Archive for Supply Chain Management

Trickle-up: A Path to US Manufacturing

fountain2This is not a political post. It is a call to personal reflection and action. Politicians and policies can help change the rules but we are the change agents in our companies. We have gutted our manufacturing prowess here in the US. We can blame trade agreements, tax burdens, short term quarterly reporting or politicians. But we also need to look at executive leadership. I am guilty. I’ve been a manufacturing executive during the biggest downturn in manufacturing…ever. Since the 90’s we have been shuffling manufacturing off-shore at an amazing rate. We have lost over 8M manufacturing jobs since the peak in 1979 with most moving to Asia since 1999. While this trend has slowed and there is some evidence of a reversal (~800K net increase in manufacturing jobs returning since 2010), it isn’t enough and we need to take action. The economics are just about there. What isn’t clearly showing in the numbers yet is the longer term benefit of having a return of the manufacturing base. I call this a trickle-up effect.

Trickle-up is not a new term but is new in this context. The trickle-up effect or fountain effect is an economic theory used to describe the combined demand of middle-class people to drive the economy. The theory is credited to John Maynard Keynes early in this century. Because each manufacturing dollar supports $1.33 in output from other sectors, it creates a trickle of economic value. Manufacturing has the largest multiplier of any other industry sector. Reshoring is a way to multiply jobs and economic value for our country. In addition there are intangible business benefits like increased creativity, faster time to market and increased customer responsiveness.

The late Andy Grove said in a 2010 New York Times essay, that what creates tech employment is scaling. “Scaling is hard work but necessary to make innovation matter.” And now scaling is not happening in the US. The big tech legends like Intel, Tandem, HP, Sun, Cisco all scaled in the US when they started. Then we shifted manufacturing to Asia. Now, companies like Foxconn and Flextronics build our electronics products with millions of engineers, technicians and managers located in Asia. Let’s tune our innovation engine to include scaling. Tools such as additive manufacturing, collaborative robotics and IC manufacturing equipment are developed here. Let’s use them here.

If we agree that it is best for our country to bring these jobs back, how can we accelerate? We need to examine our decision criteria. In some cases the numbers are in our favor already. In other cases we need to take action as leaders to change the equation. Here are some practical actions to take:

  • Calculate the total cost of manufacturing before deciding where to build. Labor costs have increased in Asia and have decreased in the US. Energy costs are competitive. In some parts of the country the real estate is less expensive and local governments are interested in attracting industry by offering tax breaks. Automation can be used to increase quality and increase efficiency further. The Reshoring Institute has developed a Total Cost of Ownership (TCO) estimator that is free to use.
  • Assign a value to time. Manufacturing close to a development team accelerates time to market. Learning quickly through rapid prototyping and iterating designs based on real manufacturing input will shorten your time to volume manufacturing and that in turn gives you an edge over the competition. If your product goes to market 1-2 months faster, what is that worth?
  • Value Superior products. New technology needs an effective ecosystem in which technology accumulates. This happens between functional areas and between inventors and makers. We are missing an element of the creative process if we don’t include manufacturing in the cycle. It can be done with Asian partners but it often isn’t. Designers often don’t even see their product being built. They don’t interact with the builders of the product and they learn only through second-hand feedback.
  • Consider the cost of quality.  Ideally when there is a failure early in a product launch, it is quickly understood and either the product or the process changes to avoid that failure the next time. Tight feedback between design and build is the key to this rapid improvement process. Proximity matters. It doesn’t guarantee the close interaction between design and build but it takes down an obvious barrier.
  • Lower inventory levels.  Do this by moving manufacturing closer to the demand. This has been called “next-shoring” or “right-shoring”.  Companies can respond to changing demand because there is less inventory on its way. The need to commit to next season’s fashion a year ahead of time goes away. Colors, fabric, quantity, sizes can change as demand is better understood.  Inventory is expensive to store, ship, scrap and obsolete. The money saved by placing build close to demand can be taken to the bottom line. Companies like Nike, GE and Brooks Brothers are working on “next-shoring”.
  • Train. One of the biggest gaps we have is the readiness of our workforce for this strengthening in US manufacturing. As business leaders we should be readying our workforce to take on manufacturing jobs through apprenticeship programs, on-the-job training, internships, partnerships with local colleges and universities and funding for skills training.

Increasing our manufacturing base in the USA will trickle up jobs and prosperity. The jobs are good ones and they are multiplicative. Job creation matters. We have an financial obligation in business to sustain the society and infrastructure on which we depend. It isn’t altruistic. It is a long term fiduciary obligation. Our children will be better off. What kind of world will this be if we only have highly paid professionals designing products and the rest are unemployed or serving those who are highly paid? We need to take action to bring manufacturing jobs back to the US. It is the right thing to do.

Be courageous. I have seen many depressions in business. Always, America has emerged from these stronger and more prosperous. Be brave as your fathers before you. Have faith! Go forward. Thomas Edison

Hardware Is The New Killer App

lunarmodulediagramI built a model of the Lunar Module when I was 12. I still remember how building it made me want to climb inside the real one and land on the moon. I was channeling Neil Armstrong and was certain that being an astronaut was my calling. Years later I graduated from Neil’s University, Purdue. I was not bound for space but I was bound for a career in making things. Taking great ideas and transforming them into a real shipping product is a pleasure that, for me, far surpassed bits and bytes or blurbs and spiel.

I’m in love with making things. Even here in Silicon Valley, the home of “dot-com”, there are big and small companies designing and building hardware products to sell to other businesses and to consumers. HW start-ups are the new “killer apps”. Funding for HW start-up companies has taken off over the last five years. Granted the number was low to start with but with this enthusiasm for hardware product companies, we are putting the Silicon back in Silicon Valley.  HW accelerators like Hax Accelerator and Highway 1 give these start-ups a home and help with the challenges of funding, building, importing and distributing products.  Kickstarter campaigns and companies like Bolt have given life to companies that otherwise would have languished waiting for friends and family to help with funding. Companies like Box Clever and MindTribe help these companies with the design itself. Companies like Dragon Innovation and OpsTrak Consulting help companies productize and launch into the market.

Building a hardware company is more complex than a SW only company but shouldn’t be feared. In fact ramping up a HW product is a blast and I highly recommend the ride.  Below are some of the key aspects to consider when building a HW company:

  • Connected: While I’m focusing on HW companies, no HW is independent of firmware, software and/or user interface. As a matter of fact the reason for HW’s resurgence is all about the internet of things. Everything is connected these days. We have moved from connecting on our computers to being connected in our cars, our homes, our clothing and in almost every industrial device. Bring in expertise or contract with the experts to be sure your HW product connects.
  • Concurrent: Small company or large, there is value to designing for manufacturing and the supply chain. Often referred to as DFM, the idea is to think about the manufacturing processes while you are designing the product. Sometimes the best way to get that perspective is to bring people in with the expertise. An easy partnership is with a contract manufacturer (CM) who is lined up to build your product. It is in their best interest to help you design your product so that it can easily be molded, assembled, fabricated, tested, labeled and shipped. If you don’t have a CM in mind yet or if you can’t get their attention due to your volume or company size, you can get the expertise from consultants or companies who have decades of this very type of experience. Bring your expert in before the design is locked in. Hold a design review and take into account the time it will take to make modifications to the design to make it more build-able. Don’t wait until you are on a critical path to release and then consider the ease of building the product.
  • Cost: Cost consideration often goes hand in hand with DFM although they are slightly different ideas. When designing a product you likely have a cost target in mind at which you will make enough money when selling your product to propel your company to success. But if you are off in your estimate by a factor of two or even off 20%, that can be a company showstopper. It is possible to iterate a design to get to a targeted cost but each change in the product costs money and the installed base needs to be considered. Ideally you know what your design will cost and you have taken into consideration the material, processes, labor and OH required to build and ship. If you have some margin in your plan you can survive a decision to quick-turn a PCBA or expedite components as you begin your ramp. Consider your cost of goods sold (COGS) budget. Get real quotes. Estimate labor time and cost. Don’t forget SG&A, material mark-up and profit from the manufacturers. Finally, if there are internal resources assigned to ramping the product their costs should be assigned as well. It is best to have a margin of safety in your model as you start so that the first product out the door can cost more without breaking your business model. That gives you some wiggle room and those costs can be whittled down later as you ramp.
  • Cash: One of the challenges to building a company that ships a product is that you have to invest in inventory, labor, space and sometimes machines to build the product. If you choose to build in-house you will need use your cash to set up a manufacturing process complete with quality and inventory control. You will likely need an MRP system to manage material and control inventory and ship orders. If your demand has its ups and downs you will want to add temporary labor and will need to train prior to the up cycles. With today’s infrastructure both in the US and in Asia, there is no need to develop a manufacturing process in-house. It is possible to entirely outsource your product build, distribution and even return and service process. Outsourcing isn’t free from costs and challenges. A clearly worded Manufacturing Services Agreement (MSA) and a solid relationship with executive management is the first step in solidifying your success. Staying involved in the process is the second step. Be there during builds and participate in the development of the assembly and test processes. The CM partner might be the expert in manufacturing but the product knowledge is in the OEM’s court.
  • Collaboration: This last attribute is wise advice for any kind of company but especially if you are a hardware company. The strength of your company is rooted in the brilliance of your design of course but the other factors that add to longevity, resilience and profitability are the supply chain, distribution channels, customer service capabilities, first customer’s adoption and marketing of your successes. All of these require relationship management. Even larger companies need to partner. A smaller company can be made by its success in partnering. Sometimes the product you are shipping needs to play in an environment that isn’t in your control. System integrators, plant managers, final customers need to be trained to use your product successfully. In the consumer market you are dependent on distribution and visibility of your product to the end customer. Creating a network of partners is a key element to success.

As children, we enjoy making things. Watch a five-year old with clay or legos.  Many who are makers inherently like to cook or sew or build furniture or design products. We like to fix things and build things. This same joy can be found in a company that builds product. I highly recommend it.

We don’t value craftsmanship anymore! All we value is ruthless efficiency, and I say we deny our own humanity that way! Without appreciation for grace and beauty, there’s no pleasure in creating things and no pleasure in having them! Our lives are made drearier, rather than richer! How can a person take pride in his work when skill and care are considered luxuries! We’re not machines! We have a human need for craftsmanship!
― Bill Watterson, Calvin and Hobbes author

The Logistics of Giving Back

2013-05-30_10-12-03_844“Bridging the gap between surplus and need”   This is a compelling value proposition for any supply chain professional. It happens every day at MedShare.

On a Thursday morning in May I arrived at the MedShare warehouse in San Leandro, California. This is one of two warehouses filled with medical supplies and equipment. The second one is in Decatur, Georgia. What I’m looking at is material that would otherwise be in landfills across the country.  As a manufacturing geek, I feel right at home in this warehouse with racking, forklifts, bar coding, computer entry, shipping docks and a container poised for loading. After the tour and instructions, I get to work sorting and re-boxing.

MedShare has been operating since 1999 and diverts on average 2000 pounds of medical surplus each week.  They have shipped over 900 containers to 93 medically underserved countries including Kenya, Haiti, Costa Rica and Ecuador. They also provision hundreds of medical teams who serve in these countries and provide free supplies to safety-net clinics in California and Georgia. This web of suppliers, volunteers, bio-medical experts and logistics professionals works to lessen the medical disparity around the world.

Our medical system in the US is, on its own, very wasteful. A surgical procedure will draw in pounds of material in kit form in the name of hospital efficiency, and then whatever is not used, will be tossed. The piles of waste include, masks, needles, surgical instruments, gowns, bottles, bandages, and gloves. MedShare is a non-profit that will accept that waste material, sort it, repackage it when necessary, label it accurately, store it and then ship it to order. Hospitals from developing countries are able to look online at MedShare’s database to determine what is available. They “shop” to fill up a container. Assuming that there are funds available to pay for the shipment, they get what they need. This is in contrast to other charities that ship what they have, when they have it. Often what is shipped does not meet the needs of the people and sits unused. Not so for MedShare shipments.

In addition to excess medical supplies, MedShare takes in, refurbishes and ships out medical equipment such as surgical tables, ultrasound machines, scales, lights. Again, in the US medical world these items are obsolete but for a developing country they are seldom seen luxuries. There are wonderful stories of medical intervention that would not have been possible without MedShare equipment and supplies.

But what does MedShare NOT have readily flowing?

  1. Cardboard boxes – Volunteers bring in boxes from home. MedShare has to buy boxes that they can’t get donated.
  2. Sponsored containers – It costs about $20,000 to ship a container to its destination. Companies can sponsor a shipment and can advertise this donation both in the US and in the receiving country. For a company expanding in the developing world or even partnering with suppliers in that region, it is a very inexpensive way to build positive brand awareness.
  3. Volunteers – They welcome volunteer groups from companies, churches and youth groups. You can show up as an interested individual and they will put you to work.
  4. Funding –  Money is very efficiently put to good use either to fund the very low administrative costs or to pay for the container shipments.
  5. Regional expansion – MedShare plans to expand this year by adding another warehouse location in the east. The numbers make it clear that this is a good strategy. Healthcare Without Harm claims that U.S. hospitals generate more than two million tons of medical waste each year, most of which is medical supplies and equipment. The World Health Organization estimates that more than 10 million children under the age of five die in the developing world due to inadequate medical care. MedShare is serving a critical need and is only scratching the surface with its fifty plus tons a year.

The efficiency of this charity has been celebrated with awards and recognition. MedShare is a four star charity in Charity Navigator. They have been featured on TV and in print. There are numerous testimonials online. However, for all of its success, it should be better known than it is. Maybe, for some, it is not so glamorous. After all, this is a process of matching supply and demand. It is a non-profit that deals with inventory management, transportation costs and material handling. The demand fluctuation has a lot to do with global forces such as economics, natural disaster and incoming funds. In short, the job done at MedShare is a job that many of us in supply chain management will recognize. The supply chain community should resonate with this charity and its work.

My morning was spent sorting, labeling and boxing and having a blast. The volunteers I worked alongside were smiling, chatting and one even burst into song. Halfway through, we took a break and watched a container load finish up. This one was funded by the MedShare’s own Western Regional Council. The stories told by Chuck Haupt, the Executive Director for the Western Region, were stirring and motivating. In fact, the volunteers themselves are raising money to ship a container, just going to show how compelling the work really is.

A sign up on the wall said it all for me: 2013-05-30_10-40-21_667

Learning from Crisis Leadership

tornadoMonday, May 20th started out as a normal day for people in Moore, Oklahoma, a community of about 56,000 people about 10 miles south of Oklahoma City. By late afternoon the world had turned into rubble and ruin for many in this town. Rescuers worked through the night to pull people out from under destroyed homes, businesses and schools. 29 people died including 9 children. Clean up will take months. Recovery will take years.

Immediately after the tornado passed, the local police, firefighters and EMTs took action. Within hours, the Oklahoma National Guard arrived at the scene with fully rehearsed rescue teams. They had the tools, skills and communication processes in place to call in more help. The additional help was triggered based on what they saw when they got there. By nightfall the Red Cross had shelters set up. The nearby medical facilities were ready for an emergency and all hands showed up to help the wounded. Now, neighbors are showing up to cook, find pets, deliver gloves and generally serve. The town is mobilized.

What kind of leadership is required to get a community through a crisis like this? What can we, as students of leadership, observe and thus learn and apply in our areas of influence?

  • Act quickly – There is no time to hesitate when a crisis occurs. Decisive action is important in triage. Even in a business context this remains true. Get moving on the critical issues of life, safety, continuity, sustenance. Know where your staff is. Get the facts. Gather your resources. Assess the damages. Send out the first responders. If the problem is with a supplier, fly there. If the issue is in your own manufacturing plant, visit and evaluate. If the problem is with a new product launch, get to where the action is and gather the information at the source.
  • Ask for help – There is no virtue in going it alone. If the problem is really a crisis, call in others. Get suppliers, partners and other functional groups involved in solving the problems. Tell the boss.
  • Communicate regularly – Perhaps the information will not be precise. Perhaps you will have to revise after more is known. But getting information out to those impacted will serve two purposes. First, you will calm those impacted. You and your team know what is happening and action is being taken. Second, you will get everyone on the same page. When should updates be expected? Who is doing what?  What are the near term instructions?
  • Create structure – Put together a war room with a steering team. Put people in charge of different parts of the problem. Ask for a cadence of information flow. Meet regularly.
  • Be visible – If you are running a local team, be there. If you are running a global team, be there virtually by calling into team meetings or even creating video updates. Be accessible. Talk with the team casually to understand mood and to get facts from all levels. Your ears are the most important tools you have during a crisis. Listen.
  • Be a servant leader – Pick up the symbolic shovel. Contribute at multiple levels even if just a little. Your job is to show others that you are in the situation with them. If you are seen as above it all, the team will not hit its full potential.
  • Have a plan prepared beforehand – Of course, this is wise. But many companies, families, small businesses are not thinking about the possibilities of a game changing emergency. Thinking through an action plan before the crisis can save crucial minutes when something happens. Put the plan in writing. Practice with a staged crisis situation. Involve your immediate organization and those throughout your value chain. Business Continuity Plans can make all the difference when a crisis occurs in your company or supply chain.

News of the tornado in Oklahoma struck a nerve for me. There is no way to predict when a crisis will occur in communities and similarly, there is no way to predict crisis in business or supply chains. The only certainty is that crisis of some sort will show up in the future. Be ready and be a leader when it happens.

In  preparing for battle I have always found that plans are useless, but planning is  indispensable.

Dwight  D. Eisenhower

Ethical Supply Chain Management

BANGLADESH-BUILDING-DISASTER-TEXTILEReshma was pulled out of the wreckage of the Bangladesh factory fire after 17 days. She survived in a dark 8 foot by 10 foot space with room enough to move and food and drink enough to survive. After finding over 900 dead in this factory, the miracle of Reshma brought joy to the rescuers. This factory garment worker did not give up her life making our clothing but somehow she puts a face on the ethical questions troubling me and many others who work in the field of supply chain management. Should we know when the factories making our products are unsafe? Do we have a responsibility for our far flung supply chains? I believe that the answer has to be yes. But fulfilling that responsibility is a difficult task.

There are attempts to organize companies around the principles of safe, humane, ethical working conditions. In the electronics industry many companies are members of EICC which is the Electronic Industry Citizenship Coalition. Their website states that “the EICC is a coalition of the world’s leading electronics companies working together to improve efficiency and social, ethical, and environmental responsibility in the global supply chain.”  HP is a member and also has its own social and environmental standards and policies. Since 2005 HP has audited over 700 suppliers in its 1000 plus company supply chain. During those audits non-compliances are found. The offending company is to fix the non-conformance and report back upon closure. Is that enough? Other companies do more or less work on this topic. How can you judge what is enough? Can we expect to get to zero non-compliances? Perhaps our goal should be an ever decreasing number of non-compliances approaching zero.

The garment industry is trying to get a coalition together for monitoring and compliance throughout the supply chain. It is called IndustriALL. There is some dragging of feet on joining. Gap is not ruling out joining this group but so far it is doing its own work to monitor factories for safety. After the Bangladesh fire there is more momentum around this topic.

And what about human trafficking? An organization called Not For Sale is focusing on this topic. Their website states that this is a $32B business and it is tied to almost every product we use. As consumers we don’t have the information to even vote with our dollars. This organization is stressing the need for transparency. If we know where the problems are and they are visible to consumers there would be a move away from those markets. The economic pressure shifted apartheid policies in South Africa and it can make a difference here as well.

What are the “to do’s” for supply chain leaders? Here are the few I can suggest:

  1. Join the coalitions available. They aren’t perfect but they at least get a collective body to call attention to a problem.
  2. Create transparency in your own supply chain. Know who your suppliers are and who their suppliers are and who their suppliers are…Spend the money to audit.
  3. Keep this high on the agenda. Talk about supply chain design with this in mind. Cost drives many decisions but take the total cost into account. Understand the cost of the monitoring required. Put the right system in place to do the right thing.
  4. Participate in the dialogue. Talk to other leaders about this topic. Engage with the government and with non-profit organizations. Take a position.
  5. Design your supply chain with ethics in mind. Enough said.

“You have just dined, and however scrupulously the slaughterhouse is concealed in the graceful distance of miles, there is complicity.” 
―    Ralph Waldo Emerson

Increasing the Odds of a Successful Launch

ski-jump-lake-placidSilicon Valley is filled with launches. We are a hotbed of new ways of thinking, new forms of work, new technologies and new products. Entrepreneurs flock to this area to take advantage of a diverse, intellectual and risk-taking labor pool. The Valley has start-up think tanks and incubators around every corner. If you want to launch something, bring your ideas and sweat equity to the Bay Area. But, when you get here don’t assume you have all it takes with just a mighty good idea.

Launching is not equal to success. One out of every ten products are successful and even that success is defined quite narrowly. How can a company increase its odds of not only launching a product that makes money but also ramping a product that grows rapidly in revenue and profitability? Much of the success of course is due to the product idea itself. That, in turn has everything to do with the brilliance of the invention and the knowledge of the market. But marketing and innovation are like a two-legged stool. The third leg that is often shorter than the others is execution. The saying that “God is in the details” holds true when it comes to getting a new product out of the door in a state that will allow for a high quality ramp. Let’s get practical about what this means in a product development setting.

1. Start with the end in mind – When a product development effort begins it is often centered around getting two or three prototypes to work. That of course is necessary but not sufficient. Shortly after a concept is built the team should be considering the implications of scale. Handy tickler questions are:

  • What is the volume expectation? Tooling decisions should be made early. Tooling is typically on the critical path. Designing for plastic/metal molding or sheet metal fabrication processes early will save time and money.
  • What does this product need to cost in order to get to the volumes anticipated? Targeting cost at an early stage will aim you at the right supply chain, material and packaging choices.
  • How will this product be used? And therefore what design margin should be used to be certain that quality expectations are met? This drives design verification test (DVT) and highly accelerated life test (HALT) decisions and likely drives material choices.
  • Given the volume and cost requirements, how will this product be built? How quickly do cost targets need to be met? This drives supplier and tooling decisions.
  • Where is the market? Is this a product for a global market or will the customers be concentrated locally? Could this change over time? This drives supplier and distribution channel decisions.

2.  Engage a cross-functional team –  Bring in an expert in manufacturing processes to work alongside the development team.  While a great product is the foundation for success, the house is built with cross-functional cooperation. Bringing a quality product to the customer at the right price point with predictability takes a team. Putting the full monty in place early sounds expensive but it doesn’t have to be. A very small team of experienced operations leaders can connect you with an array of outside services that will offer early fabrication, tooling, design for manufacturing and test (DFM/DFT), logistics and packaging expertise. These leaders should be practical, hands on people who will engage in the day-to-day problem solving. At the same time the right people will be well-connected and will know what they don’t know. They will find the experts using contract manufacturers or consultants. Paying for services amortized into part cost or paying for help by the hour will keep costs down while getting you the help you need.

3. Build fast and frequently – The idea of rapid prototyping has been around for a while but it isn’t used regularly in new product ramps often enough. Especially with additive manufacturing processes, FPGAs and quick turn proto houses available, it is possible to build a few to try out a concept prior to building many. Once you commit to a tool, whether it is a plastic mold, sheet metal punches or ASIC design, you are locking in cost and tweaking is expensive. A common mistake with the fast turn processes is to do the work independently of the final manufacturing process. Then the transition to the volume process is a major undertaking. Work with the manufacturing partners you have chosen to use rapid turn processes that best match what the final process will be.

4. Put together a diverse team – While this isn’t specifically related to execution it is related to performance. Often start-up companies are initially staffed with people who know each other well because they have worked together successfully in the past. Since we feel most comfortable with people like ourselves teams look homogeneous without some conscious intervention.  A recent study showed that start-up companies with at least one women executive made more successful exits and for every 10 percent increase in women executive and director employment, the business’s probability of success increased by six and three percent, respectively. Diversity is more than a gender thing. The highest functioning teams have different types of people. Mix up race, ethnicity, gender, age, thinking styles, life experiences. If this team is managed well the performance will be outstanding. Your output will be stronger and your risks will be lower.

5. Use checkpoints meetings…seriously – When asked, most development managers will insist that their company uses a new product introduction checkpoint process. This is a process that is defined upfront and usually consists of at least five phases: concept, proto, pilot, ramp, end of life. At the end of the phases are checkpoints that serve a purpose of bringing that diverse, cross-functional team together to talk quantitatively and qualitatively about the readiness to move to the next phase. These reviews serve as a kick in the rear for those who are behind. They keep the team accountable and they show the leaders where there are vulnerabilities. Taking these meetings seriously is one way to keep the end in mind and to get full cross-functional attention. These checkpoints are also a serious opportunity to stop the presses. Blindly moving forward when key elements are not ready will cost money at the least and will derail a company at the extreme. Ideally an honest evaluation complete with a review of the warts will allow for a course correction while the project continues. Adjustment is less expensive than redo later and much less expensive than a launch that fizzles due to quality or availability issues.

These five points, if followed, will increase your odds of launching a successful product. None of them are hugely taxing but surprisingly, most companies do not comply with all of these points. There is a resistance, especially in the start-up space, to overlaying processes. Process without purpose is a weight. Process that serves as a support to execution will be flexible and light weight and will save time, reduce risk and help a company launch a winning product.

“Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives – choice, not chance, determines your destiny.”
―    Aristotle

Manufacturing: A Bond Adventure

182_100_100M: “Bond, I need you back.” 
James Bond: “I never left.”
Quantum of Solace

Recent articles written about reshoring manufacturing bemoan the fact that we’ve lost our manufacturing expertise. We don’t have the people or the passion in the USA for a strong manufacturing culture. So, while we might want to bring manufacturing back and it might even make sense to bring it back, we just don’t have a population equipped to do the work. Common wisdom is that it would be too hard to lure people back into manufacturing and without trained engineers, technicians and line workers we would be unable to grow our manufacturing capability in North America. We could never regain our former strength because too much has been lost. Besides the difficulties in ramping up this expertise, there is also the issue of attraction. Who would want to be in manufacturing? Don’t our best and brightest want to be entrepreneurs, venture capitalists or iPhone app programmers? There is no attraction to building products in the USA. We are a service oriented culture.

Malarkey. Hogwash. Nonsense. Balderdash.  The potential of more manufacturing in the USA is “James Bond” cool.  Who wouldn’t want to be part of the fun?

  1. Adventure abounds – Building products is an adrenaline rush from start to finish. Partnering with all parts of the company to maximize the product’s value while minimizing the costs starts the adventure. Dealing with the political and environmental influences in a global supply chain while meeting the needs of customers who want it now in their chosen color and size can only be compared to solving James Bond sized problems.
  2. Intrigue and Mystery – Trying to shorten time to market while hitting the highest quality marks at the lowest cost is a puzzle worthy of the brightest minds. Working cross-functionally with design, marketing and sales to hit a promised delivery date requires social skills and Bond finesse.
  3. Global Plot – The stage on which this drama unfolds is always international. Even if manufacturing ramps back up in the USA we will work across time zones to get parts delivered and to get product shipped. The world is a Möbius strip.
  4. Flashing lights and non-stop action – The nature of manufacturing has changed for the better. Automation will increase in importance as labor rates go up around the world. In the USA, we have to use our innovative skills to drive highly productive, less labor intensive manufacturing plants. These will run 24 X 7 and will need skilled workers to design the processes and to keep things running. These will not be monotonous manufacturing plants of old.
  5. Always get the girl – Given the complexities of relationships, cultural intrigue and the problem solving nature of manufacturing the need for diversity is obvious. We need the best minds and the best combination of ideas to win this global competition. As automation takes over to build products it will be brains, not brawn that will rule. Manufacturing is gender neutral.
  6. The good guys win – The best and the brightest will design and manufacture products for the world. It will take leaders with a vision for a better paradigm. It will take young engineers who get a kick out of building things. It will take men and women who aren’t afraid to learn about competitive ways to work cross-functionally with the latest technologies. The combination of creative talents will come together to win.

I’ve always loved manufacturing. Even as it has evolved over the years it remains challenging, fun and intriguing. Consider a career in Manufacturing. Talk it up with your friends and neighbors. Encourage your children to move into this area of expertise. Aspire to this great profession. It will only get better in the future. Manufacturing is coming back as the coolest job out there.

James Bond:  “Everybody needs a hobby.” 
Raoul Silva: “So what’s yours?”
James Bond: “Resurrection”         
Skyfall

Product Actualization: Bento Box or Potluck?

During the many trips to Japan I’ve made over the years a bento box for lunch is common sup. Everything is neatly presented and fits into its section. There are many flavors but they don’t run together. Stuff stays where it is put because the box is compartmentalized. Sometimes there are familiar looking little finger sandwiches made out of white bread and what could be tunafish or chicken salad. Sometimes there are creatures of unknown origin. Always there is a neat lid that can be used to tidy up at the end.

It would be lovely if launching and ramping a product was like a bento box. If only we could keep things from blending together. If only the bad things could be ignored in their little compartment and eventually sent away with the lid on top. In the world of new product development, supply chains, manufacturing and logistics, stuff runs together.

As an operations executive I see the organization’s bias to keep things organized, separated, clean. Let the development team work their problems. Don’t slow them down. Let the marketing team think about product roadmaps and forecasts. Don’t second guess. Customer service can deal with quality issues in the field. There is no time to get to root cause with an angry customer on the phone. Just ship them a new one. But alas, without the messy cross-functional conversation and real-time data exchange the results are non-optimal. Sometimes the results are disastrous.

The international economy fluctuations have made the job of forecasting consumer goods next to impossible. I’ve worked hard in a previous position to shorten lead times to allow for faster reaction to changes in demand. But that wasn’t good enough. The breakthrough took place with a move to design the product so that we could postpone differentiation. The work was upfront with the design and marketing teams to design for postponement. The payoff is that a few “assets” could be built into many end products to meet localized needs. The result is less inventory, more availability, better customer satisfaction, lower lead time.

Potlucks are a messy, yummy, eclectic, out of control smorgasbord. When a manufacturing organization puts on a potluck it is the best darn eating you can find. There are typically dishes from all over the world. The tastes mix together on your paper plate…with any luck.

Product actualization done well is more like a potluck. The lines blur and true concurrent work happens naturally. Customer data is vigorously collected and then it flows freely to the cross-functional team. Manufacturing partners are brought in at ideation. The development team thinks about how to design for postponement. Marketing is working alongside the other functions to anticipate the localization needed and to make the product configurable as a last step. There are blurred borders and no compartmentalization and the result is a much more successful business.

Simplicity follows complexity. Business is messy.

The Fullness of Lean

Quality concepts have come and gone. Have we finally arrived at what will stick as the right approach? Or is there an extra ingredient needed to pull off Lean Six Sigma success?

Once upon a time in a manufacturing plant that no longer exists I led and evaluated Quality Circles. This was a line worker driven concept to engage all in the concept of continuous improvement. If you added up all of the on paper savings, millions upon millions of dollars were saved just in our little division. Reality was something less but we did have breakthroughs and it did improve full buy-in to the concept that quality was everyone’s job. Later, when I worked at a robotics company in the late 1990’s I brought in the concept of “demand flow” which was a precursor to “lean”. However, the Toyota Production System (TPS), the mother of all things lean, was conceived and implemented before I even started working in manufacturing. The idea of driving out muri, mura and muda (overburdening, inconsistency and waste, respectively) was the basis for the process work that went on during the second half of the last century at Toyota. TPS translated to Just In Time (JIT) and Total Quality Control (TQC) for companies in the 80’s. When I took over at the robotics company in the 90’s we combined Demand Flow and TQC to drive improvement. The concepts at that time focused on pulling product through the process based on demand, used “takt time” to balance stations in order to avoid queues and used signage to clearly mark what was to happen along the way. Making these changes helped us reduce inventory by 30% in the factory. In addition, we increased our on-time delivery and reduced lead-time. TQC was still in vogue as a term and our statistical quality control kept quality steadily improving.

Then came Six Sigma. Over the first decade of this century the concepts of Six Sigma took over the language. Measure, use data and statistical analysis to improve, teach the concepts of data driven problem solving by training green and black belts who in turn would bring “Sigma” language and action into every nook of the organization.

And today we put it together. What is refered to as “Lean Six Sigma” is the culmination of lean concepts, statistical quality control, and the data driven improvement cycle of Six Sigma.  Lean Six Sigma is what you might call the union of the sets: Lean U Sigma.

But with this definition there is a risk that we will leave out a few other more subtle concepts from the Toyota Production System that should not be forgotten. Let me call them out:

1. Respect for each other and what each party offers to the work. Each participant in the work (including partners) has a voice and a responsibility.

2. Teamwork – The whole is greater than the sum of the parts. Work together. See #1.

3. Learning organization Invest in people.

4. Long-Term Vision – Do the right thing for the organization in the long run. Don’t solve only for short-term gain.

These four softer descriptions could be simply termed signs of good leadership. I conclude then in saying that the fullness of the concept of “lean sigma” requires excellence in leadership. Leadership is the caulk in the cracks of all of these concepts that have come and gone over the years. Without the caulk, the walls will quickly crumble. I’ve seen it happen.

Not the cry, but the flight of a wild duck, leads the flock to fly and follow.
Chinese Proverb

Transformation is a Tactical-Strategic Combo

 I joined the company at a tumultuous time. The bad economy of 2009 caused this business to literally stop incoming shipments of product because inventory was building up. Ah, but then the customers came back and getting back to full speed was a long and painful process. Our major partner had closed down lines and they were slow to hire and ramp up their material flow. In the words of my sales counterpart, “you get me anything and I can sell it.” Problem defined.

To add insult to injury our contract manufacturing partner had a performance meltdown prior to my arrival. They were unpredictable in their delivery because of shortages and quality glitches. The cause of much of this was pull-ins within long leadtimes, in some cases as long as 24 weeks. Changing that was part of the eventual fix. But it shouldn’t have been a crap shoot when we were going to get product.

The staff working on the issues was scattered and unfocused. The prior administration was focused on future strategy which wasn’t all bad but the boat was sinking while the captain was plotting a course to the Bahamas.There was no future here without some short term triage accompanied by some systemic changes.

When an organization or situation calls for a dramatic overhaul the answer is a combination of tactical and strategic work to be done simultaneously. Here are some combo pointers:

  • Fix the immediate holes in the process with attention to detail but engage with suppliers and partners at a high level to set expectations for future change.
  • Measure ferociously to track progress while determining what success looks like. Make your goals public and celebrate as they are met.
  • Focus personnel in a laser-like way. Take the unessential off the of table. Assess the team’s abilities to execute but also determine what longer term action is needed. New talent infusion? Coaching for current staff? Often there is a need to reorganize to better match the work with the available talent.
  • Identify the root causes by engaging with partners, suppliers, staff, management and peers. Ask why five times. Don’t assume that the simple answers are the right ones. Often the real root cause is more engrained in the organizational behavior. Consider what the long term vision should be for the organization and incorporate the fixes into the future state. Don’t do that alone. Use the brains of the team.
  • Celebrate the success along the way. It is worth saying again. Say thank you to people as things transform. Pull away from the daily progress to make sure that the end state is a true transformation. Don’t stop at good enough.

The end of the transformation journey described at the start ended with a contract manufacturing partner rated the highest of all in the business, full product availability (apparently the sales organization couldn’t actually sell everything that they got) and an organization filled with strong, empowered employees. Systemic changes included a new SAP planning module, a metrics dashboard with weekly reviews and a 30% reduction in leadtimes.

A good leader leads people, not transformation. Change is hard for organizations because it feels like an uncontrollable outside force. Make it an inside force by harnessing the energy of your team.

“Change is the law of life and those who look only to the past or present are certain to miss the future.”

—John F. Kennedy