Managing Process Downtime -- What Are the Biggest Mistakes?

In September, Michael Beauregard published a book entitled Process Downtime Reduction: How to Minimize Waste from Breakdowns, Set-Ups, Supply Chain Issues, and Staffing Constraints. This book provides manufacturers the techniques they crucially need to keep their critical manufacturing equipment running correctly and efficiently – which increases production, decreases labor costs, decreases breakdown costs, and ultimately increases the bottom line. 

When I spoke with Michael this month, I asked him: “What are some of the biggest mistakes manufacturers make while trying to manage process downtime?” Here is his complete answer:

That is an excellent question. 

I think the biggest mistake manufacturers make with managing process downtime is that they don’t manage it – instead, they learn to live with it. They make longer runs so that they can amortize the cost of that long product changeover over more parts. They get the order out by working overtime at the end of the month. They buy more equipment than they actually need. Manufacturers are smart – they learn to adapt to survive, but often those adaptations are the fastest way to solve the problem now and not the most efficient.  

Another big mistake is not measuring downtime and where it occurs. As I wrote in Process Downtime Reduction, “Show me the data!” Many companies cannot. They have anecdotal evidence of their downtime. It takes about two hours to complete a changeover. They remember they ran out of bottles once two years ago so they are focusing tremendous efforts and costs to manage inventory at high levels when the numbers actually show that labor is their biggest downtime cause. They do not make a systematic effort to understand the downtime and where it occurs so they attack where they perceive the downtime problems to be and not the issues that cause the greatest amount of downtime. 

And a third big area is not getting the whole workforce involved. Well, maybe “involved” is the wrong word. They fail to change the culture of the workforce to be looking for wastes in the operation. They load and unload parts without thinking that the machine could have been co-extruding 10 minutes earlier if they hadn’t waited until the core had run out to notify the material handler that another roll of core was needed. 

Do you agree with Michael's thoughts here? How does process downtime affect your organization? What do you do to manage it?

Should US Manufacturers Relocate Factories and Production Back to the USA?

In June of this year, William A. Levinson published a book entitled Reshore Production Now: How to Rebuild Manufacturing and Restore High Wages, High Profits, and National Prosperity in the USA. The author contends that a manufacturing resurgence in the United States will not only increase the standard of living enormously but generate taxable economic activity that will help pay down rather than increase the Federal debt. Higher productivity also delivers a greater supply of goods to accompany higher wages and thus works against inflation. This can prevent looming recessions and disruptions.

I had a chance to speak with William this month, and during our conversation, I had the chance to ask him two crucial questions. I'm posting them here with William's answers following the questions:

What aspects of reshoring do manufacturers not fully understand? 

Accounting metrics often ignore the total cost of purchase or ownership of a product or service, and focus instead on only the immediate price. Harrington Emerson's Twelve Principles of Efficiency depicted the latter as near common sense, or focus on only the immediate bottom line, in contrast to supernal common sense which seeks to account for all costs. These include but are not limited to the carriage of inventory—one of the Toyota production system's Seven Wastes—in transit, the incompatibility of container ship-sized quantities with just-in-time production systems, the additional lead time associated with transportation, the fact that inventory gives defects a place to hide and additional exposure to force majeure supply chain interruptions. An earthquake that idles a vital offshore supplier factory, a ship that gets stuck in the Suez Canal, or a strike by longshore workers can all paralyze a supply chain. While domestic supply chains also are vulnerable to force majeure, they are also a lot shorter so there is much less exposure.

Many manufacturers and also retailers are also dependent on products from the People's Republic of China (PRC), whose recent activities have proven it to be a dangerous, untrustworthy, and unreliable supply chain partner. The PRC has a long track record of selling us counterfeit semiconductor devices, substandard active pharmaceutical intermediates (APIs), contaminated heparin, melamine-tainted foods, and most recently counterfeit N95 respirators that may have exposed their users to Covid-19. Cheap becomes expensive for domestic sellers who find themselves at the wrong ends of product liability lawsuits because their offshore suppliers, who are often beyond the reach of our judicial systems, cut corners. The PRC also threatened to cut off supplies of vital products, including medications needed to treat Covid-19, and it is now openly threatening nearby countries like Japan, Taiwan (a major exporter of semiconductors), and Australia with military force. The United States was able to respond quickly to wartime losses of access to, for example, natural rubber during the Second World War and we ought to be up to the job of making ourselves independent of the PRC today. 

Why are many company leaders reticent to rebuild manufacturing in the US?

The dysfunctional focus on labor costs drove the exportation of valuable American manufacturing jobs even though American industrial pioneers like Frederick Winslow Taylor, Harrington Emerson, and Henry Ford proved with real-world results that wages become largely irrelevant if management makes the job sufficiently productive. Emerson's Twelve Principles of Efficiency suggests that the idea of a contest of efficiency against inefficiency originated in Prussia where Helmuth von Moltke had to "do more with less" against France in 1870, as France had more soldiers, better rifles, and a superior economy. Japan adopted these principles and used them to win wars against China and Russia, both of whose populations outnumbered them. Japan applied the same organizational principles to its industries, and to the effect that American industrialists were alarmed at the prospect of having to compete against them. Americans such as Taylor, Ford, and Frank Bunker Gilbreth—who cited explicitly the application of military motion efficiency principles to civilian occupations—responded with what we now call lean manufacturing as later adopted by Toyota.

The dysfunctional focus on labor costs drove the exportation of valuable American manufacturing jobs even though American industrial pioneers like Frederick Winslow Taylor, Harrington Emerson, and Henry Ford proved with real-world results that wages become largely irrelevant if management makes the job sufficiently productive. Emerson's Twelve Principles of Efficiency suggests that the idea of a contest of efficiency against inefficiency originated in Prussia where Helmuth von Moltke had to "do more with less" against France in 1870, as France had more soldiers and a superior economy. The Japanese adopted these principles and used them to win wars against China and Russia, both of whose populations outnumbered them. Japan applied the same organizational principles to its industries, and to the effect that American industrialists were alarmed at the prospect of having to compete against them. Americans such as Taylor, Ford, and Frank Bunker Gilbreth—who cited explicitly the application of military motion efficiency principles to civilian occupations—responded with what we now call lean manufacturing as later adopted by Toyota.

Emerson, Taylor, Ford, and others also pointed out the short-sightedness of choosing cheap labor over efficiency. Ford's My Life and Work urges executives, "to overcome by management what other people try to overcome by wage reduction." Emerson's Twelve Principles of Efficiency adds, "It is unfortunate that the employer shies at the suggestion of a 10 percent advance and pays scant if any attention to a 50 percent inefficiency, two-thirds of which is his own fault." Taylor's Principles of Scientific Efficiency talked about the need to hire "high-priced men"—we would say high-priced workers today—who would follow instructions such as those typical of what we now call standard work. Taylor and Ford both added that, when workers realize that the benefits of productivity improvements will show up in their pay envelopes, they will look for ways to make their jobs more efficient. When employers pay as little as possible, the workforce will respond accordingly by doing only what it is told, and probably only when a supervisor is watching. Low wages also give management little incentive to, as Ford put it, "put more brains into the business" to make the jobs sufficiently productive to pay high wages. 

What do you think of Willam A. Levinson's perspective on manufacturing in the USA? Do you think manufacturers can be more profitable in the long run by relocating factories and production back to the USA?

Women Leaders in Manufacturing and Performance-Improvement Initiatives

Just this past week, Shannon Karels and Kathy Miller published a very important book that describes the transformation they led to converting operations from traditional manufacturing to a Lean enterprise. It is entitled Steel Toes and Stilettos: A True Story of Women Manufacturing Leaders and Lean Transformation Success, and their story provides a powerful case study of women supporting each other in the workplace to drive positive culture and significantly improve business results by leading with authenticity and inclusivity.

When I recently spoke with Shannon and Kathy, I asked them: "What is the best advice you could give future female leaders in manufacturing overseeing performance-improvement initiatives?" Here is their complete answer:

Stay true to yourself and have confidence in your ability to get results.  You have stepped into this world of manufacturing, and you are up for the challenge.  Manufacturing, at the end of the day, is about people and processes.  While you are focused on improving those processes through the well-documented improvement tools, it is advisable that you make your personal assessment of the realities of the situation.  Do not rely solely on what other people are telling you – use the data and your instincts to help guide the organization toward a better future state.  

The relationships you make along the way are invaluable, particularly with those whose daily lives are spent doing the work you seek to improve.  Each and every person you meet matters and has important contributions to make.  If you develop relationships based on trust and respect, others will work with you and not against you, particularly if you have a vision that you believe in and can articulate, especially to those who have not experienced such a future state.

Do not get discouraged if record-breaking results are not immediate.  Creating sustainable improvements requires many infrastructure and cultural changes.  However, if you are dedicated to making the lives of those with whom you interact better through improved ways of working, you will find that over time the improvement initiatives will start to build upon earlier successes and the business will experience an accelerated rate of positive change.  

Celebrate successes along the way – it makes the journey enjoyable and meaningful.   

Face challenges, no matter where they come from with tenacity, determination, and a little grit.  Be willing to learn continuously and use your unique talents and strengths in solving problems and overcoming obstacles.  

But all in all, stay true to yourself through the process.  And while you will regularly wear those steel toes proudly, you can still show off those fancy heels anytime you want (as long as it’s safe to do so!).

What do you think of Shannon and Kathy's advice? We would surely like to hear perspectives from other high-performing female leaders out there who are leading transformative performance initiatives and thriving in fast-paced business environments. 

An Enduring Business versus a Successful Business -- What are the Misconceptions?

At the beginning of this month, Rebecca Morgan published an interesting book for manufacturers entitled Manufacturing Mastery: The Path to Building Successful and Enduring Manufacturing Businesses. This book is a dynamic guide for manufacturing leaders who want to develop a realistic, progressive, and responsive thinking process that enables success. It provides a business operating system framework that is the foundation for connecting the many pieces of a manufacturing business into an effective, profitable operation. Rebecca walks through the elements, relationships, capabilities, and mutability 21st-century manufacturing requires. 

When I spoke with Rebecca recently, I asked her: "What are leaders’ biggest misconceptions about an enduring business versus a successful business?" Here is her complete answer:

Most of us consider a business successful if it is profitable. And if it’s profitable over several years, it must be enduring. But endurance isn’t simply a run of profitable years. It is the result of intention and commitment.

Businesses that endure focus on a mission that matters, not on building a bigger today. Perhaps that distinction is why so few manufacturing businesses stand the test of time.

Of course, an enduring business earns profits to fund its future but distinguishes accounting profits from strategic profits. They focus not on maximizing profits, but on leveraging profits in alignment with core values to accomplish the mission. Earning, saving, and investing strategic profits facilitate forever. Maximizing today’s profits does not.

Endurance requires growth. Not the financial growth that many view as success. Growth for the leader and every employee. Relationship growth with all five constituencies. Growth in value provided. Growth of capabilities, of thinking, and sometimes into a more evolved mission. 

Successful companies are profitable today; businesses that last are continually perceived as integral to a healthy future. That confidence does not reflect technical capabilities, but rather attitude, exploration, and sharing, and true partnering to develop expertise in anticipating and addressing opportunities. 

A significant distinction is the commitment to serve the mission by always preparing the organization for passing the company baton to the next generation of leaders. “Don’t drop the baton” is very different thinking from “if it hits the ground, we’ll just run a different race.” 

That commitment is an eternal challenge for the enduring business. It relies on developing strong leaders with an unwavering focus on mission and core values, never forgetting that baton. It can all be ended by one poorly prepared or chosen leader not quickly addressed. The mission is bigger than any one person.

What do you think of Rebecca's perspective? Does your company leverage profits in alignment with core values?

Moving Production Back to the USA -- The Better Business Strategy for US Manufacturers?

A new book by Tim Hutzel and Dave Lippert titled Bringing Jobs Back to the USA: Rebuilding America’s Manufacturing through Reshoring was published this month. This book continues the theme of their first book, Keeping Your Business in the U.S.A.: Profit Globally While Operating Locally.

As many US businesses have relocated operations to different parts around the world for supposedly cheaper labor costs and materials, I asked Tim and Dave why should a US company now consider reshoring and reestablishing its manufacturing back in the USA? Here is Tim and Dave’s response:

Some reasons may stem from the original motivation to offshore. Was it strictly cost? If so, what costs were considered? In many cases, the labor cost was the driving force. If that is the case, then looking at the current offshore labor costs, as well as the near term labor cost trend, may paint a very different picture from the original. The rapidly rising middle class in China is eliminating that country’s labor cost advantage.

Another cost is transportation. Energy costs have increased markedly from the days when many companies began their offshoring operations. This is another development that may make domestic manufacture appealing.

Travel costs and time spent coordinating with offshored production are trackable and must be included. While travel costs are calculable, the opportunity costs are probably ignored. That is, could executives traveling to offshored locations be using that travel time in much more productive ways? Also, could the staff time spent dealing with offshore production issues, including complicated logistics, be more productively spent on other matters?

There are also hidden costs that burden the offshoring company in ways it fails to recognize. Scrap and rework can be immense and also unpredictable costs. Do batches of product arrive and sometimes need rework? When that happens, are those costs tracked accurately and reflected in the actual cost of the imported product? What about outages – are there times when product is en route, and stock outages occur prior to arrival? What is the cost of an unhappy customer? Are customers driven to competitors’ products? That can be an unacceptable cost. It can also be difficult or even impossible to measure.

Is the cost of stocking large inventories completely and accurately covered? To avoid outages, extra stock may be kept and stored. Is stock sometimes damaged, or even lost, and are those costs captured? Is a heavily stocked product susceptible to obsolescence through design changes?

Perhaps the most difficult costs to identify are those that result from the distance between production and design/engineering. Are product improvement opportunities lost due to the disconnect between these two entities? Are there quality problems that result in substandard product, which can lead to lost market share? How can such subjective or camouflaged costs be measured, even though they are very real? Sadly, we are convinced that costs like these have been left out of the offshoring equation for many companies. 

What do you think of Tim and Dave's points? Do you think that the era of US companies locating their operations offshore because of supposed cheaper costs are drawing to a close?