Gemba Panta Rei

First a brief Japanese lesson, if I may. 可動率 is Operational Availability and is pronounced "ka-dou-ritsu". 稼動率 is Rate of Operation and is pronounced "ka-dou-ritsu". The pronunciation is exactly the same. Two out of three characters are the same, and the first character happens to have the same sound.

This is one of the many examples of word play that Taiichi Ohno was fond of using to teach the TPS philosophy. Two words that are nearly identical but are very different in meaning (as a point of interest, Operational Availability is also called "bekidouritsu" to make it possibly to tell the two apart).

可動率 as in Operational Availability is a measure of reliability of equipment. Operational Availability is expressed as the percentage of time that the equipment can operate properly when it is needed for production. It doesn't mean that the machine has high utilization and is running all of the time. The machine may not be running at all. The key point is that the equipment needs to be available when it is needed.

Operational Availability = Time equipment actually able to run / Time when equipment is needed to run

If the equipment was down 2 hours out of a 20 hour period when the equipment was needed (available only 18 hours), the Operational Availability would be 18 hours / 20 hours = 9/10 = 0.9 = 90%.

稼動率 is Rate of Operation and this is the ratio of the products being produced to the full capacity of the equipment running at standard operating hours. The formula is:

Rate of Operation = Rate of production on the equipment / Full capacity of the equipment based on regular hours

If you have a demand of 8,000 parts today and your machine is actually capable of running 10,000 parts on a regular shift, your Rate of Operation is 8,000 parts / 10,000 = 8/10 = 0.8 = 80%.

The production demand value for Rate of Operation must be only what is needed downstream and based on actual customer demand. In other words if you have high Rate of Operation because you are overproducing, you are in fact cheating yourself.

The 'ka" of 可 means "can" or "able to" so 可動 means "can move" or "able to run". The "ka" of 稼 means "to make money" or "work" as in the type of work people are paid for as opposed to the scientific definition of work. So 稼動 means "working" or "making money". Producing parts that don't sell right now does not make money, according to the Toyota philosophy.

Taiichi Ohno emphasized that "able to run" rate was not the only goal but the "making money" rate was what really mattered for equipment. When focusing on doing kaizen on Operational Availability (可動率) you want to eliminate the equipment losses that result in the machine being unavailable when needed. Taiichi Ohno said Operational Availability should be 100%.

When you focused on improving Rate of Operation (稼動率) you should actually work on marketing and sales since it is a measurement of load on the available capacity, producing what was needed by the downstream process. Taiichi Ohno said Rate of Operation need not be 100%, knowing that making this a target would result in loading the capacity with parts that are not needed right now (overproduction).

Practically, the ideal Rate of Operation number would depend on your customer service philosophy and backlog policy. If Rate of Operation was at 100% then that means your sales (downstream pull) exactly matched your full equipment capacity during regular hours. This is not very likely to happen unless you are smoothing you schedule very effectively using heijunka, you have a backlog and there are orders waiting, or unless you are turning away sales.

When you see numbers in the news that Toyota factories are at 116% Rate of Operation it generally means that they are running overtime or extra shifts because their numerator (demand) is greater than their denominator (available plant capacity based on regular hours).

If you focus on utilization, which is another measurement completely, the result will be high machine uptime, local optimization, overproduction but high inventory, poor cash flow and bad overall performance. In the Lean manufacturing world utilization and absorption are bad words. Understanding the subtle yet clear differences between kadouritsu / bekidouritsu and kadouritsu are critical to implementing and managing a Lean operation.

Posted by Jon Miller at 12:05 AM | Permalink | Comments (5) | TrackBacks (0)

There's an interesting article titled The Neuroscience of Leadership in Strategy+Business magazine. Thanks to Kathleen Fasanella for spotting and writing about it on her Fashion Incubator blog.

The article has a tempting tagline Breakthroughs in brain research explain how to make organizational transformation succeed. Surprisingly, no exclamation marks. What follows is very informative but borders on psychobabble at times and on reductionism at others. The authors work to answer the question of Mike, multinational Pharmaceutical CEO, “Why do people resist change so stubbornly, even when it’s in their own interest?” It makes me wonder when their best-selling business book is coming out.

Granted, I've found many of the observed behaviors mentioned in the article to be true. For instance, when teaching people, it is important to let them come to the insight on their own rather than telling them. The article says:

For insights to be useful, they need to be generated from within, not given to individuals as conclusions. This is true for several reasons. First, people will experience the adrenaline-like rush of insight only if they go through the process of making connections themselves.

More than once I've seen the best intentions result in tension during Lean implementations. The tension is between managers who want results right now, Lean specialist who "know" the solution and want to change things right now, consultants who need to prove their worth and want to change things right now, and the workers themselves (ouch! change hurts) who haven't completely bought in or "got it" yet.

If you want a true lasting culture change, understand that Lean transformation is not something that takes weeks or months but is a never-ending management of the pain that is change. This doesn't mean Lean manufacturing won't get you big results in days or weeks. It will. The problem is those results will walk out the door with you when you find another job, if the culture hasn't changed. Culture change requires the light bulb glowing above everyone's head, and this is the "adrenaline rush of insight" people have when making the connection or solving the problem themselves. Some call it thinking.

Here's another insight from the article: follow up coaching and practice after initial training improves performance.

A 1997 study of 31 public-sector managers by Baruch College researchers Gerald Olivero, K. Denise Bane, and Richard E. Kopelman found that a training program alone increased productivity 28 percent, but the addition of follow-up coaching to the training increased productivity 88 percent.

More than anything it blows my mind that research funds were spent on proving this.

The article is worth reading if you are interested in both change management and neuroscience. If it's been a while since you've seen the words basal ganglia, amygdala and quantitative electroencephalography used correctly in a sentence, dive into these 5,300 words. If not, allow me summarize the main points in 15 words:

Change hurts. People change when ready. Ask don't tell. Pay attention. Expect good things. Practice.

I suppose if you didn't learn these lessons between your kindergarten teacher and your high school football coach (or equivalent) then the neuroscience explanation might still help you.

One of the true geniuses of the Toyota Production System is their insistence on asking people to think about their work and to come up with improvement ideas. Called the Creative Idea Suggestion System, this approach generates about one implemented improvement idea per person per month, year after year. This has the effect of giving people the jolt of satisfaction at solving a problem (the authors' point about mental models and self-generated insight) while expecting change to happen around them (expectation shapes reality), as well as getting people to pay attention to their work. Not bad for a product of 1950s motivational theory.

It's safe to say that complacency is the enemy of kaizen. Dr. Deming said it another way: "It is not necessary to change. Survival is not mandatory.”

Complacency is a fact of human neuroscience. If you believe this, it will be true.

Posted by Jon Miller at 1:55 AM | Permalink | Comments (2) | TrackBacks (0)

Shmula is a blog with a funny sounding name (who am I to talk?) and the occasional gem of a post about Lean. There is an August 28th interview with Mary Poppendick, author of Lean Software Development and Implementing Lean Software Development.

She answered 12 questions from the readers of the Shmula blog. The questions and the content of the answers are quite good. Clocking in at over 4,000 words, it's one of the longer blog entries I've seen. Note to Shmula's Peter Abilla: Next time chop it into 1,000 word bites and serialize it so we can enjoy the goodness for days rather than all in one lump.

Mary Poppendick tackled questions on Lean software and business process improvement, as well as how to apply Lean concepts and tools such as kanban, 5S, heijunka, SMED, big room / open room / obeya, 5 why, TPM, visual workplace, queuing theory and software-specific improvement approaches such as Scrum and Agile.

I particularly like part 7 of the answer to question #8 regarding a roadmap for a successful Lean launch. While qualifying that "there is no roadmap to guarantee Lean success" Mary says:

7. Remove Accommodations: Uncover the rules that made it possible to live with the constraint. Decide what the new rules should be.

I've never quite heard it stated that way. Whether you call them rules, behaviors or attitudes, removing the root cause that allowed you to live with how bad things are (the current condition) is an essential reoccurrence prevention measure and a key step in Lean implementation.

Enjoy the interview.

Posted by Jon Miller at 12:01 AM | Permalink | Comments (3) | TrackBacks (0)

Visit the Lean Blog to hear Mark Graban's podcast interview of Dr. Jeffrey Liker, author of The Toyota Way and Professor of Industrial and Operations Engineerring at the University of Michigan.

Find out answers to pressing Lean manufacturing questions such as:

"Do you sometimes have to drag senior management out to the shopfloor?"

"Can you pick and choose which of the Toyota Way 14 points that you use?"

"How long will it take the new San Antonio plant to become a true lean factory?"

and why Toyota thinks you can't implement a perfect Lean manufacturing system.

Posted by Jon Miller at 12:00 AM | Permalink | Comments (0) | TrackBacks (0)

For people who have worked at Toyota or companies strongly influenced by Toyota, the term "kaizen" is used more in the general sense, closer to philosophy than activity. The term jishuken is used to describe the intentional, workplace-focused activity we call gemba kaizen.

There is an important difference in nuance between jishuken and kaizen as it is understood as a part of Lean manufacturing (whether it be kaizen suggestions, kaizen events, or kaizen projects). During kaizen events my teachers would often yell "You must do more jishuken!" at the American managers after they had said or done something to demonstrate their lack of alignment with kaizen philosophy.

Translating this simply as "You must do more kaizen!" does not have the desired effect since to many senior managers, "doing kaizen" means sponsoring a kaizen team and showing up on Friday to review the results of the kaizen event. By calling for jishuken my teachers were demanding more self-study kaizen by the American managers.

I was told the origin of jishuken comes from "kanban houshiki bukachou jishu kenkyuukai" or かんばん方式部課長自主研究会 in the original Japanese. This translates as "kanban system department & section manager autonomous study groups". This was shortened to "jishuken" which is "self study". Jishuken is often called "autonomous study groups" in English.

In the early days of building TPS, Taiichi Ohno and others required the managers to get together on the factory floor to do hands-on kaizen activity. This began with department managers and section managers from the Motomachi and Kamigo factories getting together, selecting a particular "theme" and working on various process improvements. It may have been more cost-effective to let the engineers and supervisors do this sort of gemba kaizen, but the managers' hands-on involvement in kaizen helped them learn, take ownership and build a culture of genchi gembutsu at Toyota.

Because the kanban system was one of the starting points of the Toyota Production System, the jishuken concept began with kanban but it was soon and is today generally applied as a autonomous study group kaizen for the Toyota Production System itself. At many of the companies we visit on our Lean manufacturing benchmarking trip we call the Japan Kaikaku Experience, the primary kaizen initiatives are the suggestion system (all employees) and jishuken (managers). The suggestion system is applied to local, small, daily improvements and jishuken are projects linked to business goals and driven by teams of managers.

Last year there was an article about managers from North American Toyota plants being taken to suppliers to do jishuken. The reason given was that Toyota management realized that they did not have this experience and the managers did not know how to do or teach kaizen. One of the reason for this is that the Toyota Production System is mature and running smoothly at the Toyota plants in North America. Toyota had to take their managers out of their offices and to the suppliers to find shop floor problems to solve.

I think jishuken as it was originally intended is a very important thing. There is no way that Lean manufacturing implementation will succeed at an organization that does not have a clear operational model that they are working towards (the Toyota Production System), full participation and empowerment of the workers to make local improvements, and jishuken and other hands-on strategic kaizen activity by management. More companies are doing better with the first two.

For others it's too easy to say "our CEO's time is too valuable to be doing kaizen for several day". Perhaps, but how many hours of jishuken does a Toyota manager experience before they get to be CEO?

Posted by Jon Miller at 9:03 AM | Permalink | Comments (3) | TrackBacks (0)

Toyota has made public apologies this year for both the number of recalls and goofs handling them. A Wall Street Journal article today titled Toyota May Delay New Models To Address Rising Quality Issues speculates that Toyota will slow down their new vehicle launches or extend their product development time in an effor to get a handle on this problem. It sounds like they're taking a recent page from the playbook of Bill Gates at Microsoft: don't release the product yet if it's full of bugs.

The article gives various excuses or surface level causes for the surge in recalls by Toyota in the last year:

1. Pressure to launch new vehicles faster
2. Relying too much on computer-aided design tools
3. It's Delphi's fault because they designed the part
4. Making fewer prototypes as part of the NPD process
5. Using the same components in a wider range of vehicles

Rather than excuses or a public apology (which goes a long way in Japanese culture but doesn't always do a lot in the way of root cause countermeasure) I would like to ask the Toyota brass "Can I get an A3 report with those 2.38 million recalls?" We own a Sienna and it's been back a couple of times for a "service campaign" or non-urgent recall. If it were a Lexus, they might come to me with the part and swap it without wasting my time driving to a local Toyota dealer. It's not, so the least they could to is to send me a copy of the A3 report on this issue.

A few times when I've experienced flagrantly bad service from hotels, airlines, etc. I've received apology letters from the CEO, lovingly computer-generated, machine sorted and mailed to my door like so much junk mail. Rather than platitudes and apologies, an A3 report on what they are doing to make sure they learn from this and make sure it never happens again would make me feel a lot better about continuing to be their customer.

The average Toyota driver who gets an A3 report with their recall will not know what it is. So Toyota can use this as a marketing opportunity to create a cartoon or graphic explaining why they screwed up, what they're doing about it, and thanking the customer for their continued support. That would be applying Lean thinking to marketing.

The article quotes LEI's Dr. James Womack as saying:

Toyota's recalls have involved relatively minor issues and nearly all have been voluntary actions by the company, not the kind in which consumer complaints prod the government into action.

Dr. Womack is sounding like a bit of an apologist for Toyota here. This may be a sign of how jaded we are after decades of bad vehicle quality in the U.S., if we're willing to excuse a spike in "relatively minor issues", even though each one of them wastes my time. Hardly a Lean solution.

Posted by Jon Miller at 11:19 PM | Permalink | Comments (2) | TrackBacks (0)

A Wall Street Journal article today says How You Handle Your E-mail Inbox Says A Lot About You. The article identifies that e-mail is overwhelming people. There is an example of one person who was stressed out by 500 e-mails in their inbox, another who had 10,000 e-mails in their inbox. This article should be readable without a subscription as it was in the Free Today section.

What does it mean that I have a desire to empty my inbox each day? It could be "how Mom and Dad raised you" as the article says, or it could be that Lean thinking has seeped into my e-mail habits.

Part of the kaizen philosophy is "do today's work today" which is really just one-piece flow thinking at a macro level (or vice versa). Typically I have between 3 and 12 e-mails in my inbox at the end of the day. This is visual control, as 12 is about as many as will display on a less than full-size Outlook window on a laptop, without scrolling. If there are many more e-mails in the inbox than that and I am putting in service overtime to get rid of them.

E-mail is inventory. It is WIP. You might not think so since it's just electrons and e-mail doesn't appear to "cost" anything. No direct material cost, perhaps, but there is definitely labor and overhead associated with e-mail. Labor and thought had to go into creating an e-mail message, and a software and hardware infrastructure has to support its transmission, and an IT labor has to support the hardware and the software infrastructure.

What is the cost of one e-mail message? Write it down and put it in the post to me if you know.

After examining what I did with my e-mail and how Microsoft Outlook was set up to handle incoming mail, I realized there is a very specific application of 5S at work here:

Sort the e-mails you don’t need
- Read e-mail. Act on it or delete it.
- Junk. Outlook does this for me automatically.
- Spam filters are set so that large numbers of e-mail never see the inbox.

Straighten the inbox, as in "a place for everything and everything in its place"
- Put e-mails you need to act on in the proper folder. This may be right in the inbox or separate folders.
- Sequence and prioritize for later action.

Sweep in 5S is cleaning to prevent future cleaning. E-mail 5S sweep is to get rid of e-mails and prevent them coming back.
- Block, don’t delete. Blocking the senders of spam who make it into the inbox can prevent repeat offenders.
- Unsubscribe to newsgroups or other e-mail marketing rather than deleting them.
- Don’t reply to informational e-mails with "Thanks" and certainly don't CC everyone. If you want to say thanks do it by voice or better yet in person.

Standardize how you handle e-mail
- Check e-mail at certain times of day rather than playing whack-a-mole with every new "you've got mail".
- Agree to limit who is Carbon Copied (CC) so that extra inbox material is not created.
- Spend a set amount of time on e-mail checking.
- Let people know how best to get a hold of you if it’s urgent (other than e-mail).

Self-Discipline
- Spend enough time on a message to get it done and out of the way. If you can't don't start it and create WIP.
- At the same time, leave some Standard WIP at the end of the day. For non-urgent items send out replies or requests at the end of the day so that you have actionable replies waiting in your inbox by the next morning or next time you set to check e-mails.
- Don’t check e-mail. This might seem counterintuitive but if we all did it we would all have less e-mail in our inboxes. Think about it.

I read a promising review of a book called Total Workday Control by Michael Linenberger that addresses your e-mail headaches. I also heard that the new operating system Windows Vista will cut down e-mail by 80% to 90%. I don't know what this means but it sounds intriguing. But until then I have the daily sort and straighten of e-mail 5S.

Posted by Jon Miller at 11:37 PM | Permalink | Comments (9) | TrackBacks (0)

What do you call it when a meeting of the Lean manufacturing leaders from around the globe gets cancelled at the last minute by the senior leadership of the organization, citing “business needs”? I call it cosmic irony.

One of our consultants was scheduled to participate in a such workshop with a client, with the aim of making the Lean implementation more effective in their factories. But something else more important came up and this meeting has been called off for the moment. In business as in life, things change. Fair enough.

Here is a definition of cosmic irony I pulled from Wikipedia:

Cosmic irony is a sharp incongruity between our expectations of things and what actually occurs, as if the universe were mocking us.

The whole purpose of such a Lean leadership workshop is to make the Lean transformation more effective. The whole purpose of a Lean transformation is to change the culture of the organization to one that supports continuous improvement. The whole purpose of continuous improvement is to be better able to take care of… business needs.

Posted by Jon Miller at 10:37 PM | Permalink | Comments (1) | TrackBacks (0)

If the U.S.A. needed a poster-child for kaizen and Lean manufacturing success, $20 billion industrial holding company Danaher Corporation would be a good candidate. As this Investor's Business Daily article details, they have been growing steadily over the last decade through a combination of acquisitions and organic growth, and they have done it through what they call the Danaher Business System, or DBS.

DBS is one of the best examples of kaizen principles made part of the culture of a U.S. company. A decade or so ago when Danaher was a much smaller company with fewer holdings they recognized the power of kaizen and spent the big bucks and took the hard knocks from Japanese consultants to make their operations Lean.

I have fond memories of Danaher. My favorite experience with Danaher is interpreting for a Japanese consultant Mr. N at a drop forge facility in Arkansas in January. It was an unbelievable scene. Character-building, you might say. There was inventory everywhere in metal baskets. More of it being plunked in every so many seconds. They had open gas flames to preheat the dies. They had the shutters open to keep the shop from getting too hot. There was a freak snow storm that week, so the cold blew in through the shutters. One side of me was freezing while the other side was burning up.

We had to wear helmets and hearing protection to keep from going deaf from the drop forge. Sparks flew. The Japanese consultant was yelling. I couldn't hear a word he was saying. This made him madder. It was hot, it was freezing. It was loud, the Japanese consultant was louder. All I remember about the kaizen event is that they were having some quality problems, which they fixed by the end of the week.

The people of Arkansas were all very nice. One evening at dinner the waitress at the restaurant put her hand on her hip and stared at me in disbelief when I said "well done" in response to how I wanted my steak cooked. But I digress.

The article cites Rashid Dahod of Argus Research that Danaher's free cash flow — cash from operations minus capital expenditures — was 119% of net income in 2005. This year was the 14th straight year in which free cash flow exceeded net income. Not only does Danaher throw off a lot of cash, they know what to do with it.

According to the IBD article Danaher acquired 13 companies in 2005 and are on a similar pace in 2006. The leaders at Danaher Corporation were smart enough to see kaizen as more than a set of tools, but a way of thinking that supports a winning business strategy. Danaher has acquired, kaizened their acquisitions, improved profit margins and cash flow, acquired again to repeat the cycle to grow steadily and profitably.

Morningstar analyst Eric Landry describes DBS: "It's basically a set of tools that allows Danaher to make whatever widget they are manufacturing at a cost less than most of their competitors" and "Over the past decade they have (also been moving) DBS into the back office and into sales. It produces a culture where you are never satisfied."

Enough said.

Posted by Jon Miller at 9:40 PM | Permalink | Comments (2) | TrackBacks (0)

The topic of takt time and specifically "how does it apply to me?" seems to be a popular one, based on comments left by readers at this blog entry. The latest from John asks for advice on the environment where TAKT time is ideal and where it is not applicable.

Whether you choose to write it TAKT time, Takt time or takt time (but not tact time with a "c"- that would be time for careful consideration of feelings and value of others, which is also important in Lean manufacturing, but a topic for another discussion) it is essential to Lean manufacturing. Takt is a key building block of Just In Time (Takt Time, One Piece Flow, Downstream Pull). Just In Time in turn is one of the pillars of the Toyota Production System (the other is Jidoka). Takt time is one of the three elements of Standard Work along with work sequence and standard work in process.

Takt time is a must, but it is not ideal in many environments. However takt time production is an ideal to strive for. The aim of takt time is to synchronize the speed at which work flows with actual customer demand. There are many things that make immediately converting to working to takt time (customer demand) impractical for many businesses.

For example, John describes his workplace where they are considering takt time production. They manufacture aircraft structures such as the fuselage, rear fuse, front fuse, fin, etc. The products may not lend themselves to takt time production at first glance. The realities at John's aircraft structure production company are:

- Tight tolerances
- Relatively low (30 to 60 per year) build rates
- Constant swings (medium to low) in production rate
- Suppliers that make specialist parts in low volumes can cause shortages

Converting to operating at takt time does not solve all problems, and exposes many more clearly. Measuring the cycle times of each individual process and balancing the work to takt time is a big improvement but only the first step.

If as in the example above the parts can not be made within tolerance each time the first time, meeting takt time will be difficult because there will be rework and the cycle time will not be repeatable. Kaizen effort should focus on making the process repeatable and stable. If this is not possible, you can still flow one piece at takt time by allowing extra stations (takt time pitches) based on the degree and frequency of variation in cycle time due to parts made out of tolerance. This of course will waste some space and is not ideal.

Low build rates are not a problem in takt time production, except that it becomes harder for people to gain a feeling for takt time or the "takt image" as it is sometimes called. If the production rate is 50 per year (approximately 1 per week) then 20% of the work needs to be completed each day over a five day week. It is much easier to have a takt image that is minutes or hours per unit complete, rather than days.

Pitch lines and other visual makers can be used to show progress or delay against takt time, when takt times are long and flow too slow to be felt while working. In any case extra effort will be required, including physically pulling the product at the speed of takt time. This can be done several times during the day to progressive work stations or ideally a constant slow motion. In the case of large aircraft parts this can be a challenge, but this is done at Boeing with wings and even entire aircraft so the "we don't make automobiles" excuse is gone.

Just in time production can not really be achieved without a certain degree of heijunka (averaging of both production volume and product mix). If the constant swings are too great, changes in takt time and work content due to the different number and mix of orders will make staffing and resource calculation difficult. Basically you will have to staff for the peak volume and complexity of work content or you will need the ability to flexibly add capacity during spikes. Takt time is best calculated based on an averaging of demand based on heijunka. True customer demand fluctuates too much in practically every industry. The image used for the role of a strategic finished goods buffer based on heijunka is that of a wave breaker between a raging ocean and the shore.

Suppliers as a cause of shortages is another topic entirely, and will be a problem whether you flow at takt time or flow at a batch pull. A Supplier Development partnership is highly recommended where opportunities can be identified to improve the flow of information and materials together. Proving a schedule based on heijunka and working to a pull should solve some of the problems, but it is best to go on site to understand the issues at the supplier.

Takt comes from a German musical term and means rhythm or beat. In an orchestra if the instruments are playing at different speeds, it sounds terrible. When they play at the same speed it sounds good. In the same way, if the material and information in a manufacturing company move at different speeds rather than at one speed, takt time - the pace of customer demand, the result is a higher total cost and a longer lead-time.

If your production is high volume with little variability in demand, very stable quality, a strong supply chain and a simple product, it may be easier to implement takt time production but I would not say ideal. No business of this type has come asking us for help, in any case. The environment where takt time is ideal is any process where you have challenging problems you want to solve.

I believe there is no environment to which takt time can not apply. It may not always be the place to start when doing kaizen. Just as nature has its rhythms and cycles, all takt time does is to harmonize the rhythm of customer demand with the rhythm of production.

Posted by Jon Miller at 11:32 PM | Permalink | Comments (0) | TrackBacks (0)

I’m running low on these. I do recall thinking this one was almost too easy. Enjoy.

Ship It
(to the music of “Whip It” by Devo)

Track that WIP
If you want the parts to ship
Parts on the rack
Some of them are scrap

When takt time comes along
You must ship it
Before the parts sit here too long
You must ship it
While sales are going strong
You must ship it

Now ship it
In the crates
Pack them up
Stack them straight
The easy orders
Have moved ahead
Try to book them
It's not too late
To ship it
Ship it good

When month end comes around
You must ship it
If we can’t track it down
So we can ship it
We have to expedite it
So we can ship it

I say ship it
Ship it good

Posted by Jon Miller at 10:41 PM | Permalink | Comments (2) | TrackBacks (0)

A few weeks ago when I returned to our office after having been on the road for several weeks there were some big changes. The entire layout of the office had been flipped from one side to the other. This is not so hard to do since we have put wheels on all furniture in our office. Our next big challenge is to put the bookshelves on wheels (they are 72 inches tall and 48 inches wide) and making them mobile. We will probably need smaller book shelves.

Rearranging the office opened up a lot of space and changed the flow quite a bit. I can't say I like it yet. I don't dislike it either, it's still a work in progress. The beauty of a Lean Office is that whenever something else bothers one of us for long enough, we can pull some things one direction and another until it works better.

Just today we made more changes, pulling desks this way and that, pulling a filing cabinet away from one corner. It didn't take much longer than 10 minutes and everyone was back to work. It didn't take another five minutes to find more things that needed changing. The latest moves solved some problems, exposed some others.

The open office aspect of the Lean Office requires maintaining harmony between easy collaboration and noise, visibility and privacy, access to people and distraction by people. Every day we learn what works and what needs to be improved. The open office layout is not without fault, but putting up walls is simply no longer an option.

When I returned to the office to find this new arrangement, something else caught my eye. A sheet on the wall had the words "This is an experiment. Please do not remove." written on it. I will tell you more of what this experiment is at another time, if our product development effort in this area succeeds.

It occurred to me that these were very wise words, and that sheet with these words should be part of every kaizen event, every Lean transformation activity, every ongoing culture change and continuous improvement effort.

By announcing "this is an experiment" you are creating an environment where it is safe to question and be questioned. That is the nature of experimentation. When it is an experiment, the change is not a de facto reality that must be followed because it is decreed as an initiative championed by a senior manager. The experiment may be reversed. It may be changed again. Saying and posting the words "this is an experiment" invites input and involvement by the people who will be most affected by the change, have the most knowledge of the process, and may have the most to lose if the change effort fails.

Placing the words "this is an experiment" at the workplace where kaizen is being attempted will make people curious. What is it? Will it work? Can I try? What if we did it like this? These are some of the reactions you can expect. Announcing "this is an experiment" invites people to use their minds, experience and creativity and join in the experiment.

Curiosity, playfulness and the opportunity to influence change in your work every day are some of the things that foster innovation and invention. This culture of experimentation and innovation will not only make a better workplace for people, it is good for business.

Saying "this is an experiment" should not signal that "we may decide not to change if we don't like it". It means that we will try something else until a better solution is found.

It's important to note that experiments should follow the scientific method and they should test theories. Will it be faster, cheaper, better if we do this one piece at a time? Can we improve quality by inspecting at every process or by inspecting randomly at the end? Is an open office more productive or not? Whether the answer to these questions in your case is yes or no, the next step should be the "5 why" understanding of the true reasons so that further improvement action can be taken.

The sheet with "This is an experiment" can be used for visual management just like the words "this is the standard" or "this is what good quality looks like" or "this is the hourly production target" can be. These words are at the heart of the philosophy of kaizen. Try them next time, as an experiment.

Posted by Jon Miller at 9:52 PM | Permalink | Comments (2) | TrackBacks (0)

The news from Jean's workplace, where consultants have been giving Lean healthcare a bad name, has gotten worse. Jean writes:

I think we, as a staff are beginning to feel like chicken pluckers in the Golden Plump Place where Faster is always better. The morale in our place of work has been sliding down and has recently picked up speed as the true depth of lean is being revealed to us.

Instead of holding themselves accountable for failure and practicing the "stop and fix" discipline that Lean thinkers do, these consultants are pushing their ideas without regard to how they are being received by the people most affected by them.

As it is failing in our place, the pressure to make it succeed lest the vendors of lean lose business selling the "concept", the pressure to "do it" has increased so many fold that a day at work is like that picture "The Scream" for eight hours.

What self-respecting kaizen consultant or Lean consulting firm would put getting results ahead of morale and safety of people? Perhaps they are paid based on the results they achieve, or perhaps they have guaranteed results and faced with a failing project are now are in a pickle.

I do not know what Toyota does to halt the subliminal disconnect of hearts and body that is happening in our place. Last week a co worker said she felt like an evil black vapor was loosed upon our place. We are all good nurses and are dedicated to the healing arts. We cannot figure out what we did to warrant the pattern of abuse, in the classic description, that mocks what we have spent our lives preserving.

Even Toyota is struggling with this now as their quality suffers. Toyota has grown too fast, depending too much on "permanent temporaries" or "false contract labor" as it they are now being called in Japan. These long-term "temporary" workers have no stake in the success at Toyota, and their lack of ownership of the process is showing up in the hundreds of thousands of recalls which will cost Toyota millions. I believe Toyota people have the heart to learn from this, but we will see.

Yes, it is pitty pat to say that malcontents focus blame on something else rather than face up to the challenge of lean. I say that they simply do not understand what is happening. We all now would like lean to go away.

Perhaps the Lean consultants should go away, but it would be a pity if the spirit of improvement were to go away. Jean and the other front line caregivers have too much to contribute, if only Lean were being introduced correctly here. In the United Kingdom, hospital bosses are turning to the front line workers for ideas on how to cut delays in cancer treatment. They are being trained by Toyota in their suggestion system. Read about it here in today's Scotsman.

The article quotes a NHS employee director:

"This approach is absolutely the opposite of the kind of initiatives where outsiders try and tell staff how to do their jobs with no real knowledge of the realities of life on the front line, as it were.

"This approach puts staff at the heart of spotting opportunities for positive changes for patients and making improvements happen. No-one has the monopoly on good ideas and the only way we'll get real change that works for the benefit of patients is by everyone working together as a team."

This reminded me of a comment Jean made a few month ago that as consultants "you all wear the same uniform". Perhaps the consultants at her hospital all wear the same uniform.

Jean says:

There is no joy in the hallways, no laughter ( I suppose laughing slows down the Line), no one wants to stay late or do anything extra that use to come just from the joy of working in an Operating Room. I do not know where this will end. I only have three more years until I can retire. It is going to be a long three years.

If anyone has a clue who are the consultants who are making life so unpleasant for Jean and others at this hospital, send them the link to this blog entry. Or send me a hint. If they have any integrity they will change their ways.

Posted by Jon Miller at 10:00 PM | Permalink | Comments (0) | TrackBacks (0)

So asks a white paper by the same tile by the folks at global management consulting giant McKinsey & Company.

The white paper cites an interesting statistic. The 2005 U.S. federal budget outlay was 20.3% of the GDP of the United States. If Pareto principle holds true, 80% of the improvement opportunity in the U.S. economy is within this 20%. This is my polite way of saying there is a lot of waste in government processes.

The white paper outlines two pillars to improving government productivity in the U.S., namely increasing performance transparency and supporting performance transformation. Measure it, improve it, in other words. There are six recommendations that elaborate on this in.

I hope the McKinsey white paper gets noticed by some people who are in a position to take its recommendations. But what gives me real hope for Lean government in the United States within the next two or three presidential election cycles are things like AFSO21 (an acronym for Air Force Smart Operations for the 21st Century).

AFSO21 is described at this Defense Acquisition University link as a blend of "lean, six sigma, theory of constraints, and others". Furthermore:

First, this cannot be just another program; it needs to become our operating style. In other words, this needs to be the way we see ourselves, how we think about our Air Force, and how we attempt to operate.

Second, we need to retain our primary focus on mission effectiveness. If continuous process improvement doesn't improve our warfighting effectiveness, then we simply shouldn't do it.

The brief description states that AFSO21will require commander involvement, participation, and leadership at all levels, measurable results and direct links to programming and resourcing activities, and concludes.

Beyond efficiencies to aid our recapitalization effort, AFSO21's aim is continuous improvement well beyond any targets we may have in front of us today. Whether we face pending resource reductions or not, this is the right thing to do for our Airmen and our Air Force.

Here is a good speech by Brig. Gen. Robert P. Steel that puts what AFSO21 is in very clear terms.

This may be the most exciting government program that's being funded today. It is an ambitious task, but I have no doubt that AFSO21 will succeed in its mission.

The other branches of the Armed Forces are also very active in bringing reduced cost, improved quality, enhanced safety and a faster and more flexible delivery to their operations. I am optimistic that over the next several years other branches of government will take notice of the achievements with Lean in the Armed Forces and copy them, taking steps toward Lean government.

So here's my answer to "How can American government meet its productivity challenge?"

The men and women with Lean transformation experience through AFSO21 and other initiatives will rise to positions in other branches of the government. There they will be unable to tolerate business as usual of government waste. They will influence policy and practice towards Lean government as a long-term and lasting cultural shift. As citizens we can vote them in. We can write to our government representatives and ask them what they are doing about copying programs like AFSO21 at the state and local level. They may be our greatest national resource.

Posted by Jon Miller at 8:26 PM | Permalink | Comments (0) | TrackBacks (0)

Reader Jeff made a good point in a comment he left a end of one of the articles here at Panta Rei. I suggested replacing "Take pride in the work you do" signs in the workplace with "Be dissatisfied in the work you do" signs, more appropriate for a kaizen culture.

One of my missions is to have place for people to come and work and be satisfied. A sign like that sounds counter productive. Says Jeff in his posted comment.

We certainly don't want people to see the "be dissatisfied" sign and cop a disgruntled attitude at work. Maybe this idea about dissatisfaction needs a bit more explanation.

I value "job satisfaction" but don't care for the term. Sales guru of the moment Jeffrey Gitomer had a good article a few months back in the local business journal. The article contains many clever learning points for the business development person, and possibly for the Lean manager. In it Mr. Gitomer defines satisfaction thus:

Satisfaction: The lowest level of acceptable service.

Job satisfaction implies a certain lowest acceptable level of happiness with your job. By the same token, it implies a certain acceptable level of unhappiness.

Talking about dissatisfaction and openly and willingly recognizing dissatisfaction on the part of both management and the workforce requires an awareness of the current condition as being the worst ever, and an acceptance that it must be changed for the better.

The extreme of satisfaction can be complacency, and this leads to a desire not to change. Extreme dissatisfaction can lead to low morale, and a desire not to change. Either one can lead to ruin. Choose satisfaction or dissatisfaction, as long as it is something dynamic and changing for the better.

Newton's first law of motion (a.k.a. the law of inertia) states that objects in motion tend to stay in motion, and objects at rest tend to stay at rest unless an outside force acts upon them. The same is true with kaizen. People who are dissatisfied and constantly changing for the better will always see more waste and find more ways to solve problems. People who are satisfied will tend to resist change, unless an outside force acts upon them.

In the sales world, customers come to the seller (or are willing to listen to a seller who goes to them) because they are dissatisfied with their current condition. They may have a particular want, need or pain they want fixed or their existing solution or service may be unsatisfactory. Stated simply, people buy things to avoid pain or gain pleasure. People change for the same reasons. So be dissatisfied.

Posted by Jon Miller at 5:02 PM | Permalink | Comments (1) | TrackBacks (0)

There's a great post and invaluable advice on how to kaizen the kaizen event from Mike Wroblewski at the Got Boondoggle? blog today. Mike was happy with the results from a kaizen event at an aerospace firm in Indiana, where his kaizen eventwhere his team delivered results of 36% lead-time reduction and distance traveled by 68%.

But like a true Lean guy, he was dissatisfied with the kaizen. Asking himself "how could it be better next time?" he came up with these 10 lessons to kaizen the kaizen:

Lesson 1. Keep the kaizen training to what is actually needed for the event.
Lesson 2. Provide the kaizen training at the right time.
Lesson 3. Properly scale the scope of the kaizen event.
Lesson 4. Measure twice, cut once.
Lesson 5. Do not tick off your maintenance support crew.
Lesson 6. Pick the right lean tool for the job and use it well.
Lesson 7. Buy-in, Buy-in, Buy-in.
Lesson 8. Watch out for collateral damage.
Lesson 9. Keep your kaizen goals simple.
Lesson 10. Go to gemba and stay there the entire week.

You'll need to visit Mike's blog to get the full story.

Posted by Jon Miller at 9:32 PM | Permalink | Comments (0) | TrackBacks (0)

"What is your approach to culture change?" we are often asked when clients are first getting to know us. It's always tempting to pull out a PowerPoint presentation and go through our 12-Step Program for Culture Change, deadpan. But we never do. We don't have one. If only it were that easy.

When you get down to the bottom of it, what people are asking is "How will you get us to change how we behave?" We don't. We really don't. We can't change people, only create opportunities for people to learn by trying to make things better. One of the ways we do this is kaizen.

It would be easy if we could pass out our Kaizen Philosophy cards and make everyone card-carrying members of the Kaizen Culture. But adults learn best not when they hear or see but when they do. Adults stay interested in what they are doing when it's something that they care about, or that makes their life better.

Kaizen activity is done in a lot of different ways, and the week-long kaizen event is just one of them. The kaizen event (or Accelerated Improvement Workshops, or Rapid Improvement Events, or equivalent) is characterized by being a team-based workshop focused on making practical improvements in a short time. Kaizen events change things, but more importantly change culture by helping people change.

The top 3 ways kaizen events enable culture change are:

1. Working in cross functional teams promotes not only opportunities for better communication but also the chance to see internal customer-supplier relationships. The goal is for people to see the bigger picture and optimize the flow of work across the entire process rather than individual operations. These cross functional teams often include customers and suppliers from outside the company. Involving non-experts from outside of the area being kaizened can also open up the discussion as the newcomers need to have some of the basics of the process explained to them, often exposing long-held assumptions. Having a cross-functional team avoids group think as people can offer fresh perspectives on issues.

2. Going to see what's actually happening can be the difference between a successful kaizen and one that's not so. One of the things we like to ask prior to a planned kaizen is "will we be able to observe the actual process?" since without going to see what's actually happening, the risk is that it's all so much talk. The "go see" behavior can be a challenge when doing kaizen where the process is less visible, such as projects or in some office processes, but critical all the same. The discipline of spending time on the gemba collecting the facts and verifying the current condition is a characteristic of a kaizen culture that kaizen events help teach.

3. Testing ideas out right now leads to a culture of experimentation where trial and error in rapid cycle helps everything from innovation to decision making to simple process changes easier. If it's ok to try, it's ok to fail as well, provided you learn from it and keep trying. One of the goals of a kaizen event is to make enough improvements during the week so that by Friday you have a new process that is stable enough to be documented with Standard Work. This enables people to see that significant change can happen in less time than it takes to debate it.

So if you're using kaizen events primarily to drive business results in the short term, you may want to consider using kaizen events to demonstrate a new way of thinking and doing business so that culture change can deliver long-term business results for you also.

Posted by Jon Miller at 11:27 PM | Permalink | Comments (6) | TrackBacks (0)

It's worth repeating time and time again that what makes an organization Lean is not whether they have implemented the methodologies, tools and procedures that people recognize as part of the Toyota Production System model. In other words what is important is not whether you have kanban systems or don't, or whether you produce in u-cells or with giant machining centers.

The kaizen philosophy is the thinking behind why you choose to do these things. What's important is that you have the kaizen philosophy of never being satisfied, taking action now and always making things better based on looking at the facts and asking "why?" until you find the root cause.

You can have a very good physical and system level copy of TPS and still lose money. Many U.S. automotive firms are proving this. The Lean methods, tools and procedures may look similar to and even be award-winning, but aren't really kaizen without the thinking. This thinking extends beyond the factory in to how everyone solves problems. When the problem is "we have no orders" or "we are not making money" then problem solving can't be limited to the factory.

When we see Lean expanding into new areas or new industries it's common to see this same copying of form but not the thinking behind it. It's much easier for companies to rearrange the people, machines and materials than to rearrange what's in the heads of leaders. Software development may be one of these areas.

I spoke to a friend who is a Microsoft programmer last month. He described several recent projects (he was unsure but thought they were Six Sigma or Agile) that basically involved documenting the entire development process and adhering very closely to it. Measuring a process and setting a baseline standard sounds like a reasonable approach. Yet he reports that the success rate with this approach is still about 50%.

Based on our experience in teaching Lean principles to people who are not familiar with them, the lack of understanding by the Microsoft programmers on the "why are we doing this?" may be a big contribution to the low success rate. Defining the software development methods, tools and procedures seems to be where the focus is at the moment.

But what about kaizen? Rather than new tools, faster methods or defined procedures why not start by seeing the waste? If programmers agree that waste is bad, then choosing a tool or method to get rid of that waste becomes more natural to the way they work.

What are the 7 types of waste a programmer should look for?

Overproduction could be adding in features and processes that are not needed, or not needed right now to support the current version and the needs of the market. Imagine if software did only what we needed it to do? How much of what you see on your screen right now is "pushed" at you?

Transportation is always a difficult one to identify in the knowledge work arena, but anytime distance (such as distance between development centers) creates artificial batches and economies of scale, you have the avoidance of transportation waste as a cause. If you could code it, check it, build it one at a time with no transportation delays would you have a better software product?

Motion waste can be a wide range of things since due to keyboard interface software development is largely manual labor. Any movement of hands, movement of pieces of code, building of code, etc. that doesn't get you closer to a good finished product would be a waste of motion.

Waiting if you're having to multi-task, you're probably waiting for something. I'd like to imagine that programmers have lightening-fast machines and never have to wait for anything to happen, but there are probably times when you have to let you code compile, test, etc. before you can see the results of your work and come back to kill bugs.

Defects would be bugs, bad code, all of the things that make my Windows PC crash. I wonder how much of the work programmers do is correcting and rework versus simply creating something new that they know will work correctly the first time? How much of that is truly inventing something new and how much of that is knowing what to select? Building quality is in is where standardization, better tools, procedures, and methods comes in. Looking for bugs after a lot of coding has already been done is pretty much the opposite of jidoka, which is to check the quality of work early and often and stop the work when as soon as a defect is found.

Processing waste would be things like redundant lines of code, or code that is a less elegant (i.e. longer) than it needs to be, or methods of programming that add extra steps. Meetings, from what I have heard, are often a form of wasted processing at software developers.

Inventory is harder to see in knowledge work but this would be any "work in process". Any project or part of a project you are working on but is not complete would be inventory. It has labor and thought added into it, but is not ready to ship. So it has a cost. The key thing with inventory is not to explain it away or accept that it is inevitable, but to understand that it is a waste and root cause of that inventory is where you should focus kaizen.

It's been 25 years since I took a programming class, and I think that was Basic on a TRS 80 so I would be interested in hearing from any real programmers out there if this makes any sense.

Posted by Jon Miller at 6:38 PM | Permalink | Comments (4) | TrackBacks (0)

I made a big mistake last week. Apologies were made. Lessons were learned. Errors in judgment are revealing mistakes to learn from, since in your your state of mind at the time you were not in error. The kaizen philosophy requires that we learn from both our mistakes and our good decisions.

Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience? These are generous and courageous words from the late industrialist Thomas J. Watson, who built IBM.

Although we're not IBM and we can't afford nearly so many zeros on the mistakes we make, I try to live by these words. When the mistakes are mine, firing isn't really a productive option anyway. I try to understand the root cause my mistakes so the fix can be more than "I'll try harder."

What have I learned in this particular case? The poet T.S. Eliot said The only wisdom we can hope to acquire is the wisdom of humility: Humility is endless. Humility is a difficult concept for many people. In this case it might mean "think of others first" or "always be grateful" or "recognize the limit of your ability to make important decision while jet-lagged".

Posted by Jon Miller at 9:08 PM | Permalink | Comments (0) | TrackBacks (0)

"I never get angry at the workers. However, I will get very angry at supervisors and above." Some people say that Taiichi Ohno was not a very nice man. Ohno had a reputation for being very tough on his students, and some even call him a monster. I have never met him, but I have been yelled at by plenty of Japanese kaizen masters, and I think many of them are misunderstood. The following sentence may come as a surprise to those who label Ohno as not suffering fools well.

"It's convenient for me to get angry at them when I am on the gemba. It's noisy out there, and they don't really hear what I am saying. When I yell at the supervisor on the gemba, the workers feel sympathy for them. This makes it easier for the supervisor to give the workers instruction."

Taiichi Onho says that rather than taking the supervisor aside and scold them, you should do it in a public place. Preferably this is a noisy gemba so no one will hear clearly what you are saying. That way you can yell as loud as you like. Ohno is saying that for people to be relentless in their pursuit of waste reduction and kaizen, you have to scold them relentlessly.

Even if the person scolded doesn't really understand why they are being scolded, the effect on the workers of seeing their boss scolded makes them more open to being instructed in the future. There is a fundamental assumption of teamwork here, as well as a clear respect for authority and seniority that may be lacking in many organizations outside of Japan. Even if you fancy yourself a Lean Master, don't try this at your factory without thinking deeply about it first.

Taiichi Ohno said that when he was first promoted from supervisor to manager, his boss told him never to scold supervisors in front of their workers. Ohno says that scolding supervisor about an actual mistake may make him angry, while being shouted at in a loud voice is actually less stressful. "Even though everyone hates being scolded in public at first, I think it makes it easier for supervisors to communicate with their workers."

This only works if you have a long working relationship between the supervisors and workers on the gemba. Ohno recommends that supervisors and team leaders not be changed so often. People in the factory need a reliable boss. He says promoting people from supervisor to production manager is okay because it is just an expansion of the area of supervision, but it is not so good when they are promoted and moved to another factory every 1 or 2 years.

"I feel sorry for blue collar workers. They need reliable bosses. If the reliable people are frequently moved to other positions, they can no longer be relied upon." Says Ohno. "On the other hand white collar workers each think they are on their own path. They do not rely on each other. That's why when it's they hit retirement age we have to find them another place to work." This may seem like a puzzling statement, but it's one that's very revealing of how Japanese companies work.

Taiichi Ohno sees the lack of reliable bosses due to the turnover of factory supervisors and managers as a contributor to low morale and low productivity. The factory loses a certain vitality when the people know that even if they work hard to support them, their best supervisors and bosses will promoted and moved to another factory and they will start all over again with someone new. This makes people think that their bosses will get promoted no matter what, so they might as well live day by day in the factory. This erodes performance in the long haul.

"One time I gave an engineer who worked on the gemba some grief. I summoned him, and a lady from the office went to tell him the factory manager was calling for him. So the engineer came running to the office. I scolded him and told him that if I really needed to see him I would go the gemba. I told him if he could come running to the office to see me that means the people on the gemba don't rely on him."

Ohno's point was that the engineer should have had so many requests for help from the people in the factory that he had no time to spare to meet the factory manager. If the engineer had time to drop his work and run to see the factory manager, the people in the factory didn't depend on him enough.

Ohno gave him the following advice, "When you are out observing on the gemba, do something to help them. If you do, people will come to expect that you can help them and will look forward to seeing you again on the gemba. Eventually the workers will stop you and ask you for help in making a difficult process easier."

Now I ask all of the engineers and continuous improvement people who read this: how long does it take you to walk 100 meters in your gemba? This is a good Lean benchmark. Measure it sometime and set a goal to improve it. But improving it does not mean walking faster. Ohno says:

"It should take you hours to walk 100 meters each time you enter the factory. If it takes you no time at all to walk 100 meters that means no one is relying on you."

When you are a reliable boss or a reliable engineer or a reliable kaizen leader and you are helping people by solving their problems and making their work easier, you will get a reputation and people will ask you for help whenever they see you. When your average walking speed on the gemba is no more than 50 meters per hours, you may have become a reliable boss.

Posted by Jon Miller at 6:55 PM | Permalink | Comments (0) | TrackBacks (0)

We met today with a long-term client of ours who has a small fabrication shop near our office. They make prosthetics (artificial limbs) which are each truly "one of a kind", custom fit to the individual. As a small, growing company with limited resources they haven't been able to pull themselves away from the day-to-day and focus on kaizen, process development and people development nearly as much as they would like. The managers have read The Toyota Way by Jeffrey Liker, they invested the time and money to go with us to Japan for a one-week benchmarking trip, and they are fully supportive of Lean manufacturing. They get it. This was driven home on our visit today.

They walked us around their gemba, showing all of the small improvements they had made since our last visit. Parts presentation kaizen here, material waste reduction kaizen there, pokayoke device here, visual controls there, one after another in every corner of their small shop. But the greatest thing for us was their passion when they talked about their problems. They didn't let pride or shame cloud them, they saw their problems and wanted to attack them. One of the bolts on the pokayoke device was missing. They found some minor flaws on two pieces of work in process on jigs. They shared their woes with us about their struggle to develop true Toyota-style team leaders.

This made me particularly happy because they were picking on problems that they may not even have recognized a year or two ago. Now that they know what a Toyota-style team leader looks like, they are not happy with what they have. Now that they understand the importance of error-proofing, they are frustrated when the pokayoke has not been error-proofed. They now hold themselves to a higher standard of quality and they judge their product quality based on whether the customer would be happy and how it reflects on the company, rather than how close they are to due date.

There was a sign on the wall that read "Take pride in the work you do." Take pride, but don't be proud. Instead, be dissatisfied. If you are a true believer in kaizen, hang up a sign reading "Be dissatisfied in the work you do." That is one key to a Lean culture.

Posted by Jon Miller at 10:06 PM | Permalink | Comments (3) | TrackBacks (0)

Toyota does not sell cars because people crave their sleek design or because the Camry is a status symbol. People buy and drive Toyotas because they are reliable and they have a high resale value. They are well built and reasonably priced. What would happen if Toyota vehicles were suddenly unreliable, prone to defects, and lost their resale value?

This is one of the questions the article Disturbing Changes at Toyota: Legendary Quality in Shambles (Toyota no ihen kuzureta hinshitsu shinwa) asks in the July 26, 2006 issue of the Weekly Toyo Keizai business magazine.

The headline screams: The world's greatest factory floor is fatigued! The article lists the following disturbing changes at Toyota:

1) Recalls are increasing at a faster pace than ever before in the history of Toyota
2) Three senior managers of Quality Assurance were investigated by police for failing to address known defects
3) Toyota announces more recalls in the United States than Chrysler
4) An employee from a supplier sues Toyota for violation of labor laws
5) Hyundai surpasses Toyota in quality rankings
6) Toyota struggles with domestic sales of the Lexus vehicles
7) A separate and second Toyota labor union has been recently established to kaizen working conditions

Toyota's breakneck pace of expansion over the past 10 years is resulting in a surge in both design and manufacturing defects now surfacing as recalls. This is simply due to managers, engineers, supervisors and workers being stretched too thin both at Toyota and the supply base, according to the article.

The article cites revealing statistics from Japan's domestic Ministry of Transportation:

In the year 2001:

Toyota: market share = 42.1% share of recalls = 1.4%
Nissan: market share = 17.9% share of recalls = 11.9%
Honda: market share = 14.9% share of recalls = 21.9%

In the year 2005:

Toyota: market share = 44.0% share of recalls = 34%
Nissan: market share = 18.4% share of recalls = 3.5%
Honda: market share = 11.8% share of recalls = 3.6%

According to Toyota supplier sources the Toyo Keizai article declines to name, among the trends mentioned:

At the automobile manufacturer:
- The number of investigations into non-conforming quality has doubled in the past five years
- One third of the defects are related to manufacturing, and production processes in particular
- Even small process flaws are resulting in recalls
- Suppliers are increasingly evaluated first on quality

At the parts manufacturer:
- Hiring of supervisors and workers is not keeping up with production growth, resulting in greater strain on workers
- Managers and supervisors have an increases span of supervision
- Support to tier 2 and tier 3 suppliers is lacking
- Basic lack of inspection resulting in missed visual checks

What's going on? The commonization of parts has leader to the quantity of each recall being larger, since a bad part now must be recalled from a wider range of vehicles. The overburden on the fatigued factory floor, as well as strain on engineers and designers is leading to rising defects.

Another cause, according to the article who sites an automotive engineer:

"Education in the use of CAD (Computer Aided Design) is lacking at Japanese universities. Therefore, the creation of the CAD diagrams is outsourced. The designer is not the same person who creates the CAD diagram. Because of this, the designer can miss drawing errors. These errors were previously caught be experienced veteran engineers. However, as the number of these skilled workers becomes thinner, the errors are beginning to show."

The Toyo Keizai article cites a Toyota group company employee who says that there is now a chronic shortage of people at Toyota. The number of regular employees at Toyota has remained stable while the number of temporary laborers has double or even tripled, according to the article. The implied result of temporary workers playing a larger role in manufacturing is the larger number of quality problems and recalls.

The lights on the Toyota Technical Center building are on past 10PM, even at midnight on some days. There is no second shift of engineers, they are simply putting in very long hours. Toyo Keizai interviewed some young workers from a Toyota supplier "If we stay on this path, quality problems will increase and so will the lawsuits" and "If they keep working people this hard, eventually no one will want to work here."

Can anything stop Toyota's reckless push to expand? At an executive management planning meeting on the theme of "Global Master Plan" in January of 2006, executives presented plans to build new factories in North America, China and elsewhere. Honorary Chairman Shoichiro Toyoda spoke out:

"When did Toyota get to be a company like this? There is no reason to hurry. We need to think deeply and act quickly once we decide. That is the Toyota way."

According to the article this created a chill among the senior leaders present and many of the plans for new factories were put on hold.

There is a three-page insert in the article revealing for the first time the details of over 50 of the recalls based on research by Toyo Keizai. The list includes many design errors of software, parts configuration, raw material properties and a variety of surprising manufacturing errors from insufficient nut torque, missing fasteners, damage during assembly, and mis-assembly. I don't think this is what former Toyota Chairman Hiroshi Okuda meant last year when he said Toyota should give General Motors some breathing room.

Posted by Jon Miller at 6:06 PM | Permalink | Comments (6) | TrackBacks (0)