By Jon Miller | Post Date: February 12, 2007 11:12 PM | Comments: 4
Blogger BDG123 at Rantings on Markets, Economics and Business Strategy is an electrical engineer and mathematician by training, one-time corporate consultant and corporate sales and marketing executive in the information technology and business consulting, and securities trader, according to his profile.
Last week he asked some questions on the industrial economy and followed up today on the issue of whether in the grand scheme of things the pursuit of low manufacturing wage means a thing. He invoked Shigeo Shingo and Henry Ford while peeling off a rant:
The reality is manufacturing efficiency and the ultimate end product cost contains many variables beyond labor rates. Cost is more about a maniacal focus on continuously optimizing efficiency, quality and lowering labor's input into the final output. Labor's input into final output is not wage rate but continuous improvement of doing more with less via technology and business process improvement. And, a great industrial company never rests as it pertains to continuous improvement. Always questioning how to do more with less, even questioning if I need a skilled worker to do unskilled labor. Or whether my skilled labor would serve my client better by focusing on higher value work. So, where does this notion that people must make piddly salaries come from? Is this a reflection of too many finance minded executives infiltrating all sectors of our economy? Because I can assure you, most of what is taught at Toyota would require you to throw what was taught at Wharton Business School. Manufacturing and operations related segments of the economy are not about spreadsheets, they are about real commitment to rolling up your sleeves and understanding how you make something and continuously make it better.
Amen. He lists the seven types of waste plus information, then continues:
Do you see wage rates in the above list of lean manufacturing focus areas? If I pay someone $25 an hour or $10 an hour, how does that fact improve the processes above? To the contrary, doesn't the fact that I pay higher wages mean that I should be able to attract a more qualified worker and a more committed work force? That I should theoretically find employees more capable of adding more intellectual value to my organization and thus finding continuous answers to the never ending innovative improvements required in a competitive world? And, in the end, wouldn't that allow me to reduce the labor cost per unit of output? Part of excellence in any organization is to encourage all teammates to provide continuous feedback on how to improve operations regardless of what their role is in the organization. When was the last time your organization asked you to participate in such an exercise? At Toyota it is a condition of employment. It is processized. It is demanded and expected that you use your brain regardless of what your job title is, be it janitorial services or CEO.
What is the only variable between those four companies? Senior management's commitment to their company, the success of their products and their employees?
but takes it a step further
May I ask what the difference is between a country who has a poor record of human rights and a company which only values the bottom line at the expense of associate welfare? Is there a difference?
and makes a case that this is a matter both of social responsibility and a matter of pro-business, when he asks
In the end, as a shareholder or customer or consumer, is that an environment you endorse?
There's a lot more ranting where that came from. Also check out his Quotes for Daily Reflection, Self-Improvement and Success along the left margins of his blog. There are one or two reflections in there for everyone.Comments are moderated to filter spam and inappropriate content. There may be a delay before your comment is published.