Nothing is Certain but Death and Taxes (and change)

There’s an old saying that “nothing is certain but death and taxes”, but it’s not true. Change is also certain. A recent Wall Street Journal article demonstrates the latest validation that whether the economy or your particular market is shrinking or growing, change is constant.

They report shortages in tiny electronics like transistors, capacitors and integrated circuits are halting production of a myriad of products like snowmobiles or cell phones – curbing sales due to product shortages.

The shortage is pinned on lean chip manufacturers that downsized for the recession and are now struggling to bolster production in an economic rebound where product demand has returned.

On one side of the coin, manufacturers of end-products like our snowmobile company Polaris have to adapt quickly to refocus on what they can build that doesn’t require specific electronics that just aren’t available. On the other side, the semiconductor companies that can ramp production back up the quickest and manufacture the right chips that are in shortage have an opportunity to grab new customers who wouldn’t have considered their product before.

The interesting part is that just a few years ago these very same chip manufacturers had to rapidly shrink their production pace to match declining demands and prevent flooding the market with extra inventory. Now they need to scale up as quickly as possible right after having scaled down.

In fact, Polaris just retooled their manufacturing plants to create products that don’t require the electronics involved in power steering, but in less than a year those supply limitations could be lifted and they’ll have to bounce right back.

You may be going through a change right now – in the market, in manufacturing or in your products. It may even be a painful change and you just want it to be over. Sometimes it’s hard to think that in a year or two, you may be undoing the very change you just implemented.

That’s why manufacturers need to look beyond the most urgent change and think systematically about being able to implement change faster and without pain.

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Why do projects kill innovation? Is there a better way?

“Managing and innovation did not always fit comfortably together” – Lewis Lehro, about the first years at 3M

Projects with the objective of building competitive advantage or addressing an operational challenge can often be a catalyst for organizational change. At the same time, these projects can be a big headache for the project manager. Chances are that you won’t know a large portion of the business requirements upfront, but will be responsible for managing to a strict timeline and budget.

A few examples of such projects include:

  • Ramping up volume production for a new generation of products
  • Undertaking a company-wide business process transformation initiative
  • Building a next generation manufacturing execution system, such as a MOM or MES, that drives manufacturing process innovation

The innovative, cross functional nature of these projects calls for collaboration across multiple functional departments, subject matter experts, business users and technologists. All of them must gather together to hammer out the details and experiment through trial and error before a working solution can emerge. Frequently, such an “avenue of innovation” is required beyond the lifespan of the initial project to support future continuous improvement.

While innovation calls for change, traditional project implementation methodologies displace change. In order to complete a process improvement or system upgrade, it is often necessary to freeze all project requirements to achieve sign-off on all design documents. Change requests during the building and testing phases of these projects are the enemies of project managers as risks to on-time and on-budget project completion.

Applying Lean to Project Management
An alternative methodology that embraces change is referred to as an Agile implementation methodology, which derived many of its techniques from principles of lean manufacturing. Just like a manufacturing Kanban triggers Just-In-Time (JIT) production based on actual progress instead of an upfront plan from MRP, Agile calls for triggering project tasks based on actual project progress, rather than trying to maintain a static project plan.

A key aspect of Agile is the emphasis on working software instead of on documents. Software that can model an actual user experience can be a very powerful facilitation tool. It allows business users and technologists, who typically speak different languages, to work better together as a team. Free flowing collaboration can accelerate interactions towards a mutual, innovative solution that keeps multiple stakeholders (often with conflicting interests) to stay focused on problem resolution. This approach also builds trust faster than the alternative of writing a mutually agreed, jargon-packed design document. A relationship built on trust can be the glue that binds a team together, to work out conflicting goals, to embrace innovation as well as to keep within agreed upon timeline and budget constraints.

Unfortunately, few off-the-shelf software packages can effectively support an Agile implementation very well. The majority of enterprise ERP, WMS, MES or other projects will typically leverage off-the-shelf software packages based on a rigid architecture with limited number of configuration options.

These types of projects often start with a gap-fit analysis, which identifies gaps that either require end-users to adapt to the software or for custom coding to be performed to fill the gap. The very nature of an off-the-shelf software implementation is to prioritize system rationalization over process innovation, which is in direct contradiction of why the project may have been identified as necessary in the first place!

Business Process Management is the Solution
Business Process Management (BPM) technology offers a panacea – the flexibility of unlimited configuration options without the complexity of custom programming. Fast blueprinting and prototyping capabilities can be used to effectively model user experiences. Automatic testing and documentation tools empower scrum team to meet the targets of short sprint cycles that are part of an Agile implementation. Version control, process by process upgrade, multisite portability, searching and indexing, performance monitoring and simulation capabilities can enable scrum processes to be effectively applied to continuous improvement beyond the initial project’s lifetime. Read how Apriso uses BPM to accelerate enterprise deployment of its manufacturing operations management software, as part of an Agile implementation.

Innovation for Innovation
MIT professor of Innovation Studies Warren Bennis remarked, “Innovation by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, monotonous rehearsals before innovation can be accepted and internalized by an organization.” BPM technology reduces the efforts required for endless demonstrations and rehearsals. When combined with a Lean, Agile methodologies, BPM puts the innovation process under budgetary and timeline control. It can be an innovative approach that synthesizes people, process and technology to accelerate the organizational internalization of innovation.

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Push or Pull. That is the question.

A recent post on the Lean Journey blog by Tim McMahon was on manufacturing bottlenecks, but was also on a state of mind and the principles of being demand-driven.

Tim illustrates that bottlenecks don’t exist, unless the bottleneck is producing less than what’s needed for product demand. The underlying assumption is that the business has adopted a demand-driven mindset. Have you?

For manufacturing organizations that are trying to maximize use of their existing capital investments in hardware, there is ALWAYS a bottleneck on whatever asset is producing less than its counterparts. The moment you fix one bottleneck, another asset becomes the next target. The organization is then constantly improving whatever asset is producing the least, which results in progressive production growth over time regardless of demand.

Despite the widely accepted best practice of being demand-driven, the model of maximizing use of assets to minimize their cost impact on each individual unit is still widely prevalent. In this model, bottlenecks are what managers and executives live and breathe.

For demand-driven organizations we spend our time staring at the store shelf, the car lot and the customer, identifying exactly how much should be manufactured to keep up with inventory needs for increasingly diversified products. Bottlenecks become important in the best of cases, where demand exceeds production. For example it’s been in the news that a shortage in LG displays may be a bottleneck for Apple. The opposite camp is looking inwards, focusing on how much could be manufactured.

Is your organization a bottleneck-obsessed inward looker? Or a demand obsessed analytical calculator?

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Weather, the Supply Chain and the Accuracy of Your Crystal Ball

Well-structured businesses like to predict everything: supply, demand, distribution, costs, revenues, schedules, staff needs, market changes, the works. The more powerful the company’s crystal ball is – and the better they are at responding to these forecasts – the more business benefits they can reap from forming an accurate view of the future: lower inventory costs (acquisition, storage, obsolescence), consistency in matching production to demand and delivery of the highest quality products across the entire manufacturing landscape.

These forecasts are extremely complicated. Mastering that complexity with the help of technology is a multi-billion dollar industry, with disciplines that span dozens of fields.

But if there’s one thing tough to predict it’s this:

Lately, the supply chain connecting the US to Mexico has been a disaster. The Mexican railroad has been disrupted due to hurricanes; rains have flooded the border crossing at Laredo Texas. The weather can take your delicately laid plans and float them down a river, literally.

The weather is so complex that the world’s leading intellectual minds can’t find ways to create reliable weather predictions more than a few days in advance. Most mathematical theory behind weather predictions recognizes there are factors that cannot be measured or accounted for. So if decades of mathematicians, meteorologists and technologists haven’t figured it out, it might be out of your league too.

Instead, you can prepare for unexpected disruptions in a way that allows you to minimize the potential impact to your customers while reducing your risk. The key is having real-time visibility and control of your manufacturing and supply chain operations. The sooner you have visibility to your shipment “floating down the river,” the sooner you can take control of the situation by executing alternative transportation or sourcing plans.

But even after you have secured the flow of inbound material to your plant and outbound finished goods to your customer, there are a lot of other potential problems that can remain hidden for a long time. Let’s now take a closer look at two examples of how best-in-class manufacturers can reduce their risk when managing the unexpected consequences arising from unplanned events.

Inline Quality
Not every weather condition challenge is a natural disaster. Humidity is one of our most formidable weather conditions. It can negatively impact your products through sub-standard components from your supplier or be driven from within your own operations, such as coating and painting processes. By utilizing an inline Statistical Process Control (SPC) tool embedded within your production processes, you can be alerted immediately if test results start to trend up or down or even violate pre-established control parameters, indicating potentially serious production anomalies in your manufacturing process.

These results can drive specific actions within your manufacturing execution solution; from simple problem alarming and alerting to diversion of the product to Quality Inspection labs or alternative re-work operations. In fact, a study by Deloitte discovered that “microclimates” not only occurred between the front and back of an individual refrigerated trailer, but also within stacks of pallets. In one test, the bottom pallets in the middle of the trailer experienced a nearly seven degree temperature variation.

Traceability and Containment
The impact of weather on materials and components may not be readily noticeable until after end-products have been manufactured, possibly even shipped to customers. To protect their operations and reputation from harm, best-in-class manufacturers will typically deploy strong traceability systems in their plants. The best-in-class will utilize interlocking traceability, providing the ability to identify part / component / assembly relationships AND any number of associated process-related variables such as torque setting, operator id, pressure and temperature measures, etc.

Comprehensive traceability at this level of detail is a critical element in the identification of operational issues. Increasingly, best-in-class manufacturers will combine interlocking traceability with advanced defect containment processes to identify, isolate and hold in place all suspected defective material or components within the plant, supply chain and distribution chain. When applied across a complete global manufacturing network, the results can be quite dramatic. For example, an automotive manufacturer recently had a situation whereby approximately 70,000 parts were found to be defective across the entire supply chain. A similar situation occurred a few years back, which took 3 months to identify and resolve, and involved thousands of unplanned labor hours. With a comprehensive traceability and containment solution in place, a similar defective part situation of roughly the same size was resolved in less than a day with no additional labor hours needed. That’s how one best-in-class manufacturer is protecting their reputation.

As much as we might like to think we can control the world around us or have perfect visibility into the future through a crystal ball – you simply can’t control the weather, nor can you accurately predict weather conditions more than a day or two in the future. The next best thing is to have a highly responsive manufacturing operations and supply chain system that is capable of near-instant response to unexpected events, providing you with complete visibility and control of your manufacturing operations when weather or other unexpected disruptions occur.

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BPM and continuous improvement were made for each other

I was at the North American MESA conference a couple of weeks ago, and it was clear to me that Business Process Management (BPM) was on the verge of getting its due. Like the market it serves, MESA is embracing the inherent power of BPM for manufacturing. This is a good thing. However, what I haven’t seen much is folks explicitly tying BPM to continuous improvement. And, BPM just screams “continuous improvement”.

There are three bits of information you need for your continuous improvement projects: where you are now, where you want to go, and how you will know when you’ve arrived.

So, what is it about BPM that makes it such a natural fit for your Six Sigma or Kaizen improvement efforts? BPM brings with it transparency, agility and compliance. Let’s talk about those three things and how they relate to continuous improvement:

A key objective of the Measure stage of a Six Sigma project is to baseline your process (aka: your “as is” state). Without a baseline, the black belt or green belt leading the charge is going to fall flat on his face. Because, there’s no way to measure any gain or improvement without knowing your starting point (and without any measurable gain, say goodbye to your bonus or credit towards your Master BB).

BPM provides transparency to your value added processes because it provides an explicit, executable model of your process. Throw away your flowcharts (they’re just taking up space on your shelf anyway) –your process model is always up-to-date because it’s actually driving and directing operations execution on your shop floor.

So, now you know where you are. In the Define stage, you identified the critical factors you’re going to address –critical to quality (CTQ), critical to cost (CTC) or critical to schedule (CTS) and translated that to deliverables (aka the “future” state). The key now is to engage your cross-functional team in a timely and effective way.

BPM enables your team to move fast because there’s no need to wait on IT to translate your requirements into specs , code, build, test, etc. BPM supports a cross functional team by supporting separation of roles, visual process modeling and enabling cross functional collaboration. With prototyping, you’re getting feedback fast to ensure alignment to goals and high customer satisfaction.

BPM is inherently compliant because you are automating the steps of your process which direct and enforce your standard operating procedures. Since steps and actions are logged, it’s easy to embed process metrics which will feed your performance dashboards (andon boards, scorecards, operator screens, alerts, etc). In addition, with built-in documentation (sometimes known as “blue printing”), your new “as is” state or baseline is already documented for your next six sigma project or Kaizen event.

If you’re a Six Sigma or Lean practitioner (or practicing other forms of continuous improvement), isn’t this the kind of environment you want to be working in?

Jordan can be found on Google+

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