Volume 4, Number 5 - May 2, 2006

I recently had reason to review the Baldrige Award self-test for leaders. Here are a few statements from that document, with potential answers ranging from “strongly disagree” to “strongly agree”:

• Our leadership team asks employees what they think
• Our employees know the parts of our organization’s plans that will affect them and their work
• Our employees know how to tell if they are making progress on their work group’s part of the plan
• Our employees keep in touch with their customers
• Our employees get all the important information they need to do their work
• Our employees can make changes that will improve their work
• Our employees are satisfied with their jobs

Baldrige says the best companies can answer each with “strongly agree.” How did you do? If any of your competitors can answer more of them that way than you, who do you think has the advantage in your markets?

Axel Johnson, Inc., the North American operating arm of the Swedish-based Axel Johnson Group, has acquired Kinetico, one of the world’s leading manufacturers of residential, commercial, industrial, and municipal water treatment systems. Axel is a privately held company, as was Kinetico. Congratulations to Vince Slusarz and the rest of the Kinetico management team for selecting a buyer with a culture and value system compatible with those of Kinetico employees.

In a globally competitive world, effective cost control is more important than ever. For many years reducing costs was equated with reducing labor rates, even in industries with relatively low labor content. As demand for energy and key materials accelerates in developing countries, non-labor costs have gained attention. Baby boomers approaching retirement age has forced an acknowledgement of the costs of defined benefits plans. Those structural impacts on costs rightly concern American manufacturers.

More and more companies have begun to seek manufacturing efficiencies through the application of Toyota’s production model. As many are busy painting lines and shadow boxes and creating kanban systems, a relative few take the implementation of TPS into the product development process. Many studies indicate that about 70% of manufacturing costs are determined during design. Just as moving to lower cost southern plants in the 1980’s didn’t solve the cost problem, ignoring that critical 70% won’t solve it either.

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