Category Archives: Podcast Series: Finish Strong®

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.

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.

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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.

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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.

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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.

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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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