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.

JIT is NOT the Problem!

The Wall Street Journal and the New York Times are fact-based high-quality newspapers. Each has acquired ‘political leanings’ in some of their writing, but for business articles they are widely respected.

Each has recently published a poorly researched and factually incorrect article about the impact of the current supply chain upheavals on the preponderance of Just-in-Time inventory strategies in American manufacturing businesses. The error is in believing that their sources understood JIT and had discovered some new failing.

They were right in stating that JIT was originated by Toyota. They are right in that many manufacturers are moving as quickly as they can from minimal inventories to holding significant quantities in storage to protect themselves from future supply interruptions.

The authors were wrong in believing and writing that those manufacturers ever understood JIT or had implemented the concepts wisely. JIT is so much more than lowering inventories, but few chose to do all the hard work that effective and managed JIT involves.

Why has Toyota not suffered the chip shortage the way their automotive competitors have? Because several months earlier they had acquired a significant quantity as they foresaw the potential for a significant supply issue. That wasn’t luck. That was supply chain visibility and risk management.

JIT was never intended to be an inventory strategy. It was always a means for Toyota to highlight problems in the system and address them before they could become severe. That is the point that both articles missed completely. And apparently their sources simply did not understand that incredibly basic aspect of the JIT philosophy. Which means their manufacturing businesses think they are lean but do not understand what that means at all.

So now those companies are back to high inventory dollars and all the problems that come with that. They’ve learned a lesson from the current crises, but the wrong one! It is not JIT that failed. It was the leaders who believed JIT was an inventory management system that failed.

Supply chain visibility is not a digital transformation catch phrase. It is one element of building a resilient manufacturing business.

As you analyze what works and what doesn’t for your manufacturing company, always dig deep to understand WHY. Luck or current conditions can make you believe things that simply are not true. So can failure to identify and track the underlying assumptions you make. And sadly, so can reading Wall Street Journal or New York Times articles that rely on ill informed sources and lazy journalists.

Don’t Accept False Choices

When I was growing up in manufacturing a primary point of friction between leadership and production workers was “quality or quantity.” Leaders did not understand what was so irrational about their expectation; the two should not be mutually exclusive. The production workers, however, who worked with existing processes, couldn’t see why management would expect such a thing when their day-to-day experience was that a choice had to be made.

Yet today, I see comments on LinkedIn about the requirement to choose two of the triumvirate of cheap, fast, and good. This is another false distinction, just as was quality and quantity.

In new product development we are told that we must choose between budget, timing, and good design.

This is another false choice that exists because we haven’t figured out how to meet budget and schedule while creating excellent design. That doesn’t mean it’s impossible, just like quantity and quality were never mutually exclusive.

Solutions rest not on demanding a more likeable schedule and budget or reducing product expectations, but on answering the question: “what is preventing us from accomplishing all 3?”

Why do people still accept false choices? Because it’s easier to think “woe is us” than to dig deep to determine what’s making us believe the choice cannot be overcome.

Let’s get over that today. That doesn’t require that we know exactly how to eliminate a perceived contradiction, but that we recognize what it is and that we commit to figuring out how to eliminate it.

“Because it’s hard” is no reason to be stuck tomorrow with today’s challenges.

Your Age of Discontinuity

I wish we would all quit acting like everything was “normal,” implying steady and predictable, before Covid. It’s like we’ve all decided to recall “the good old days” the way octogenarians do. What has really happened is that we were comfortable with the types of ongoing constant change, something unexpected happened that impacted all of us around the world, and we act like all the ongoing constant change we now experience is something different.

It’s not.

Scientists figured out pretty darned quickly how to prevent billions of us from becoming ill with Covid-19. Manufacturers figured out pretty darned quickly how to make doses of the vaccine available worldwide. Some governments handled distribution well and others, primarily those that minimize Covid as a legitimate threat, did not. Those of us who care to know, know that wearing masks indoors or in groups of unvaccinated people significantly reduces the chances of spreading the disease.

Peter Drucker’s book The Age of Discontinuity; Guidelines to Our Changing Society was first published in 1969. While hardly the first major treatise on our changing world, his is well known. He pointed out 4 primary discontinuities impacting the world then, and those 4 impact us still.

First, he mentioned technology. We’d all agree that technical developments impact all of us today. Next, he described the shift from an international economy to a world economy. Sure feels like we’re there right now also. As a matter of fact, Covid woke many to the true world nature of our everyday lives.

Talk of reshoring is primarily that: talk. Yes, a few governments will identify some truly strategic supply chain sources and consider a national strategy to ensure more reliable supply. Fear of China controlling many resources and technologies and its threat of conquering Taiwan – the major source of semiconductors to the world – will have a much bigger impact on adjustments to world sourcing than Covid ever would. We will continue to be a global economy.

Drucker’s 3rd discontinuity was “a new sociopolitical reality, embracing business, government, and other pluralistic institutions.” That surely sounds familiar and current to you.  His 4th was “the rising importance of knowledge and of formal education, with resulting implications for work, life, leisure, and leadership.”  He recommended major changes to our educational institutions to provide more flexible and appropriate “on demand” educational opportunities. Another very familiar topic.

In our lifetimes, and before, there has been constant change, and most of it for the good. My mother much prefers indoor plumbing and electric lighting. I much prefer my reliable and safe automobile that I chose based on internet research. Each of us can name many things we find improved over a year ago, and the pandemic was underway then. Different does not mean bad or worse.

If you think the “old normal” was great, and eagerly anticipate a return to it, life won’t be easy for you. The human species does not move backward; we move forward.  You may not like all the new options and challenges, but it is more productive to accept that they are coming tomorrow, and again the day after that.

Discontinuity is continuous. Even the broad drivers remain similar over decades. Stop looking for any “normal” other than that of discontinuity. That is what is normal, and it is what was normal last year too.

I encourage you to make a list of the top 5 things that impact your daily life negatively that have changed dramatically in the past year. What are the odds of them returning to prior status? If high, then stop fretting and simply wait; if low odds, wrap your head and emotions around succeeding in the newness tomorrow will bring. I hate that I cannot travel internationally now, but I will again. It will be different, and better in many ways.

 

Attracting the Best Candidates

As manufacturers are searching high and low for employees, it is crucial that we not make bad hiring decisions out of a sense of desperation. A warm body is not what you need. Today we’ll dig into how to attract candidates who can help you create a future that you can’t even predict well right now.

Technology is the future of manufacturing, yet we need other than technologists.

We need to identify those who can help us learn, change, and grow as an organization.

Machines make better machines than people ever will. And conversely, people make better people than machines ever will. Hiring people for repetitive and low-thinking tasks is an extremely short-term strategy. No one will be happy with that. Trying to automate judgement, creativity, passion, and fascination with learning will fail.

Start by determining if you really need a person or if you should pursue task automation instead. Many roles are repetitive and require only rules-based decision-making. Physical automation can handle much of the repetitive rules-based decision-making work in production arenas.

A good candidate can be wasted if we’re not careful. We don’t need bad ones.

If we want people who can and will think, we need to provide them work opportunities where thinking is integral to the job.

Most employees can do much more than is asked of them. At virtually every one of the clients I’ve worked with over 30 years, I’ve discovered employees with great potential who management considered high-maintenance complainers, and others management liked who only did what they were told.

Does leadership style attract, develop, and retain the kind of employees you need? Are the job roles offered consistent with the type of employees you need?

Perhaps before you look for candidates it is worth looking at the actual work.

Eliminate or automate lousy work. Your company will be a much stronger magnet for people who are creative, passionate, and fascinated with learning. Those are the ones fundamental to your company’s success.

Getting From Here to There

I hope you have a mission for why your manufacturing company exists, and that you have some kind of vision for what it should look like in a few short years to ensure you’re closer to accomplishing that mission.

Your business is somewhere right now. You haven’t accomplished the mission so where you are now is insufficient for where you intend to be.

That tells you that no matter where your company is right now, it has to be in a different place in a few months and an even better place 6 months after that, if you are to bring the vision to reality.

The question is “how?” What do you do to get from here to there?

Logical steps to take in moving from here to there are:

1)   If you don’t have clarity of why you’re in business – your mission – I suggest you work on that. It drives everything else. Without it, your organization is taking a random walk, which is hardly the foundation for building an enduring manufacturing business.

2)   Complete a hard-nosed assessment of where you are now on the important “chunks” of your business

3)   Complete a hard-nosed assessment of where you need to be in 6 – 24 months on those chunks

4)   Specify what those gaps mean

5)   Identify each considered change to close the gaps either foundational, or strategic. Prioritize the gaps in terms of reduced risk or requirement to move forward, and then fold that into your operating improvement and strategic plans.

None of these steps is particularly easy, but you will become better with practice.

You know how I’m going to close this podcast: Start now, and as always, Finish Strong.

How Fast Should You Improve?

Today’s topic is “how fast should your company improve?”

While the bottom-line answer is the same for most all manufacturers, it is worth first looking at the question by size of company.

Small manufacturers face a challenge just getting orders in and out and all too often don’t focus on making significant improvements. That last part is why so many of them struggle to grow or to catch their breath. It’s the well-known conundrum of we’re too busy to figure out how to do it better.

Mid-sized manufacturers, those generally between $100MM and $1B, have systems and processes in place to facilitate order processing, as well as non-value-adding functions like accounting, scheduling, and engineering change management. In this range the challenge is often complacency from a healthy balance sheet and confusing meaningful progress with starting each inning on 3rd base.

Those over $1B in sales have the resources to improve quickly, but often insist that it’s much harder to turn a large ship than it is a small one.

So while the reasoning is different, most manufacturers have excuses for why they improve at the rate they do and not faster. No company is too big, or too small, to fail.

Amazon made Sears irrelevant. Uber made taxis a dying breed. Smart phones made pagers and landlines things of the past. Craft beers made Budweiser and Miller-Coors cry. The internet killed newspapers and the stupid business model they had relied upon.

Here’s what each of you needs to do:

How User Controlled Pull Impacts Manufacturing

People want what they want when they want it. That’s hardly a crazy concept; just one most manufacturers don’t believe applies to them. But it does. The JIT concept has been saying that for a long time, but again, many manufacturers didn’t believe their customers really wanted or needed that.

Here’s the thing: No one cares how hard your business is, or why you find it so difficult to provide what is needed or wanted at the right time. The more widespread this expectation becomes, and it is already embedded in the life of most consumers, the less willing your customers are to live with a lower level of delivery performance from you. You think B2B is different from consumer goods? Your customers are consumers too.

Customer expectations continue to evolve, and all of it is more in the vein of “I want what I want when I want it and where I want it and just exactly like I want it.” That is not going to reverse itself, hording toilet paper to the contrary.

No manufacturer can afford to continue to make large lots with long lead-times with limited customization while expecting customers to pay for inventory impacted by an engineering change. You may not like it, but it is true, nonetheless.

Here’s the question for you to ask, and then answer, for every aspect of your business: “What would it take to….?” The end of that question could be “to cut lead-times in half,” or “to cut lot sizes in half,” or “to implement customer requested changes in under an hour,” or anything else.

User-controlled pull is one aspect of evolving, but reasonable. customer expectations. There are others. Like location-independence.

Start asking the questions today, answer them, take action, and then ask them again. And of course, with each step in the process, Finish Strong.

What is Strategic Inventory?

While the integral role of supply chain, which includes inventory decisions, has become more obvious to everyone, and college degrees in supply chain are increasing, many manufacturers still see it as a renamed purchasing department.

Effective procurement is an important profession, but it does not define nor integrate inventory strategies into the company mission, core values, and strategy. If anywhere at all, that is likely the responsibility of planning or scheduling, or supply chain.

But do any of them really do that for your business?

Setting up parameters in your ERP system is not strategic inventory management. Nor is negotiating for volume discounts with suppliers. Both of those may be worth doing, but neither adds value in a vacuum.

Most inventory decisions today are based more on supplier pricing, lead-times, and financial scenarios. A company that is currently highly profitable pays little attention to inventory, until sales and profits sag or a major outage occurs. Then, all the sudden, things change.

It is important to gain meaningful understanding of the role of inventories in the business and operations strategies, and in accomplishing the mission consistent with core values. That is not a one-hour meeting. It is developing strategic thinking skills and line-of-sight connections from individual decisions to those elements.

One good question to start with is: “how would we know if our inventory strategy supported our mission, core values and business and operations strategy?”

Follow that with: “what changes to our inventory strategy could improve that interconnectedness?”

 

 

How to Learn From Experience

Well, you’ve certainly had a chance to see just how strong your supply chain is, as well as how well your organization can plan and execute shifts in volume and mix. More importantly, you have likely seen weaknesses in the multi-level understanding of the supply chain, including towards the customer.

As you’ve gained 12 months experience dealing with how this particular pandemic impacted your business, it’s important that you no longer let it absorb more attention than it needs to.

Now is time to strategize your future, using what you’ve learned.

I challenge you to answer these 4 questions:

Covid Uncertainty in 2021

In a recent webinar, attendees responded to a poll by answering that uncertainty around Covid is one of the biggest concerns about 2021. It shouldn’t be!

I started with responder poll results. I found the responses to this question: “My biggest concerns for 2021 are…” intriguing. The number one response was “continued uncertainty around Covid” while the 2nd most common response was “new regulations from Democratic administration.” Fifty percent chose the first, and 38% chose the latter.

When I pursued the reasoning for ongoing Covid concerns, the dominant response was related to new variants. They each admitted that they knew how to handle scheduling and keeping people safe. Many had reduced product offerings and felt comfortable they could make smart rationalization decisions as conditions might change. They had confidence in science to modify vaccines quickly to address new variants. Yet that worry remained top of the list.

When we can define our areas of uncertainty, and have recently experienced them, there is no excuse for not being ready if they reoccur. Here are 3 things every manufacturer should have at hand right now:

·     What are the key triggers that would lead to a change in strategy as of now?

·     Who is tracking them to wave the flag should it be needed?

·     Do you know what decisions you would make under various conditions?

Plan for the predictable, be ready for the likely, and have a disaster recovery plan for all monsters that you find under the bed. If you already know them, they are more a difficult pet than a true monster.