After recently returning to the world of process improvement consulting, I began to ponder where U.S. manufacturing stands with regard to worldwide competitiveness after so many decades of highs and lows. Globally, we have U.S. manufacturing to thank for leading the way out of the great recession, albeit ever so slowly. But as the months warmed up this spring and summer, U.S. manufacturing has cooled.
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Quality in U.S. manufacturing has improved tremendously since the late 1970s and 1980s, and we should be proud of our comeback from a dark era during which we questioned whether U.S. workers could ever manufacture high-quality, low-cost products again. We’ve done well to catch up in many industries, but what can we do now to compete with and surpass other countries’ manufacturing prowess, especially when our wages and taxes are so much higher than other developed and developing countries?
A recent article in Industry Market Trends written by David Butcher, “4 Key Roadblocks to U.S. Manufacturing Competitiveness,” focuses on external actions that can and should be taken to improve U.S. competitiveness in the global market, including:
• Expand and improve the quaity of infrastructure such as roads, bridges, and railways
• Change the societal stigma and bad reputation of factory work
• Review and simplify corporate tax codes that create a disincentive to expand and invest
• Develop a long-range, comprehensive national manufacturing strategy like most other developed and developing countries have
These actions, though extremely important, are outside of a company’s control and in the hands of politicians and academic institutions. But what can an individual company do to improve its own competitiveness in the global market place? I will discuss three key areas: innovation, supplier partnering, and creating a continuous improvement culture.
Innovation
The key to continuing success and staying ahead of the competition is ongoing, quick innovation, and there is a fundamental process to make this to happen. During the development of the automotive standards based on QS-9000, the key term and acronym coined—and still used in many industries today—was advanced product quality planning (APQP). It was based on designing and developing products and their related processes simultaneously, which slashed months off the overall development time. APQP was derived from terms such as “concurrent engineering” and “simultaneous engineering,” which were used during the 1980s and 1990s.
Today, APQP is fast being replaced by the term lean product and process development (LPPD). Lean product and process development is based on the same principles of APQP, but it also provides specific tools or ways to design, develop, and innovate, which allow companies to react quickly to opportunities for developing and commercializing new product offerings before the competition does. LPPD uses some of the same tools and practices used in a lean manufacturing environment and applies them to the design world, including some of the following ideas from the excellent book, Mastering Lean Product Development, by Ronald Mascitelli (Technology Perspectives, 2011).
Visual management
Visually manage projects, milestones, actions, resource capacities, project dedication, and ongoing risk assessment throughout the project. This can be a manual or electronic display, but it must be visible at all times, not just “accessible.”
Daily accountability meetings
Hold daily accountability meetings and provide progress updates to the cross-functional team frequently. “Daily” may be three days a week, or even weekly, depending on the project, keeping in mind that the more time that elapses between meetings, the longer the wait for taking action and completing tasks. These meetings, like ones on a factory floor, are meant to be brief, stand-up meetings.
This process also eliminates the traditional reliance on the typical phase/gate approach to development that so many companies employ. In the typical scenario, oftentimes unexpected surprises might show up at a gate weeks or months into a project, resulting in a new course that must be established. By meeting much more frequently in short bursts of time and thereby communicating more often, the element of surprise and associated wastes can be averted.
Standardized methodology
Standardized methodology that is scalable to the project size and type but is nonetheless the same process.
Controls
Controls to help balance the load—but not overload—product and manufacturing engineers, so they can focus on their project(s) with as little interruption (or “brain changeover”) as possible. This might include putting other projects or tasks into a prioritized kanban system before assigning it to any one individual.
Develop many alternatives
Instead of deciding on one design concept early in the process and constantly testing, fixing, and redesigning it, create and develop many different alternatives up front, narrowing them down methodically based on how well they meet design inputs and customer requirements. Once a team achieves consensus on the final design, it can be implemented rapidly. At Toyota, this is called nemawashi.
Kaizen events
Scheduled kaizen events for which the team might dedicate an entire day in a working meeting to perhaps develop market and design requirements, or watch the prototype build-and-test phase to further refine the design and process requirements. These would be similar to kaizen events on a production floor, where a dedicated, uninterrupted amount of time is allotted to a team for specific tasks. These events can shave weeks off a traditional design effort by eliminating emails being sent back and forth and wasting away in Outlook.
One-piece flow
Develop one-piece flow systems for paperwork, drawings, designs, and prototypes.
Provide an optimal environment for the flow of creativity
Creating a space or environment to allow for creativity to flow. Sometimes this might be an ideation room, or co-locating key team members of a project, or allowing the team to determine how and where it is most creative.
Tools to stimulate creativity
Teaching tools that entice and motivate creativity, whether they are based on TRIZ or Edward de Bono’s Six Thinking Hats (Back Bay Books, 1999) or some other technique that stimulates creative thought.
Supplier partnering
Relationships between suppliers and customers have gotten better over the years but still have room for improvement. To increase overall competitiveness, customers and suppliers must work together more closely, and to do this they should be located “closer” to each other. The relationship should be based on loyalty and trust so that constant improvement of quality, productivity, and cost is achieved through working together. Expectations and results against expectations must be continually defined and monitored.
Total cost of ownership
Base supplier sourcing decisions worldwide on a total cost of ownership model, which should take into account all associated costs such as FOB price, packaging, duty, freight, all inventory (e.g., en-route, safety stock, obsolete stock), rework and quality, product liability, intellectual property risk, impact on innovation, travel, prototype costs, wage inflation, and currency appreciation.
Yes, some of these costs are difficult to estimate, so people would rather not make an attempt to do so. The worst error one can make is to ignore the difficult costs to estimate. By ignoring them, one is basically stating there is a zero cost, which is worse than making an estimate that can be debated. We can’t ignore certain costs, and good management must somehow find a way to take them into account.
Reshoring initiative leader, Harry Moser, offers a free total cost of ownership calculator for anyone who requests it, to encourage wiser sourcing decisions.
Joint problem solving
Working together on joint problem solving is key to ongoing competitiveness, and it’s as important as design of experiments or root cause analysis. Joint problem solving is even more important. Sending in a team of Six Sigma Black Belts to fix a supplier’s problems doesn’t work because that’s not joint problem solving but more of a parent/child relationship with one party controlling the other. Working together collaboratively does work.
Auditing
It’s important to audit each other’s processes, especially the “touch” processes in which the supplier and customer are affected by what each other does. Relying on a third party to audit your suppliers is wasting a relationship and opportunity to improve and learn from each other. It should be quite normal that when a customer audits a supplier’s facility, the customer might find a few nonconformities of its own.
Gemba
Expanding on the point above, performing gemba walks around each other’s touch processes to identify waste and see how one party can help the other eliminate identified waste can be most beneficial.
Involve supplier in design and development
Supplier involvement in the design and development process can and should lead to creating more robust and less costly designs, perhaps through design for manufacturability or failure mode and effects analysis (FMEA) techniques. In turn, this increases the competitiveness of the organization and its new products.
Logistics and transportation
Improving supplier delivery logistics and transportation costs to reduce inventory levels makes both companies more competitive. Constant monitoring of a supplier’s actual results vs. expected results, and quick feedback systems to improve quality and delivery, are also important to long-term improvement and cost control.
Creating a culture of continuous improvement
Everyone, absolutely everyone, should be involved in problem solving. Every person has a brain and some degree of creativity. Not using everyone’s brain is the biggest waste of all and makes the organization less competitive as the same problems continue to arise. These cost the company lots of money, respect in the industry, and potential lost business.
The best organizations have all their employees focused on solving problems whether they are small issues “caused by people” (where the solution would be to mistake-proof the process), or larger issues like a supplier’s interrupted delivery caused by a fire in the facility, or catastrophic issues like a tsunami hitting a country and wiping out a large portion of the entire supply chain.
The mindset should be that when there is a big problem, everyone knows it is his problem, too; everyone should swarm onto the problem, as one, with the same common goal—fix it now and for good.
To create this culture, there must be:
• Some level of problem solving and “seeing waste” training for all employees
• Eliminating the fear of suggesting or trying something and being ridiculed for it, as well as the fear that if you make a mistake, you will be penalized
• Allow people to openly display, admit, and show their mistakes so that others can help solve them and eliminate duplication
• A thorough understanding that treating symptoms with band-aids (e.g., additional inspection or additional inventory) will not make a company more competitive in the long run because the system will never get fixed, and the process will just get more expensive
• Creating vehicles by which any employee can voice her suggestions every day via quick and easy kaizen, daily accountability meetings, or visual management boards
• Focus on the process, not the department. Your customers don’t care about your departments or how big they are; they only care about the efficiency and effectiveness of your processes. Strong, demanding, competitive departments thwart a continuous improvement culture. The competition is on the outside, not on the inside.
• Focus on process expectations vs. actual results to drive improvement. Be aware of what is expected each day for performance and plan accordingly. If actual results did not meet expected results, then determine the reason and make it known. Establish more predictability in all that you do.
• Ensure everyone understands that variation is evil and must be constantly decreased. Just meeting specs does not improve quality, nor does it improve competitiveness.
Making U.S. manufacturing even more competitive in the world market must be an organization's goal both externally and internally. We can all start by working internally on our processes and cultures.
Comments
Wages and taxes
I was very surprised to read that according to Mr Mickelwright US companies are faced with much higher wages and taxes than other countries. I accept that in relation to undeveloped countries, though it would be intersting to hear what countries are meant, but I doubt this very much in relation to developed countries as mentioned as well in the text. Apart from having energy prices that are four times higher than in the US, I know that wages and taxes are considerably higher in Western Europe than in the US. I also doubt very much if Japan would be a cheaper country to manufacture in. Could you indicate what developed countries have considerably lower wages and taxes than the US? Kind regards,Willy Vandenbrande
Correction on previous comment
Where it said "undeveloped" it should state "developing".
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