The problem with Shingo Prizes and Best Plant Awards is that they fail to recognize that a manufacturing business is a team sport. In the end, they are as vague, unknowable and irrelevant as water cooler arguments about whether Kobe Bryant is the best player in the National Basketball Association. Bryant is the leading scorer in the NBA and he put on a one-man circus act a few nights back when he scored 81 points, but his team is not very good. The basketball experts can opine and debate forever without proving anything. Is Bryant the greatest player in the game, surrounded by mediocre team mates? Or is Bryant a superstar at the expense of overall team performance?
That was an analogy, folks – I asked a rhetorical question for the sake of making a point. You don’t know the answer and I do not want to read your opinion concerning the answer to the Kobe Bryant question. The point is that the value of one individual on a team is virtually impossible to measure. All teams require cohesion, understanding of roles and performing to team based objectives that may cause one individual to look bad in order for the overall team to be better.
Peter Drucker wrote a remarkable article in the Harvard Business Review in 1990 called the Emerging Theory of Manufacturing. It is chock full of brilliant insights, revolving around four fundamental principles he saw as defining manufacturing competitiveness in the future: An overhauled manufacturing accounting approach; a statistical approach to quality control; business as a system; and most important to this epistle – "the factory as little more than a wide place in the stream of producing value, rather than as a collection of machines isolated from the rest of the business."
The essence of lean manufacturing is a process orientation, rather than an individual operations focus. Our manufacturing failure in the past, at the factory level, has been to assume that if each individual machine or operation was optimized to a local measurement – usually direct labor efficiency or machine utilization – that the whole of factory performance would take care of itself. Clearly, it has not worked. Lean, the Toyota Production System, defies that theory. It drives us to optimize the process as a whole, regardless of what the total optimization does to any individual operation. It says spend an extra dollar in lost efficiency at operation A if it saves two dollars in operations efficiency at operation B. Lean says that the only metric that counts is the total.
Eli Goldratt knew this. He said that "Local optimization does not necessarily lead to global optimization." Kobe Bryant performing at amazing individual levels does not necessarily lead to the Los Angeles Lakers performing at great, or even good levels. The best teams now in the NBA – Detroit, Dallas and San Antonio – do not have any players on them that are discussed among the water cooler experts as being the best. What good does it do the Lakers, their fans or their owners for one player to be brilliant to an individual metric – no matter how important that metric seems to be – if the team is not winning? For that matter, what good did it do the United States Olympic Team to have a roster full of hockey superstars who could not beat even the marginal teams in Turin?
And what good did it do Delphi to have individual plants that won Shingo Prizes?
Drucker’s point was that the process view is not limited to the flow within the factory walls. It extends to the entire supply chain and to the entire business. The factory is not, to use his words, "a collection of machines isolated from the rest of the business". It is "a wide place in the stream of producing value." So how does the Shingo Prize determine whether a plant performed at excellent levels, or how does Industry Week determine that a plant is worthy of ‘Best Plant’ recognition, if the performance of the overall value stream is not the critical criteria?
The last plant I worked in as an employee had its bottom line performance driven largely by two major factors: The biggest deterrent to performance was the inability of another plant in the same company to consistently deliver quality components on time. The biggest boost to plant performance was the availability of huge company distribution centers to unload production into, whether it was needed or not. Clearly, the performance of that plant could not be fairly assessed unless one looked at the overall stream of plants and distribution centers. The plant certainly looked lean and had metrics indicating that it really was lean, but it would have looked even leaner had the sister plant performed better, and it would have looked less lean had the distribution system not been so accommodating.
In sports or in business, I cannot see how a single unit – be it a player or a plant – can be crowned the best when the team on which it plays is not winning. As long as the Lakers are struggling, there will be a serious question concerning Kobe Bryant’s true worth as a player. He might even be hurting the team. When Delphi is bankrupt, there will be the same dark cloud of skepticism over any of its Shingo Prize winning plants.
No plant should be considered by the Shingo Prize committee or the Industry Week Best Plant committee for award unless the company, or at least the division or overall value stream in which the plant contributes, is profitable. To measure a single plant for greatness is to view it as "a collection of machines isolated from the rest of the business", which to me indicates that the people who have set themselves up as the judges of lean excellence do not really understand lean manufacturing at all.