Lean Aerospace Initiative

Topic: Management Improvement, Lean Manufacturing

The Lean Aerospace Initiative at MIT has a large number of reports, case studies and articles available online.

The Initiative was formally launched as the Lean Aircraft Initiative in 1993 when leaders from the U.S. Air Force, MIT, labor unions, and defense aerospace businesses forged a trail-blazing partnership to transform the industry, reinvigorate the workplace, and reinvest in America using a philosophy called "lean."

The Initiative's stated mission is to research, develop, and promulgate practices, tools, and knowledge that enable and accelerate the envisioned transformation of the greater United States aerospace enterprise through people and processes.

What makes Toyota tick?

Topic: Management Improvement

Advanced Manufacturing magazine continues the focus on Toyota with a cover article, What Makes Toyota Tick? by Vanessa Chris

"Toyota has been coined 'the most feared automaker in the industry.'" Just a few days ago I posted on: Fear Remains a Toyota Motivator. No matter what Toyota continues to be the focus of attention.

Every aspect of the assembly process flows flawlessly into the next - making the plant's 157 processes seem like one. Parts from suppliers are delivered on racks that attach seamlessly onto Toyota's assembly cells. When an assembly line is short on parts, sensors send messages to a team member's wireless PDA, so he or she knows exactly when and what type of part is needed. Every team member here is recertified in six month intervals, to ensure optimal performance. And digital andon boards hanging throughout the facility report issues and the day's progress - as well as any problems - in real time.

In the two-and-a-half years the plant has been in operation, team members have worked diligently to shave nine seconds of takt time off the assembly process without increasing manpower - mainly by focusing on little changes, like putting all fluids in before the final line, and ensuring carpet and seats are installed at the very end to avoid stains or damage.

Lean so lean it doesn't stand out
In this plant, there are no new lean cells that are "under construction." There are no pre-lean horror stories and no wide-eyed employees excited about their newly-organized work area. The lean philosophy is so deeply embedded here it's as if it requires almost no effort at all, emphasizing the differences between first generation lean and, well, a pioneer like Toyota. "It's tough to adapt a whole system to another system that's already in place," says Gerry Malloy, the editor of Canadian Auto Dealer magazine, and a respected automotive industry journalist. "It's how (Toyota's) been doing business from the beginning and it's difficult for other people to catch up."

People might get tired of reading about Toyota but when you read articles like this you see that a principle reason for there being so much focus on Toyota is that they really are doing great things.

The editor's note, Life lessons from a car company? is also worth reading:

These examples, and there are many more, help explain what fuels Toyota's success. There's no question there's something different about this company worth a closer look - and it's not just the top-notch manufacturing technology and advanced lean methods visible on the factory floor. True, some of these factors are "touchy-feely" things that are hard to quantify. But the way Toyota treats its workers, er, team members, also extends to the way it conducts itself with customers, suppliers, the local community, and the environment. It's a holistic approach to running a business that is no doubt hard for many North American-trained business executives to grasp - and even harder to copy.

More reading:

• Lean manufacturing articles
  
• Previous posts about Toyota
  

Tags: management, lean manufacturing, TPS

Shenandoah National Park Photos

Topic: travel photos, Shenandoah National Park



Shenandoah National Park, Virginia, lies in the Blue Ridge Mountains, a few hours from Washington DC. Skyline Drive runs the length of the park as does the Appalachian Trail. I hiked several trails in October, 2004 and took these pictures.


More of my photos:

• Washington DC area travel photos: Library of Congress - United States Botanical Garden - Bull Run Trail (Virginia) - Great Falls Park (Virginia) - C&O Towpath (Maryland)

• Curious Cat Travelogues and Travel Photos

Secrets of the World's Best Companies

Best-kept secrets of the world's best companies by Paul Kaihla.

Not even the most successful companies in the world are managed by the book. Great management formulas aren't handed down on stone tablets, or found in the writings or speeches of gurus and consultants. They emerge from years of experimentation, trial and error, regime change, reorganizations, crises, and employee suggestions.

I agree that management is much more complex than books or simple theories claim. I think one of the great difficulties people have in evaluating management concepts is that the complexity (and interaction) makes it very difficult to evaluate (especially using accurate data).

Still, I think great management ideas are found in the thoughts of leading management thinkers (now it is true most I think most "writings or speeches of gurus and consultants" don't provide much use but the right thinkers do offer great value).

As Dr. W. Edwards Deming said there is no instant pudding for management (no quick fix). And management requires customization to the organization. You cannot just copy management practices from one place, where they are successful, to another. You can learn from what has been successful and adopt it to your organization if you have knowledge and theory and know how to test (pdsa) the effectiveness of new ideas in your organization.

I don't find many of the "secrets" mentioned to be the greatest ideas for management (the best ideas I find among the thoughts of Deming, Ackoff, Ohno, Provost, Csikszentmihalyi, Hoerl, etc..

Still, I believe it is good to learn about what others are doing. Then, as with brainstorming, what you learn about may lead you to a new idea that will work for your organization (you may also get lucky and find something that is almost directly applicable).

If so-called prediction markets--betting pools in which shares are traded to gauge the odds of upcoming events--can call presidential elections and Oscar races with accuracy, why not use them inside companies to identify their next hit products? The answer: It's a lot harder to tap into collective brainpower about a product's market potential, and other key business questions, than it is to foretell the winner for Best Picture.

In his first effort, Proebsting chose 25 programmers and quality-control testers from a team of more than 50 working on a new Windows testing application. Via an internal website, workers could buy shares for the month they believed the product would ship. Shares were valued at $1 apiece, and the engineers drew on accounts stocked with $50 each to fund their bids. Within minutes of the site's launch, shares for a February ship date shot up in value while those for November, the scheduled release date, dropped to almost zero. That came as a shock to the project director, who had heard nothing but optimism in meetings and e-mail updates.

This is one example of an intriguing idea I see here. I think I would see it as a management project that had a very high chance of failing (not providing a reasonable value for the effort expended). Partially this is because working to apply this would put you in largely in unknown territory. This has not been applied for decades by many companies and been refined to a point where experience has shown the strengths and weaknesses in this approach such as: what types of things is this a useful tool to manage.

I've read about similar attempts with decisions on what drug development to fund. Here are some more articles on this topic: The End Of Management? - All seeing all knowing - Trying Out the Wisdom of Crowds

Lean and Theory of Constraints

Topic: Management Improvement, Lean Thinking

David Anderson's post, Lean vs. TOC - No Conflict, is an excellent addition to the previous post here: Lean Thinking and Management.

I demonstrated these ideas recently by taking an updated version of my XIT Sustained Engineering paper from the TOCICO in Barcelona to the Lean Design and Development conference and recasting all the exploitation and subordination steps as waste reduction instead.

David refers to a post, looking for a conflict, that is definitely worth reading:

This is the dilemma: "Optimize everything" conflicts with "Only optimize the bottleneck". I like both approaches and have used them both successfully. How is it possible that two of my favourite techniques disagree?

I like the way the post looks at this question. I must admit, my personally view is that the conflict is not as stark as it may appear. I tend to believe the theory of constraints view is helpful but can be misleading since often the interdependencies within the system mean that it is not true that "optimizing non-bottlenecks will introduce waste" (that may be true but is not necessarily true - that is how I see it anyway).

These are good ideas to be discussing.

Related:

• Theory of Constraints (ToC) articles
  
• lean manufacturing articles
  
• How To Compare Six Sigma, Lean and the Theory of Constraints by Dave Nave (a friend who will also be at the Deming Institute Seminar that I am co-presenting in April in Boston - sign up).
  

Lean Thinking and Management

Topic: Management Improvement

Several interesting posts have been inspired by the Kaizen Priorities post on Got Boondoggle. While it has been mentioned debating these ideas may not be valuable, I believe it can be valuable to explore the reasons behind the different views.

Bill Waddel's post, Lean Manufacturing, points to the importance of cycle time reduction (versus the priorities mentioned in the original post). I think that point is valuable. He also talks about the reasons for Six Sigma's failures and the difficulty finding lean manufacturing success stories (outside Toyota).

I agree that we should acknowledge the paucity of success stories. The failures of management are not minor. The problems are large and the successes seem limited. The biggest thing I think we need to learn from this is that improving management is not easy. The concepts may seem simple but most of us can look around and see much more Dilbert Boss behavior than lean thinking behavior. And the gap between those two types of behavior seems to rise as you go "up" the organization chart.

My belief is that an organization must slowly and consistently move in the right direction. Toyota got to where it is today after many decades of continuous improvement. I don't think there are shortcuts to truly operating as a lean company.

However that does not mean that an organization cannot move in the right direction. I think many alternatives can help start that journey. To me the most important factors to whether the steps will actually lead anywhere are:

• success that builds upon success upon success...
  
• a commitment to continuous improvement
• a commitment to learning
• long term leadership for management improvement
  

To me most organizations will not even seriously consider changing the current management thought process without drastic threat (bankruptcy) or numerous successful improvements that give credibility to the new management ideas. Therefore to me the most important thing is finding a way to successfully introduce ideas and build upon those successes over time.

The second through fourth factors might not even be present at first. I believe it is perfectly fine to start with successfully improving and only after people start to take notice work on those points. And don't expect that to be easy. I believe most organizations never will accept that anything other than a few new tools are needed. And they move on to the next fad (Management by Objective, TQM, Re-engineering, Six Sigma, Lean Thinking...).

To me "Kaizen Priorities" was about what to actually do now. "Lean Manufacturing" is about what to do now (reduce cycle time) and warning about the fact that most likely the overriding management will not change. In The Heart of the Matter, Bill Waddel quotes Bryan Lund:

A select number of companies will "get it" by researching the history of TPS and understanding why TPS is what it is today, by educating themselves and through deep experiential reflection. Those companies will be the most successful in the world. The bulk of the companies in the world will continue to apply the tools, always scratching the surface, never knowing what is at the heart of TPS.

Right on. Bill goes on to talk about the importance of (in my words) transforming the way management thinks versus just applying some new tools without changing the current management beliefs. I completely agree that the largest benefits will go only to those organizations that change the way management thinks. I also believe that is a very difficult task.

I agree we need to find ways to improve the success of management improvement going forward. I agree we would be much better off if we could come up with ways to speed up the adoption of better management. But I really think we need to focus on how to be successful and then worry about speeding it up.

In Kaizen Priorities Part 2, Mike Wroblewski states:

This point leads to the concept of kaizen. I was taught kaizen is more than just continuous improvement of a process or cycle time focused, it is about people. The meaning of kaizen includes the development, training and improvement of people along with removing the burdens that people deal with in work.

As this is done I think we build the capacity of the organization to accept and move forward more lean thinking. Getting the management system to adopt the ideas is much more challenging (than starting to apply some tools) but I think progress is being made.

Still I am confident in the next 10 years there will be much, much more success at applying lean tools more widely than there will be in creating organizations that management is truly knowledgeable and effective in using lean thinking.

I would love it if I am wrong and many organizations adapt a lean management system but I think we have a very difficult task ahead of us. Hopefully the success of those applying lean tools will spur the interest of some using those tools to see what more there is to this lean stuff. And hopefully some of them will join our effort.

Hopefully this discussion can continue (for quite a long time) because I think we are only scratching the surface of what is possible.

Deming and Toyota

Topic: Management Improvement

In response to Deming Electronic Network message, Deming and Toyota:
"I have read a few of the threads referring to Toyota and their success. I am somewhat familiar with the Toyota Production System (where Lean principles sprouted from), but I have often wondered if Toyota subscribed to all of Deming's 14 points.

I believe Toyota applied Deming's ideas to create a management system and continued to develop that system to create the Toyota Production System (also known as lean manufacturing). I believe a convincing argument can be made for Toyota following all 14 points.

An interesting article on Toyota's web site illustrates their commitment to several of the points, Toyota Special Report: Thinking Production System.

Another interesting document, on Toyota's web site is an environmental and social report - that while it does not mention Deming's 14 points does illustrate their belief in several of them (for example: "We must provide to customers cleaner, safer, and more attractive products with excellent value. To shareholders, we must enhance share value through long-term and stable growth by increasing profits and paying appropriate dividends. With business partners, we must engage in fair business based on a spirit of mutual benefit.").

I do not believe Toyota has "abolished the annual rating or merit system" - I may be wrong (I just figure I would have heard of it if they had).

One point that I believe people confuse is, "eliminate numerical goals, numerical quotas and management by objectives." Toyota does mention numerical goals. However, the way they talk about numerical goals I do not feel conflict with Deming's point. For example, see: Innovation at Toyota.

I believe they subscribe to: "Drive out fear and build trust." But that doesn't prevent conflict at times that certainly must bring up fear in some. But taking this seriously and attempting to work on doing this I think is part of Toyota's management system.

John Hunter

Using Design of Experiments

How to Institute DOE in Your Company by Davis Balestracci:

DOE works, but I don't need to sell that to the readers of this newsletter. But as certain as we all are, no one can deny that design of experiments faces resistance even in environments where it is a proven tool. Every research scientist or engineer who has had a major success from DOE can tell you story after story of how management still wanted problems solved one-factor-at-a-time.

Design of Experiments (DoE) was developed by R.A. Fisher in the 1920s (related terms: factorial design, multivariate expertness). Six Sigma was the first general management approach that specifically highlighted the use of Designed Experiments for improvement. Still the use of factorial designed experiments is much less than it could be.

A Brief Overview of DOE from the Macomb Intermediate School District which has a high school course on the topic.

Design of Experiments can seem complicated but at the core it is fairly simple and powerful. By applying the proper techniques it allows you to gage the effect of several variables and, very importantly, the interactions of those variables with a small number of experiments (or tests or pilots).

George Box is a wonderful author (and friend) who can write for mangers who are not knowledgeable about statistics and statisticians. Statistics for Discovery does a good job of explaining how organizations should use experiments to improve.

While the adoption of DoE is still growing slowly, an increasing number of organizations are using DoE to improve. In the past most companies (in most industries anyway) did not have to compete with others that were using DoE to improve. But as more adopt DoE as one more tool to help increase the pace of improvement those that fail to take advantage of this tool will find themselves at a serious disadvantage.

Related links:

• Design of Experiment articles
  
• Design of Experiments in Advertising
  
• 101 Ways to Design an Experiment, or Some Ideas About Teaching Design of Experiments by William G. Hunter
  
• Design of Experiments (DoE) definition
  
• Marketers Are Embracing Statistical Design of Experiments
  
• Design of Experiment Directory
  

VIP?

Topic: This is broken

The images shows: I am 64th in line as a VIP. If I were not a VIP I would be 1st in line.

Actually the graphic is mainly just funny. The real broken part is that the system has disconnected me twice and then you have to wait to be readmitted - granted only a minute and a half. CBS is trying live internet video on a scale not attempted before. It is bound to have a level of service less than tried and true methods.

By signing up early (still for free) you could be treated as a VIP. The first time I tried to sign in my VIP status helped. The image for the video is of pretty low quality but still I am satisfied. I would hope in future years the quality will improve. But for now I am happy with this opportunity at all. The biggest failure with the current setup is the do not allow viewing of the game that "is being broadcast" in your area. However right now my station stopped showing the Marquette game and the internet site still doesn't let me view it. They really should fix this problem.

See more broken items

Six Sigma Won't Fix Bad Management?

Topic: Management Improvement

Re: Six Sigma won't cure bad management

I believe Six Sigma can be an effective management improvement strategy. It is not the most effective, in my opinion, but still effective. In my opinion, if Six Sigma isn't making a significant impact on fixing bad management then it isn't a very effective six sigma effort.

Like most management concepts how it is applied varies tremendously. If one just uses some tools that are part of the "Six Sigma tool kit" (mostly tools from TQM and the like) then you might improve bad management only marginally.

But if you read the work of Roger Hoerl, Soren Bisgaard, Forrest Breyfogle III... and learn and apply what they talk about as Six Sigma you will definitely have to address bad management practices. There Six Sigma is definitely a management improvement system (you can't apply their concepts of Six Sigma without fixing many bad management practices).

Also see my thoughts after a Six Sigma conference in 1999 and more recent posts on Deming and Six Sigma and Has Six Sigma been a failure?.

Customer Focus

Winning With Service by John Teresko:

"From our viewpoint, machines are increasingly more difficult to differentiate for most applications," admits Harry C. Moser, president, Agie Charmilles Corp., Lincolnshire, Ill. "There are many good competitors, and while we think our products are the best, for a lot of applications it is getting increasingly hard to prove, and therefore we have chosen to [also] differentiate via service.

Service can be a great differentiator, if you can do it well. Since, so often, service is poor in so many areas those that provide good service can set themselves apart. It is usually difficult for competitors to copy exceptional service.


Related posts:

• Customer Service is Important
  
• Innovation and Customer Focus
  
• Deming's Ideas at Markey's Audio Visual
  
• Superior Customer Experiences
  

NCAA Basketball Tournament Challenge

Topic: Fun, Basketball

Once again I have created a group on the ESPN NCAA Basketball Tournament Challenge for curiouscat basketball fans.

To play, sign in to ESPN and register, if you need to, or sign into your account (using the link at the very top of the page).

Once you create your entry, you will see a link to "create or join groups." Click that link. Then enter curiouscat in the find group box. Select the curiouscat group and enter cat as the password.

Enjoy,

Boondoggle Rules

Topic: Management Improvement, Lean Thinking

Easy Lean from Got Boondoggle:

The lean journey is a long, continuous process of learning, experimentation and improvement.
...
Most of you are smart enough not to buy into this branding of lean. However, there are some short-sighted executives that might fall for this slick shortcut to "Easy Lean." That would be a shame. For those with limited lean enlightenment, I will provide a few short rules to get past the branding of "Easy Lean."

• Lean is not easy
• There are NO software solutions in lean.
• Always Simplify first, Automate last (and automate only if needed)
• If it sounds too good to be true, it is!

Another great post from the great Got Boondoggle blog.

Related Posts:

• The Deming Difference
  
• The Quick Fix
  
• Open Source Management Terms
  

Mount Rainier National Park Photos

Topic: Travel Photos, Mount Rainier National Park



I have posted, the final destination of my trip last summer to the Pacific Northwest National Parks: Mount Rainier National Park.

• Curious Cat Travelogues and Travel Photos
  
• Worldwide directory of travelogues
• Worldwide directory of travel photo essays
  

Lean Management Idea for Health Care

The Health Factory by Stpehen Spear, New York Times opinion piece:

Today, going to an American hospital seems about as safe as parachuting off a bridge. An estimated 98,000 Americans die each year as a result of medical error, and a nearly equal number succumb to infections they acquire in hospitals. Those rates are unacceptable in the world's most medically advanced country.
...
To go from working around problems to identifying and solving them required hospital workers to change the way they worked, from the front lines to the senior levels. But the effects were profound. If the rest of the country's hospitals follow that example, the national savings would be measured in tens of thousands of lives and billions of dollars every year.

• Saving Lives: US Heath Care Improvement
• Institute of Healthcare Improvement
• Excessive Health Care Costs
  

Warren Buffett's Shareholder Letter

Topic: Investing, Management Improvement

As usually Warren Buffett's Berkshire Hathaway shareholder letter is packed with good investment thoughts along with some management wisdom.

Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won't change, moreover, because the deck is stacked against investors when it comes to the CEO's pay. The upshot is that a mediocre-or-worse CEO - aided by his handpicked VP of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo - all too often receives gobs of money from an ill-designed compensation arrangement.

Page 13, related posts:

• Toyota Manufacturing Powerhouse "In a reflection of Toyota's team-oriented approach, its executive pay is paltry by U.S. standards. Analyst Ron Tadross at Banc of America Securities estimates the total annual compensation of Toyota's CEO at under $1 million - about as much as a vice president at GM or Ford Motor Co. makes in a good year."
  
• Excessive Executive Pay
  
• CEO Pay: Obscene
  

My views on America's long-term problem in respect to trade imbalances, which I have laid out in previous reports, remain unchanged. My conviction, however, cost Berkshire $955 million pre-tax in 2005.

From 2004 letter: "Should we continue to run current account deficits comparable to those now prevailing, the net ownership of the U.S. by other countries and their citizens a decade from now will amount to roughly $11 trillion. And, if foreign investors were to earn only 5% on that net holding, we would need to send a net of $.55 trillion of goods and services abroad every year merely to service the U.S. investments then held by foreigners. At that date, a decade out, our GDP would probably total about $18 trillion (assuming low inflation, which is far from a sure thing). Therefore, our U.S. "family" would then be delivering 3% of its
annual output to the rest of the world simply as tribute for the overindulgences of the past. In this case, unlike that involving budget deficits, the sons would truly pay for the sins of their fathers. - page 20"


More information on Warren Buffett

Seth Godin Video

Topic: Marketing - Management Improvement

Seth Godin has a great blog on marketing. To me, his views put marketing within the context of the system (of the whole organization) rather than a disconnected "stovepipe" as it is often treated. This fits with my bias in favor of systems thinking. He has written several books on the topic:

• All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World


• Purple Cow: Transform Your Business by Being Remarkable


• The Big Moo: Stop Trying to Be Perfect and Start Being Remarkable by Seth Godin and many others

He recently spoke at Google: view via Google Video. I found the video enjoyable and worth the 45 minutes.

Random comment: he needed some simple help from someone who spoke Japanese, he posted a message to his blog and a few minutes latter had two volunteers. I think that type of interaction is cool.

Saving for Retirement

Topic: Investing, Retirement

Our Financial Failings by Neil Irwin, Washington Post:

Meet the typical American family.

It has about $3,800 in the bank. No one has a retirement account, and the neighbors who do only have about $35,000 in theirs. Mutual funds? Stocks? Bonds? Nope. The house is worth $160,000, but the family owes $95,000 on it to the bank. The breadwinners make more than $43,000 a year but can't manage to pay off a $2,200 credit card balance.

That is the portrait of the median American household as painted by the Federal Reserve Board's Survey of Consumer Finances.

Saving for retirement is not complicated, it is just a matter of priorities. Most people care more about a Startbucks coffee each day (or season tickets, or new shoes, or a new car every couple of years or...) today than saving money for retirement. In a capitalist society we believe in letting people make their economic choices. The choices most of us make (in the USA) lead to the results above.

I think that choice is not a good one (but that is just my opinion - obviously not the decision of most making decisions each day). If someone doesn't want to reduce their current expenditures they have options:

• Earn more money to allow both your desire for current purchases and savings
  
• Cut back your current expenses and increase savings
• Decide you will live well now and poorly later
• Hope that you will become much more wealthy later in life (get stock options with your company that does tremendously well, invest like Warren Buffett [of course you need at least some investment to start with and decades of time for this to work wonders], win the lottery, etc.)

Failure to save for retirement is not a complex matter. It might be that we don't like the choices, but those are the choices. I think in reality most in the USA are choosing to live well now and poorly later (actually I just thought of another option, live well now and die early so maybe I am missing other options too). They may not voice their decision to spend now and not save as a choice to live well now and poorly later but that is what most are choosing (based on realistic future economic reality and their choices).

Savings for retirement is difficult mainly because of our trouble planning for the long term, it is not at all a complex problem. The fable of the ant and the grasshopper illustrates this point very simply and it is really that simple. People need to do a better job of applying the lessons from that story to their retirement savings.

Many choose to consume more and save less. That is their choice. But to assure a comfortable retirement most must save for it during most of their working life. I am worried that despite the vast amount of news stories and advice saying the same thing still few are doing so. And I fear many attempt to ignore the choice they are making by pretending that if they don't think about their decision then they won't be responsible for the decisions they make. Sorry, but I think the fable of the ant and the grasshopper (and all the more recent advice, news coverage, etc.) make that a wish to avoid responsibility without merit.

More sources of information on saving for retirement:

• Curious Cat Investing Library
• Roth IRA
• Dollar cost averaging
• Articles on Retirement Planning and Investing
• Prepare for a Gruesome Retirement by Selena Maranjian, fool.com

Cease Mass Inspection for Quality

Comment in response to, Re-Discovering W. Edwards Deming, a partial quote from that post:

Not all of the Deming approach is part of core TPS thinking. In particular, Deming advocated a statistical sampling approach to quality inspection, while Toyota focuses on 100% inspection or eliminating the need for inspection through via the concepts of Poka Yoke and Jidoka. As much as I admire Deming and his philosophy, I agree with the Toyota innovation that it is better to prevent defects from occurring, or at least preventing defects from reaching the customer.

Thanks for you continued interesting blog. I think some might read this post and be confused about what Deming thought about sampling and inspection.

Deming point 3 is "Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place." (Out of the Crisis, 1982). I think Toyota's improvement of the system to build quality into the product is exactly what Deming had it mind.

Deming believed in improving the process, and doing so using process measures (which often may involve sampling) to guide improvement efforts. He did not believe in using inspection to select out the bad products, which is what inspection largely was before Deming.

He also talked about inspection of incoming material from suppliers - see Chapter 15 of Out of the Crisis.

He also did a great deal of work with sampling to improve population estimates for the US Census Bureau and others as well as on surveys and the sampling involved in surveys.

More on Deming's thought on Inspection

The Power of Purpose

The Power of Purpose by Rebecca A. Morgan:

Constancy of purpose means that quality decisions are not situational. End of month quality is the same as beginning of month. It means that the long term benefit of the organization is not sacrificed to hit quarterly targets. It means having your eye on the competition, whether it is in your industry or coming from elsewhere, with plans to stay ahead. Constancy of purpose doesn't require the threat of a customer leaving to implement corrective actions based on root cause. It means that while your team may argue about how best to accomplish it, no one is confused about the commitment to deliver reliable quality.

Deming's Fourteen Points, point 1: Create constancy of purpose for the improvement of product and service. With the aim to become competitive, stay in business, and provided jobs." source, Deming Institute

• More of Deming's thoughts on Management
• Deming Prize: 2005 Deming Prize winners - 2004 Deming Prize winners
• Purpose of an Organization
• 2 minute webcast of Deming (and Robert Reich) on constancy of purpose

Not Lean Retailing

Topic: Management Improvement

Renovating Home Depot Business Week

It is always dangerous to make too much of a magazine article, but Home Depot seems to be moving away from lean thinking in the following examples, to me anyway. The Home Depot founders:

allowed store managers immense autonomy. "Whether it was an aisle, department, or store, you were truly in charge of it," says former store operations manager...

These days every major decision and goal at Home Depot flows down from Nardelli's office. "There's no question; Bob's the general," says Joe DeAngelo, 44, executive vice-president of Home Depot Supply and a GE veteran.

Nothing is wrong with major decisions being made by the leaders but the article leaves the impression many non-major decisions are cetralized too. That is a problem for those who believe in management improvement ideas including lean thinking.

By squeezing more out of each orange box through centralized purchasing and a $1.1 billion investment in technology, such as self-checkout aisles and in-store Web kiosks, profits have more than doubled in Nardelli's tenure, to $5.8 billion. Home Depot's gross margins inched up from 30% in 2000 to 33.5% last year. But fast-growing Lowe's is still Wall Street's darling, in large part because analysts are only now getting comfortable with Nardelli's strategy.

Centralized purchasing sounds like it could easily lead to non-lean behavior. From a previous post on Evolving Excellence:

You don't read much about whiz bang technology driving Home Depot distribution centers because they didn't waste their money on such things. They have a few DC's for imported stuff, but the rule for doing business with Home Depot is that manufacturers generally ship directly to stores in box and skid quantities. Most of the purchasing is done regionally, rather than from headquarters. A Home Depot store manager has an 800 number for each supplier that he feels quite free to use any time, any day, to replenish whatever is needed in any quantity needed.

Another quote from the Business Week article:

Before he arrived, managers ran Home Depot's stores on "tribal knowledge," based on years of experience about what sold and what didn't. Now they click nervously through BlackBerrys at the end of each week, hoping they "made plan," a combination of sales and profit targets. The once-heavy ranks of full-time Home Depot store staff have been replaced with part-timers to drive down labor costs. Underperforming executives are routinely culled from the ranks. Since 2001, 98% of Home Depot's 170 top executives are new to their positions and, at headquarters in Atlanta, 56% of job changes involved bringing new managers in from outside the company. Says one former executive: "Every single week you shuddered when you looked at e-mail because another officer was gone."

Again moving away from lean ideas: longevity of management, focus on value of employees rather than cost of employees...

But drilling workers in how to treat customers may not be enough. The University of Michigan's annual American Customer Satisfaction Index, released on Feb. 21, shows Home Depot slipped to dead last among major U.S. retailers. With a score of 67, down from 73 in 2004, Home Depot scored 11 points behind Lowe's and three points lower than much-maligned Kmart.

Not giving customers what they want or expect. I know this has been my experience at Home Depot, and that of those I have talked to for years - poor service. The article does not leave me with a positive view of Home Depot's future. However it is only one article I would like to hear what others think.

• Management Training Program
• The Lion of Lean
• Lean Retailing
• Deming's 14 points