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April 24, 2012

TWI Job Relations Session 1

By Pat Boutier April 24, 2012

Management Culture or Cultural Engineering & TWI Job Relations Blog

Please read and answer the two questions below:

Why do managers think they don’t need to learn how to deal with employees?

Do any of the numbered items below ring through with yourself, or with managers you have observed?

1)”Basically if a manager has treated one personnel problem successfully, he thinks everyone should be able to handle it too.”

2) “Everyone has had a tremendous amount of personnel training, they should know how to deal with people problems.”

3)  “I just wish they would all grow up and behave.”

4) “We don’t have any real personnel problems, everyone is happy to have a job.”

5) “Management doesn’t have it on their priority list.”

A- Myself: please select one or more of the numbered responses, 1-5:

B- My management: please select one or more of the numbered responses, 1-5

April 17, 2012

LSS and the Business Process

By ayanez April 17, 2012

Most industries or service provider’s organizations think that the Lean Six Sigma (LSS) methodology should be tailored to their particular processes, culture or company idiosyncrasies.  The fact is that LSS is rather universal and can be applied to manufacturing industries that may include: high volume with low number of parts offered, high number of parts with low volume, chemical continuous processes, paper mills, insurance companies, Information Technology, banking industries and most recently to the healthcare industry.

Even pure manufacturing companies have many business processes that, in many cases, are the constraint operation. These business processes may include: purchasing, accounts payable/receivables, accounting, human resources, IT, etc.  The fallacy is thinking that the only processes that need improvement are those related with manufacturing and thinking that business processes have little or no impact in improving quality, reducing lead time, lowering the cost or eliminating waste.  I have experienced that business processes can have a much bigger impact on reducing cost or lead time than manufacturing processes.

I am a LSS instructor for Green and Black Belt and, one of the requirements for the GB/BB to get certified, is for the students to submit completed projects for certification.  In addition I provide coaching to GB or BB to assess that the projects follow the Define, Measure, Analyze Improve and Control (DMAIC) methodology.  While comparing manufacturing or business completed projects side by side, I have noticed that the projects are a mirror image and it is hard to differentiate them apart.  Granted, certain LSS tools need to be modified to accommodate a particular industry or process.  The main causes in a Fishbone diagram will be different between a business and manufacturing process and the same can be said about completing a Value Stream Map.

My recommendation is to not overlook business process.

April 10, 2012

GE and Lean Innovation

By Esteban Pedraza April 10, 2012

The opening of GE’s new GeoSpring Hybrid Electric Water Heater plant in Kentucky isn’t just a great endorsement for American Manufacturing but an affirmation of Lean’s ability to help improve a company’s competitive edge in today’s global marketplace. The events that have taken place at GE and GE’s Appliance Park in Louisville read like a case study straight out of a Lean handbook.

In the 1980s America was in an industrial decline and when the GE facility could no longer compete with production costs in Asia, for reasons such as an increase in wages and a decrease in the selling price of products, GE began moving production to the Asian plants. As expected GE was able to reduce labor cost and save on materials, but over time the cost savings from outsourcing was outweighed by the negative impact on GE’s competitiveness. The following examples are just a few problems GE encountered:

  • A longer and more complex supply chain emerged; this slowed the information feedback loop and impaired the company’s ability to respond to problems and customer needs in a timely manner.
  • Cycle time was affected.
  • GE had to carry more inventory in the U.S. for products made in China.
  • A lack of communication due to functional departmentalization led to some loss of overall product knowledge (core competencies) by employees.

What did GE do to address these problems? They invested millions of dollars in Appliance Park.   In addition to the problems brought on by outsourcing, two major events helped initiate the investment. The first was the availability of job-creation incentives from the state and federal governments and the second was a competitive labor costs as a result of the 2009 Competitive Wage Agreement between GE and IUE-CWA Local 761. But according to GE the company had not invested in Appliance Park because the culture “wasn’t right to invest”. How did GE address the culture problem? They embarked on a lean initiative that “maximizes customer value while minimizing waste and identifies employees as the most valuable resource a company has”, said a GE spokesperson.

GE’s upper management is showing their commitment to changing the company’s manufacturing culture by investing not just in the building with a multimillion dollar renovation but in their people. Investment in the people has been done through lean training and employee empowerment. The empowerment has removed barriers that would keep any employee from taking positive action that would lead to better quality and/or performance.  According to GE’s Appliance Lean Leaders and employees, the way of thinking and the way things are done at Appliance Park have changed:

  • Everyone is involved in the manufacturing process setup from Engineering to sourcing to production. (cross functional approach)
  • We focus on removing non-value added work from the design process through production
  • One team with one goal mindset
  • Communication is essential (information boards, visual tools, etc.)
  • Everything is built around supporting the operator getting the product out the door
  • Focused on greater customer satisfaction
  • Renewed emphasis on quality and technology
  • We Learn by doing and leverage the power of collaboration
  • Operators take pride in what they do

Using lean practices and tools, GE has reported cutting cycle time by 50%, eliminated 20% of the parts included in the GeoSpring final assembly, and reduced equipment investment by 30%.  GE’s lean journey is demonstrating that Global competitiveness can be accomplished when the right tools are used in the right way.

According to a report by Boston Consulting Group (BCG), labor cost in China have risen dramatically and shipping and fuel costs have skyrocketed, this means China is not as cheap as it used to be and the United States is poised to bring back jobs from China. The report also points out that by 2015, it will only be about 10% cheaper to manufacture in China. If the BCG report is correct then the question for the United States will not be what company’s want the jobs but what companies have the capability (structure and culture) to compete in a global market.

With the freedom that a consumer has, in today’s global market, to go almost anyplace for a product that meets their quality and price requirements companies must be agile enough to meet consumers changing needs. As GE is showing us, the place can be the United States and the way to get it done can be through American Manufacturing.

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