Manufacturing Companies Have A Long Way To Go Before They Are World Class

Reprinted from the November 18 Manufacturing & Technology News

Most of America’s small- and medium-sized manufacturers know what it will take for them to become successful global competitors, but only a fraction of them are implementing best management and manufacturing practices to get there.

Small- and medium-sized manufacturers “have trouble implementing next generation manufacturing strategies” that focus on the development of talent, innovation, process improvements, sustainable manufacturing practices, supply chain management and exports, according to John Brandt, CEO of the Manufacturing Performance Institute (MPI).

In one of the most comprehensive surveys ever conducted of U.S. manufacturers, MPI found that most manufacturing executives understand what is required, but there remains a “significant execution gap,” according to Brandt. For example, three-quarters of manufacturers say supply chain management is important or highly important to the success of their operation, but only 29 percent are at or near world-class levels. The same is true of developing leadership capabilities, attracting talent and installing automated production equipment. “Only a small percentage of manufacturers have state-of-the-art equipment or are ready to move forward into the next generation,” says Brandt. The survey notes that the execution gap “represents a substantial barrier to long-term success for U.S. manufacturing.”

The Performance Management Institute’s “2001 Next Generation Manufacturing Study” updates research conducted in 2009. It finds that most U.S. manufacturers “lack key success factors–talented people, business systems and equipment, company-specific strategy–and face competitive disadvantage.” Many manufacturers “haven’t yet recognized the critical importance of Next Generation Manufacturing (NGM) strategies.”

Thirty-two percent of American manufacturers have no strategy for global engagement. Twenty-five percent have no strategy for sustainable production. And 15 percent have no strategy for human-capital management.

Carrie Hines, Executive Director of the American Small Manufacturers Coalition, the trade group representing the nation’s Manufacturing Extension Partnership (MEP) centers, says the study “reinforces how critical it is for U.S. leaders to put and keep in place existing support resources for small manufacturers as they assess whether they have the workforce, business systems, equipment and strategies in place to successfully compete in the future. Small businesses that don’t have deep pockets like large corporations can benefit from additional resources that can help them compete in today’s economy.”

Others agree. Mary Isbister, president of GenMet Corp. has used the Wisconsin MEP to implement a series of performance improvement strategies. “We have measurable quantifiable results that demonstrate that they have transformed our business to be truly competitive in today’s market,” says Isbister. The metal fabrication company’s sustainable continuous improvement (Lean) program, has enabled GenMet to increase inventory turns from nine to twelve per year to 33 to 39 per year. The company has cut its lead times for delivering contract manufactured products in half, allowing it to effectively compete with offshore competitors that have longer lead times and lower quality. It has reduced its finished goods inventory by 90 percent.

“Because we can manufacture much faster in small quantities we don’t have to carry any inventory, that frees up valuable space in our facility,” says Isbister. ”With the same footprint of 10 years ago, we have more than quadrupled the revenue from our facility.”

Implementing Lean has changed its relationship with suppliers and its customers. The company is “never more than two days away from our raw material,” which helps increase inventory turns. “It’s not just how quickly suppliers can deliver the material — it’s the expectation that quality and on-time delivery are [essential],” says Isbister. “That is what those suppliers have to bring to the party in order to participate with GenMet, but it’s also developing those deeper relationships where they are looking for innovative ideas on how to assist us to be competitive with our customers.”

Here are some of the findings from MPI’s benchmarking survey:

• 60 percent of manufacturers anticipate a planned leadership succession in the next five years, up five percentage points from 2009.
• 67 percent of manufacturers spend less than 5 percent of sales on capital equipment
• 91 percent of manufacturers spend less than 5 percent on information technology
• 43 percent of manufacturers say they are near or at world-class customer-focused innovation
• 22 percent of manufacturers invest more than 5 percent of sales in new product development and R&D, a drop of 10 percentage points from 2009. “This raises concerns about U.S. manufacturers’ ability to meet customer demands for new products faster,” says the study.
• 70 percent of manufacturers commercialize less than one-quarter of their R&D expenses
• 30 percent of manufacturers report that they are near or at world-class with human capital management
• 9 percent of manufacturers say their business systems and equipment are state of the art
• 33 percent of manufacturers have either inadequate systems and equipment or none at all
• 42 percent of manufacturers have established skill standards for training
• 29 percent of firms still train each employee eight hours or fewer annually
• 28 percent of manufacturers report value added per employee of more than $125,000

The study is located at http://www.smallmanufacturers.org/wp-content/uploads/NGM-Study-Executive-Summary.pdf.

Steve Jobs’ Seven Rules of Success are all about having a System

Steve Jobs was one of a kind.  I have been inspired by what has been written about him since his passing.

I believe the challenge for most organizations is how do you imprint ‘Steve Jobs’ on your culture?  Lots of companies are looking for the next Ipod, or Ipad, but what Steve Jobs figured out, it’s the system of invention and not the invention itself that creates success.  By the time Apple’s inventions are copied, they are on to the next cool thing.  No wonder they are the most valued company in the world.

Over the past several years, my organization, Impact Washington, has been working on how to help companies create the ‘system’.  I am receiving my black belt in innovation through NIST/MEP.  As good as the training has been, this article talking about Steve Jobs’ Seven Rules of Success give one the ‘focus’.

Lean Ranger’s Tribute to Steve Jobs

OK, since all the cool bloggers have related their particular Steve Jobs story, it’s time to relate mine.

In 1985, I was working swing shift at Graphicolor in South Seattle. My regular truck driving gig at Bayless Bindery kept me busy enough, but the extra income was nice, and, as my mother used to say, “It keeps him out of the taverns.”

GC’s big web press was there and they had recently added a MGD saddle stitcher to their arsenal. Saddle stitching is a method of binding magazines that’s still in use today, but you don’t see it much. Open up your favorite small magazine. If it’s held together by at least two staples, that’s saddle stitching.

Back then there was a publication called The Auto Trader. If you wanted to sell your car, you called them. You could put a photo of your car in there with the listing. It was a great way for potential buyers to see what you were trying to sell.  Very much like Craigslist, only black and white and done on cheap newsprint.

At Graphicolor, we loved The Auto Trader for several reasons:

• It was free.
• We saw the listings days before anyone else.
• It was a ‘bread and butter’ job – we ran that mag three nights a week, every week.

Running that MGD saddle stitcher was about as challenging as running an automated sausage grinder. The hard part was making sure you loaded the different sections of newsprint into the machine in the right order and right side up. This required the ability to read and count up to four. Setting up the trim knives meant sizing the magazine so the pages would open correctly, and that was about it. Pretty hard to screw up.

Once we got rolling, the night settled into a regular pattern – the forklift driver brought up pallets piled high with newsprint, the loaders jogged the stacks of paper into shape and loaded them into the machine, the MGD howled as the folded sections raced down the chain to the stitcher head. The stitches were shot in the blink of an eye, the trim knives slicing through the edges in another. I checked the quality of the product, spelled everyone while they took breaks and was responsible for making footballs out of newsprint, water and super sticky packing tape.

Throwing the football around was a way to keep from getting hypnotized by the monotony of the job. Zoning out could also be dangerous. If you had to keep an eye out for a flying spitwad that could knock your glasses off and stick in your hair while you worked, you stayed sharp. There were no rules to this game – if we were setting up, the football stayed on the control panel. If time was beginning to crawl, we threw the ball. We’d throw it at other workers passing by our area. If it was warm and the roll up doors were open, we’d throw it at cars passing by on Marginal Way. Supply was not a problem. If the ball was seized by a furious co-worker, or stuck to a Metro bus windshield, we just made another.

The other great entertainment was looking at the stuff the pressmen had made during day shift. There was a small Heidelberg GTO four-color press nearby, and it was assigned to some pretty jobs. Lots of four-page Nordstrom ads, Frederick & Nelson seasonal sales, posters for Wagner operas, stuff like that. They’d print these masterpieces by day and let them dry all night.

One night, the pressmen left us a pallet of Apple brochures. It featured a black and white exploded view of a drill motor. The brochure explained that now, thanks to the Apple Macintosh and this new thing, the LaserWriter, it was possible to make a line drawing this good AND print it out.

Twenty-five years later, I’d like to assign some drama to this moment, but it’s not that simple. I took the brochure back over to the control panel, peeled the football off the work table and hurled it at a passing forklift. I spread out the Apple brochure to read about this new thing, a Laser Printer. It was fascinating.

I called around and discovered that Shoreline Community College had a room full of Macs and would soon have LaserWriters. To get at them, I signed up for a day class. While I was there, I heard about this journalism class that was very hard to get into – you had to submit a writing sample.

That fall, I returned to school full-time. They liked my writing sample. I left two steady jobs for what my family described as “basically nothing”. Four years later, I got my degree.

Once upon a time, two guys named Steve set out to change the world. In their wake was another guy, impressed by what they’d built, who also set out.

Rest in peace, Mr. Jobs.

American Innovation Can Lead Worldwide Growth with the Right Mindset

As former British Prime Minister Gordon Brown so succinctly puts it in this article, there is potential for American innovation to lead worldwide growth in green technologies and other areas that would lead to exports, manufacturing growth and millions of new jobs.  It all boils down to a mindset that starts with a proactive approach to growth. Without innovation, manufacturing will die a sad death in the U.S.  To avoid that, we need to look for opportunities to sell our products beyond our borders.

Gordon Brown’s Global New Deal Manifesto

Impact Washington Comments on President Obama’s Scheduled Jobs Speech

Highlights the importance of manufacturing jobs to support economic growth in Washington State

President Barack Obama will address the nation tonight to unveil his proposed jobs plan, which is expected to outline a variety of measures in both the public and private sectors to help stimulate job creation and economic growth. Impact Washington believes that continued support for the Manufacturing Extension Partnership (MEP) is a critical component of any jobs plan.

“Impact Washington, the MEP affiliate for the state of Washington, appreciates the strong bipartisan support the MEP program has received thus far from the Administration and Congress,” said John Vicklund, Impact Washington President. “We’re calling on both to continue their support of the public-private partnership between the MEP and America’s small manufacturers, which has been successful despite a weakening economic landscape.”

The results of an independent survey of the MEP program nationwide support this fact.  Despite an economy in the throes of a severe recession, the MEP program nationwide helped create 72,075 jobs in 2009 alone.  Here in Washington, in the second quarter of this year, manufacturers that worked with Impact Washington reported 115 jobs created, 126 jobs retained, over $21 million in new increased sales, and over $5 million in increased investment.

“The current job scene in America is discouraging, but manufacturing has the potential for significant growtn,” Vicklund commented. “If policymakers continue to tout that small business is the economic cornerstone to U.S. growth, then more should be done to help small manufacturers succeed. Washington manufacturers are leading the recovery by becoming more innovative, investing in new technologies and business practices, and increasing the productivity of their workers.”

Lean Ranger Blog: Exploded Sandwiches and the Path to Visual Management

Inspiration can strike at any time. Today it struck while ordering a raspberry smoothie.

While waiting for my order at the Kelso Burgerville, I noticed a colorful poster on the door. It was an exploded view of 15 different sandwiches.

If you’re not familiar with Burgerville, they’re a chain of restaurants mostly located in Oregon. The northernmost “BV” is in Centralia, Washington. I tend to frequent the stores near client sites – Kelso, Woodland, Vancouver.

They make excellent burgers. So excellent, in fact, a leading consumer magazine (the one that hates it when you identify them as “Consumer Reports”) rates the Burgerville product second only to the epic In-n-Out Burger.

So, Kelso Burgerville, raspberry smoothie, poster of 15 exploded sandwiches.

The young man behind the counter explained the poster was there as a reminder of what the various sandwiches contained. “We look at those all the time – they’re great for training new people.” He went on to explain that his own training had involved creating a notebook of drawings that, in a personal way, mirrored the information provided by the poster.

What can a poster of exploded sandwiches teach us seekers of Lean?

First, it sets expectations – the poster says, “This is how we do it. This is our standard work. While it may seem a petty thing to place the tomato slice atop the lettuce every time, we do it because our customers expect it. Our customer buy our burgers because they are so good, and so consistent. If, in the course of time, our customers demand a shift in the tomato/lettuce alignment, we will change our standard work to accommodate the new thinking. Until then, this is how we do it.”

Second, it reminds the worker of how rarely ordered sandwiches are constructed. The specific order of the Tillamook Cheese Burger may be seared on your soul in letters of fire, but the Anasazi Bean Burger could be a mystery to you. Sales volume will do that to a person. The poster of the exploded sandwich understands and provides that calm assurance that, yes, you can build an Anasazi Bean Burger too. All of our 15 sandwiches can be constructed simply by looking here.

“Brilliant,” you’re thinking, “but we don’t make burgers. We make ball valves.” How many components are there to your ball valve? Six? Has anyone ever forgotten to mount that rubber O-ring when they were assembling a ball valve? What’s it worth to you to not have that happen again?

Or…”brilliant,” you’re thinking, “but we don’t make burgers. We do blood draws.” Right. Do you remember the needle size designed for babies? Do you have an absorbent pad for the arm of your phlebotomy chair? Are you scrubbed up and gloved up? How many draw tubes do you need? Got the right colored labels? Sharp container at the ready?

The things we use to add value to our work come in all shapes, colors and sizes. Burgerville sets expectations, lends guidance and assurance, all with a colorful poster of exploded sandwiches.

A Good News Story from a Local Manufacturer

This article was contributed to Made in Washington by Dave Barton, Sales Manager at Aero-Plastics, Inc.

Here is a local business story with a “feel good” message and possibly a challenge to the Puget Sound business community.

Several years ago, local entrepreneur Curt Bingham purchased a Bellevue-based company, Garden Works. Garden Works had successfully been in business for over a dozen years, supplying garden centers, nurseries and gift shops with unique tools, gloves, plant supports and other accessories used by gardeners. Curt set out to grow his business by both adding quality products and improving upon his existing product line. Many of his products were being produced offshore. The quoted prices from China were very enticing; considerably lower than from manufacturing sources in the USA.

Being a businessman, college instructor, and working on his PhD in business as well, Bingham analyzed the total costs of his products, not just the quoted price. The analysis of his TuffTote, a molded polyethylene plastic multi-use container, was top priority as he was experiencing problems with quality and delivery from China. Among many “hidden” costs were the cost, in both money and time, of freight from Asia. After visiting factories in China and Mexico, Mr. Bingham moved his production molds to a molder in Mexico.

Though the initial results were improved, the quality and delivery began to slide. Curt was on a mission to add as much North American-made product as he could to his product line. He likes to think globally, but buy locally, so he contacted Aero-Plastics, Inc., a precision machining and injection molding company located in Renton, WA.  He was doubtful that the dollars and cents of the local production would pencil out. After all, doesn’t everything big and plastic come from a factory outside the USA?

Aero-Plastics has been in business for over 50 years, serving primarily aerospace customers. How could they compete making a plastic gardening bucket?

Bingham realized he was paying a lot for the product after it left the factory. Freight was considerable. He had to re-count, inspect, handle and administer the paperwork of rejections and credits. He had no real legal protection when dealing with manufacturers outside the US, just the hope that the supplier would do the right thing. Worst of all, he had unhappy customers when quality was poor and delivery late. All of these issues cost money, even though they don’t appear on the invoice from the foreign manufacturer with the low price.

Through several meetings that included discussion of all aspects of producing and delivering the finished goods to the end customer (refining the manufacturing process, sourcing quality domestic raw materials, efficient lot sizes, shipping, warehousing, payment terms, etc.), Garden Works and Aero-Plastsics struck a deal.

Garden Works’ TuffTote containers now proudly sport a “MADE IN USA” sticker. The quality is flawless, and delivery 100% on time. Sales of the product have doubled and Curt Bingham’s headaches are gone; his attention can be focused elsewhere.

End of the story? Not really. On paper, both Garden Works and Aero-Plastics are working harder for a little less to the bottom line, but who isn’t in today’s economy? And when you consider the cost savings of smaller inventories, zero defects and NO customer complaints, the slightly lower margins more than offset the headaches of doing business out of the country. What is the real cost of replacing defective products? What is the additional shipping cost to replace these products? What is the cost of losing the faith and confidence of your customer? All of these are the hidden costs that make the decision to move production to the US very attractive. And look at the big picture benefit to our local economy and beyond. Making the products here allows the money to stay here in the Puget Sound area. Those dollars multiply as they move throughout the region. Each step of the way, from raw material supplier to the retail sale, the multiplier effect goes on and on!  Not to mention the “feel good” factor of BUYING AMERICAN-MADE PRODUCTS!

This is just one company moving one product back to US manufacturing. Imagine what would happen if we could get just 10% back. It doesn’t have to be high technology or high-priced business. When you capture all of the true costs of manufacturing and getting your product to the consumer, US manufacturing is the way to go.  We need to challenge our local companies to bring their manufacturing back home and reap the rewards of doing so.

For more information, contact:

Aero-Plastics, Inc.
Dave Barton, Sales Manager
425-226-3400
www.aero-plastics.com

Garden Works
Curt Bingham
888-660-8511
www.garden-works.net

Vancouver Business Journal Article Highlights Impact Washington Lean Consortium Project

The July 22nd edition of the Vancouver Business Journal takes a look at a recent Manufacturers Lean Consortium cooperative project, funded by the Southwest Washignton Workforce Development Council (SWWDC) through a state grant.  Impact Washington partnered with Clark College, Lower Columbia College and SWWDC in delivering Lean resources to the companies that participated in the project.  Those companies raved about the training and the results, and the article highlights the benefits of such a partnership to deliver needed services to local manufacturing communities.

Participants Rave About Lean Manufacturing Training

Lean Ranger Blog: The Legacy of Wendy Rose

A few years ago, at a Seattle neighborhood block party, an elderly lady named Fern told the assembled youngsters how it went down on December 7, 1941.

“It gets dark pretty early that time of year. For the past few hours, everybody had been running around trying to figure out where Pearl Harbor was and what the President would do about it. Then, we heard that groups of people were smashing out the streetlights so the Japanese couldn’t see us. Everyone was glued to the radio. Then, they came on and said, ‘the miliary authorities have advised us to shut down our transmitters so the signal won’t serve as a beacon for a Japanese attack. Good night and good luck.’

“Now we’re completely in the dark. Think we were scared? Hell yes, we were scared. We were scared for about a year.”

A few weeks into the new year, Fern got a job building electric motors.

Recently, during a break in a Job Instruction TWI session at a Vancouver hotel, one of my older students commented, “My mom was a welder at the Kaiser shipyards during the war. I guess there were thousands of them. Have you ever seen the statue they put up for them?”

Later that afternoon, I walked down to the river to see ”Wendy Rose”, a statue erected in 2008 to honor the women who worked the shipyards on the Columbia River during WWII.

Wendy Rose Statue on the Columbia River

The name “Wendy Rose” comes from a co-joining of two folk heroes of the time – Wendy the Welder and Rosie the Riveter. Located a little east of the McMenamin’s and Beaches restaurants, there are commemorative plaques, names of donors engraved in stone, benches to sit on and one amazing steel statue. It’s a good place to sit and consider the work done there seventy years ago.

I’ve been teaching Job Instruction for three years now. The methods haven’t changed a bit since their introduction in 1940. The language in the materials sounds a little dated, but it works. Job Instruction trains people how to train people.

Supervisors then had the same concerns as supervisors now. Who needs to be trained? In what? How much time have I got to train them before I get called up? And the question that kept them awake at night…can they do it after I’m gone?

It’s the same story today. Workers are required to know more, to learn more, to do more with less. Supervisors have to provide the tools and skills their workers need. And supervisors still ask, “Can they do it?”

In 1944, Kaiser Shipyards Portland employed 28,000 women. Nearly one-third of the workforce was female. An onsite daycare looked after 4,000 children on a 24/7 basis. Those women learned to weld, learned to rivet, learned to do the impossible with the help of the TWI Job Instruction program. They taught each other how to cope, how to carry on in a world that had suddenly gone dark.

Meet the Lean Ranger

Welcome to The Lean Ranger, the blog within a blog that goes behind the scenes to show off the tools of Lean Manufacturing and how they work. My goal is to present a video every week that illustrates a tool we use in our work here at Impact Washington.

First up is a video of Pat Weiler, a foreman at Karcher North America in Camas, Washington. Karcher manufactures pressure washing equipment of all sizes. They’re probably best known for their Hotsy line of hot water pressure washers.

Karcher has facilities all over the world — and the Camas facility routinely achieves the highest corporate quality measures.

Karcher has been on their Lean journey for several years now. They’re clear on what adds value to their products. They know how to spot waste, and they know the value of sustaining and training.

In “Keeping Track on the Shop Floor“, Pat Weiler explains two matrices posted on his area Team Board. He’s talking to Kristin Kautz, Impact Washington Project Specialist.

Pat starts with his Training matrix. Team member names are listed on one axis, the job titles on the other. A white square means the worker has not been trained in that task – yet. If the square is green, it means they’re in training for the position now. When Pat is satisfied that the worker is fully trained in the job and can train someone else,  he’ll change the square to yellow.

Pat’s goals is to have his entire crew at Status Yellow. With a fully cross-trained team, he’s able to move his crew in and out of specific jobs at any time, even during the work day. If a team member is out sick, Pat can consult his training matrix and know immediately who he can move into the job. The same holds true for vacation requests. Pat has even got his temporary workers on this chart - and some of them are Yellow already.

A similar Training matrix is part of the TWI (Training Within Industry) Job Instruction program we offer at Impact Washington. Job Instruction was one of the first programs developed  by TWI in the early 1940′s. TWI programs were integral to the Allied victory in WWII. They were adopted by Japanese manufacturers in the 1950′s. Toyota was an early adopter and continues ot use the TWI methods.

The second item Pat describes is the department’s Improvement matrix. The fourteen work cells in Pat’s department are checked daily for their compliance in such areas as Floor Marking, Color Coding, Rack Labeling, etc. Pat makes the rounds with this chart daily; if he spots an area that is not up to standard, he’ll mark it on his To Do List. When the cell has a few minutes for CI (continuous improvement) work during the day, these items are addressed first.

Pat’s video debut was shot with my Canon DC410 camcorder, a consumer level unit that records directly to mini DVDs. This was the maiden voyage of my new Rode Video shotgun microphone, which does a much better job of capturing sound than the Canon’s built-in mike. But, as you can tell, there’s still work to be done to improve the sound when shooting in a noisy manufacturing environment. I’m going to try a wired lavaliere microphone for my next installment…