Volume 3, Number 4 - April 5, 2005

Many manufacturers are struggling with the decisions to invest in additional people, plant and equipment as they look cautiously to the future. Not quite sure that they’re over the hump, not quite sure what the future holds. As you make the decisions, look first at your systems for getting the most out of those investments.

Look at your people. Think about that last seminar or class you sent one of them to. Investing in your people is absolutely critical to success. You can get the most out of that investment by including a process to share and maintain that learning. That doesn’t mean every seminar should change the way you do business. But it does mean that every seminar should lead to discussion about the possibility about how something might change.

Look at your plant and equipment. Is it well maintained? Just because accountants plan for financial depreciation doesn’t mean Operations needs to accept physical decline of facilities or equipment. Would techniques like visual factory and total productive maintenance make your plant and equipment investments more profitable? New, more capable equipment may be required, but a system in place to make sure it retains those statistical capabilities may be required to justify the expenditure.

Investing in your business isn’t just about buying stuff it didn’t have before. It’s also about taking care of the stuff it already has. When you decide to hire new people, be ready to train them effectively. When you decide to train the ones you have, be ready to help translate that into improved behaviors, processes, and decision-making. When you buy new equipment, be ready to keep it in like-new condition for a long time.

Set expectations: We invest. We don’t pour money. This is a business, not a boat.
(Although many people keep a boat a lot cleaner.)

No surprise to many of you, a recent conversation of mine with a fellow manufacturing professional bounced from exchange rate issues, to trade policy, to the lack of government support for the sector, and then to the many challenges faced by small business in general. What may surprise you is that the conversation was with John Walley, CEO of the Canterbury Manufacturers’ Association in Christchurch, New Zealand. Though the trip to get there was long, the streets along this busman’s holiday were eerily familiar.

On a recent weekend, I had the opportunity to be among an eclectic group of people. It was there that I learned that the concept of “zero inventory” is a conspiracy developed by European and Japanese business to destroy American manufacturing. The plan was simple. Simply tout it as the reason for their success. American business would try it, and soon fail. And then European and Japanese businesses could sweep in and pick up the pieces.

The proof of the malevolent plot was explained to me: about 4 years ago, the two manufacturing companies employing the two fellows describing this conspiracy (one at 85 db and demonstrating an ability to exhale that would make Maria Callas proud, the other by nodding in agreement) had significantly reduced inventories “because companies in Europe and Japan had.” When I asked if they had made any other changes at the same time – say, reduced set-up times or scrap -- they simultaneously sighed that exhausted sigh and stated that set-up times and scrap are just part of their processes. They went on to say that luckily their employers had dropped the concept of zero inventories just in the nick of time. Both of them expressed relief that they are now safe from the
threat of competition because their bosses wisely house a couple months of inventory and “we’re
adding to it all the time, so when our customers call, we can respond.”

The conspiracy had been uncovered when the friend of a friend of a friend knew someone who had read it in an article somewhere.

Quite convinced they see the light at the end of the tunnel getting closer, they pay no attention to the sound of its whistle getting louder. They will never know what hit them. To the degree the description of their companies’ decision-making is accurate, their employers won’t either. Poor communication, poor leadership, or conspiracy?

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