to take a month or a year off from developing crucial muscles.

Make Better Decisions

Do you ever say “what was she thinking!” in exasperation? Most of us do. And if we’re honest, we also ask “what was I thinking?”

No one bats 1000 in making great decisions, but all of us can improve the quality of the decisions we make. And we can help others do the same. As leaders, we need to do both.

A few easy-to-implement steps include asking these simple questions:

1) what happens if you are wrong?

2) what alternatives did you consider and reject?

3) what are the downsides of this decision?

If you and your team ask yourselves these three questions when making any decision beyond snacks for the meeting, you’ll find improved decision-making becoming your reality.

This podcast includes a few other suggestions for you to consider. The important idea is that you not see poor decisions as a fact of life with no way out.

Stop the Pendulum!

Following the inflation, high interest rates, and economic downturn of the late 1970s and early 1980s, American manufactures felt significant price pressures. They, wrongly, believed that offshoring production and sourcing to low wage rate countries was the only way to remain competitive.

As they complicated the supply chain and extended lead times, they also began to listen to select parts of the Toyota Production System. Select, as in they chose to see Just-in-Time as reducing inventories rather than designing systems to meet customer demand just in time.

The combination of offshoring, adding complexity, and reducing inventories locally was a bomb waiting to be lit. Covid did just that.

So what are a number of US manufacturers doing now? They are swinging the pendulum back the other direction by jacking up inventories and relocating sourcing to the US.

That makes no more sense now than the decisions to offshore made before. The unintended consequences are in most cases foreseeable, if only we look.We shipped middle class careers to other countries. Wage pressures in the United States are mounting as every industry faces labor shortages. Just how will re-shoring solve your problems now?

When is the last time you spoke with “customer support” that is located in the United States? We outsourced our customer relationships to India — an educated and English speaking country with low wage rates. Because services are less impacted by supply chain disruptions, no one is discussing moving that back to the US.

While the thinking of businesses advances in some areas, in critical ones it seems to swing as a pendulum. Core competency, or vertical integration, or conglomerate? Look at the historical trends, and its easy to see the near future. Outsource, face a problem, then in-source. Lower inventories, run out of things, raise inventories.

Where is the strategic problem prevention and solution? Going back to what we used to do may be quick and comforting, but that doesn’t make it wise.

If you haven’t developed a robust supplier selection and development process over the past decade, you’ll regret making changes now. Bouncing from one undesirable situation to another is not the goal.

While speed is important and highly valued, actual strategic thinking is more important.

If you insist on moving quickly, and for some of you there is little choice, at least identify the very predictable problems that the quick moves will create. Develop plans quickly to minimize the negative impact.

Agile was never intended to mean bounce from one bad decision to another. The value in agile capabilities within your company is its fast learning, fast change incorporating that learning, and then fast learning again.

If you skip the learning, incorporate learning steps, you’re not agile. You’re just chaotic.

Stop the pendulum from returning you to prior problems.

Think. Analyze. Rely on robust processes you’ve put in place.

Leveraging Diversity

Could your manufacturing company utilize a retiring Brigadier General who has led small and large international groups in theaters of war and in standing up government infrastructure in countries in turmoil?

The typical immediate response is “wow! what a background. But what could he do for us with no experience in manufacturing?”

Hiring someone because they look different, or come from somewhere else is too often an effort to hit a target rather than hire the best.

When I was in the corporate world a global corporation was looking for a female executive to lead the operations of a technical division. I was told by the executive recruiter I had a head start because I am female. I had no problem gaining an interview because I not only had a strong background but also am a woman. I would have had a problem with getting an offer because I am a woman.

My confidence is sufficently high to know I was offered the role because I am competent. Competency and diversity are not mutually exclusive. I honor that company’s leadership for working to become more diverse in the 1980s, before it was “a thing.”

A room filled with Ivy League grads will generate less creativity than a room filled with intelligent people with diverse educational and life backgrounds.

When an organization repeatedly chooses to hire people with the same look, the same background, and the same thinking, the organization will fail. Maybe not today, but sooner than later.

If we can’t figure out how to leverage the experience and thinking of people unlike ourselves, we’re not very smart.

And that is true whether “we” are a group of black women, a group of middle-aged college-educated citizens, a group of McKinsey alum, or a group of new immigrants.

How do you recognize and leverage diversity?