5.29.2009

Book Talk: A Guide to Lean Six Sigma Management Skills

Leadership is a popular topic for book buyers, with people often wanting to know how leaders can engage workers and develop a lean culture.

A Guide to Lean Six Sigma Management Skills is one of our new books in this area. It is written by Dr. Howard Gitlow, executive director of the Institute for the Study of Quality, Director of the Master of Science degree in Management Science, and a Professor of Management Science, School of Business Administration, University of Miami. He is also a Six Sigma Master Black Belt.

Gitlow focuses on how leaders can help workers understand their role in the big picture, increase enjoyment of their work and achieve peak performance.

He presents theories, tools and methods from the view of what he describes as the “worker bees” so managers have the best understanding of the leadership required.

And he discusses how Lean Six Sigma can be used to constantly review internal processes and continuously improve working conditions. This is a useful book for anyone who serves as a lean change agent.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.

5.28.2009

Do You Like Your Books Printed, Recorded or Electronic?

One of the challenges facing us at Productivity Press is that people increasingly want information available in a variety of formats, through many different channels. We are looking at how we can meet that demand for information.

Our goal is to provide information on business process improvement. We have traditionally done that by selling books – bound paper books. And we’re likely to continue selling such books for a long time.


But today, people don’t obtain information just by reading paper books. They listen to audio books. They download electronic books to their computers, iPods and Kindles.

Others like to browse online, visiting websites where they subscribe for periods of time to research the material there.

People gather information through social media – chat rooms, forums, blogs, networking websites.

I’m looking for feedback. How do you like to obtain information? What kinds of information products, or what methods of delivery, do you want?

Please post your answers as comments on this blog. Your input can help us chart a course for the future that will best meet your needs.

Thanks for your help.

5.27.2009

Apple’s Outsourcing is Not the Model for Detroit Automakers

I do not believe that outsourcing is the future of U.S. auto manufacturing, with design and manufacturing the only in-house functions of a car company.

I say this because Forbes suggests that it is. In its latest cover story, under the headline “The Next Detroit,” the magazine profiles Fisker Automotive, a relatively new company headed by renowned car designer Henrik Fisker.

The company already sells the $88,000 Fisker Karma, a plug-in hybrid sports sedan that gets up to 100 mpg. And it is developing a $50,000 model, due in three to five years, claiming that it will eventually sell 100,000 cars annually worldwide.

But Fisker is not a manufacturer.


Almost everything is outsourced--engineering, components, the electric power train, manufacturing. No messy work rules to worry about, no postretirement health care. Only design and marketing remain in-house…

History is littered with the failed visions of automobile impresarios like Preston Tucker, John DeLorean and Malcolm Bricklin. Henrik Fisker figures his fate will be different because he has more than just a new design or variety of propulsion in play. He wants to change the very definition of an American car company, taking his inspiration from firms such as Apple and Nike, which focus on branding and design, not running factories. Indeed, if the Big Three could start over, without the baggage of high labor costs and excess brands, they might create a car company that looks a lot like Fisker Automotive.


Fisker acknowledges that to be viable, he needs a subsidy from the U.S. government. He is seeking some of the money available from Washington to encourage new automotive technologies. And tax breaks for buyers of electric cars don’t hurt either.

Regardless of whether Fisker succeeds, I’m not impressed either by his business model or Forbes’ take on it.

I believe a true manufacturer that embraces a lean strategy will ultimately perform better than a company based on outsourcing. Apple may be a rare exception, but companies with lean manufacturing in-house avoid the logistics and quality issues that can bedevil an outsourcer. Not to mention the fact that your outsourcing suppliers may ultimately become so skilled at what they do that they choose to become your competitors.

Fisker is not The Next Detroit. The Next Detroit is the Toyota plant in Georgetown, Kentucky, and the Nissan plant in Smyrna, Tennessee, and the plants of other foreign carmakers within the U.S. who understood a long time ago how to do a better job than GM, Ford and Chrysler.

5.26.2009

Medical Residents Should Not Have to Work 80 Hours Per Week

When I’m flying, I don’t want the pilot of my plane to be sleepy – a point I made recently when writing about processes of small commuter airlines that set up pilots for fatigue and may have contributed to a recent crash.

Similarly, when I’m sick, I don’t want to be treated at a hospital by a sleepy doctor.

I mention that because of recent reports of a controversy over whether to revise guidelines that let hospitals make medical residents work 80 hours per week.

Believe it or not, the rules used to allow residents in some specialties to work 100 hours per week. The current guidelines resulted from a revision in 2003 (which came about after the death of a patient).

A government-funded report released last year suggested further restrictions, including a maximum 16-hour shift without sleep, or time for naps during longer shifts.

But as a recent article in The Wall Street Journal notes, the New England Journal of Medicine just published an editorial challenging the new recommendations.


Ever since the 2003 guidelines were implemented, however, no conclusive evidence has emerged that the shorter workweek leads to a reduction in patient harm, according to an editorial in this week's New England Journal of Medicine.

"Published studies on this question focusing on mortality rates or a propensity for medical errors have not reached consensus," says the editorial, co-written by Melvin Blanchard of the Washington University School of Medicine in St. Louis

A follow-up study to the 2008 report on the proposed reductions says the recommendations need to weighed against the costs. The study, also published in the New England Journal, estimates shorter shifts and naps would cost about $1.6 billion a year, because teaching hospitals would have to hire more residents or other personnel. Implementing the recommendations "would be costly, and their effectiveness is unknown," says the study…

Another study has indicated that shorter shifts might actually increase patient harm because a departing resident hands over the patient to a fresh resident unfamiliar with the case. "Reducing the work hours of residents leads to an increase in the number of handoffs in care, and this increase outweighs the potential benefits of reducing residents' fatigue," argues the NEJM editorial, whose three authors "strongly disagree" with the Institute of Medicine's recommendations for shorter shifts.


While I don’t dispute the risks of increasing the number of handoffs, proper procedures for handoffs can go a long way toward reducing those risks.

And while hospitals may very well face increased costs, I can’t see that as a justification for overworking residents. There may not be consensus about the benefits of reducing work hours, but you can’t convince me that having doctors who are sleepy is a good thing.

I write about this because I see lean principles at issue here. One is respect for people, meaning residents should be respected by not being forced to work under conditions that lead to fatigue.

More importantly, patients are entitled to medical care that does not put them at risk, which can happen when a doctor is fatigued. This is not only a safety issue, though that may be the most important aspect. It is also about delivering value for patients (customers), which is what lean is all about.

Somehow, I suspect that patients find value in having a doctor who is rested and alert.

I know I do.

5.22.2009

Book Talk: The Basics of Performance Measurement, Second Edition

Certain basic books are the workhorses of publishing. They don’t get a lot of attention, but people like them and find them useful, and we sell plenty of copies year after year. That is because they contain solid, fundamental content.

But even a basic book deserves updating now and then. That is why we are issuing The Basics of Performance Measurement, Second Edition by Jerry L. Harbour.

First published in 1997, this well-known “little yellow book” – which is now blue – helped pioneer the science of performance measurement and continues to serve as an industry standard.

The book features a six-step method for developing a performance measurement system. It also shows how to design performance measurement families and how to build hierarchies tailored to different levels within an organization. And it covers collection and distribution, as well as the value of performance measure displays.

The new edition contains two additional chapters. One discusses units of measurement. The other introduces ways to better interpret what has been measured and then translate those measurement-related interpretations into actionable knowledge.

At only $14.95, this book delivers a lot of value. It gives you the confidence and the skill to go beyond the numbers, influence decisions, and make a difference.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.

5.21.2009

Lean Insider Updates on Twitter

I don’t believe I’ve mentioned this before, but each time I post an article on this blog, it automatically generates a link that is posted on Twitter.

If you are a regular reader of the blog, or subscribe to it through an RSS reader such as Google Reader, then you are already getting everything.

However, if you know anyone who might be interested in the blog and prefers Twitter to an RSS reader, please tell them they can find me on Twitter at http://twitter.com/ralphbernstein.

By the way, for those of you who are technologically curious, the links to the blog are generated on Twitter by an application called TwitterFeed.

5.20.2009

Is the Consumer Responsible for Product Safety?

Pop Quiz: Your company makes frozen pot pies, and some cases of salmonella have been traced back to your products. What do you do?

Did you answer, “Tell the consumer to do a better job of cooking the pie”? I sure didn’t.

But a recent article in The New York Times says that is exactly what food manufacturers are doing.

The new trend traces back to two years ago, when 15,000 people became ill, and investigators traced the salmonella to pot pies made by ConAgra Foods.


So ConAgra — which sold more than 100 million pot pies last year under its popular Banquet label — decided to make the consumer responsible for the kill step. The “food safety” instructions and four-step diagram on the 69-cent pies offer this guidance: “Internal temperature needs to reach 165° F as measured by a food thermometer in several spots…”

In addition to ConAgra, other food giants like NestlĂ© and the Blackstone Group, a New York firm that acquired the Swanson and Hungry-Man brands two years ago, concede that they cannot ensure the safety of items — from frozen vegetables to pizzas — and that they are shifting the burden to the consumer. General Mills, which recalled about five million frozen pizzas in 2007 after an E. coli outbreak, now advises consumers to avoid microwaves and cook only with conventional ovens. ConAgra has also added food safety instructions to its other frozen meals, including the Healthy Choice brand.


As a lean advocate, I can’t help thinking that ensuring the safety of its products is the responsibility of the manufacturer or food processor, not the customer. And I’m also inclined to think that using lean strategies to improve processes should make it possible to do that.

In fairness, I’m sure food processing is challenging. I’m sure that even with excellent processes, sometimes some of those nasty bacteria can sneak through.

However, the Times article (by Michael Moss) makes clear that this is not just a processing issue, but a supply chain issue. Many of the ingredients used by a company like ConAgra are provided – and processed – by suppliers.


Increasingly, the corporations that supply Americans with processed foods are unable to guarantee the safety of their ingredients. In this case, ConAgra could not pinpoint which of the more than 25 ingredients in its pies was carrying salmonella. Other companies do not even know who is supplying their ingredients, let alone if those suppliers are screening the items for microbes and other potential dangers, interviews and documents show.

Yet the supply chain for ingredients in processed foods — from flavorings to flour to fruits and vegetables — is becoming more complex and global as the drive to keep food costs down intensifies. As a result, almost every element, not just red meat and poultry, is now a potential carrier of pathogens, government and industry officials concede…

Ensuring the safety of ingredients has been further complicated as food companies subcontract processing work to save money: smaller companies prepare flavor mixes and dough that a big manufacturer then assembles. “There is talk of having passports for ingredients,” said Jamie Rice, the marketing director of RTS Resource, a research firm based in England. “At each stage they are signed off on for quality and safety. That would help companies, if there is a scare, in tracing back.”

But government efforts to impose tougher trace-back requirements for ingredients have met with resistance from food industry groups including the Grocery Manufacturers Association, which complained to the Food and Drug Administration: “This information is not reasonably needed and it is often not practical or possible to provide it.”

Now, in the wake of polls that show food poisoning incidents are shaking shopper confidence, the group is re-evaluating its position.


I should mention that in addition to changing its labels, ConAgra has also been taking other actions, including testing for microbes in all pie ingredients.

But there is great variation among the steps different food manufacturers are taking, including variation on what they say on their newest labels.

And to shake your confidence further, the Times cooked pies following the new directions and found that parts of the pies did not reach the temperatures considered high enough to kill bacteria.

I can’t help but believe that the never-ending search for low-cost suppliers is a contributing factor to this problem.

It’s a tough situation. I don’t know exactly what steps ConAgra and the other processors should be taking.

But I do know I’ll never look at a frozen pot pie the same way.

PS – A recent article in Forbes highlighted a company called Yottamark that makes software for tracking food products


Its HarvestMark system already allows folks who buy produce from 40 companies to go to harvestmark.com, type in the product code on any label bearing the company's butterfly-like logo and see the source of the food they're about to eat…

For half a penny or less per box (the plastic container that holds Driscoll's berries, for instance), Yottamark provides growers with a tracking code, printed on the bottom. In the fields of Salinas, Calif. or any area where Driscoll's grows strawberries, a supervisor records data about a batch--such as the crew of pickers, the date and the lot where the berries were picked--and sweeps the form with an electronic scanner. Those data get uploaded to a central server…

There's no way, of course, for HarvestMark to know if the produce it tracks carries disease-causing bacteria or not. That's why the company and its clients are careful about how they pitch the service. Grant points out that companies that use HarvestMark shouldn't say their products are "safer." Instead, they are "traceable."

5.18.2009

Commuter Airline ‘Set Up’ Pilots for Fatigue

Respect for people, a fundamental lean principle, can mean many things.

Perhaps the meaning we think of most often is that employees are intelligent, capable human beings who are capable of coming up with good ideas and whose input should be sought and valued.

But it also means that employees deserve a safe working environment and working conditions that do not cause injury or fatigue.

Apparently Colgan Air – and possibly other small commuter airlines – never learned that lesson.

Colgan was the operator of the plane that crashed outside Buffalo in February, killing all 49 people aboard.

According to a report in The New York Times, members of the National Transportation Safety Board investigating the crash said that pilots and other employees were “set up” for fatigue and inattention, and Colgan was guilty of “winking and nodding” at safety conditions.

How so? First, employees are paid relatively low wages by industry standards, and many view their jobs as stepping stones to better jobs. As a result, they may live hundreds or thousands of miles away, and get free rides on company planes to commute to their jobs. The company has a rule that pilots should not commute in on the day a shift begins, but the rule is not enforced.

Further, employees sometimes use the crew room at Newark airport for sleeping, violating another rule that is not enforced.


“It’s not quality rest,” Harry Mitchel, Colgan’s vice president for flight operations, testified. “There’s a lot of activity in our crew rooms.”


The result of all of this is fatigue.


The acting chairman of the board, Mark V. Rosenker, said the company was “winking and nodding” about its pilots’ commuting practices. Another board member, Kathryn O. Higgins, said, “When you put together the commuting patterns, the pay levels, the fact that your crew rooms that aren’t supposed to be used, are being used, I think it’s a recipe for an accident.”


To its credit, the Times followed up on its report of the investigation with an article on the front page this past Sunday describing the life of pilots at small airlines.


The details of that world have surprised many Americans — the strikingly low pay for new pilots; the rigors of flying multiple flights, at lower altitudes and thus often in worse weather than pilots on longer routes, while scrambling to get enough sleep; the relative inexperience of pilots at the smaller airlines, whose training standards are the same, but whose skills may not be.


The well-written article, by David Halbfinger, Matthew Wald and Christopher Drew, is a chilling piece that will make you think twice about flying with a small airline.

What has been learned so far about the Buffalo crash is disturbing.


In the crash, the first officer, Rebecca L. Shaw, 24, a Colgan employee for about a year, apparently pulled an all-nighter to get a free transcontinental trip to work…

The captain, Marvin D. Renslow, 47, who had been with Colgan since September 2005, had flown to Newark from his Florida home the previous evening. He was logged on to a computer at 3 a.m.; investigators are not sure where he slept, but he was known to have sometimes used the crew lounge at Newark

In the crash, the crew lost track of their deteriorating airspeed, and when a warning system activated, Captain Renslow reacted wrongly, pulling up the nose instead of pushing it down, to regain airspeed and improve the angle of the wings.

The plane went into a stall, meaning the combination of angle and speed left the wings unable to generate lift…

Both pilots can be heard yawning on the cockpit voice recorder…

Ms. Shaw could be heard sneezing on the cockpit voice recorder, and at one point suggested to Captain Renslow that they seek permission from air traffic control to descend early because that would be more comfortable for her ears, which were stuffed. Pilots earn sick time at the rate of half a day a month, but calling in sick can often mean missing more than one day of work, since they are often assigned to two- or three-day trips.


There are likely to be recommendations from the NTSB, and the FAA might also get involved. Stay tuned.

5.15.2009

Book Talk: Health Care Will Not Reform Itself

The CEO, more than any other executive, is often the person responsible for creating and setting a vision, not only for his or her company but sometimes for an industry as a whole.

That can be the basis for an insightful book, which is the kind we like to publish. Unfortunately, we don’t find many CEOs who have the time or inclination to write a book.

Therefore, we are delighted to be publishing Health Care Will Not Reform Itself: A User's Guide to Refocusing and Reforming American Health Care, a new book by George C. Halvorson, CEO of Kaiser Permanente, the nation’s largest private health care plan.

Halvorson shows why what he calls the nonsystem we now use is failing. He then answers President Obama’s mandate for reform with a profound incentive-based, system-supported, goal-focused, care-improvement plan.

He uses examples of successful systems across the world to show that while good health care is expensive, it is nowhere near as costly as bad health care (something we lean advocates have long believed).

His recommendations range from setting new priorities to focusing on preventive care to better use of information technology.

We hope this timely book will be an important voice in the debate over health care reform.

By the way, all royalties from the sale of this book go to Oakland Community Voices: Healthcare for the Underserved.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.

5.14.2009

Are There Any Online Lean Book Clubs?

My wife belongs to a book club, in which the members select a book, read it and then meet to discuss it.

That’s pretty common, and nowadays it is also increasingly common to create online book clubs or discussion groups. Some people might do it by forming a group on a site such as Yahoo. Others might use a site designed specifically for this purpose, such as Book Talk.

So I was wondering whether there might be a club or discussion group formed to talk about lean books. (Since we publish lean books, I’m curious to know what people are saying about them.)

One resource I’ve found is The Lean Library, which is the brainchild of Jamie Flinchbaugh, co-founder of the Lean Learning Center. The site offers lists of books, reviews and an Ask the Librarian section.

That seems like a good site, but a little different from the book club or discussion site I was thinking of.

Does anyone know of any such site? Is anyone interested in creating one?

5.13.2009

Does Standard Work in Healthcare Require Legal Protection?

Several key healthcare industry groups have pledged to join in President Obama’s efforts to curb rising costs, though there are few details yet as to how that will be achieved.

One of the approaches everyone is talking about is evidence-based guidelines. This means establishing what would be, in effect, best practices in medicine. (In lean terms, they might also be called standard work.) They would be designed to eliminate, or at least reduce, wide variations that currently occur in the numbers and types of tests doctors order in specific situations – many of which are believed to be unnecessary.

However, The Wall Street Journal Health Blog quotes Jim Rohack, president-elect of the AMA – one of the groups making the pledge – as saying doctors want something in return: protection from being sued.


If we as the profession come up with evidence-based ways to provide care, and as a result of that can reduce unnecessary tests or unnecessary procedures, then the physician and the patient should feel comfortable that if the physician has followed the guideline, the physician is not later going to be sued.


Presumably, many unnecessary tests are ordered today because doctors fear being sued if they don’t order every possible test.

The essence of continuous improvement is that best practices are constantly evolving, and those involved in a work situation – whether it is manufacturing or medical treatment – should be able to constantly look for better ways to operate, and to eliminate waste.

If a medical test almost never reveals anything of value, it might be considered waste, and eliminated.

But perhaps the test does reveal something of value one percent of the time. If the test is not performed in that one-percent situation, and something bad happens, should the patient have the right to sue the doctor for not performing the test?

I’m inclined to support the doctors’ push for legal protection, but it’s a tough question. What do you think?

5.11.2009

Has Manufacturing Created Its Own Worker Problems?

Why don’t young people go into manufacturing anymore?

Is it because they are not interested in “getting their hands dirty” in manual labor (a theory I know many people believe)? Is it because they see manufacturing in the U.S. as a dying industry? Or is it something else?

I am pondering this question after reading a recent column on the website of the Hartford Business Journal by Allen Samuel, executive director of Aerospace Components Manufacturers, a nonprofit cluster of independent Connecticut aerospace manufacturers.

Samuel says his industry faces a “silver tsunami” as large numbers of older, skilled workers head for retirement. Replacing them is difficult, he notes, urging that action must be taken.


We must fill the pipeline with new workers ready to be trained as the skilled work force that is our future. We must educate and enlighten our teachers, counselors, parents and high school students about our industry to attract the state’s young people. That is the key.


Notably absent from Samuel’s comments is the kind of root-cause analysis that is a key principle of lean. He doesn’t discuss (at least not in this column) why finding new young workers is so difficult. And as any lean devotee knows, you need to identify the cause of a problem to truly solve it.

A reader who identified himself as L. Hobbs of NOVAN Capital posted a comment on the column, offering his own analysis of the cause.


I came to the industry because I loved airplanes...and wanted to 'find a way'. I did...and it took me forty years of being 'beat up', lied to, laid-off. managed by 'mouth-breathers', assigned to money losing and irrelevant projects, pressured to work overtime on holiday weekends, birthdays, kids' graduations, anniversaries, hired and laid-off in the same week, had companies cease operations and shut down with no notices, severance or compensation...I loved airplanes...and still do! But the aviation 'industry' is simply an obsolete paradigm...and will continue to erode and shrink...until the 'industry' figures out...the problem is at the top...and NOT in the pipeline!


What is the cause? How do we “fill the pipeline”? What are your thoughts?

5.08.2009

Book Talk: Making the Numbers Count

When you think of a lean change agent within a company, do you think of someone in operations? Perhaps an engineer? Maybe you should think of an accountant.

In Making the Numbers Count, Second Edition: The Accountant as Change Agent on the World-Class Team, author Brian Maskell clarifies methods for innovative, proactive management accounting and presents techniques for simplifying accounting systems so that they serve production, marketing, and engineering sectors with equal efficiency.

Maskell, who is also the co-author of Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise, sounds a call to arms for accountants and controllers at manufacturers pursuing lean transformations.

The book details such methods as value stream costing, VAM, performance measurement, concurrent engineering, target costing, value engineering, and life cycle costing.

A truly lean company has all departments involved in its initiatives, from the shop floor to the back office. Appropriate and accurate financial metrics are critical to that effort, so financial people should absolutely be part of the lean leadership. Maskell’s book can help bring that about.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.

5.07.2009

New Tools Help Physician Practices Improve Safety

The focus of many efforts to improve processes in healthcare has been primarily on hospitals. That is understandable, both because of the many patients hospitals serve and because hospitals abound with opportunities for improvement.

But so far, there haven’t been many resources developed for clinics or private practices. That is why I am encouraged to learn that a consortium of healthcare organizations has developed Pathways for Patient Safety, a set of tools geared specifically to help physician practices improve safety.

The three Pathways modules were developed by the Health Research & Educational Trust (HRET), in partnership with the Institute for Safe Medication Practices (ISMP) and the Medical Group Management Association (MGMA), and with support from The Commonwealth Fund.

I don’t know whether anyone involved in development of the modules knew anything about lean concepts, but the modules (which are free) seem to be on the right track.


Working as a Team - outlines actions required for building high-performing patient safety teams and techniques for effective communications among care givers to reduce patient harm.

Assessing Where You Stand - provides practical steps toward minimizing medical errors by assessing current patient-safety procedures, addressing practice culture and setting goals.

Creating Medication Safety - describes factors practices should consider when implementing or augmenting a medical reconciliation process, and when prescribing or administering medications that may be harmful to patients.


This is another encouraging development in improvement of healthcare.

5.06.2009

Forbes Gets it Wrong in Article on Outsourcing

We lean advocates don’t like outsourcing, particularly overseas outsourcing. The cost savings are often much less than the outsourcing company expects because of transportation and other costs, lead times are longer and quality control is reduced. More importantly, the U.S. manufacturer might do just as well by embracing a lean strategy that will make its processes more efficient and less expensive.

That is why I was disturbed by a recent article in Forbes about Doug Smith, whose Ohio-based company, SmithCNC-USA, is a middleman that helps U.S. manufacturers find low-cost overseas suppliers.

It’s not Smith or his company that bother me – he is just seizing a market opportunity that stems from demand for outsourcing (however misguided that demand may be).

The problem is the attitude of the article (by Christopher Steiner), which carries the headline “One Way to Save U.S. Manufacturing Jobs.”


The way to save U.S. manufacturing jobs is to export some of them. That seeming illogic lies behind the business model of SmithCNC-USA, a North Lawrence, Ohio firm that helps midwestern manufacturers get components and raw materials abroad. By leaning on cheap Chinese suppliers, they keep at least some value-added work in the hands of domestic factories. Absent the partial outsourcing, these American goods producers might be so uncompetitive that they'd be out of business.


The article quotes some of Smith’s clients, who agree with that view.


Take Derek Lidderdale, vice president of Omni Die Casting in Massillon, Ohio. Omni sells metal parts like the aluminum housings that go into lighting fixtures in factories. These are made by injecting molten aluminum into 3,000-pound molds made out of steel. Tooling up these custom-made molds, which wear out after 100,000 injections, is a big part of Omni's cost structure. "We were getting killed by foreign tooling," he says. "We were looking for a source but didn't want somebody who wasn't going to go over there and examine the process and the product in person."

Smith found a Chinese outfit in Ningbo in Zhejiang Province to make the molds for $40,000, a third what they cost when Omni used U.S. tool-and-die workers. Since signing up with Smith 18 months ago, Omni has made 45 new kinds of parts, all requiring separate molds or tools. In that time Omni hasn't had to eliminate any production jobs.


To focus on that example, the problem is that Omni assumes there is no way to improve (and reduce the cost of) the processes by which the molds are made. That kind of assumption is not uncommon, and the folks at Omni (like so many others) may simply be ignorant of what lean can do.

But I wish the folks at Forbes weren’t so ignorant. They report on a wide range of businesses, and they have surely heard of lean manufacturing. They ought to know better.

5.04.2009

Your Lean Job in a Recession: Do More, Cut Costs, Hope to Avoid Layoffs

If you have responsibility for implementing lean initiatives at your company, you may be expected to do more in this recession. But even lean jobs are not safe; some will be eliminated, particularly at larger firms.

Those are some of the insights I came away with from the recently-released Lean Leadership Survey conducted by Stiles Associates, an executive recruiting firm specializing in lean jobs.

The findings are the results of an online survey conducted earlier this year. Stiles Associates sent email invitations to companies to complete the survey. There were 524 completed surveys from a wide range of manufacturing companies of varying sizes, with most surveys completed by people at various levels of management.

The vast majority of those responding believe their improvement initiatives have been effective (to varying degrees) in helping them achieve their objectives. Slightly more than half said they expect an increased number of improvement projects this year, while about a quarter expect the number to decrease.

But less than a third of the companies said they expect to increase the size of their improvement staff, which means there will be a greater burden on those who remain. Another third expect to cut at least some of their improvement staff.

Not surprisingly, the top priority for 71 percent of those surveyed is cost-cutting. Large firms are the most pessimistic. Nearly 40 percent of companies with at least $1 billion in revenue anticipate spending less on operational improvements, while the figure is only 27 percent for companies with revenue up to $100 million. (About 33 percent of companies with revenue in between those two groups expect lower improvement spending.)

Long-term commitment pays off: The longer a company has been pursuing improvements, the higher they rated the effectiveness of those efforts.

Some of the more intriguing responses came when the survey asked what the priorities should be for the new federal government position of Chief Performance Officer, created by President Obama.

The top priority, chosen by nearly 61 percent of respondents, is to establish transparent and objective performance and productivity measures. That was followed by:

  • Focus on streamlining a few model departments to set an example for other areas of government (49 percent)
  • Train all federal employees to recognize waste and give them the tools to improve administrative processes (42 percent)
  • Engender a plan-do-check-act problem-solving culture (38 percent)

5.01.2009

Book Talk: Healthcare Transformation

Some of our books are written as training materials for shopfloor workers. Others are written for mid- and top-level managers. But few are written for the highest level: board members.

Healthcare Transformation: A Guide for the Hospital Board Member, by Maulik Joshi and Bernard Horak, is one of those few. This new book is designed to help hospital board members play an active role in transforming their institutions.

Each chapter focuses on action steps that can be taken to disseminate best practices, build organizational quality, establish transparency, and develop the culture and leadership needed to facilitate change.

The book helps board members focus on what problems exist, how they can be changed, the best practices for addressing a particular problem, and the questions board members should be asking.

With dramatic change coming in healthcare, this is a timely and valuable book.

Do you have a question or comment about a book(s) that you would like addressed in Book Talk? Email me directly at Ralph.bernstein@taylorandfrancis.com.