Since I've been working exclusively in healthcare for almost two years, I haven't been in too many factories lately. I was excited to get an invitation from the local Society of Manufacturing Engineers (SME) chapter to tour a local factory. The company was described as a family-owned, private company that was an example of lean practices. I hoped this would be a very positive story. The great lean case studies featured here on the blog seem more likely to come from smaller private companies rather than large global public firms. For reasons you'll soon see, I'm keeping the name of the company private.
One trait I'm trying to further develop is my “respect for people” hat, namely in the context of “respect for managers.” I don't think I'm a complete “boss hater,” as Jack Welch puts it, but I get very frustrated with management because, as Deming taught, they are primarily responsible for quality and responsible for “the system” in which we work. In that vein, I'll say a few positive things about the company and our tour to start:
- The company makes a wide range of products, ranging from small commodity items to large, custom-engineered pieces. There is some engineering know-how that's worthy of respect.
- The company has zero debt load and gave the impression of being very profitable for the multiple generations of family owners (the 2nd generation was in their 70's with the 3rd generation waiting in the wings).
- The General Manager pointed out how their China factories were for China customers, as their larger, more complex products could not be shipped from China to the U.S. because of the resulting slow response time and high shipping costs. The company's goal is to be “the last ____ maker standing” in the U.S., given the competition and pressures from lower labor cost countries. There was a real commitment to U.S. manufacturing that seemed genuine, something I admire and appreciate.
That said, the tour got started on a very dubious note. As our SME leader was introducing our host, he mentioned lean. The GM of the host company shook his head and said, “No…. a lot of what we do flies in the face of your lean stuff,” spoken with the tone of voice that is dismissive of “our” lean stuff, as if lean and economics don't apply to everyone.
What are the innovative ideas that fly in the face of “that Lean stuff?” First, the GM said, “You see, WE consider inventory to be an asset!” as if they were the first company to rely on inventory not just as a financial asset on the books, but also as an operational strategy. They certain had plenty of assets on board, as 100k sq ft of the 400 sq ft were officially designated as “warehouse” (and this is not counting the outdoor metal storage and the piles of WIP that were everywhere in the “production” areas).
Inventory was everywhere and the company embraced its batch production strategy. The factory ran on a typical mid-market MRP/ERP system. From peeking at some shop orders, I saw a lot of MRP work orders with blank process times, which means they were running “infinite capacity” MRP planning, something that's outdated even for the MRP world. I also saw plenty of orders that were beyond their delivery date and showed typical MRP production patterns of one short value-added operation followed by days or weeks of waiting time before the next scheduled operation.
Batch production was driven by their factory layout – it was straight out of the mass production playbook: a functionally driven layout with identical machines grouped in their own large departments of similar like-minded machines. Travel distances between operations were long, I'm sure, which only encouraged the batching mentality. At that point in the tour, I couldn't muster up the energy to ask why they didn't try forming a trial Lean production cell. Even with the MRP and the bad layout and the large batches, they could indeed get an order out “same day” if needed (which proves it IS possible). But, same days orders came either thanks to a lot of WIP or a vibrant “hero mentality.” The GM explained how they normally work two shifts, but they'll work all night if necessary to get a hot order out for an important customer.
Putting the MRP system in (because of Y2K concerns) “damn near killed us” because it was running so slowly and they lost a lot of the functionality that was in their old custom system (a common complaint of MRP/ERP customers). They claimed the MRP system allowed them to “accurately cost out” the production and setup time. Maybe I was unlucky in peaking at work orders that had zero times, or the costing isn't as accurate as they think.
Even with custom products, the GM bragged about their batch production, how they determined “optimal” run sizes based on their set up times, often producing a “year's worth” of the product and then shipping it gradually in small quantities during the year. I didn't get a chance to ask why they hadn't tried reducing their setup times so that they could produce smaller batches.
Many types of waste were rampant, including operators watching machines (it wasn't quite one man per machine, but it was close). I did see one machine running unattended, at least. I felt particularly bad for one operator who was loading successive parts of a batch after first carrying the heavy metal part about 20 feet from the WIP pallet to the machine. Why nobody was moving the pallet closer to the machine is anybody's guess.
There were, of course, huge banners with the company logo proclaiming “Quality is a Way of Life” and “Do it RIGHT the First Time!” (maybe they are also proud to fly in the face of “that Deming stuff”). After walking through the giant warehouse, our next stop was the large “Inspection Department,” which makes you question why they need it if they were doing it right the first time, as the signs demanded. One of the engineers in our tour group asked about a popular quality method and the answer back was “What's Six Sigma?”
I recall a large Safety banner hanging up for all to see, but also saw a machine running without guarding and another a vertical turning lathe with chips piled up so high around it that it was bound to be a safety problem or a quality problem, I wasn't sure which, but it looked awful. The machines were old (which isn't bad necessarily) but they were also oil colored – either through some master plan to keep them from looking dirty, or they were just covered in oil, as was the floor in many places. You really had to watch your step or you'd slip in oil or trip over a pallet holding WIP.
Anyway, I'm not trying to exaggerate it. The factory was a mess. It was a mess that management seemed quite content with. It really made me wonder, which of these was the case:
- Their metal-cutting business is such an “unsexy” business that they can afford to be inefficient and still make money
- The place was doomed, it was just a matter of time before they would lose all of the business, short of the most custom and most lead-time sensitive products.
As we left, the tour guide thanked the GM for touring us around. I was thinking “thanks for taking us in the time machine.” A tour member asked the GM, “What's the secret to your success?”
The answer: “Inventory.”
I emailed the SME tour organizer afterward (not wanting to be rude while on site at the tour, a main reason for just keeping my mouth shut) and asked about the disconnect in what was advertised as a “lean” company tour and the non-lean reality. The answer I got back started with “I guess it's a matter of perspective. I was quite impressed with their logistics….” I don't want to badmouth SME as they do a lot of good work and publishing related to Lean, but the sense I got from the average SME member on tour with us was that they were fascinated with the details of each individual machine, but they couldn't see the waste around them. I'm glad the SME is at least trying to educate their members about Lean.
So even though I've completely badmouthed the nameless company, I really do appreciate them letting me come in and tour their operations. If anything, it was a reminder that not everybody values what Lean can bring to them. I just hope that the company is able to learn about Lean before it's too late. Should I have spoken up and pushed Lean more? Would that have ultimately been more respectful than keeping my mouth shut for the most part?
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