One of the great social myths is the inherent gift kids have for understanding technology. Young people are said to have a natural talent for working with computers, cell phones, I-Pods and such, intuitively grasping how they work, and making them perform with an ease that escapes older folks. Only a kid is capable of making the 0’s on your DVD player stop flashing all the time. In fact, the average kid is a techno-wizard right up until there is a problem. Then the superficiality of teenage genius becomes apparent.
The average kid could not explain the difference between data files, applications and operating systems. The term ‘binary code’ would stump most of them in a spelling bee, let alone a math class. What the kid has mastered is pointing and clicking, screen navigation and using the features of software and electronic devices that old geezers like me have missed – usually because I didn’t bother to read the manual In short, they are in complete command of everything on the outside of a computer, and completely in the dark concerning the inside.
There is nothing so much like a kid with technology as an MBA, Lawyer or Accountant running a manufacturing company, unless it is a Wall Street analyst. They demonstrate apparent genius with their skillful manipulation of the numbers describing manufacturing. Robert McNamara, who ran both Ford and the Viet Nam War by the numbers (with similar outcomes in both endeavors), was said to have awed visitors with the ease with which he could sketch the DuPont ROI model from memory, including all of its mathematical forumulas, nuances and jargon, then wax eloquently for hours on the interpretation and significance of each element.
This whiz of all ‘Whiz Kids’ was, at the same time, wholly ignorant of manufacturing, to the point of embarrassment. Once when presented with an urgent need to approve a capital investment in paint facilities – the existing paint booth was not big enough to fit a new car model – he resisted, as is the knee jerk reaction of typical accountants, suggesting that the engineers first explore cutting all of the cars in half immediately before paint, then welding them back together afterward. I will leave it to you to decide which was dumber: thinking that an automobile could be cut in half, then welded back together without a structural integrity and quality disaster; or welding anything back together after it has been painted.
As manufacturing companies are presented with the challenge of lean competitors, the numbers people in charge are like so many teenagers when the computer crashes or freezes – clueless and panicked. The problem has exceeded the boundaries of their superficial expertise. And like the kid who announces that the only possible solution is to toss the computer out and buy a new one, the only solution the ‘professional manager’ can come up with is to close the plant and move the whole thing to Asia or Mexico.
Time is to manufacturing what binary code is to computers. Tracking, minimizing and controlling time is the key to manufacturing effectiveness, but time seems to be a little too elusive, perhaps a bit too zen-like, for the MBA who rules his world with numbers preceded by $$$ and ratios between those numbers. For whatever reason, a fundamental failure to keenly grasp the basic time principles that drive manufacturing results dooms the numbers driven managers to failure every time they have to face a lean manufacturer.
Time is the core driver of the cost of quality. The elapsed cycle time between creating a defect and discovering a defect determines whether the root cause can ever be eliminated or not. Companies that do final inspections, and kid themselves into thinking they are taking corrective actions when they find defects, will never have excellent quality results because their corrective actions are aimed only at guesses as to root cause. The only way to truly know the root cause of a defect is to catch it immediately. Elapsed time also determines how much was produced once the root cause arose before it was addressed (if it ever actually is addressed.) The numbers people cannot possibly manage quality by counting defects. They can only do it by compressing time.
Time is the core driver of inventory. The amount of inventory needed in any process to satisfy the customers is a simple mathematical calculation of variability over the cycle time of the process. It answers the question, ‘how much inventory do I need to cover the fluctuations in supply and demand before I can get more?’ Of course lean and six sigma principles are aimed at reducing variability in the process, but the most effective driver is reducing the time over which the process is exposed to variation. After the fact, financial inventory turnover ratios are as useful as autopsies. Inventory is only minimized by continual compression of process cycle times as they are occurring.
Time is the core driver of investment. Since time equates to inventory – if you are selling 100 per day, an inventory of 1,000 equates to a ten day cycle time, and an inventory of 10,000 equates to a 100 day cycle time. The length of the cycle time determines how much floor space, material handling equipment, racks and conveyors a plant needs. Numbers people who think inventory is an asset, by definition think that long cycle times are also assets – so they invest in more assets to store and move the inventory assets. Then when they have invested in too many assets, they close the plant and start using Chinese assets.
Time is the core driver of cost. The cost of the non-value added work – everything that happens between the arrival of material and the shipment of the product, other than the few minutes of actual conversion – is waste. In most companies the non-value added cycle time amounts to more than 90% of the total cycle time. Direct labor in most companies amounts to 5% or less of the total, but overheads are typically 400 – 800%. The six or seven bucks going out the door for every dollar of direct labor can be found within the non-value adding stretches of the cycle time. Get rid of the cycle time, and you will get rid of the overhead. But numbers people who agonize over how to get another penny out of direct labor until they get migraine headaches will never get rid of the big costs.
It’s fine to have your kid show how to install a new program and have it show up on the menu you want, or to hook up your new scanner; but when files get corrupted or a virus gets downloaded, you need to send the kid back to his room to play video games and get a serious computer expert involved. In the same manner, it was fine to have the boys and girls, all clever masters of numbers games, running the show before global competition showed up. Now its time to send them off to play games somewhere else and get serious manufacturing people involved in crunching cycle times.