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| Lean Roadmap Newsletter
Becoming a World Class Enterprise
15th Edition
Greetings!
We interrupt our previously scheduled articles to present:
- Can American Businesses Compete Globally?
Our previously scheduled articles (see Next Issue at bottom of page) continue in the 16th Edition. |
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Free Lean Webinars Schedule |
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"Lean Administration" |
In most manufacturing organizations the area of lowest productivity is in the office, not in operations. This Webinar will discuss the 5 steps to implementing Lean in administrative areas.
Title: Introduction to Implementing Lean in Administrative and Office Areas
Date: Thursday, September 10, 2009 Time: 11:00 AM - 12:00 PM Eastern Daylight Time
After registering you will receive a confirmation email containing information about joining the Webinar.
System Requirements:
Speakers for listening, a microphone to verbally participate
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista
Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer |
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"Introduction to Policy Deployment & Lean Implementation Planning" - Two Hour Version |
A more detailed (than our previous one hour webinar) version of the most powerful Lean activity your organization will ever accomplish!!
Title: Introduction to Policy Deployment & Lean Implementation Planning
Date: Thursday, September 17, 2009
Time: 10:00 AM - 12:00 PM Eastern Daylight Time
Space is limited. Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/464428754
After registering you will receive a confirmation email containing information about joining the Webinar.
System Requirements: (same as above) |
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"Introduction to A3 Problem Solving" |
This is an introduction to the structured problem solving format known as A3 Problem Solving. Popularized by Toyota, the A3 format is used in Toyota for problem solving, proposal writing, and status reports.
This is a repeat of the previous A3 Webinar
Title: Introduction to A3 Problem Solving
Date: Thursday, September 24, 2009
Time: 11:00 AM - 12:00 PM Eastern Daylight Time
Space is limited. Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/220774203
After registering you will receive a confirmation email containing information about joining the Webinar.
System Requirements:
Speakers for listening, a microphone to verbally participate
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista
Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer
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Can American Businesses Compete Globally? |
Yes we can - but it requires a significant improvement (change) in how American executives lead and manage their organizations.
by Larry Rubrich |
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It is with significant dismay that we watch American businesses move their companies to Mexico, China, and other foreign countries, and then ship their products, produced by people who are paid relatively low wages, back to the US.
We find this disturbing on two levels. First, if we hope to have an ever-increasing standard of living, we must continue to create wealth. Wealth is only created when we work to increase the value of an item by changing it from a low value item to a higher value item. For example, wealth is created when we take a tiny seed and create a harvestable corn stalk (farming), or when we take iron ore out of the ground (mining) so steel can be produced, or when we cast raw material, machine it, weld it, assemble it, or do any other of the thousands of different operations that go into making American products.
Service industries, such as banking and insurance, while necessary businesses for a vibrant economy, do not produce wealth and do not increase the standard of living.
Many questions that can be asked here: Can farming and mining support the growth of wealth? Will the American consumer, working in the service industry, be able to afford products produced in foreign countries in the future? We choose to ignore these questions since our immediate goal is to question and stem the exodus of companies to foreign shores.
This brings us to the second reason that we are disturbed by this business flight to foreign shores. Our experience has been that these companies, in general, do not have well-managed or efficient business operations, and because they are poorly managed and inefficient, they require low wages to keep their businesses afloat.
How can we say this? How are we measuring?
Let's start this discussion with the customer. In all businesses, to be profitable, we must have satisfied customers. Ultimately, like the Japanese say, "profits are the reward of a satisfied customer." Customer satisfaction comes in two parts: first, we must produce products/services that customers want, and second, we must deliver them to the customer in a way that produces satisfaction. We will ignore the issue of producing products that customers want, since we believe we correctly assume that companies are not moving overseas without a market. In general then, customer satisfaction means meeting the customer's expectations for the quality, price, delivery, performance, and service of our products.
So, how do you know what the customer wants? You ask them! In the global economy we live in today, it generally means producing and selling your product for a lower price with improved quality, reduced lead-times, and improved delivery. Faced with this pressure, the poorly managed, inefficient operations go after low wages.
There is another way!
In our discussion about wealth creation, we mentioned processes that take a low value item and create a higher level of value (farming, mining, manufacturing). In our businesses, customers ask us to do the same thing. Create an item/part/product that is of value to them for which they are willing to pay for. So any step, procedure, or process in our business that the customer cares about or is willing to pay for is a step/procedure/process that adds value in the eyes of the customer. To be efficient, we must concentrate all of our administrative and manufacturing efforts on only those things the customer will pay us to do. Any step/process/procedure the customer is unwilling to pay for must be considered waste. An excellent consideration in determining whether something is adding value or is waste is this question: If I listed this step/process/procedure on the invoice, would the customer be willing to pay for it?
Some people will jump in at this point and say, "Some processes are necessary even though the customer may not be willing to pay for it-for example payroll." A concern we certainly would agree with, and point out that since it is not value added we must try to spend very little time doing it correctly (automate it?).
Concentrating on only the things the customer is willing to pay for makes us more efficient. For 95% of American companies there are huge opportunities for productivity gains, which do not require their people to work harder--just smarter!
Below is a pie chart that represents videotaping a person from our administrative areas and/or our manufacturing areas for an entire day/shift. The day following the videotaping we sit down with these associates and segregate their activities for the day and create Figure #1.
In Figure #1, we see that 11% of the day they spent on breaks, lunches, 5S time, and in team meetings. 5S is a World Class Manufacturing/Enterprise (also known as Lean Enterprise) technique that keeps our work areas safe, clean, organized, and ergonomically correct. As business mangers, we are happy with this 11%. We want our people doing these things.
The next part of the pie, 14% is the part of the day we spent doing things the customer would pay us to do (adding value). If we showed this part of the video to the customer, they would say, "Yes, we are willing to pay that person to do that step/process/procedure."
The remainder of the pie, 75%, was spent on items that the customer is not willing to pay for because they do not add value and are wasteful. In World Class Manufacturing/Enterprise, the list of wasteful activities shown in Figure #1 is known as the Eight Types of Business Waste. It's not that people are not working--they are. The problem is that they are doing activities the customer will not pay them to do, and if the customer is not paying them, the company is, and it's coming right out of profits.
Productivity improvements occur when we stop doing wasteful activities and substitute value adding activities.
This is where we believe companies get confused about their ability to compete. Companies have pies that look like Figure #1, and their response is to chase low wages!
For the purpose of analyzing our ability to compete globally, let's assume that a company has a composite pie (administrative and manufacturing) that looks like Figure #1, and are paying their people an average of $15.00 per hour. If, over time, we were able to stop doing some wasteful activities and substitute value adding activities so that our pie (Figure #2) looks like this:
what we have effectively done (besides doubling our productivity) is to reduce our wage rate, as it appears to the competition, to $7.50 per hour.
If we were able eliminate more waste and could get the pie (Figure #3) to look like this:
Figure #3
what we have effectively done is to reduce our wage rate, as it appears to the competition, to $3.75 per hour.
Although the Chinese are paying their people $1.00/hour, the landed cost of a product, which includes freight, inventory carrying costs, communication issues and other costs, is closer to $4.00/hour.
Looks like American companies are in the ballpark!
With the required top management leadership and support, and by implementing World Class Manufacturing/Enterprise techniques, America can increase productivity and effectively lower their wage rate, allowing American companies to compete globally without chasing lower wages in foreign countries.
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| WCM Associates Lean Activities Schedule |
"We have tried other Lean providers in the past, but WCM Associates has proven to be the best in all aspects of Lean."
Keith Lodahl
Goodwill Industries |
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Lean Master Facilitator Training
Grunau Construction Company
Milwaukee, WI |
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This standard Lean Master Facilitator training session will be hosted by Grunau Construction Company in Milwaukee, WI (just south of the airport - MKE).
Grunau Company has been written up in several construction trade magazines for the strides they have made in their journey to become a World Class organization.
You can attend just one class or start the journey to becoming a Lean Master Facilitator by attending all 3 weeks.
Session dates are:
Week 1 = October 19th
Week 2 = November 16th
Week 3 = December 14th
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Lean Master Facilitator Training
Goodwill Industries
Appleton, WI |
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This standard Lean Master Facilitator training session will be hosted by Goodwill Industries in Appleton, WI.
You can attend just one class or start the journey to becoming a Lean Master Facilitator by attending all 3 weeks.
Session dates are:
Week 1 = October 12th
Week 2 = November 2nd
Week 3 = December 7th
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Lean Master Facilitator Training
Fort Wayne, IN |
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This standard Lean Master Facilitator training session will be hosted by Bluffton Motor Works in Bluffton, IN (just south of Fort Wayne, IN).
You may qualify for Indiana state funding for this training. Please contact the following agencies for more information:
Indiana Economic Dev. Corporation
http://www.in.gov/iedc/ Chantel Anderson 317-234-3213 canderson@iedc.in.gov WorkOne Allen County residents contact: Robin Nichols 260-459-1400 x 4506. All other counties please visit: http://www.workoneworks.com/ You can attend just one class or start the journey to becoming a Lean Master Facilitator by attending all 3 weeks.
Session dates are:
Week 1 = September 21st
Week 2 = October 19th
Week 3 = November 16th
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Larry Rubrich
WCM Associates LLC
© 2009 WCM Associates
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