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.

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Could You Make A Forever Promise?

The business model in manufacturing and distribution has long been own it, sell it, get paid for it. For most of those companies, it still is.

But our world is changing. The concept of ownership has a very different place in our thinking, as does the concept of value. The potential enabled by rapidly advancing technology is integral in changing thinking about optimal business models.

When I worked for Perdue Farms in the late 1970s, my first major assignment was to build and implement a feed formulation system that would meet nutrient requirements for the chickens at the lowest cost given potential ingredient inventories and market prices.

Computers then weren’t what they are now, but those calculations were easy to perform once the program was written and the inventory, nutrient, and market data for all potential ingredients were available to the model. Updating that information took time, time that is virtually zero now. Advanced technology didn’t eliminate the need for the analysis, but made it much faster.

That use of data was focused internally toward cost reduction. But the thinking can easily be turned externally to identify information incredibly valuable to the market.

You’ve likely heard that airlines are not committed to owning jet engines; what they really want is reliable, fuel-efficient thrust on each of their planes. That means predictive maintenance, well-designed engines and valuable real-time analytics of data converted to information used in flight. And in the design of better engines in the future.

Data from a single engine on a specific plane, from a type of engine on a number of planes, from a type of engine on a variety of types of planes, and more, is changing both current and future operations of the air travel industry. Do you care who owns the engines on the plane you’re flying on today?

We see personal and shared ownership of cars, no ownership of cars (Uber, taxis,), mass transportation, bicycles, walking, and more. The “best” business model depends on value as perceived by the target market, and on the providers ability to actually deliver that value.

If instead of selling your products to customers, you will focus on the amazing value those products can provide, comprehension of real value is the crucial first step. Most of us are not close enough to our markets and do not listen well enough to truly understand that. And most of us struggle to eliminate the assumptions inherent in our thinking — like “it’s all about the product.”

To consider shifting to a subscription business model, your organization must have the awareness and thinking to understand value at every level. That model will not work for you or your customers unless it improves the value proposition for both. That value proposition must not be just a cute quote but a better business result for both for the long term.

What promise could you make to your market that would entice it to shift to you? And equally important, what promise could you think and evolve quickly enough to keep all the time and forever?

It’s much easier to just make something and sell it, but only today. Tomorrow requires much more.

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How Outdated is Your Job?

Are you a pneumatic tube operator?

A COO is not a COO is not a COO. While the title Chief Operating Officer should indicate range of responsibilities, it does little to describe them.

Same for a Buyer, a Plant Manager, or an New Product Development Manager.

These titles have very different meanings in a $5M, a $100MM, and a $1B company. They also have very different responsibilities in a contract machine shop, a pharmaceutical business, and an international defense Tier 2 contractor.

And they have different responsibilities and expectations as a single manufacturer or distributor changes volumes, markets, or ownership.

The plant manager of a $50MM contract metal working company was in over his head as it grew to $75MM. He left to become the COO of a less than $10MM machine shop.

So who is responsible for ensuring that an employee or team grows its competencies as the needs of the business change?

Those needs change frequently and never decline. Even plummeting sales do not lessen compliance, performance, and competency expectations of the market. Lifelong learning is a great phrase, and a requirement of the culture embedded in any manufacturer who intends to endure.

Daily constant learning is an even more important phrase and element of culture, as it implies lifelong.

Each employee of every business owns responsibility for willingly learning and expanding skillsets and knowledge base. Each leader at any level owns that responsibility not only for herself, but for every member of her team.

Keeping pace with today’s needs is basic need. Anticipating and meeting tomorrow’s requirements is an equally basic need.

How do you know if the requirements of your job are changing faster than you are? Of your team? Of your entire business? Of your entire supply chain? Of all of your constituencies?

Jobs do not stay the same. Careers do not either.

If you go to work today to do the same things you did yesterday, come home, and go in again tomorrow to do the same things again, your company is in trouble, as is your job.

Sadly, the Social Security Administration continues to use a list of active unskilled jobs that includes “pneumatic tube operator” in considering disability claims. Dowel inspector and shelling nuts are two other jobs it deems in significant numbers to decline benefits to people it believes could do those. Good luck finding one of those openings at a facility near you.

How long until the job you currently perform is just another embarrassing kernel of the SSA list of active unskilled opportunities?

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My Call is Not Important to You

When a recorded message for customers is considered a snide comment you’ve failed. Yet the way to fix that is not to prevent customers from calling you.

Each day another company quietly moves from a call center to a contact center. That is the official method of precluding customers from actually talking with someone who could help them.

While AI and bots are better than they were a year or two ago, they are still a long way from actually answering the majority of questions your customers have when they call.

Data abounds to tell us the cost of customer churn, yet based on some accounting analysis we make decisions to reduce costs and increase churn. Yes, the last half of that sentence is an oxymoron.

Looking at a P&L statement, it is much easier to see the costs of personnel who actually help customers than the cost of AI bots that chase them away.

To retain customers, operations must deliver on promises made and additional expectations of the market. Attempted incoming communication by the market is a world of valuable information, if only we actually care. We can collect data on the reasons for calls, using analytics see trends and interrelations that aren’t obvious, and get to root cause.

If contact is repeatedly about status of an order, you can eliminate the majority of those calls through simple technology — which many companies currently use. But problem orders — for example those with a bad tracking number – must be identified and addressed. With no fast reliable means of getting the status from your company, the customer is likely to go elsewhere next time.

The concepts of contact centers instead of call centers, and bots instead of humans, are some of the most expensive ideas we’ve implemented of late. Not only irritating to customers, they fail to capture valuable information that points to root cause. By ignoring root cause, you fail to actually fix the problems that initiate the calls.

If any attempt by a customer to get information from you is important to you, use humans trained to answer questions. Make them quickly available through a multitude of means, including actual human-to-human conversation.

And get to root cause and fix it.

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Excellence Betrayed by Mediocrity

The Cleveland Clinic is widely recognized as one of the best medical systems in the world. And its delivery of medical services deserves that recognition.

But its costs are unnecessarily high, its critical medical resources wasted, and its doctors and patients needlessly irritated by its short-sighted approach to scheduling.

Scheduling, an organizational weakness since the mid-1970s based on my own experience, appears to be viewed as a cost center rather than the path to effectiveness.

The Clinic has long used schedulers with no knowledge whatsoever of medical professions. Rather than train and educate, the powers that be prefer schedulers who waste the time of doctors and patients and physical resources by scheduling with the wrong professionals.

There is a significant difference between a cardiologist and a electro-physiologist cardiologist. There is a significant difference between a retina specialist and an ophthalmologist. But the schedulers don’t understand those terms and schedule patients accordingly. And on it goes.

Now the Clinic is reducing costs by not printing after-visit summaries when the patient leaves.

Those should have never been printed in the first place for any patients comfortable with MyChart, the online capability and app that includes all that information. HIPPA laws focus on confidentiality, but needlessly printing confidential paperwork for patients who then accidentally leave it in the bathroom or at Starbucks is below mediocre.

Your manufacturing business must make high quality products and deliver them to your customers in the quantity and elapsed time that the market demands. That’s a given. That’s the equivalent of the Clinic delivering excellent care.

But, like the Clinic, your business has supporting processes that are required. Those are often the source of high costs, time-burning organizational friction, and the waste of critical resources.

Mediocrity in those support processes can cost your business its future.

I’ve served leaders of manufacturing companies with my strategic insights and experience for over 30 years. I am not an engineer and have never been able to explain how to make a machine run faster.

But that is never the primary problem preventing excellence in a manufacturing business. If you believe it is your major obstacle, hire an engineer to work on that.

Be warned, your business will not thrive because you took that action. Nor will the Clinic thrive by ordering physicians to see more patients in an hour.

Mediocrity in support processes will betray any excellence products and services offer.

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Moving Manufacturing Operations From China Because…..

A number of manufacturers have announced plans to leave China, primarily due to the upheaval in Hong Kong and impacts of the government’s “zero covid” policy.

But what’s the destination?

If a leader does not completely understand why his operations strategy involves leaving one location for another, how will success be measured?

Vietnam, the Philippines, Indonesia, and other popular southeast Asian manufacturing locations may be little better than China. Government uncertainly? Port challenges? Distance from major markets?

Before moving operations from or to anywhere, begin with a clear understanding of “why?” What problems are you trying to overcome, or what benefits do you intend to gain? What risks become higher, and which become lower?

Manufacturers left the United States in search of cheap labor because they didn’t know how else to be cost competitive with new foreign competition. Standard accounting reports made direct labor an obvious target, and gave operations leadership an easy out. Why not hold them accountable for reducing costs without moving operations?

Most leadership thinks in terms of 5% improvements, not 50% improvement. That’s a leadership problem facilitated by accounting and by business schools.

As you consider leaving China, or Russia, or any other location, define the objectives of success.

When first moving to China, did you consider the obvious risk of the extended supply chain? Apparently not, or it was one you accepted.

Some decisions result in negative impacts that were acceptable risk. Decisions that result in negative impacts because obvious risks were ignored reflect poor leadership. Decisions that are defined by actions (e.g., “leave China”) without examining alternatives thoroughly are, except in case of true emergency, poor leadership.

If you plan to move your operations out of China, where will you move them to?

Why?

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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.

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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!

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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.

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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.

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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?

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