Making The Pieces Fit

Just in case anyone thought they were finally getting their arms around all of the complexities of lean manufacturing – starting to see some consistencies and some universal rules concerning all of it – I thought I’d throw in a little something to muddy the waters again.

It should have received more attention in this country than it did, but something called the ‘Japan 21 Project’ took place about 20 years or so ago, and it was a systematic approach the private and public sectors of Japan used to map out Japan’s economic vision and industrial policies for the 21st century.  I don’t really know what became of it, but the method they used to put manufacturing into perspective is very valuable.  It was something like this:

 

The ‘Macro’ boxes on the left are the big picture – the country or the region in which the manufacturer operates.  The ‘Micro’ boxes on the right are the company.

The ‘Structure’ boxes on top are the physical, tangible stuff, while the ‘Infrastructure’ boxes on the bottom are the softer stuff, like people, culture, management systems and so forth.

The dynamic between them is the key.  The double sided arrows indicate where consistency and compatibility are necessary for success.

So what? Well, an obvious example of the validity of the logic is in the fact that there is not, and never will be, a thriving industrial metal working business in Mexico.  The natural resources needed to make steel aren’t there (the macro structure box on the top left) – so there is no machining culture and tradition (the macro infrastructure box on the bottom left) – so nobody is going to succeed in any big way trying to force fit a big machining operation into Mexico (the micro structure box on the top right).  And it stands to reason doesn’t it?  If you want to do any large scale machining in Mexico you’re going to have to haul all of the steel down from the U.S., which gets pretty expensive, and you are going to have to train and develop a workforce pretty much from scratch.  Any sober analysis of the idea leads you to the conclusion that the machining should be done in the U.S. or in China, or some other place where steel fits into the boxes on the left, then ship the finished parts to Mexico if you need them there for assembly.

You see this logic violated – at least in planning – with just about every small town economic development group in America.  Almost every village and burg sooner or later dreams of developing its economy around IT.  They want to become the ‘Silicon Valley of the South’, or of the Midwest, or of the northern plains, or wherever they are.  That makes sense if you only look at the fact that there is a strong and growing demand for IT products, and there is a lot of money to be made in IT.  However, most small towns have neither the education resources nor the tradition needed to crank out a workforce capable of adding much value to the IT world.  Why on earth would the next Bill Gates want to build his empire in East Nowhere when the folks there are reluctant to even use automatic check out lanes at the local Walmart, it took ten years for ATMs to catch on and the schools don’t crank out kids with any particular IT skills?  The people of East Nowhere are good folks, to be sure, and they can add a lot of value in a lot of areas, but IT isn’t one of them.

When recently retired UAW Director of Education Programs, Carly Murdy, commented on my book that lean manufacturing requires a community effort – not just labor and management – she was alluding to that lower left box.  The support of local government and the school systems are critical inputs to lean manufacturing success, or any business success.  The mayor of East Nowhere would be better off taking a long, hard look at how his community shapes up in the lower left box, seeing what industries his community can provide value adding people to, then going after those industries.  That yields much better results than dreaming of the company that will never come, or giving huge tax breaks and laying out big cash inducements to a business the community cannot sustain.

A big issue here as far as lean manufacturing is concerned is in the bottom two boxes.  Would-be lean manufacturers cannot take a ‘one size fits all’ approach to people.  The degree to which people can and will participate in the continuous improvement effort has an awful lot to do with the nature of the people.  Deming said you cannot change culture.  I don’t completely agree with that statement, but I do know you are not going to change the culture of the company to anything that exceeds the bounds of the community.  All of the good things and the bad things – and the things that are neither good nor bad – that exist in the community are going to spill over into the factory. 

Mexico’s wretched education system puts a severe restriction on employees’ ability to contribute.  The people are not stupid by any means, but if all they have to contribute is their compulsory sixth grade education, the level of their problem solving skills is going to be pretty low.  On the other hand, there would seem to be very little excuse for a manufacturer in Japan or western Europe to not have every employee fully engaged at a fairly high level.

It seems clear that Toyota misread the tea leaves in Bangalore, India where there have been four strikes, the last one pretty ugly – in just a few years.  They did everything by their book.  They put all of the people through their training programs, and even sent many to Japan for in-depth TPS schooling.  The people of Bangalore seem to want nothing of it.  The political and cultural situation there seems to have engendered a distrust of management that runs deep and goes back a long way.  The people of the region also have a strong independent spirit that bridles at being told much of anything is ‘mandatory’. The failure to realize the standard TPS culture tends to validate Deming’s point – or at least my application of it.

The trade off between having computers do most of the thinking and having the people do the thinking depends quite a bit on what you find in the box on the bottom left.  The degree to which people can be developed into multi-skilled operators also  is a function of that box.

The big criticism of American manufacturing is that we have largely failed to take advantage of the resources in that lower left box.  People have a solid education, a heritage of mechanical skills or a strong work ethic, and we have them check it at the door when they enter the factory.  Of course, most manufacturers have to plead guilty to that charge.  In our rush to correct it, however, we need to be sure that we do not overreach, and that we look to leverage the strengths of the community, but do not unrealistically expect too much.

Toyota seems to have found near perfect alignment of the strengths of the community in Georgetown, Kentucky and the vaunted TPS (which resides almost entirely in the lower right box).  While there are a lot of positives in the ‘macro infrastructure’ of Detroit, I do not think that, with its generations long division between management and labor, its political climate, and the economic expectations of the workforce, it can be nearly as conducive to the TPS – at least as it is practiced in Georgetown and Toyota City.  Expecting the River Rouge plant to ever operate with the same management infrastructure and culture as Georgetown is not practical.

Finally, to go back to beating the same horse I have bludgeoned to death long ago, the tax codes and accounting rules in the U.S. all reside in the lower left box.  They have codified money spent on inventory as an asset, and they have codified money spent on training and developing people as an expense.  The management principles and practices of lean manufacturing that sit in the box on the lower right are fundamentally incompatible with those rules and regulations.  Inventory can never be truly treated as waste and people will never really be anyone’s ‘most important asset’ so long as those two boxes do not complement each other.