Say No to "Quick Changeover"...

Changeover.com

You might be surprised to see that phrase. Say "no" to quick changeover?? That's a core method in the Toyota Production System, right? Well, a method called "SMED" or "Single Minute Exchange of Dies" is. Why the distinction in terminology?

I recently was contacted by John Henry, who has the changeover.com website. He says this:

At Changeover.com, we don't believe in "quick" changeover. Too often, this simply means trying to do the same thing quicker by making associates work harder and faster. This doesn't lead to any lasting gains and may cause more problems than it solves.

We believe in lean changeover.

Lean changeover is changeover from which all wasted effort, motion, tasks and, most importantly, time, have been removed.

Great point, SMED isn't about rushing through your work or doing it the "same way, but faster."

Henry advocates what he calls "ESEE":

We believe that changeover should be ESEE:

Eliminate all non-value added tasks

Simplify all tasks that cannot be eliminated

Externalize changeover as much as possible

Exactly! Make all changeover settings precise and repeatable

There is a presentation (PDF format) that talks about SMED and racing pit crews, take a look.

Henry also pointed out that the old Henry Ford book, "My Life and Work" is available for free download on the internet. Nice free resource there.

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Thinking is For Factories, Too

Seth's Blog: Henry Ford and the source of our fear

I really like Seth Godin's blog... but when he steps into "Lean" territory, he tends to be wrong (as he was last year).

In his recent post, he explores the history of how Ford-ism (and I'd add Taylor-ism) impacted fundamental assumptions that we hold in current-day worklife. Kind of an interesting read.

But his concluding statement is fundamentally flawed:

"Obedience works fine on the well-organized, standardized factory floor. But what happens when we start using our heads, not our hands, when our collars change from blue to white?"

I emailed Seth (who always responds) and told him that he had that wrong. A "well-organized, standardized factory floor," such as Toyota, doesn't lend itself to "obedience." Toyota wants its people to think -- hence the "Thinking Production System "" (I know, sounds like a slogan, but it's a good one.)

The concept of obedience, asking people to just do their jobs without thinking or participation in kaizen... that's not ideal in a factory, or a hospital, or any other environment. What does white collar or blue collar have to do with it? Many people, in any setting, regardless of their education level, want to have their ideas valued, they want to contribute to improvement. It's wrong to belittle blue collar workers as not being interested in that.

As managers and leaders, we have to recognize that there might be fear. We have to explicitly give employees permission to give their suggestions and to make changes. Again, this is pretty universal, be it factories or hospitals.

I do agree with Seth that insecurity and fear are bad things - they do not lead to kaizen, efficiency, or quality.

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The Dispersion of Toyota Talent

One of the most fascinating trends out of there is the spread of Toyota folks into other old-line automakers or parts suppliers -- Gary Convis, Jim Press, and Jim Farley, to name three. What impact can they have outside of Toyota? It remains to be seen and it's a story worth following. How much impact can one man have on the culture of an entire organization, even if they're at the top?

The big news this week was the hiring of retired Toyota executive Gary Convis as CEO at Dana, a parts maker and auto supplier. Convis is one of my favorite role models and examples of Lean leadership. Even though Dana has had some success with Lean practices (including some Shingo Prizes), it didn't save the company from bankruptcy.

Dana Puts Convis at the Wheel - WSJ.com

From the WSJ article:

Toledo automobile-components supplier Dana Corp. will announce Thursday the hiring of longtime Toyota Motor Corp. manufacturing whiz Gary Convis as its new chief executive.

I'd argue that "manufacturing whiz" only scratches the surface of his leadership talent. When you see quotes from Convis like this (from previous articles):

•

“You respect people, you listen to them, you work together. You don’t blame them. Maybe the process was not set up well, so it was easy to make a mistake.”

That type of mindset and leadership should translate well to an entire company. Will Convis be able to stem the tide of traditional blaming and strict top-down leadership? Will Convis be able to spread the "respect for people" philosophy throughout Dana? Will he have the runway to be able to do that? Or will Wall Street and the investors want short-term focus? Will Convis be able to live the Toyota Way? Will he even try, given this is Dana?

Back to the WSJ article, it gives the required analyst quote, for whatever dubious value they add to the conversation:

Lehman Brothers automotive analyst Brian Johnson said the paring of Mr. Convis with Mr. Devine should give the company a management team that is capable of strengthening relations with customers and Wall Street.

He said Mr. Convis's immediate challenge is "delivering the performance improvement" and driving the company "to a leaner manufacturing philosophy."

Well, duh, of course Convis is supposed to help improve performance. You might think, from his choice of words, that this analyst doesn't understand the Lean approach. "Leaner?" Lean isn't an end point, it's a philosophy and a business system. What does "leaner" mean? That Dana will have MORE of a long-term focus than Toyota? What the heck does that mean? It would be more accurate to say something like "driving the company to more fully implement the lean manufacturing methods and philosophies." Or how else would you put it?

Either way, I hope Convis is wildly successful at Dana. That would be a nice data point to prove that the Toyota Production System works well in other companies.

A Star a Toyota, a Believer at Ford - NY Times

The second related story is about Jim Farley and his move from Toyota to Ford. It's a fascinating profile - we learn, among other things, that he is a cousin of the departed comedian Chris Farley (there is a passing resemblance).

More importantly, Farley shares his passion for Ford and his drive to help save the company.

Now Farley isn't leading change from the top, but he can influence the culture. Hopefully, he can bring the customer obsession from Toyota:

Mr. Farley rode the fast track at Toyota. He moved to Europe in 1995 and helped introduce versions of the Yaris minicar and the Corolla compact. He also became obsessed with what cars people drove and why.

“I used to walk parking lots all the time, all over Europe,” he said. “When I’m in a new situation, my formula is to really find the truth in things, to observe and get close to the truth.”

The truth, as he saw it at Toyota, was all about the customer — unlike at some other automakers that let executives dictate what cars to build.

“One of the many things that Toyota does really, really well is that it can put the voice of the customer right there at the table in front of the chairman of the company, in a way that even he can’t change it,” he said.

Farley learned to go to the "gemba," to actually observe and talk with customers. This is a long-standing pattern in Toyota (including the stories of Japanese employees coming to the U.S. to drive minivans across the continent to understand customer needs here).

It also sounds like he will open up channels of communication:

“At Ford, it was like the boss was always right,” he said. “But it is fascinating how quickly the people I work with were able to shift to where they had their own opinions and expressed them.”

Tie that back to the Convis quote. Convis is a servant leader. He listens to his employees. That's the magic. I hope that's what they can both help bring to Dana and Ford. If it can work there, it can work anywhere.

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Toyota marks 50 years in U.S.

This month marks a pretty significant milestone, 50 years since Toyota first started selling cars in the U.S. A collection of articles:

Toyota marks 50 years in U.S. Dallas Morning News

It's important to keep in mind that Toyota was hardly an overnight success:

"Ambitious, detail-oriented Toyota – the most feared automaker in the industry – landed in the U.S. 50 years ago this month with a tiny, tinny thud.... started with one product – the lumbering Toyota Land Cruiser wagon/off-road vehicle – and later got the comical Toyopet sedan, a car that dealers said was overweight, underpowered and often overheated." (Dallas Morning News)

Toyota has gotten better at product development and in matching supply and production to customer demand, avoiding the waste of overproduction.

"One thing Toyota has been really good at is predicting demand three to five years down the road," said Jesse Toprak, executive director of industry analysis at Edmunds.com. "Their goal is to always build one fewer vehicle than there is demand, and they are very good at hitting it." (Dallas Morning News)

Toyota's launch of the new Tundra pickup was hardly a success, but Toyota responded with what sounds like "kaizen" (or continuous improvement) in action:

"Earlier this year, for example, the new Tundra pickup was launched to unexpectedly slow sales. After analyzing sales data and talking to dealers, Toyota realized that buyers wanted more upscale trucks than it was offering and changed the production mix."

50 YEARS OF TOYOTA -- Chicago Tribune

Again, Toyota started slowly:

Toyota sold 288 Toyopet Crown sedans and one Land Cruiser in 1957, its first year in the U.S., a performance so bad the company almost went home.

"It started with a mistake," said Jim Lentz, executive vice president of Toyota Motor Sales U.S.A. "That car really wasn't fit for U.S. roads or the U.S. consumer." (Tribune)

Can you imagine how things would be different here if Toyota *had* gone home? Would Honda have grown to dominate the U.S. market in their place? Would the demise of the Detroit Three have been slower?

Here is a story I have heard before, but it really illustrates the idea of "go and see" management, the idea of going to the "gemba," or the actual place, to see problems first hand. That's a core element of the Toyota management system:

Gieszl recalls a story from the 1970s when Shoichiro Toyoda, son of the company founder and later chairman of Toyota Motor Corp., visited the U.S. On one stop, a
dealer complained that certain engines had a flaw that left metal shavings in the oil, causing mechanical problems. When told that a vehicle with that problem was in the service department, Toyoda rolled up his sleeves, reached into the oil, felt the shavings and ordered a fix."Something like that really sets the tone," Gieszl said. "When you go right to the scene, there's no filter of the information coming up. Then you have a real understanding of the situation." (Tribune)

No filtering of information... I can only imagine how much information is filtered by the time it gets to the CEO's of Ford or GM. I remember a story about when Alan Mulally was new to Ford and he had to, basically, tell his managers to start telling the truth about problems. Understanding problems clearly is the first step in effective problem solving.

The Same Kind of Different Car Company

By Andy Wagner:

A poignant story showed up in the Washington Post during the recent GM strike that hits at the heart of the principle of respect for people. It came from the Saturn plant in Spring Hill, Tennessee. Management, required to work during the strike, gave their friends, their union hourly workers, rides to the picket line. They delivered hot coffee and donuts. They showed that respect for people is alive in well at the real Saturn, despite the fact that Spring Hill, home of the "different kind of car company" doesn't even assemble cars any more.

Today, most of Saturn's products are now designed in Europe by GM's Opel division and built on the same lines as every other GM vehicle. Surprisingly, the article showed that while the vision of Saturn's founding died in a boardroom in Detroit, there still is something unique in Spring Hill. If only the culture had become a model for the rest of the company, rather than a short-lived "experiment", the strike, and GM's current condition, might not have come to pass.

When I was a youngster growing up in Ford country on Detroit's west side in the early 1980s, we heard a lot of buzz about the "new car company" that GM was starting in Tennessee. A few folks even made the move, leaving Detroit behind and moving south to be a part of it. By the time of Saturn's anti-climatic launch in 1990, the Ford die-hards felt like we had the last laugh. While GM had spent 10 years and billions of dollars creating a new division to build and sell small cars to compete with the Japanese, Ford took a different approach.

CEO Don Petersen, under the influence of weekly meetings with Deming, rebuilt the company from within. A team philosophy was adopted across the company. On the product side, they introduced vehicles that met the market's desires. Production teaming at the plant level improved quality and reduced costs. Escort and Taurus took the crown as best sellers while Motor Trend Car of the Year awards flowed in year after year. During the late 1980s and early 90s, Ford racked up market share almost as fast as the Japanese, and ironically, they did so with techniques and philosophies that GM said couldn't be done in their existing plants.

So what happened? What happened to Saturn, the noble experiment? What happened in Dearborn to Don Petersen's "Better Idea"? The same thing, I suppose that happened to Wiremold. Deming's "constancy of purpose" lasts only as long as leadership believes in it.

Before we get all depressed, I'd have to say that the stories of Ford in the '80s and Saturn during the strike of 2007 give me a glimmer of hope. Ford showed, during that brief bit of history, that even an old dinosaur could have new life with the right leadership. And the Spring Hill plant shows that respect for people, once established, endures, even when management doesn't know how to make the most of it. With a bit of persistence, perhaps someday we'll be able to say that we had an opportunity to work at a place like that.

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Changing the Culture at Ford

At Ford, the 'Outsider' Is Optimistic - WSJ.com

There's an interview with Ford CEO Alan Mulally today, we've featured him before on the blog (click the "Ford" link at the bottom of the post for more on the company).

The article focuses on leadership and, although not mentioning Lean or TPS (a first for a Mulally article?), you can see leadership and Lean culture traits that he is trying to instill in the executives and the company.

He first says:

"I listened to everybody. You use facts and data, and must demand and have high expectations for absolute clarity around the business environment. You talk to all the stakeholders, starting with the customers. You also look at the macro economics, the economy. You talk to customers, dealers, Ford employees, UAW, your suppliers, your investors, everybody."

This reminds me of quotes from Toyota's Gary Convis, you listen to folks, you look at "facts and data" (reminding me of the quote, from Ohno I think, that "data are nice, but facts are better"). Data can be fudged, facts are things you can see with your own eyes. I remember the NUMMI-trained plant manager who came into my GM factory. He spent months walking around and talking to people. Some of us were hungry for action, "Just tell us what to do!" But he took a very measured approach to understanding the problem and building trust, which seems to be Mulally's approach, as well.

Mulally also talks about the concept of making problems visible. He's talked before about how Ford had a culture of making things look good, of hiding the problems. As the Toyota saying goes, "No problem is a problem," or as David Mann (author of Creating A Lean Culture) puts it, you have to "embrace your problems." Again, Mulally tells a story:

"One of the first meetings we had, I asked how it's going, and most of it was all green and a little yellow. I said, "Hey, we lost like $12 billion, it can't all be green."

The next week, [Ford Executive Vice President] Mark Fields was launching the Edge [Ford's new small sport-utility vehicle] up at Oakville [Ontario]. He had a technical issue, so he chose not to deliver the car because we wanted to start off with the highest quality. In the weekly review, he presents the chart with all the launches. It has all the greens, yellows and this one big red box. The place goes silent.

I started to clap. I said, "Mark, that is great visibility and I am glad you understand that. Is there any help you need? Other resources you could get from technical or product development?"

So, within a couple weeks it went from red to yellow to green and we had a great launch. It's not a warm and fuzzy thing, it's relentless focus on your area. The expectation is we will portray it exactly as it is, and that's OK. What will not be OK is not dealing with it. "

I love that, "What will not be OK is not dealing with it." Baby steps toward changing the culture at Ford. I wish them luck. Maybe they should be bumped up a few places in the Best Lean Companies poll?

Does anyone else, short of the executive suite, see signs of similar culture change throughout the company? Click comments to tell us.

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Time for Value Added Engineering

Ford Adopts Focus Time - Detroit News

By Andy Wagner:

I have blogged before on the inefficiency of multi-tasking and the virtues of more single-piece flow in the engineering environment. Judging by this article, it looks like somebody at Ford Motor has been listening.

"Here's a novel idea for Dearborn: Ford Motor Co. is giving its engineers two days a week to do nothing but engineer. That means no meetings, no design reviews, no other distractions -- just designing new cars and trucks."

In his last years prior to retiring from Ford, my dad probably complained more about the endless meetings than any other single aspect of the company. After 37-years, he had his share of complaints, so that's saying something.

It seems to be endemic in companies that manage by results instead of managing by process, that they are endlessly meeting and reporting out. In my experience, every report out two-levels up in the organization, requires a separate meeting with the leaders one-level up to review what's going to be said. Instead of focusing on getting the work done, getting the right resources in place and taking down barriers to execution, emphasis is put on pretty charts and status report after status report.

I speak out at work about the ratio of value add to non-value add in terms of our meetings and project tracking specifically, but its a difficult case to make. The meetings allow our managers to feel like they are involved and "doing something" to move projects forward. This is particularly necessary when so many of them are located remotely. Often they underestimate the cost of tracking spreadsheets, databases, and PowerPoint.

What should they be doing? Much like lean on the factory floor, engineering managers need to understand their team's process. They need to understand how things are functioning as a system. Why does it take so long to perform an analysis? Because information isn't available. Why not?

The status of this or that project is not significant. The function of the department as a whole is. You might have to get into the weeds of a specific project in order to understand the failures of the process, but it's important for management to understand that receiving a weekly status update and responding with exhortations to do better is not leading. Finding the wasteful patterns across the organization and rooting them out systemically, managing the means of performance, not the results-that's where leadership shines.

From what I've heard from my dad, Ford has had meeting paralysis for several years now. Two days per week to focus on the job at hand could be a great relief at the working level, and a definite morale boost for a white-collar work force that's been decimated by lay-offs and defections. If the folks in Dearborn are lucky, 'focus time' also represents the beginnings of a culture change to an environment where adding value to their product is more important than being perceived as adding value.

Suppliers: GM better, rivals not

Detroit News Article

GM, Ford, and Chrysler are frequent targets here for their "beat up the suppliers" approach to supply chain management. Here's some encouraging news for GM (and for their suppliers)... not such good news for Ford

General Motors Corp. has substantially improved its rocky relationship with parts suppliers for the first time in 15 years, while the rapport has worsened at Ford Motor Co. and Chrysler, according to a study to be released today.

GM's improvement suggests the automaker's aggressive plan to work more harmoniously with its parts makers is gaining traction.

Comparing Toyota to Ford:

...82 percent of suppliers consider Toyota a preferred or very preferred customer, compared to 10 percent for Ford, which has the worst supplier relations, according to the survey.

This was true at some work I did with a Tier 1 auto supplier once... the same company made parts for Toyota and Chrysler, and they MUCH preferred Toyota as a customer, partly due to their attitudes and partly due to the fact that Toyota actually kept their production plan stable instead of changing it constantly (Beer Game, anyone?).

There are more metrics and examples in the article, check it out.

Toyota Way Principle #11 says:

Respect your extended network of partners and suppliers by challenging them and helping them improve.

Dr. Deming used to preach, as part of his 14 points:

2. Adopt the new philosophy of cooperation (win-win) in which everybody wins. Put it into practice and teach it to employees, customers. and suppliers.

4. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost in the long run. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

Looking at the data, GM has a long ways to go, but at least they are improving.

On a scale of zero to 500 -- with zero being the worst -- the survey rated GM's overall relations with its suppliers at 174, up from 131 last year. "We've never seen that type of improvement before," said John Henke, president of Planning Perspectives. "They've just generally been doing things better from the standpoint of working with their suppliers."

As they have since the report began in 2001, the suppliers ranked Toyota and Honda the best companies with which to work.

Of the six companies ranked, Toyota had the best relations with suppliers with a score of 415, followed by Honda (380), Nissan (289), Chrysler (199), GM (174) and Ford (162). Ford and Chrysler fell several points from last year.

Henke called a Ford program to improve supplier relations a "disappointing failure."

Any suppliers care to comment on how the "Detroit Three" are doing?

L.A.M.E. -- Thinking That Lean Hurts People

'Lean Production' May Also be a Lean Toward Injuries

People getting hurt would be a good indicator of Lean As Misguidedly Executed. The above link is from the American Psychology Association of all places, and they are talking about physical injuries AND mental stress, in an article from 1999.

Employers' movement toward "lean production" may be increasing workers' risk of injury, say experts.

Makes me wonder who the "experts" are?

Lean-production practices attempt to increase productivity through continuous improvement, improved inventory systems and elimination of wasted time and motion.

But new research suggests that lean production can backfire if not implemented carefully, warned researchers at the March "Work, stress and health conference."

That's true. If "Lean" is not implemented properly or non-Lean concepts are called "Lean," people might get hurt. Every environment I've worked in that was implementing Lean focused on Safety. Look at the common Lean metrics: SQDCM (Safety, Quality, Delivery, Cost, Morale). It's no accident that Safety comes first. Lean environments often start EVERY meeting with a safety related topic. That's a good practice. Lean environments don't attempt to work people to the point of injury, Lean doesn't ask people to work in non-ergonomic or unsafe ways. That said, people DO get hurt at Toyota factories (a fact the UAW loves to trumpet), but I've seen non-Lean environments that cared far less about safety than the Lean ones.

In the above paragraph, I said "Lean doesn't...." Lean is just a word, it's a concept. People and leaders are the ones who drive the importance of safety. People are the ones that ignore safety. You can probably have an environment where the organization is implementing Lean tools (kanban, 5S, heijunka, etc.) but does NOT care about safety. This is wrong. Caring about safety is part of the Lean "respect for people" concept, a core pillar of the Toyota Production System.

"There's a big debate between the people who think lean production will help people work smarter and people who think it will make workers miserable," said Sharon K. Parker, PhD, of the University of Sheffield. "It's a very polarized debate."

Yes, that's a very active debate. I don't mind shedding light on the debate or engaging in that debate here.

Lean Should Help Employees Feel Better

The article continues:

The assembly-line workers reported increased stress and depression, reduced autonomy and decreased job satisfaction. Evidence also suggested that accidents had increased and product quality decreased. Most distressed of all were assembly-line workers who had to certify their procedures as the line moved inexorably past them.

By "reduced autonomy," they might mean that workers have to be to work at given times and take break at certain Standard times. When workers are in isolated islands, working on batches, they are often disconnected and have the "freedom" to work fast and then take breaks. Lean doesn't allow this, as employees and their work operations are more tightly connected. You'd hope that this loss of autonomy is explained in terms of the customer needs and what is good for the company. If employees don't feel like they win when the company and customers win, that's a very challenging culture and leadership problem.

You'd expect that employees would have great opportunities to contribute to continuous improvement and that their ideas would be listened to by management, as opposed to the old "check your brain at the door" mentality. You'd think this would be good for mental health and self-confidence. But, if companies are implementing Lean methods (synchronized assembly lines) without also implementing the "Respect for People" side (which often happens), then the "benefits" of Lean would be missing and it would be understandable how employees would hate Lean.

In contrast to the assembly-line workers, for example, workers in cells enjoyed some positive mental health outcomes that compensated for their decreased control over their jobs. In addition, assembly-line workers' complaints about not being listened to suggest that opportunities to provide feedback could mitigate some of the line's negative effects.

As I would expect.

Companies may also change their ways [away from lean] when they see data demonstrating declines in product quality, said Parker, adding that 65 percent of the workers felt quality was getting worse. Unfortunately, there will be a lag before those data become available.

As I've written about before, it's mind boggling to me how a company can implement Lean and have quality get WORSE. If quality is declining, that would be another sign that only a subset of the Lean methods have been implemented. If the company put workers into new roles and didn't properly train people (not properly implementing Standard Work), then quality MIGHT decline. I would blame this more on a misapplication of "Lean" instead of a problem with Lean itself.

Something Positive, At Least

There are some positive reports in the article, at least:

In a study of a Ford facility outside Detroit, Kaminski found that a strong union and cooperative managers can work together to create a system offering the profit-enhancing benefits of lean production without harming workers' mental health.

The facility introduced work teams in 1990. The change was designed to push decision-making down the hierarchy and increase workers' control over their work. In contrast to other companies where supervisors dominate teams, the Ford plant chose to create teams led by hourly employees elected by their peers.

This sounds more like Lean, what Ford was doing.

It Gets Worse: Their Description of "Lean" in a Hospital

The article then goes on to describe "lean" in healthcare:

The potential for harm is even greater in the health-care arena, where lean-production techniques are becoming increasingly common. For nurses, changes in work organization can be deadly.

That's because nurses have borne the brunt of hospitals' efforts to maintain profits by downsizing, said Susan Wilburn, MPH, of the American Nurses Association. The association analyzed nurses' injury rates in a dozen Minneapolis/St. Paul hospitals from 1990 to 1994.

During that period, patients' length of stay and hours of care per day increased, yet the number of nurses decreased by about 10 percent. In this fast-paced work environment, the number of reported injuries and illnesses jumped 50 percent for licensed practical nurses, 65 percent for registered nurses and 117 percent for unlicensed "assistive personnel." Back injuries and needle "sticks" were the most common injuries.

Downsizing is not "Lean"!!!!!!!! There's nothing to indicate that the period from 1990 to 1994 had anything to do with Lean at those hospitals. Given the time frame, I'd suggest it's very UNLIKELY that this was a Lean implementation. This sounds exactly like traditional cost-cutting thinking and traditional management. It's very unfair to lump this downsizing in with "Lean." It's as bad as the IBM Global Services "LEAN" effort that's just a bunch of downsizing.

I did some Lean work in a hospital lab where, in previous years, they were attempting to cut costs through the traditional benchmarking analysis and downsizing route. The remaining employees were stressed out and the system was performing poorly. We came in with Lean and promised ZERO LAYOFFS as the result of Lean improvements. This was quite a nice success story where Lean was an attempt to reduce waste and make things easier for employees while also, obviously benefiting patients.

LeanBlog Podcast #24 - Jim Womack, State of the Auto World

Episode #24 of the LeanBlog Podcast is the 2nd part of my recent conversation with Jim Womack, of the Lean Enterprise Institute. In this episode, we talk about the state of the auto industry, from the time of The Machine That Changed the World through today. Who does Jim think is in the best shape among the "Detroit Three?" Jim also answers some questions from Lean Blog readers.

MP3 File (Right Click to Save-As)

Show Notes and Approximate Time, Episode #24

• 1:50 “We had some brief hopes for Ford in ‘Machine’”
• 2:20 “Mind of Toyota” book is a Womack must-read: “it’s a great book, harder than heck to read” Inside the Mind of Toyota: Management Principles for Enduring Growth
• 3:00 Womack on GM’s decline
• 4:15 What about the Ford Atlanta plant going from most efficient to shut down? The Taurus story, original development took 7 years when Toyota was taking only 3. At least it was what the public wanted and was easier to put together than the comparable GM product.
• 7:00 GM’s political footprint is shrinking as factories are closed outside of Michigan and Ohio, while Toyota’s is growing with factory expansion.
• 9:15 BBC series on the auto industry and lean production, pulling the cord much more at Toyota, and how people were scared at the Ford plant to pull the cord (mistrust between workers and management).
• 10:15 “If it were just a plant-on-plant competition, they [Ford] would be OK, they’ve learned enough… all over the company, the managers are not pulling the andon cords.”
• 10:40 More on Ford management and the “corrupt” Ford culture
• 12:10 How things stand with GM today, according to Jim
• 12:50 “Ford and Chrysler have a different magnitude of problem than GM.” If not for the legacy problems, GM would be OK, not a world-beater… “not as good as they should be.”
• 14:30 “Ford and Chrysler’s problem is management.”
• 14:45 Question from the blog, from John Hunter, “What 3 publicly traded companies have the deepest understanding and execution of Lean?” Danaher, “can’t vouch for it personally….” Tried to put them in the Lean Thinking, but was escorted off the property because the President declared they had deep secrets….
• 16:15 Article about Danaher from Business Week
• 17:00 G.E. has been a “make the numbers” company as opposed to a “fix the company” company, says Jim. But now GE is saying they have to be like Toyota… “is there anything beyond Six Sigma or even to Six Sigma?”
• 18:25 Lots of other little guys out there, privately held. “Wish I could point to other examples of large companies…”
• 19:00 LEI is doing some research for how to take a traditional mass production mentality company and transition them to a lean management approach, what methods do you have to implement?
• 20:00 “The world is pretty Dilbert-like.”
• 20:30 “I wish I could rattle off the 14 companies who have actually done it…. No stock tips.”
• 20:50 From Joe Wilson, what about “Lean and Mean? Do you wish you had picked a different word than Lean?
• 21:15 “It also rhymes with green…. A word is a word, you have to pick something.” Jim meant it to describe “how to do more with less” but many have spun it into “how to do less with a whole lot less, including people.”
• 22:00 “If lean is taken on by managers who are clueless to the real meaning, well then over time, the meaning becomes the meaning that people deduce from the behavior of those managers. I can’t do anything about that.”
• 23:00 “Lean got us out of the nationalism and ethnic focus,” that it had something to do with Japan. “Lean” was designed to focus on an objective measure of performance. (the term coined by Jon Krafcik)
• 24:40 “Sorry that so many clueless people [made lean “mean”]… it’s a lot of stupid meanness, where you try to hurt others and end up hurting yourself.” Toyota was about growth, not trying to get rid of people. “Where you get into the problem with Lean is when you have these big behemoths that are fading fast…”
• 26:10 Jim spent a week in Australia looking at healthcare organizations… “How would Toyota run healthcare?” “Toyota treats car parts better than a hospital treats its patients, and treat people better than hospitals treat their staffs.”
• 26:45 “We’re going to bankrupt every company with our healthcare practices.”
• 27:45 Far more than half of the visitors to the LEI website and those signing up for workshops have nothing to do with manufacturing… “How would Toyota run Starbucks?”

If you have feedback on the podcast, or any questions for me or my guests, you can email me at leanpodcast@gmail.com or you can call and leave a voicemail by calling the "Lean Line" at (817) 776-LEAN (817-776-5326) or contact me via Skype id "mgraban". Please give your location and your first name. Any comments (email or voicemail) might be used in follow ups to the podcast.

Click here for the main LeanBlog Podcast page with all previous episodes.

Ford: Quality equal to Toyota

Detroit News Article

In terms of initial vehicle quality, Ford Motor Co. is in a statistical dead-heat for second place with Japan's Toyota Motor Corp. and Nissan Motor Co., according to a new study the Dearborn automaker plans to release today. Honda Motor Co. is the quality leader.

There are other quality measurements beyond initial quality:

In terms of initial vehicle quality, Ford Motor Co. is in a statistical dead-heat for second place with Japan's Toyota Motor Corp. and Nissan Motor Co., according to a new study the Dearborn automaker plans to release today. Honda Motor Co. is the quality leader.

It's nice to see Ford making quality improvements. As Deming might have asked, "By what methods?" Is the quality improvement a design effort (DFSS or Design For Six Sigma, maybe?) or a production quality effort, possibly driven by Lean methods?

As GM has complained about, it takes time for customer perception to catch up to reality.

And dealers say improved quality is helping bring customers back into their showrooms.

"We're not seeing the recalls after the launch of the vehicles like we used to," said Tim Mullahey of Mullahey Ford in Arroyo Grande, Calif. He said rampant recalls in the 1990s did immeasurable damage to Ford's brand image. Now, he and other dealers are touting Ford's recent quality improvements in their advertising. "The problem is really one of perception. We're trying to overcome the stereotypes."

TX Paper Accuses Mulally of Insulting Salespeople

Star-Telegram.com | 04/06/2007 | America’s Great Automotive Stuntmen

Local car columnist Ed Wallace seems like a friendly curmudgeon. This week, he writes about Ford's CEO Allan Mulally and his adventures at Village Ford (back in Dearborn). Wallace rightfully takes on the "hero CEO" image that the Ford P.R. folks are apparently trying to create. That seems to go against the Lean and Toyota mindset, but Mulally has a tough enough job ahead without us nitpicking (and it's not even worth the bother to nitpick his paycheck, or Mark Fields').

From the Wallace column:

“Four cars (almost) in 40 minutes. That’s the Alan Mulally sales tally at Village Ford in Dearborn.” — Automotive News, March 28, 2007 “I’d say ‘Hi, I’m Alan. I’m from Ford. I’m just helping out today.’ I got so close to one family …”
— Alan Mulally, from the same article

Here we go again: PR campaigns being sold as real news, as the new head of the Ford Motor Company innocently and unintentionally manages to insult everyone who has ever tried to earn a living in the automobile industry by selling cars. The only humorous aspect to this story is that it ran in a respected automotive publication, the Automotive News, to which every new car dealer in this country probably subscribes.

It’s humorous because I doubt sincerely that any dealer, reading that Ford CEO Alan Mulally dropped by Village Ford in Dearborn for a mere 40 minutes and made three sales (and has another pending), did anything but roll his eyes and groan at that outrageous claim. Why? Because even at the best-run dealerships it often takes 10 minutes just to find the keys to the particular automobile that the customer is interested in purchasing.

The article also invites a pertinent question: Why, if Mr. Mulally can easily sell four cars in 40 minutes, didn’t he stay at the dealership all day earning new customers for Ford? After all, the owner of Village Ford probably would have appreciated the additional 72 more sales on that one day.

Wallace also takes a slap at Bill Ford:

Reading these stories reminded me of a Fortune magazine cover from many years ago, during Bill Ford’s ascendancy at his great-grandfather’s firm. It was a close-up of Ford sporting stylish sunglasses, under a title blaring, “Motown Cool.” One has to wonder what, exactly, is “cool” about nearly destroying one of America’s great automotive companies in less than half a decade.

At least Ford was only drawing a $1 salary. My thought is that we need fewer "hero CEO's" and more effort and focus on improving processes, improving quality, engaging employees (and dealers), and taking care of the customer.

How About Partnership Instead?

New Detroit Woe: Makers of Parts Won't Cut Prices - WSJ.com

Wah, the latest complaint from the "Detroit Three" (formerly known as the "Big Three") is that they are having trouble squeezing and stomping on their suppliers for lower prices. Because so many suppliers were beaten up over time, they have consolidated, have had plants closed, and/or were bought by private equity firms. Seems like a natural response for a part of the industry that has been abused by many OEM's for a long time.

The WSJ article talks about the trend toward shorter and shorter contracts with suppliers, as opposed to long-term partnership and collaboration.

Principle #11 of The Toyota Way says:

Respect your extended network of partners and suppliers by challenging them and helping them improve.

Toyota treats suppliers much like they treat their employees, challenging them to do better and helping them to achieve it. Toyota provides cross functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.

Does this type of interaction sound like respect? From the WSJ article, describing the negotiating practices of the Detroit Three:

...says auto makers and large "tier one" parts makers continue to ask Bluewater to accept business under terms that cover just labor and materials, with nothing left over for overhead or profit. "We are constantly getting calls asking, 'Can you take on this or that business from another supplier?'" says Mr. Lord. "We tell them, 'Here is our price,' and many times they get offended and say, 'We won't be doing business with you.' That threat hasn't proven valid."

The Curious Cat blog has a nice summary of the Detroit Three's supposed attempts at "partnering" with suppliers, including a recapping of Deming's attempts to push Ford toward partnering with suppliers, not just demand price reductions.

What Deming tried to re-introduce to Ford [in the 1980s] was a more modern and refined version of what had made Ford great.

Here’s what I mean - During the early days, Ford and his associates were dissatisfied with the price that an auto body manufacturer was demanding.

They wanted him to get his price down, just as today’s Big Three want their suppliers to reduce prices.

The difference was that Ford and his co-workers didn’t just tell the supplier to cut his price.

They looked at the supplier’s product and taught the supplier how to make it more efficiently.

The supplier’s production costs dropped so far that the supplier could not only give Ford the price he wanted, but also make more money for himself.

When will the Detroit Three ever learn? Instead of whining about "legacy costs," why not change the way you are doing business??

Chrysler supposedly made the most progress in this areas, in the 1990's, under the leadership of Thomas Stallkamp. After Stallkamp left with the Daimler merger/acquisition, those partnership practices went away. I saw Stallkamp give a talk once in an academic setting where he seemed near tears that all of his work had been done away with. Sad. Stallkamp is now, ironically enough, working with private equity firms and the supplier base, including one possible attempt by a supplier (Magna) to purchase an OEM (Chrysler).

I wonder if Magna will use Detroit Three tactics to beat the Chrysler price down??

Why You Can Never Be Satisfied

Desperate to Cut Costs, Ford Gets Union's Help - WSJ.com

Here's an example of why you can never be satisfied. A key to Toyota's success is the mindset that you're always shooting for perfection (an article with some examples). Here's a story about Ford:

Ford acknowledges it rested on its laurels as the profits from its popular sport-utility vehicles and pickups masked underlying problems in its manufacturing systems. By 2000, GM and Chrysler began to gain on Ford. Last year, the Harbour Report estimated that Ford was two hours slower than GM and Chrysler, and also had slipped to six or seven hours behind the Japanese companies.

"No question, we let others pass us on these things. We took our eye off the ball and got intoxicated with just making trucks," said Chris Bolen, a Ford director of manufacturing who started out as a Lima line worker. "Internally we ignored a lot of waste....We let manufacturing get in trouble, and now we've painted ourselves into a corner where without radical changes we could go out of business."

Ouch, that's a very candid assessment, coming from Ford. Let's hope the company can pull out of it's downward spiral.

The BBC on Lean Production

BBC NEWS | Business | The triumph of lean production

The BBC highlights lean practices and provides a stunning contrast between Toyota and Ford:

On the assembly line at Toyota's giant plant, Laura Wilshire is not happy.

There is something wrong with a seatbelt fitting on the Camry she is working on.

Laura pulls a cord, stopping the production line - and prompting her five fellow workers on trim line three to crowd round.

They soon see why it is not screwed in properly and fix the problem.

"I don't like to let something like that go," she says. "That's really important for people who buy our cars."

Workers at the Toyota plant in Georgetown, Kentucky, pull the cord 2,000 times a week - and their care is what makes Toyota one of the most reliable, and most desired, brands in the US.

In contrast, workers at Ford's brand-new truck plant in Dearborn, Michigan, pull the cord only twice a week - the legacy of generations of mistrust between shop-floor workers and managers.

There's a huge cultural difference between Toyota and Ford. Even with Ford's attempts at reclaiming the "Ford Production System," all of the lean design and lean documentation doesn't matter if you're not going to "manage lean" which includes letting workers pull the cord to fix quality problems.

The article doesn't delve deeper into Ford, but instead looks at GM's efforts to catch up to Toyota from a labor productivity standpoint. But it mentions nothing about quality or how GM's "andon" (not "andan" as the BBC spelled it) process works any better than Ford's. GM has had the chance to learn from Toyota at NUMMI, so you'd hope they would have a more robust line stop and quality improvement process. Do they?

The article doesn't draw a direct comparison to GM, Ford, and Chrysler building what they want (or what they can) and dumping it on dealers, but I will. Here's Toyota's approach:

Toyota also has a close relationship between the dealers who sell its cars and its plants.

The production run is adjusted at the Georgetown plant, and extra Saturday working is added, only when computerised orders from the dealer network show it is needed.

And individual buyers can alter what they want in their car - changing the paint colour or specifications - right on the production line, by notifying their dealers.

Let's not point out management practices as the differences between the "Detroit 3" and Toyota... let's blame healthcare and currency policy. Right. The differences between Toyota and the Detroit gang are so obvious. Having the better management system -- that's the key to Toyota's success.

The article ends with some added cynicism from our friend and future Podcast guest Jim Womack:

At a deeper level, the question is whether GM and Ford - the companies that perfected mass production -can fundamentally change their culture to the new lean production system.

"I hope they make it - but I am not optimistic they all will be able to," says James Womack, an expert who has advised many global companies, from Tesco to Boeing, on the advantages of lean production.

Mr Womack says it has to be something that is inculcated in all the company's workers, from the bosses to those on the factory floor.

"This is not Japanese companies vs American companies, it is smart Japanese companies vs smart American companies," he says.

"GM has caught up on assembly plants, but Toyota is still ahead on suppliers, product development and a problem-solving approach to issues.

"For too long, managers at US car companies were in denial about their problems."

Ford's Fields in Folicle Fantasy Land

Mullet or not, Fields' hair is talk of the auto industry

I know it's juvenile of me to point out the Mark Fields hockey hair and I was good about not mentioning it for a while (I made it past my promised 30 days). The "Jalopnik" blog also refers to his hair as a mullet. I'm not sure who started it first, but I scooped them on this one.

As is often the case, the "blogosphere" beat the "mainstream media" to the story.

Sunday's Detroit Free Press had an article about his hair. So I guess it's OK to talk about it. It's still juvenile, but we have to be able to laugh about something in the face of all of this auto industry decay.

Mark Fields gave up the corporate plane to fly home to Florida on the weekend.

But don’t expect him to cut his thick, wiry black hair — no matter how many people complain, tease or obsess about his so-called mullet.

That’s a hairstyle known for being short on top and longer in the back, and it was made popular in the 1970s and early 1980s. The often-ridiculed hairstyle is sometimes called hockey hair, a reference to the many players who still wear the style.

Fields said he doesn’t believe he has a mullet, but he prefers to wear his hair a little longer, even though it seems so out-of-step with the conservative culture and fashions in the auto industry.

“I don’t want to be too corporate,” he told the Free Press. “That’s part of my radical side.”

I would put a picture here, but please click on the Freep link because the picture there has a feature I can't offer -- "click to zoom." It's priceless.

I guess we've all collectively upset or puzzled his wife:

Don’t people in Detroit have better things to worry about?” Fields’ wife, Jane, a petite, tough-talking East Coat native, asked the Free Press in Las Vegas last month.

So the Financial Times actually beat us bloggers to it:

The first mention of Fields’ hair in a news article was in 1999, when it was announced Fields would lead Mazda.

The article ponders why we would care?

Such personal criticism or praise about the appearance of an automotive executive is highly unusual.

I'm no psycho-analyst, but I think the reason we all get so petty about minor things like hair is that we have so little control over the big things that matter, like boring car designs that don't sell, sourcing decisions, and plant closures... the total collapse of a great American car company.

Ford must copy Toyota, which copied Ford

Detroit Free Press Commentary

Excellent commentary here from columnist Tom Walsh. He says, in part:

GM and Ford butchered the lean-production system in subsequent decades and lost their zeal for rooting out waste. When Toyota and Honda and other carmakers set up shop on American shores in the 1980s, Detroit responded with denial and excuses for its loss of market share to foreign-owned rivals. But even after conceding the merits of Toyota's system, the Detroit Three have found it difficult to duplicate.

Wonder why?

Walsh has some quotes from Jim Womack and makes reference to an upcoming republication of the seminal book, The Machine That Changed the World: The Story of Lean Production-- Toyota's Secret Weapon in the Global Car Wars That Is Now Revolutionizing World Industry (which deserves an award for it's long non-lean title!).

"Good Paying Jobs" for Michigan?

Visteon to build local plant

Not sure if I understand my home state's strategy here, as the governor says:

"The company's investment in Highland Park will bring good-paying jobs to the community and strengthen Michigan's position as the global leader in automotive research and development," she said in a statement Tuesday.

Visteon will invest $35 million to build the facility and plans to hire 175 workers at a starting wage of about $9 an hour -- an amount that is expected to climb to $11 an hour by 2010.

Will cheap labor save Visteon??

A commentator points out the "just in time" advantages of being near customers (not a bad concept), but:

He expects the company decided to build it in the United States because of complex customer requirements for just-in-time sourcing. Otherwise, labor costs would be too high to warrant Visteon's investment in Michigan.

$9 to $11 an hour is "too high?" Geez oh pete.

Ford's Fields Finally Sacrifices

Detroit News Article | Jan 4. WSJ Article on Uproar

This was in Automotive News, a follow up to this earlier blog post and story about Mark Fields using a private company jet to fly home to Florida each weekend.

Ford Motor Co. executive Mark Fields will stop using the company plane to fly home to Florida on the weekends, the automaker confirmed today. Fields, Ford's president of the Americas, told employees about the change in a Thursday morning internal Web cast.

Automotive News reported that it was Fields' decision, not Alan Mulally's. While Mulally had recently publicly supported the use of the jet as being necessary to recruit top talent, such as Fields, there was significant "backlash" and the issue had come up in employee forums. Mulally, by the way, is reportedly moving his family from Seattle to the Detroit area, while Fields refuses to relocate.

From the article:

“He said he has made a decision to stop using the company aircraft for his personal use,” Ford spokesman Tom Hoyt said. “He doesn’t want this or any other issue to distract the team from its main mission, which is to deliver the Way Forward plan and return our North American business to profitability.”

It was certainly Ford's right to give Fields this perk, it was a private employment agreement that the parties entered into freely. That doesn't mean it's right from a leadership standpoint, to send the signal that we "all need to sacrifice" for a money-losing company and then turnaround and spend a reported $900,000 a year on a perk like that. Leadership (with Lean or otherwise) means being in the fight with your employees, being on the same team, rather than holding yourself above the team in very visible ways.

From the Jan 4 WSJ article:

"It just looks bad and I'm sure Mark kind of regrets it himself," said Tom Addis, a Ford dealer in Idaho and the departing chairman of the Ford Dealer Council. "Right or wrong, that's the perks executives get, I guess. Should it be suspended during times like these? Well, you've got a guy who's been saying to employees we all need to sacrifice. It's probably even more contentious with employees than dealers."

Good for Fields. I promise I'll go at least 30 days without mentioning his mullet. Hold me to that, blog readers.

Update: To be fair, Fields isn't the only exec getting this type of perk these days, per a NY Times article.

Update: How GM's CFO handles this same situation

Blog Roundup: Auto Blog,