Manufacturing Executive

Free Money for Manufacturers

By Chris Chiappinelli | Published: September 30, 2009

It’s rare that a week goes by in which I don’t see a press release announcing the successful completion of a manufacturing worker training program, the funding for which was provided (at least in part) through some state or federal grant.

This week the notice came from Flexcon Industries, which makes diaphragm expansion tanks at its headquarters in Randolph, MA. According to the statement, “Flexcon employees worked with Bob Elliott of the Greater Boston Manufacturing Partnership (GBMP) to apply continuous improvement principles and tools to improve their work processes.”

After less than a week’s worth of training in lean and continuous improvement techniques, Flexcon workers implemented a kanban system that already has saved the company $106,000.

The GBMP may be among the most visible government-funded organizations focused on manufacturing — it makes a point of promoting its efforts often — but it certainly isn’t the only one. States across the country regularly steer funds to training grants and other manufacturing-focused incentives. It’s up to you to find them and put them to good use.

To get you started, we’ve compiled a list of national and state-based programs that provide grants to manufacturers for various activities. The list is only meant as a sample; if you don’t see your state on the list, do a quick search online to find out what’s available. State economic development offices and labor departments are good resources.

National Resources:

Innovative Workforce Solutions to Help the Advanced Manufacturing Industry Address Hiring, Training, and Retention Challenges
http://www.doleta.gov/brG/Indprof/Manufacturing.cfm

The National Manufacturing Extension Partnership
http://www.mep.nist.gov/

State-Based Resources:

Connecticut’s Manufacturer’s Assistance Act (MAA) Training Grants For Manufacturers
http://www.ctdol.state.ct.us/busservices/MAA%20Overview.pdf

Colorado Manufacturers Receive Training Grants
http://www.bcbr.com/article.asp?id=101764

Training Grants Pay Off for Florida Manufacturers
http://www.madduxpress.com/economic-development/2009/06/18/training-grants-pay-off-for-manatee-county-manufacturers-467

Enhancing Manufacturing Skills in Indiana
http://www.in.gov/iedc/SEF.htm

Kentucky’s Bluegrass State Skills Corporation Offers Grants for Manufacturers
http://www.thinkkentucky.com/bssc/

Ohio’s Workforce Guarantee Helps Retain Ohio Jobs
http://development.ohio.gov/edd/OITP/RequestForAssistance.htm

Tennessee to Provide Funding for Incumbent Worker Grants Beginning October 1, 2009
http://www.tn.gov/labor-wfd/et_services_employers.html

Ten Washington Manufacturers Receive Training Grants from the State
http://www.awb.org/articles/magazine/of_note_ten_awb_members_receive_training_grants_from_state.htm

Wisconsin Secretary Gassman Alerts Manufacturers to Worker Training Grants
http://www.dwd.state.wi.us/dwd/newsreleases/2009/052809_mssc_rfp.pdf

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More Than Just Clocking In

By Chris Chiappinelli | Published: September 23, 2009

Employers have kept a sharp eye on the productivity of their workers ever since the first pyramid builder asked for a smoke break and turned up two hours later asleep under a palm tree. In more recent days, purveyors of time-and-attendance software have enlisted legions of engineers to foil attempts by workers to skirt their duties through extended breaks, buddy-punching, etc. It’s a classic cat-and-mouse game that no one ever seems to really win — although in the best-run companies, high worker motivation makes this less of a concern.

Still, we can all agree there’s more to an effective labor force than just showing up at the appointed hour and putting in one’s time. It’s also important what that employee produces while working, and how that measures up against the company’s production goals. This is especially important for lean practitioners, which may partly explain why American manufacturers have made such impressive productivity gains in recent decades, a time of growing interest in lean manufacturing.

In a truly lean company, however, simple productivity metrics — goods produced per hours worked — aren’t enough. Progressive manufacturers are thinking more holistically. In the context of an unstable economy, in which companies have slashed thousands of jobs but aren’t sure when to begin rehiring workers, this kind of business intelligence takes on greater significance.

Consider the benefit to your organization of measuring the utilization of your workforce as well as its on-the-job performance and the quality of the products it helps to make. Time and attendance standout Kronos has wrapped these measures into a KPI it calls Overall Labor Effectiveness, or OLE. Though Kronos coined the term as a counterpart to Overall Equipment Effectiveness (OEE) and offers software to measure OLE, the concept has applicability well beyond that company’s customer base.

The integration of metrics such as quality of output, productivity, and general workforce utilization provides a good measure of that most important asset of all — your workforce.

The concept is quite forward-looking; even Kronos’ executives admit that. After all, the Overall Equipment Effectiveness KPI hasn’t caught on in all corners of the industrial world, even after many years in circulation. But the idea of measuring labor in similar ways should be appealing. And perhaps, far down the road, we’ll see a fusion of OEE and OLE, since your production equipment and the people who run it are two parts of the same whole.

What do you think? How does your company measure workforce effectiveness?

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This Week in Lean

By Chris Chiappinelli | Published: September 16, 2009

I came across a few lean-related items in the media stream this past week that I thought I’d share them with Lean Matters readers.

First up was a press release Monday from Maxtek Components Corp., a microelectronics manufacturer and subsidiary of Tektronix. The company announced details of a “year-long project to apply lean manufacturing principals [sic] throughout their 32,000 square foot assembly facility.” The headline: Maxtek Completes Lean Manufacturing Project. While I commend the company for its efforts and applaud its impressive results, I can’t help noting a certain irony in labeling a lean project “completed,” especially when it falls under the company’s “continuous improvement initiative.” (Contrast that with the experience of Lean Matters reader Tracy Theisen, whose company’s 10-year lean journey is far from over.)

For the past few months now, I’ve maintained a Twitter account to keep folks apprised of new MA content, share mid-day musings on manufacturing technology, and the like (find me at twitter.com/chrischip). So far, I’ve resisted the urge to extol the virtues of my Chihuahua, traffic in celebrity gossip, and describe a wonderful breakfast that I got to eat and you didn’t. The whole world is better for this, and I wish more Twitterers would find less to say. But just once in a while, a weightless thought shared on Twitter can give someone else pause. That’s just what happened when I read this message earlier this week from a poster I won’t name: resisting urge to stab myself.  2 weeks of lean manufacturing workshops started today.  zzzzzzzzz

Any reporter worth his salt knows that one idle Twitter comment does not signal a trend. Still, it made me wonder about the rest of you. If you’ve undergone lean training, how would you rate it? Did it bore you as much as it did our Twitter friend? I trust the skills of the trainer(s) make or break these sessions, but there’s also something very elemental in the lean philosophy, and perhaps it reminds some people of kindergarten — a surefire way to induce naps.

Finally, in its September 21 issue, Business Week published an article on the resurgence of Six Sigma that’s notable for the mentality it exposes. In the cash-strapped world of commerce that companies must navigate these days, some are getting desperate. And desperation can turn a good thing into something it’s not. Thus this passage from the article:

“We’ve really seen in the past 12 to 18 months that companies that want Lean Six Sigma want something very different,” says Mark O. George, managing director in the Process & Innovation Performance group at Accenture. Instead of the kind of cultural change often associated with a Six Sigma initiative, they’re looking for techniques that can pay off quickly.

Six Sigma and lean initiatives aren’t meant to yield quick payoffs, and they don’t end in three to six months.

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Lean Out Products, Too

By Chris Chiappinelli | Published: September 9, 2009

Think upstream.

No, it’s not a motivational poster for salmon. It’s one of the mantras of lean design.

Lean design is the oft-forgotten stepchild of lean manufacturing. Many companies spend time and money pounding on their production processes, learning how to tweak them for maximum efficiency. Fewer put the magnifying glass to the blueprints for products themselves.

Proponents of lean design, or design for manufacturability, think they should. They encourage manufacturers to look upstream and downstream in the new product development process, examining the designs themselves to see whether they invite efficient manufacturing processes. Factory floor engineers can use their expertise to weigh in on whether a certain type of subassembly will create wasted motion in a manufacturing cell, for instance. Likewise, a product designer can take simple steps to excise waste, such as minimizing screws and fasteners in their designs.

It’s a good lesson to relearn now. The coming economic cycle promises to loosen up operating capital. Manufacturers that have been stuck in inventory-reduction mode will start to invest in new product development. Companies that have always taken pains to run simulations and ensure that product designs will perform properly in real-world conditions should seize this opportunity to vet their CAD designs against the reality of their factory floor equipment, their production workers, and the supplier parts that constitute their products.

Lean design is nothing new, but maybe it’s time to give it its due. Consider what it can contribute to your own lean efforts and operational goals, and remember to think more like a salmon.

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Productivity Up, Waste Down?

By Chris Chiappinelli | Published: September 3, 2009

The recession and the jittery employers it has created drove waste out of the workplace at a torrid pace in the second quarter of 2009, pushing U.S. worker productivity to a 6.6% annual rate, according to the U.S. Labor Department. The workplace hasn’t seen that level of productivity since the summer of 2003. In fact, over the quarter century from 1979 to 2005, the annual rate averaged 4.1%.

The short story behind the recent boost is that many businesses have made cuts to their workforces and distributed the work among the remaining, often shell-shocked employees. Even in cases where production has slowed, too, the layoffs have generally been deeper than the reduction in work.

Theoretically, this is a triumph of lean manufacturing. If 100 workers can do the same amount of work that 125 workers were performing, showing 25 workers the door makes sense. (However, most lean practitioners would probably say that those 25 workers should be put to work at more value-added tasks.)

But that’s not the whole story.

Some workers, it turns out, see things differently. According to a new survey from the Workforce Institute at HRM software provider Kronos, 40% of employees at companies that have executed layoffs believe that productivity has been negatively impacted. Of that group, 66% said that as a result “morale has suffered and people are less motivated.” Sixty-four percent thought there was too much work to be done and not enough workers to do it.

The Workforce Institute encouraged respondents to suggest remedies for employers: 50% thought bosses should work to boost morale, 46% advocated more process automation to enhance efficiency, and 36% said employers should “take a fresh look at how to redistribute the workload among those employees who are left.”

But the strangest response came when the survey takers asked workers their opinions of the layoffs. Fifty-three percent said the correct number of colleagues had been let go.

Perhaps that helps explain the boost in productivity. Beleaguered workers are still workers, after all, and in most cases, even under duress, they will apply themselves effectively to the task at hand.

For more on productivity, check out a Managing Automation article from 2006 that dissects the improvements manufacturers have made in recent decades.

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GM Ramps, Toyota Cuts

By Chris Chiappinelli | Published: August 26, 2009

There goes GM again, drunk on a passing sales boost and hopeful for more. Time to ramp up inventory. Toyota has other plans, involving less production and fewer sales. Who’s got the right formula now?

Maybe they both do, but my money’s on Toyota. If nothing else, the divergent paths say something about how tough it is to run an auto business these days, as if that weren’t abundantly clear already. It’s brutal enough eating the billion-dollar losses that both of these automakers have sustained, but they also must forge ahead into the fog, forecasting/guessing/sensing customer demand and betting big on those expectations. Or, in Toyota’s case, taking money off the table.

Recently, GM’s antennae have picked up signs of life, and the company this week said it would produce 60,000 more vehicles than it had planned to this year. That will necessitate extra shifts, overtime, and the reinstatement of 1,350 workers, according to a recent ABC News report.

What looks like a Cash for Clunkers-induced euphoria is in fact just good forecasting, according to GM. ABC quotes Mark LaNeve, GM’s vice president of U.S. sales, as saying, “Some of the lift that we are seeing from that program, we are anticipating in our sale forecast, obviously, that will fall off, and even with that given, we definitely need to have this production, if not more.”

Sixty-thousand units may or may not sound like a lot of cars, but the measures GM will employ to produce them, including running overtime shifts and hiring back workers, make this a big gamble. Remember: Bad forecasting = bloated inventory = wasted operating capital.

Meanwhile, Toyota, which placed three of its models (Corolla, Camry, Prius) among the top six vehicles sold under the Cash for Clunkers program (GM didn’t make the top 10), will cut production by 220,000 vehicles. This may be a case of “once bitten, twice shy” for Toyota, a company unaccustomed to red ink but awash in it recently. It may also be the smartest bet at the table.

With an economy as unsettled as today’s, filled with consumers wary of buying clothes, let alone cars, Toyota’s move seems to be the right tack, while GM’s seems out of touch. Time will tell whose Magic 8 Ball served them well, but recent history favors Toyota.

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Leaning Out for a Good Cause

By Chris Chiappinelli | Published: August 19, 2009

As a manufacturer, you’re probably not a rabid fan of the Environmental Protection Agency. You haven’t friended them on Facebook, you don’t hang on their every press release. Fair enough. But there may be a good reason to give at least one part of the EPA’s website a second, or first, look.

In recognition of lean manufacturing’s appeal, no doubt, the agency has devoted a section of its site to resources that can help manufacturers make money while going green. I checked out a PDF titled, “The Lean and Environment Toolkit.”

I like the way it starts off: “Lean works well when it focuses on identifying and eliminating non-value added activity. Environmental improvement efforts that have potential to distract Lean efforts from this prime focus will likely not get much traction.”

This acknowledges the simple truth that governs any conservation effort: If it doesn’t add business value, I’m not wasting my time with it.

The toolkit specifically addresses that, saying, “Adding environmental considerations to lean efforts can increase value, accelerate lean implementation, decrease material costs, and reduce liability and the risk of compliance violations.”

The paper defines environmental waste as “any unnecessary use of resources or a substance released into the air, water, or land that could harm human health or the environment. Environmental wastes can occur when companies use resources to provide products or services to customers, and/or when customers use and dispose of products.”

On a scale of most obvious to least, the examples are:

  • Excessive consumption of energy, water, or other raw materials (i.e., save money by cutting out needless consumption)
  • Using hazardous substances during production or within end products (i.e., don’t kill or harm your customers/workers; they’ll leave you)
  • Releasing pollutants and material wastes into the environment, such as air emissions, wastewater discharges, hazardous wastes and solid wastes (i.e., one man’s scrap is another man’s chronic respiratory infection)

In my opinion, the EPA’s biggest challenge is illuminating the business cost of this last type. In this case, the fibers connecting lean manufacturing, environmental stewardship, and corporate profits might be a little harder to tease out. But the EPA’s message might simply be: Don’t do it, because you’ll eventually get caught (which will add the cost of fines to your bottom line and force you to retrofit operations and reengineer processes).

Take General Electric, for example, which this May began dredging the Hudson River to remove the PCB that its factories dumped into the water decades ago. With a price tag pegged at $750 million — GE’s treat — the company’s dumping was wasteful not just in environmental terms but in business terms as well.

Or see the case of electronic instruments maker Ametek Inc., which may face more than $1 million in fines related to groundwater contamination in San Diego.

There’s no shortage of cases, and the statute of limitations extends for years, in many cases. GE is paying the price of environmental waste it jettisoned more than 30 years ago.

So where do you rank environmental consideration when it comes to lean efforts? Is it a fair connection to make?

Let me know your thoughts — comment below.

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Maybe Lean Isn’t Right for Starbucks

By Chris Chiappinelli | Published: August 12, 2009

The news last week that coffee juggernaut Starbucks has embraced lean techniques produced a frothy stir on the Internet, with some factions hailing the move for its business efficiencies and others deriding it for subverting the laissez-faire culture of Starbucks itself.

I like its embrace of lean principles, but I don’t think it works for Starbucks’ clientele (note that I’m not one of them). Seeking operational synergies through lean practices is a signal that Starbucks has gone corporate, and nothing kills the coffee-house vibe quicker than a P&L statement.

To wit: Lean isn’t right for all businesses.

Waste-stripping has shown up in some strange places lately, spurred by a flagging economy and a distaste for workplace extravagance. Starbucks’ vice president of lean thinking, Scott Heydon, has put a 10-person lean team to work spelunking Starbucks locations for process inefficiencies. According to a Wall Street Journal article, changes will include “no more idle moments waiting for expired coffee to drain and no more dillydallying at the pastry case.”

A recent Business Week article focused on CEO Howard Schultz noted that the company will have its baristas employ “a standard six-step process to brew coffee rather than do whatever they feel like. “

Some have bemoaned the ensuing loss of freedom, according to the WSJ article, and worry that Starbucks will come to resemble the very fast food behemoths from which it likes to distance itself. The premium that customers pay for Starbucks’ wares is an investment in the atmosphere of the place. No one I know is particularly proud to be a McDonald’s customer, but Starbucks regulars have a sense of pride and belonging that seems to be brewed into the very coffee they drink.

So will they like the new face of the coffeehouse? Or will the motions they see behind the counter look too regimented for their taste? In my opinion, they’ll prefer to see milk sloshing over the sides of pots and muda in every cup, because that’s part of Starbucks’ appeal. And if they go elsewhere because of it, all the efficiency gains in the world won’t save the brand.

What do you think? Is lean right for all companies?

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Magic 8 Ball Says…

By Chris Chiappinelli | Published: August 5, 2009

I’m fascinated by demand planning and forecasting software. It is often pitched as the ultimate Magic 8 Ball for manufacturers, but I find myself wondering whether it does a better job than those black toys we used to shake for answers as kids. I’ve discussed my thoughts before, and the long and short of my argument is that I don’t think even our best algorithms can predict the future.

Now we have the makings of a good case study. It’s possible that we can — like some of the software in question — take a good look backward in order to see the way forward.

The coverage of manufacturers over the past six to 12 months has often highlighted the oversized inventories created by this languid economy. Automakers are probably the most visible targets, with their hulking SUVs and even fuel-efficient compacts huddled by the hundreds on intake lots. But just about everyone has felt the implosion in consumer demand — golf club makers, building materials suppliers, toymakers.

Theoretically, demand forecasting should have helped companies avoid this plight, and I’d like to hear about cases where it did.

Perhaps there are instances in which, as the economy sank deeper into the red, software models picked up on the decline in demand and extrapolated that a company should err toward producing less stock. That in itself would be valuable, since it would stem overproduction and draw down inventory in preparation for an extended demand sag. Better yet would be the instance in which manufacturers using smart forecasting software saw the economic black hole even before it formed.

I’d like to issue an open call for companies — manufacturers and/or technology vendors — to offer up the demand forecasting solution that predicted the global economic collapse (within the context of a particular company, of course). If some in the audience doubt the competitive advantage of large software packages these days, proof of a corporate Magic 8 Ball might change some minds.

Consider the phone lines open.

(For a defense of forecasting tools, see this 2006 interview with logistics guru John Vande Vate of Georgia Tech.)

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Those Ungrateful Workers…

By Chris Chiappinelli | Published: July 29, 2009

Last night’s NBC Nightly News featured a report on Excel Foundry & Machine, a Peoria, IL-based metals manufacturer. Excel earned national attention because it has managed to improve sales by 7% even as fellow manufacturers in the area (which is Caterpillar country) have slashed personnel to cope with slowing orders.

Excel’s innovation? Hiring versatile workers, cross-training others, and generally promoting an “all hands on deck” culture, according to CEO Doug Parsons, who said he is determined to avoid layoffs.

“By committing to their employees,” commented Laurence Weinzimmer, a Bradley University economist interviewed for the report, “[their] employees are committing back to the organization, which means they’re going to step out of their traditional work roles and do whatever it takes to get the job done.”

The NBC story recalls the debate over how to compensate workers who acquire new skills and perform multiple tasks within the production environment. Should they be paid more? This tug-of-war gets a thorough treatment in Jon Miller’s recent blog post at Gemba Panta Rei.

Miller’s insight on the topic is good, but overlooks one key factor, in my opinion. His aim is to find a compromise between a company that has cross-trained its workers and those workers, who subsequently assert that their increased productivity is grounds for a raise. Miller suggests that the situation is in fact a win-win: The company becomes more productive and the employee becomes more marketable due to his or her enhanced skills. That’s the career equivalent of a raise, Miller seems to be saying.

The catch, as I see it, is that under that scenario the company has effectively given a valuable worker an IOU that can only be cashed in at another company. That is, if the worker becomes more valuable by virtue of the new skills, but doesn’t see any additional pocket value in return, he or she may be tempted to redeem that intangible value elsewhere.

Manufacturers should be in the business of rewarding effort, not strategizing ways to shortchange it. If a worker’s cross-training creates new value for the company and the customer, that worker shouldn’t be barred from sharing in the return on that value. You wouldn’t treat a customer that way — why do so to an employee?

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