Tuesday, February 28, 2006

Made in the USA

Is 'Made in U.S.A.' back in vogue?

As the need for speed in fashion retailing becomes ever more crucial to merchants, industry observers say "Made in U.S.A" is once again looking more attractive to some U.S. retailers versus importing from China.
The company used to import 70 percent of its merchandise from China and elsewhere and manufactured a smaller 30 percent of it in the U.S. Today it manufactures 60 percent locally and imports 40 percent, according to CEO Moshe Tsabag.

By shifting manufacturing back home, Tsabag said he's able to deliver his order to retailers in about 45 days versus the 120 to 150 days it would take to source the same items from China.

More evidence of the benefits of "lean manufacturing," though it seems they are getting only a few benefits (reduction of waste, faster resupply of "hot items") and they may well not know about lean thinking. By studying and applying lean ideas they should be able to reduce the 45 day turn-around time. Perhaps they should read the Fashion Incubator blog.

One more interesting bit of fashion news: Amazon.com bought a internet clothing retailer based in Madison, Wisconsin: shopbop.com. I don't get it. We will have to see if time shows what Bezos sees that I don't.
Update: Fashion Incubator and Evolving Exellence posts on this topic

Sunday, February 26, 2006

Lean Retailing

Topic: Management Improvement

Teaching the Big Box New Tricks

Tesco in Britain has been a pioneer in lean provision for more than a decade. In the mid-1990s, as he looked at the opportunities for retailers provided by the emergence of lean logistics, Graham Booth, Tesco's supply-chain director (now retired) had a very simple insight: A rapid replenishment system triggered by the customer would work in any retail format.

Book excerpt from Lean Solutions.

The consequence, in terms of performance, is remarkable. Total "touches" on the product (each of which involves costly human effort) have been reduced from 150 to 50. The total throughput time, from the filling line at the supplier to the customer leaving the store with the cola, has declined
from 20 days to five days.

And Tesco is moving into the United States retail market in the West Coast in 2007: Wal-Mart, Kroger, Safeway better watch out. The British are coming! by Parija Bhatnagar, CNNMoney.com "Tesco indicated that it will spend more than $400 million a year to build its U.S. stores. Langdoc estimates that the initial investment could pay for 100 to 150 stores."

Previous Lean Retailing post.

Manufacturing's Influential Thinkers

Manufacturing's Influential Thinkers & Doers by John S. McClenahen

This article includes many of those I feel have contributed to the improvement of management over the last 35 years including: W. Edwards Deming, Taiichi Ohno, Shigeo Shingo, Gary Hamel and Eliyahu M. Goldratt.

However, "the best manufacturing thinkers of the last several decades" are Taiichi Ohno and Shigeo Shingo, contends Mercer's Slywotzky. Ohno was a Toyota Motor Co. vice president and Shingo a consultant. In laying out the principles now often collected under the label "lean," they challenged the prevailing notion that manufacturing had to be done on a large scale with long runs and large inventories. They challenged the notion that quality control was something done at the end of the production line. And they challenged the notion that a production line keeps running no matter what. "What they introduced went 100% against the grain and the mindset of great manufacturers of that time, both inside Japan and outside Japan," Slywotzky stresses. The famed Toyota Production System, which emphasizes reducing waste and eliminating defects, is a product of their work. Its impact can be seen at Toyota, the "hundreds of Toyota suppliers" and "the hundreds of companies in the West that, with a 10- or 15-year lag, sometimes a 20-year lag, began to rethink and change their manufacturing," Slywotzky says.

Related Posts:

Friday, February 24, 2006

Innovation at Toyota

Topic: Management Improvement, Innovation

The Birth of the Prius by Alex Taylor III:

By the end of 1993 the development team had determined that higher oil prices and a growing middle class around the world would require the new car to be both roomy and fuel-efficient. Other than that, they were given no guidance. "I was trying to come up with the future direction of the company," says Watanabe, who headed corporate planning at the time. "I didn't have a very specific idea about the vehicle."

Seems like a good job of providing a vision of what was needed without overly restrictive targets and goals (See: Targets Distorting the System).

In a plan he submitted to Wada in 1994, he wrote that the introduction of an improved engine and transmission system could boost fuel efficiency by 50%. But that wasn't audacious enough for Wada, who didn't want to be remembered for producing yet another Japanese econobox. "It was not enough to be a simple extension of existing technology," Wada says. One possible solution intrigued him: a hybrid power system.

While targets and goals can distract from improvement some guidance is useful. If the desire to is have incremental improvement one strategy may be reasonable but if the desire is to aim for huge improvement another strategy is likely required. In general target are far too specific and overused so as a general rule I am inclined to be biased against targets. However the proper use of "soft" targets (doubling or in the range of 10% for example) to define the scope of an effort make sense.

If Toyota can continue to reduce costs, and it most probably will, the potential for hybrids may be nearly unlimited. With its huge headstart, better technology, enormous scale, and powerful will to make hybrids an everyday alternative to the internal combustion engine--a combination no other auto maker can match--it's hard to see Toyota not dominating the industry for years to come.

Investing in innovation is risky. If successful, the benefits can build a competitive advantage that is difficult for others to eliminate. However, others will try and if you fail to execute as well in the future those benefits can disappear quickly. Toyota shows few signs of letting others catch up though.

Thursday, February 23, 2006

2006 Shingo Prize for Excellence in Manufacturing

2006 Shingo Prize for Excellence in Manufacturing

American manufacturing continues to experience turbulent times in maintaining and growing manufacturing jobs. The only business approach that has demonstrated superior achievement is Lean Enterprise Management (the Toyota Production System), the foundation of the Shingo Prize. All 14 companies to be recognized in 2006 have clearly achieved exemplary lean manufacturing excellence.

I am sure the Delphi winning plants are going to feed the complaints raised earlier: Don't Let Delphi Drag Down the Shingo Prize - Delphi's Sobering Message To Us All.

Maybe this is another victory for Alfie Kohn and Punished By Rewards. But, I think Bill Waddell said it best:

Mr. Robson would serve manufacturing and the Shingo Prize much better if he would focus his energy on what lessons can be learned. Clearly the bankruptcy of Delphi is evidence of a gaping hole in the Shingo Prize criteria, as well as in the lean body of knowledge. That is no big deal - just learn from it, improve the Prize criteria, and move on.

My guess is the lean community is going to be more upset with these awards given after Delphi announced bankruptcy.

Wednesday, February 22, 2006

Global Manufacturing Data by Country

Update 2013: see chart of manufacturing output by leading countries from 1999-2011.  The current ranking is China, USA, Japan, Germany.

Topic: Economics, Manufacturing

I am still looking for a good source for manufacturing data by country and year. Today I found some data from the United Nations Statistics Division. The data for the top five manufacturing economies: China, Germany, Japan, United Kingdom and United States. Figures are in current $US billion. The data used is for Mining, Manufacturing and Utilities (because China and Germany do not have manufacturing data separated out).

United States1,7811,7791,8762,012
United Kingdom280283322378

For manufacturing output only:

United States1,4601,4631,5231,623
United Kingdom220223254298

This data shows the United States manufacturing economy is continuing to grow and is solidly the largest manufacturing economy: which contradicts what many believe. It is true manufacturing jobs are decreasing in the United States and worldwide - China is losing far more manufacturing jobs than the USA.

I including some information on the manufacturing economy in my post to the Curious Cat Science and Engineering blog: Phony Science Gap? and referenced my previous post here, Manufacturing and the Economy which reminded me that I wanted some updated data.

Related Posts

Tuesday, February 21, 2006

Quality Customer Focus

Delivering Two Kinds of Quality by Keith McFarland, Business Week:

What do the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly -- whether it's cars, subway schedules, traditional flower arranging, or the famous tea ceremony.

Japanese manufacturers were so obsessed with taken-for-granted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality. In today's competitive markets, manufacturers need to be very far along this quality innovation curve -- or moving along it very quickly.

Related ideas:
Kano model of Customer Satisfaction: Kano saw three types of customer satisfaction: required (basic quality also threshold requirements), more is better (performance quality) and delighter (excitement quality).

Customers expectations change over time. Often what was once enough to delight a customer (remote control for a TV) becomes expected. Once a feature is expected the organization gets no credit for providing it they only risk a negative reaction if they fail to provide it.

Voice of the Customer

Monday, February 20, 2006

John Simpson

Topic: Fun

This is the best I can do to create my Simpson self. Until I have a guest appearance on the show, I guess this will have to do. You can try for yourself using the Simpson Maker: post a comment with a link to your character.

Here is a photo of the real John Hunter (Glacier National Park, 2005):

Sunday, February 19, 2006

The Deming Difference

The Deming Difference:

Everyone wants instant pudding. Then, Dr. Deming stands up and says there is no such thing as instant pudding. That we must learn how to integrate knowledge of people, statistics, and theory of knowledge into a working, breathing organizational system. That understanding these principles will lead to transformation. Instead of being competitive, individual components of the system will, for optimization, reinforce each other. This process is not spontaneous and is discontinuous. Some days little will seem to be accomplished. Other days great breakthroughs will occur. Progress will not be predictable.

Saturday, February 18, 2006

Visible Data

Effective visual signals are important for effective management improvement: lean thinking emphasizes such ideas. Top 5 Rules of Effective Measurement Boards is an excellent post on how to make measurement effective.

Take the time to find the important measures and then don't keep data hidden in some drawer or computer file out of people's view and therefore out of mind. Post the important data for everyone to see. Review the data as changes are made and see that the changes had the desired result. Update the measures when appropriate (for posting visibly - you will of course be measuring more than the few measures that belong on measurement boards).

If a the data posted is not being used as a resource something is wrong. The information on the board may not be the right information. If that is the case, different information needs to be posted. Alternatively the board could be a distraction ("we have changed, look at those charts we have posted on the wall") from the truth - that improvement is not happening, change has only been superficial. A measurement board is a tool, not an end.

Related Posts:

Curious Cat Management Improvement Glossary:

Wednesday, February 15, 2006

Performance Appraisal Problems

The Struggle To Measure Performance, Business Week:

One company that recently decided to dump forced rankings altogether is Chemtura (CEM), a $3 billion specialty chemicals company formed by the July merger of Crompton in Middlebury, Conn., and Great Lakes Chemical in Indianapolis.

"The system forced me to turn people who were excellent performers into people who were getting mediocre ratings," says Eric Wisnefsky, Chemtura's vice-president for corporate finance. "That demotivates them, and they'd follow up with asking: 'What could I do differently next year?' That's a very difficult question to answer when you feel that people actually met all your expectations." Chemtura's new process still assigns grades. But to better motivate employees in the middle, labels such as "satisfactory" have been upgraded to phrases such as "successful performance."

As we mentioned in our previous thread on performance without appraisal more organizations are acting on what most people know - performance appraisal process is counter-productive. Deming on Performance Appraisal, Out of the Crisis, page 101:

Evaluation of performance, merit rating, or annual review... The idea of a merit rating is alluring. the sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

From Business Week's article:

Whether a company calls it stack ranking, forced ranking, or differentiation, "there's no magic process," says Sartain. "We just want to make sure we're making our bets and that we're investing in the people we most want to keep. That's what this is all about."

There are no easy answers, but what it should be about is managing the system to produce the best results. My best advice is to read chapter 9 of The Leader's Handbook and read the rest of the Leader's Handbook and other great management improvement books. And manage using the ideas of Deming, Ackoff, Scholtes, McGregor, Ohno... Refer back to the great books as you gain experience and continue to learn and practice management improvement. It still won't be easy but the chance of you managing systems and people effectively will greatly increase.

Two great books on managing people: Abolishing Performance Appraisals: Why They Backfire and What to Do Instead by Tom Coens, Mary Jenkins and forward by Peter Block - Peopleware: Productive Projects and Teams by Tom DeMarco and Timothy Lister.

Related Links

Monday, February 13, 2006

Toyota Special Report: Thinking Production System

Toyota Special Report: Thinking Production System. A very interesting article on Toyota's web site (www.toyota.co.jp).

At the 2003 Automotive Parts System Solution Fair, held in Tokyo, June 18, 2003, Teruyuki Minoura, then-managing director of global purchasing, Toyota Motor Corporation, talked about his experiences with TPS (the Toyota Production System), and what it means for suppliers and for the future of the auto industry.

This short article is pepered with many great quotes as section headers:
  • In TPS, the T also stands for "Thinking"
  • To cut lead-time, cut out all the bits that don't add value.
  • The line must stop if there is a problem.
  • Ask yourself "Why?" five times.
  • Develop people who can come up with unique ideas.

Minoura warns "simply introducing kanban cards or andon boards doesn't mean you've implemented the Toyota Production System, for they remain nothing more than mere tools. The new information technologies are no exception, and they should also be applied and implemented as tools."

Early in his career, Minoura worked under Taiichi Ohno, recognized as the creator of the Toyota Production System. Ohno, through tireless trial and error, managed to put into practice a "pull" system that stopped the factory producing unnecessary items. But Minoura observes that it was only by developing this "loose collection of techniques" into a fully-fledged system, dubbed the Toyota Production System or TPS, that they were able to deploy this throughout the company

Organization, Systems and Culture

Organization, Systems and Culture by S. M. Lane, G. J. Garrett, with contributions from R A. Long:

Traditional methods of how companies are organized, staffed and managed have become obsolete. The purpose of this paper revolves around those things most companies can do to remain successful, in spite of changing times, changing economies, global competition and customer needs. The information contained within is not new and is not radical, but it is a different way of handling things. Leaders of today cannot rely on successful past practices to guarantee future success. A new global economy requires a different philosophy that supports the new economic age and a different philosophy must take hold in order to survive and prosper in it.

This paper does a good job of pulling together ideas and present them is a simple manner. It is also refreshing to read an article where many sources are given credit and the author does not attempt to "sell" their unique ideas. Management improvement is mainly about using great ideas that have been around for years and decades.

Useful, innovative new management ideas are great. But far too much effort is placed in trying to package "systems" (or copyrighted terms) as some new breakthrough in management when most often they offer little of value. This article points to a number of very useful sources, in my opinion such as: The Leader's Handbook.

Monday, February 06, 2006

Learning, Systems and Improvement

A Major Mistake That Managers Make by Russell L. Ackoff

Once again Ackoff provides great ideas:

Errors of omission, lost opportunities, are generally more critical than errors of commission. Organizations fail or decline more frequently because of what they did not do than because of what they did.

Page 4 and 5 explore the method to effectively learn from decisions the organization makes. The idea seem simple but they are powerful.

Preparing a record of every decision of any significance, ones that involve doing something or (of particular importance) ones that involve not doing
something. This record should include the following information:

• The justification for the decision including its expected effects and the
time by which they are expected...
• The assumptions on which the expectations are based...
• The information, knowledge, and understanding that went into the
• Who made the decision, how it was made, and when...

The decision should be monitored to determine whether the expectations are
being met and the assumptions on which they are based remain valid.

When a deviation is found in either the assumptions or expectations, it should
be diagnosed, the cause determined and corrective action prescribed and

The corrective action is itself the result of a decision. A record of this decision
should be made and treated as the original decision. In this way the process
can not only yield learning but also learning how to learn.

A record of the entire process (all four steps) should be made and stored for
easy access by those who may later be confronted by the need to make a
similar type of decision.

More articles and books by Russell Ackoff

Theory of Knowledge