Toyota Benchmarked... Yet Again

There's a great article worth checking out over on the CNNMoney / Fortune site. It's one thing to see software companies adapting Lean methodologies, but it's quite another to see them transform their culture, and Menlo Innovations seems to be doing the latter. Jeffrey Liker confirms: "Any piece you see in Menlo you'll see somewhere else. What you won't find [elsewhere] is all the pieces working together…."

The article covers four techniques that contribute to Menlo's success -- Assigning bite-sized pieces of work, Keeping projects in plain sight, Observing the customer in action, and Training workers to stay flexible -- but, it's this last area that I found quite insightful, and CEO Rich Sheridan's explanation of "towers of knowledge." Because all programmers at the company work in pairs, no one employee becomes the sole "owner" and facilitator of a particular project. This keeps programmers available to delve into other areas as well making all projects team efforts.

What do you think of Menlo Innovations' work atmosphere and business techniques? Will it become a benchmark for its own industry? Do you know of any other software developers that are building this type of culture?

"Made in the USA" -- Can it Happen Again?

During the past 20 years, US manufacturers have moved their production operations, at a massive rate, to foreign countries that offer cheaper labor costs.The migration of US manufacturing jobs to such locations as China have resulted in cheaper products, but the overall effect on the US economy has been hotly debated. Will manufacturing in the United States ever see a resurgence?

Tim Hutzel and Paul Piechota recently published a very interesting and timely book titled Keeping Your Business in the U.S.A.: Profit Globally While Operating Locally, and they feel that the current adage -- "The US can't compete with offshore labor costs" -- is a mere myth. Both have spent the past three years researching companies that have flourished while manufacturing their products in the US and their book documents just how these organizations achieved this goal.

I recently asked both authors why they believe the US can recover from the out flow of manufacturing, and here is their response:

A burning issue that is certainly in need of a remedy is the mass departure of manufacturing from the US to foreign countries. The results of this exodus are felt every day. As much as you would like to buy US-made products, this has become an impossible task. It is heartbreaking and disturbing that so many products, such as bicycles, clocks, garments, shoes, and computers are not produced domestically anymore.

Manufacturing can return to the US because many companies have been hurt by the rush to outsource. We have heard the tales of many business leaders regretting their outsourcing decisions -– the unplanned costs, poor quality, uncontrolled processes, long delivery times, graft, monstrous order quantities, inventory nightmares, lost and damaged products, oversight trips overseas, confrontations, half-truths, excessive order-to-remittance times, and added debt. In addition, there are social and national implications of outsourcing -– unemployment, increased government jobs, loss of skills, weakened national defense, loss of tax base, and unbridled national debt.

In our book, we clearly illustrate three manufacturing companies that have been able to resist the outsourcing trend and achieve overwhelming success while keeping jobs in the US. We have examined the successes, failures, lessons learned, and methods used by each company to achieve and sustain profitability.

What do you think the future holds for US manufacturing? Will labor costs in China only eventually rise? Will shipping and inventory costs associated with production in foreign countries eventually be important factors in cost?

The Supply Chain Executive?

I recently came across this great article written by Michael Koploy over on the Software Advice site. Koploy argues that technology companies must appoint more persons with strong supply chain backgrounds at the C-level (top-level executive) to operate at utmost efficiency. He believes that a talent crisis is, unfortunately, holding back this field from gaining increased exposure among executives.

Koploy notes Apple Inc.'s recent appointment of Tim Cook as new CEO of the company is groundbreaking because "a supply chain-minded executive is a rare sight" and believes "organizations need to take Apple’s lead and include supply chain-minded executives at the leadership table: to help organize, implement and manage strategies to improve the business’ value chain."

One of the most important points made in this article is essentially a statement that I've heard during many supply-chain presentations at various Lean conferences: Supply-chain experts must now "transition from a traditionally execution-based role to a strategic one."

Koploy's list of attributes for the ideal supply-chain executive candidate are:

1. Experience managing large, global supply chains.
2. A track record for being able to adhere to lean and just-in-time fundamentals.
3. Experienced enough with SCM software to know how to implement and leverage its benefits.
4. The ability to continually push both strategic and operational supply chain improvements.

What are your thoughts on Koploy's assertions? Should more companies follow Apple's example? How should the industry respond to the skills' shortfall?

What Toyota Team Members Have to Say

Productivity Press recently published a very special book -- One Team on All Levels: Stories from Toyota Team Members, Second Edition. This book, written by Tim Turner and his colleagues at Toyota's Georgetown, Kentucky facility, is far from another technical explanation of the Toyota Production System (TPS) -- It is rather a clear illustration of the culture it creates.

One such insightful recollection was provided by Raymond Bryant, an assistant general manager in the assembly department. He writes:

We often say that the most valuable resource we have is our workforce, the team members. I don’t just believe this, I know it.

Our company functions on the basic principals of the Toyota Production System (TPS). The Toyota Way guides us as we go about doing daily and longer term operations. When asked, "What is TPS?" the reference is usually to the tools widely talked about (andons, kanbans, etc.). As one of the many students of TPS (we all are still studying and learning), I have come to the conclusion that the success of TPS is in the commitment of our workforce to pursue it.

The tools are easily copied and put into place. They are, for all practical purposes, simple. The ability to understand and use them is equally as simple. The commitment to use them seems to be the struggling point for many organizations. Why? This is the "million dollar question."

I believe that our success is in the very simple understanding of what TPS really is. This I would define as:
1. Always doing the right thing.
2. Always knowing that you can do better.

The significance is in the "simplicity" of these two concepts. All of our workforce, each team member, can understand, make decisions, and feel proud of these two guiding thoughts.

Pulling the andon is simply "doing the right thing." Alerting your staff or assistant manager when a problem has come up in a project is also done for the same basic reason. The one making the decision to notify and possibly seek help, along with the one that is receiving the news and/or request both know that this is the "right thing" and expected in our culture. This naturally carries beyond our work life into our personal life.
We sadly lost a team member some time ago in an automobile accident. Along with the strong support you might expect to see of the family during the days after this tragedy, many of the team members and leaders gathered together several weeks later to complete a home project that he had started. This was the "right thing to do."

My role is pretty basic in the grand scheme of things:
1. Setting clear goals that, if met, equal success (this requires face-to-face discussions to clarify and provide the why behind them) approving the ideas and methods suggested on how to reach those goals (this requires even more discussions, primarily listening, coaching, and the willingness to see many other points of view).
2. Supplying the support and/or resources needed (this really requires the highest amount of listening skill, because the secret is knowing when not to give input).

A successful manager knows not "when to say something," but when "not to." Thousands of minds, all working to "do the right thing." Everyone understanding that "we can always do better."

What are you thoughts of Raymond's ideas? Have any of you visited Toyota's facility in Kentucky?  Have any of you experienced Toyota's leadship firsthand?

What Happens When Two Automakers Cross Paths at an Airport?

I actually had to read this great article over on the International Business Times site a couple of times to ensure I got it right! Toyota and Ford Motor Company will work together to develop a gas-electric hybrid fuel system for their respective pickup trucks and SUVs. According to the article, the seeds of the idea were planted when Ford CEO Alan Mulally and Toyota CEO Akio Toyoda "crossed paths at an airport." I guess it should not be that surprising considering Alan Mulally was an executive at Boeing prior to his position as CEO at Ford -- Boeing was an ardent adopter of the Toyota Production System, which helped develop one of Boeing's best-selling jet airliners: the 777. I'm glad the article included some lines about the long history the two companies have shared dating back to the 1930s -- especially  Kiichiro Toyoda's (Toyota automotive founder) admiration for Henry Ford's 1926 book Today and Tomorrow.

What are you thoughts on this joint venture? Is it a win-win? Do you think it will ultimately benefit the consumer?

Mapping the Process -- Finding the Waste

Robert Damelio published a second edition of his best selling book The Basics of Process Mapping this year, and I recently spoke with him about it. I asked him: "While you were developing the second edition of your book, which of the most important concepts in your book still often gets misunderstood?" Here is Robert's reply:

One of the most important (and often misunderstood) properties of work is "waste." Those familiar with the cost of poor quality concept often tend to equate “waste” with defects, rework, returns, inspection, appraisal, failure in test or operation, etc. In general these are forms of waste related to work outputs.

It turns out that more forms of waste, and much greater cost are associated with the resources used and applied during a work activity. This is why waste is defined as any work that does not create value as perceived by the customer.

Here is a table from the new edition of Robert's book that illustrates his points:


What do you think of Robert's table? Do you think his definitions and examples are accurate? What are your experiences with process maps? Do they help diagnose and improve work?

Are Team Conflicts Often Part of the Process in Lean Design Projects?

Have any readers been involved in a construction project that applied Lean design techniques ? Most often, the benefits described involve reduced time and waste. This article over on the Construction Digital site discusses the reduction of risk such as "owner changes, constructability changes, incompatible design, rework, budget overruns, misinterpretations, unsafe construction, and project team conflicts." The success of a Lean design project relies heavily on the efficiency of the cross-functional team, which can include architects, construction managers, investors, and consultants. Although it is crucial for this team to in place right from the beginning of the project, I wonder how long it takes the players involved to overcome obstacles in regard to "territory" and autonomy. When these teams are first form, are interpersonal conflicts initially increased? Are personality conflicts and territorial issues greater for a team such as this because of the vastly different perspectives on the project each member brings to the table? Last year, Productivity Press published a book by Gary Santorella titled Lean Culture for the Construction Industry: Building Responsible and Committed Project Teams that touched on these issues.

I'd like to hear from professionals out in the field who have firsthand experience with these teams and if they initially appeared to hasten or hinder a project. The eventual measurable benefits of these teams greatly increases the success of the project, but do these teams cause initial rough spots?

Green in a Globalized World

During a recent email exchange with Joao Neiva de Figueiredo -- co-editor of the recently released book, Green Products: Perspectives on Innovation and Adoption -- I asked him what he thought were the most important considerations for the sustainable adoption of green products and services in an increasingly globalized world. Here is his complete response:

"In analyzing examples of green product innovation and adoption in various countries around the world, I believe the three necessary conditions for sustainable adoption of green practices are:

1. The need for a systemic approach in which the different moving parts in the development and adoption of new technologies are addressed with attention to their many linkages. In addition, interrelationships between these new technologies and institutions and markets need to be considered systemically. It is not enough to have a brilliant solution for one part of the puzzle if the linkages to related issues are not examined and solutions found.
2. The need for mechanisms that align the incentives of all stakeholders to ensure widespread adoption of a green technology. The first step in the process is necessary to correctly identify the stakeholders and their objectives. This can be a complex process because often major stakeholders are not even at the table and therefore cannot explicitly defend their own point of view. Once stakeholders are identified, it is desirable that markets, society, and governmental institutions provide incentives for those stakeholders to behave in a way that favors adoption of the green innovation.
3. It is necessary for the innovative solution to address each of the three 'people, planet, profit' dimensions (i.e., social, environmental, and economic considerations need to be integrated in any large-scale proposed green solution). Furthermore, from an adoption standpoint it is helpful to use both a top-down and a bottom-up approach (i.e., policies that stimulate thinking globally and acting locally seem to be the most successful).

I've seen several cases that illustrate these precepts and therefore help sharpen our understanding of the necessary conditions for successful green product innovation and adoption. Whether tourism in the Galapagos or mass transport in Mexico City, whether ethanol in Brazil or electric cars in Japan, each case has lessons that are useful to us as we strive to make ours a greener planet."

What do you think of his conclusions? Have you seen any examples of green practices that have adopted these tenets? Have you seen green projects that have failed due to poor planning or incomplete considerations?

Lean and the Smaller Companies

I recently read this article, authored by Glyn Finney, over on the Achieving Business Excellence site, about the effectiveness of Lean implementations within smaller organizations. Two interesting points stuck out:

1. Because smaller organization do not have the resources to employ Lean management senseis to drive the initiative, many now have the option of robust online courses.
2. Smaller organizations often comprise employees that work together much closer than their larger counterparts -- the Lean management systems will reveal waste much quicker.

Do you agree with Finney's points in his article? Do you think that online courses are improving to the point that they can be used in lieu of a sensei? Do any readers have any experiences with online courses? How about experiences with Lean initiatives in smaller companies? What were the particular challenges?

Perceived Quality and Market Share

Last week, I had a phone conversation with Robert Fantina, co-author of the recently released book, Your Customers' Perception of Quality: What It Means to Your Bottom Line and How to Control It, about customers' buying habits and what they consider value-adds. Many attendees at conferences I attend often state that their companies' products and services are of very high quality, yet they struggle to maintain market share. Shouldn't the quality speak for itself? I posed this question to Robert, and here is a summary of his answer:

Unfortunately, many companies do all the right things in terms of quality, including reducing their defects to near zero, eliminating call waiting times, etc., and still struggle to hold onto their customers. Repeatedly, this appears to be because their customers do not perceive them as delivering quality.

High quality in products and services is vital but insufficient; despite high quality, customers may still perceive quality to be inferior. What is causing that perception?

The answers to that question are many and complex. Unfortunately, it appears that a variety of concerns experienced by customers translate in their minds into ‘poor quality.’ For example:

• A customer that buys a product though a third-party distributor and has problems with that distributor, may view the quality of the product as poor.


• A customer who loves his/her product, but then struggles to find some information on a difficult-to-navigate website, may begin to view the quality of that product as poor.


• The company that orders 1,000 widgets, and receives them all individually wrapped, and must discard/recycle all that wrapping, may say that quality is poor.

While it is clear that none of these issues in any way reflects the actual quality of the product, they can influence customers' perception of quality. And if their perception of quality is poor, the actual high-quality of the product is meaningless.

Do any of you suffer from this situation? How did you recover? Have you experienced an instance in which the delivery of a product or service affected its popularity? How did you discover this?