Evolving Excellence

Fun With Statistics, Lazy Women Doctors Edition

How's that for a title for this edition of Fun With Statistics?  But before I receive a bunch of comments that I have the power to simply discard, let's learn a bit more.  First off, some background.

Various studies have projected a shortfall of anywhere from 50,000 to 100,000 physicians in the U.S. relative to demand by 2020, and the Institute of Medicine, a federal advisory body, just reported that in a mere three years senior citizens will be facing a health-care workforce that is "too small and woefully unprepared."

So... what does that have to do with women?

This looming shortage is forcing into the open a controversy that has been cautiously debated in hospitals and medical practices for some time: Are women doctors part of the problem? It's not the abilities of female doctors that are in question. It's that study after study has found women doctors tend to work 20% to 25% fewer hours than their male counterparts.

And now I'll get myself off the hook.  The women aren't lazy, they simply value balance in their lives.

Women doctors in the U.S. work less—47 hours per week on average, versus 53 for men. They also see about 10% fewer patients and tend to take more time off early in their careers. "It's pretty much an even bet that within a year or two of entering practice they will go on maternity leave," says Phillip Miller, a vice-president of the medical recruiting firm Merritt, Hawkins & Associates. "Then they are going to want more flexible hours."

This does create some advantages.

On the plus side, women are willing to take on lower-paying specialties that male doctors are moving away from, such as primary care, pediatrics, and obstetrics. Since 1996 there has been a 40% jump in the number of women choosing primary care, offsetting the 16% decline in men entering the field. A lighter workload also has its advantages. "Lots of studies show that doctors who work fewer hours have less burnout," says Dr. Joseph Flaherty, dean of University of Illinois College of Medicine. "There is a strong association between long hours and medical errors."

But the real lesson is for the future, when both men and women will be looking for balance... and how that will impact statistics.  As you look at your workforce and consider the level as well as the succession plans I'm sure you already have in place (right...?), do you account for an increasing desire for balance?  Or are you driving them hard?  If so, you may be surprised by how your workforce has to grow over the next few years just to accomplish the same tasks. 

Of course the other option is to focus on lean manufacturing and lean enterprise methods to reduce the number of tasks to balance with the load your employees are willing to take on.

Getting Paid Not To Work

Do you want a quick response while on the phone with customer service?  Should you?  A new book by Bill Price and David Jaffe, The Best Service is No Service, asks that very question.  I haven't read the book myself, so I'm referring to a review by David Price.

In theory, we should be living in a golden age of customer support. Blogs and Web sites make it easier than ever for consumers to reward good service and punish bad. Companies, for their part, can avail themselves of sophisticated customer-service technology and, thanks to the rise of Indian call centers, less-expensive workers. But reality hasn't seemed to follow theory.

Nope, not by any measure.

When calling an 800 number, we expect to find ourselves in voice-response hell. We dutifully follow instructions to key in a 10-digit policy number – only to be asked by the customer-service rep for the same darn number. Waiting on hold for 25 minutes? Well, that's what speakerphones are for. A simple email query languishes for days.

We know there are exceptions... Southwest, Amazon, and Apple come to mind.  So why the disparity?  It comes down to management... or leadership.

Senior executives at most companies, the authors believe, are simply in the dark. "The standard across most service operations is to report and track how quickly things were done," they write, "not how well they were done or how often, or why they needed to be done at all." Thus typical measures like "pickup within three rings" or "email response within 24 hours" hide more about customer service than they reveal. And the measuring is easily gamed.

Instead you should figure out why service is required at all.

The authors contrast these crude metrics with Amazon.com's focus on "CPX" – contacts per order, contacts per unit shipped, contacts per transaction and contacts per customer. In other words: Don't just ask how long it took to help the customer, ask how often the customer needed help and why. The goal is to avoid creating a need for a customer to contact the company in the first place.

The goal is to work customer service out of a job... not get them to work faster to handle more service calls. 

This reminds me of a very innovative company I visited over a decade ago, well before total productive maintenance became a core part of the lean lexicon.  It was a large molding operation that paid its mechanics... when they didn't work.  If the goal was to keep machines running, then why incent the practice of repair?  With the new compensation program, albeit difficult to implement in certain states with rigid labor rules, mechanics were paid on a sliding scale based on the percentage of the work day when they weren't directly working on a machine.  The response was immediate: preventive maintenance became the norm and the mechanics spent considerable time educating the operators in the proper care and feeding of the machines.  Everything revolved around keeping them up and running.  Putting off the inevitable simply created more pain later.

Are you measuring... and incenting... the creation of value to the customer?  Or just how well you respond to problems?

Costco vs. the Lean Corner Store

A while back I somehow ended up with a Costco card, but I have never used it.  I don't necessarily have anything against the store, it's just that I don't need to buy in bulk.  In fact, I rarely have to buy, period.  My wife and I have pretty busy schedules, and often meet for dinner out.  In an effort to reduce a ridiculous amount of eating out, we've recently begun to have some meals brought in.  A small luxury perhaps, but it saves a lot of time.  When I do cook it usually takes about six trips to the store just to obtain all the ingredients to grill a slab of salmon.

Although overall I'd say we tend more toward the frugal side, I realize we're in the minority with regards to meal habits.  In fact, as gas prices go up, trips to the store are going down.

Until two years ago, Natalie Stone paid twice-a-month visits to her local BJ's Wholesale Club in Greenville, S.C., to buy paper towels and toilet paper for her home, meat for the dinner table, and diapers for her son. Often, during the week, she would also swing by her local supermarket for items she'd forgotten. But rising gas prices and other budgetary constraints have killed off such side trips. "Now I go to BJ's just once a month," says the 29-year-old homemaker.

This change is becoming more prevalent.

The confluence of high food and gas prices, slumping real estate, and the credit crunch has left the Stones and millions of other middle-class families feeling pinched. That has major implications for the nation's retailers. As consumers get more anxious and more organized about where and when they shop, they're drawn to Wal-Mart Stores, Costco Wholesale, and the like. "We're seeing some clear changes in consumer behavior," says A.G. Lafley, CEO of Procter & Gamble.

So much for demand-flow, pulling from the customer just the amount needed.  So much for one piece flow in the pantry.  So much for lean grocery shopping.  Where do people store a month's worth of food for an entire family?  Our pantry isn't that large, or at least it wasn't the last time I checked.  But we've done quite a bit of remodeling since then, so perhaps it has changed.

Earlier this century when I started my own contract manufacturing company I wanted to drive home that lean manufacturing isn't just for the shop floor.  So I enforced rules for the purchase of shop supplies, office supplies, and equipment just when they were needed, in the exact quantity needed.  Everything was kanban'd.  Including toilet paper.  I thought it was brilliant... if the extra roll was still on the shelf, all was good.  If not, time to go buy another.  My administrative assistant was not impressed.  As you may imagine, an exception to the rule was created the next day, although I guess we could have just increased the size of the TP kanban.

However I believe there could still be hope for the lean pantry.  Instead of making once monstrous trip to the local Costco, how about looking for alternatives?  Not the overproduction of leftovers or multiple runs to the large big box store.  Although large stores are becoming more prevalent, much of the rest of the world enjoys a luxury we don't have in North America: the tiny local store on the corner of seemingly every block. Just the staples... a short distance away in just the quantities needed.  Go and get just what you need for the day.  For some reason those stores just never took off in modern America.  So much for the lean pantry. 

I think I'll stick with eating out.  It's much easier.

Morro Bay Coffee Learns From Starbucks

A few weeks ago Starbucks launched MyStarbucksIdea.com, basically an online suggestion box for customers to submit and discuss ideas for improvement.  Already the site has been a resounding success.

One customer wants Starbucks to make ice cubes out of coffee so when they melt they won't dilute cold drinks; 7,660 fellow customers agree. Another wants the chain to install shelves in restrooms—where else can you put your drink when you've drunk too much? Although some customers are repelled by that suggestion, Starbucks thinks it's a "sleeper idea" worth considering. More than 10,000 Starbucks fans wish for something to plug the hole in lids to prevent sloshing. Starbucks listened and just introduced reusable "splash sticks" to do that.

Starbucks wasn't the first to try such a thing.

[Starbucks CEO Howard] Schultz is following in the footsteps of Michael Dell, who also returned to his troubled namesake, Dell Inc., a year earlier and launched IdeaStorm.com to gather and act on customers' ideas. Dell has implemented a score of suggestions, including the introduction of computers running Linux instead of Windows.

It's an interactive process, in which Starbucks takes an active role.

Starbucks' chief added "idea partners"—48 specially trained employees who act as hosts of the discussion. The idea partners also act as advocates for customers' suggestions back at their departments, so that "customers would have a seat at the table when product decisions are being made," [Starbucks CTO Chris] Bruzzo says.

Idea partners also view the comments posted online as a laboratory. They push back on ideas, telling customers what has been tried and hasn't worked. For example, some customers want express lines for brewed coffee orders, as opposed to the half-caf, skinny, extra-foam pumpkin lattes that seem to take longer to order than to make or drink. But the idea partner said that hasn't worked because of the layout of Starbucks stores.

And therein lies the rub.  Connecting with customers is good.  Getting ideas from customers is good.  Acting on them is even better, even if it means telling the customer that their idea is off the wall.

But just remember, customers aren't the only people that read online suggestion forums.  That information is a treasure trove of ideas and analysis that only a high-priced research group could produce.  Which is why I'm betting that every corner coffee shop from my favorite down the street to Starbucks arch-rival Peet's is also checking the Starbucks suggestion forum.  If they aren't they should be.

Is it still worth it to Starbucks?  Probably.  Just don't lose site of the fact that you are truly sharing.

What If Your Best Wasn't Needed?

The new Chrysler has the potential for a bright future.  Some great new management and especially the flexibility of not being constrained by the short-term mindset of Wall Street.  They can take the long view and do the right things.  Perhaps they will, but in a Detroit Free Press column last Sunday Mark Phelan inadvertently brings up a potential fundamental fallacy to the dream.  Inadvertently because Mr. Phelan missed one critical point.

Chrysler's deal with Nissan last week demonstrates an important, often overlooked fact about the struggling Auburn Hills automaker: Chrysler does some things better than any car company in the world, and other things far better than most.  The company's future may hinge on recognizing that truth and leveraging the clout leadership brings.

"Chrysler" and "better than any car company" and "leadership clout" in a single paragraph is something you'll only see out of a Detroit newspaper, but in the narrow context of his intent it makes some sense.

The column goes on to discuss how Chrysler will build large vehicles for Nissan and Nissan will supply or co-manufacture small vehicles for Chrysler.  This will help reduce the multiple architecture or platform problem that Mr. Phelan believes is critical to Chrysler's long term viability.

The more different vehicles a company builds using a single architecture, the lower its costs and higher the chance of turning a profit. The break-even point differs, based on a variety of factors.  Depending on how you count -- and excluding the Viper -- Chrysler has 10 or 11 architectures in production today. Does not compute, Will Robinson. Two million vehicles divided by 10 architectures equals 200,000 per. That spells Trouble with a capital T, and that rhymes with C, and that stands for Chrysler.

As he points out, Chrysler does have some strong platforms.

Today, Chrysler builds four or five architectures that are among the world's best in their categories:

• Full-size pickups (Dodge Ram)
• Minivans (Chrysler Town & Country and Dodge Grand Caravan)
• Rear-wheel drive cars (Chrysler 300, Dodge Charger, Dodge Challenger)
• Small SUV (Jeep Wrangler)
• Larger SUV (Jeep Grand Cherokee)

There's only one problem... something Mr. Phelan missed.  All of those strong platforms are experiencing severe pressure from small vehicles, primarily due to the cost of gas.  A strategy based on leveraging the prior strength of those vehicles could create major issues in the future.

Teaching Penguins to Fly

Boeing's going through a bit of a rough patch with its 787 Dreamliner program.  We've been chronicling the delays due to design and especially supply chain issues, while at the same time admiring their ability to take significant risks to radically change aircraft technology.  You'd think they would have every possible resource dedicated to fixing the Dreamliner problems.

Apparently they still have time to help out non-profit organizations.  It's a laudable thing to do, so we won't knock them for the effort.  But based on Boeing's recent history I'm a little fearful about the impact on the non-profit... in this case the Woodland Park Zoo in Seattle.

At first, penguins and airplanes seem to have little in common. After all, penguins can't fly.

Neither can the 787 Dreamliner.  Yet.  Sorry... that was just too easy to resist.

The Seattle zoo is one of a handful of nonprofits that Boeing has trained in lean process techniques, an efficiency program closely associated with manufacturing that eliminates costs by reducing wasted time and materials.

"The value of doing this is, it saves us a ton of time," said Bruce Bohmke, deputy director at the zoo. Using lean techniques to design the new penguin habitat, the zoo was able to reduce its exhibit design cycle to eight months from 18.

Not bad.  The penguin habitat designer should work for Boeing.  Oops... she apparently does.  So the next question is obviously... sorry, couldn't resist again... has Boeing taught the zoo that the most efficient animal feed supply chain is to clone a wild animal to transport feed from a different continent instead of the feed facility next door? 

Perhaps they could call the mutated blue heronesque creature the "Feedlifter."

Wisconsin Outsmarts China... for Now

Just last weekend we told you how Michigan was doing everything in its power to drive the few remaining manufacturers out of the state.  Would the last cell leader to leave please turn off the andon light?  We mentioned off-hand that they should be looking next door to Wisconsin to learn how to grow business, and now we have more evidence why.

Many manufacturers in southeastern Wisconsin are not only dealing with global competition, but they are they’re beating it. Select manufacturers in old-line industries such as investment casting, injection molding, precision machining and tool-and-die making are routinely taking business away from their Chinese competitors.

Good for them.  How are they doing it?

To effectively compete, many Wisconsin manufacturers have transformed their operating models using the principles of lean manufacturing, automation, quality assurance and control, just-in-time delivery, innovation and technology, said Mike Klosinski, executive director of the Wisconsin Manufacturing Extension Partnership (WMEP), a private, nonprofit organization dedicated to the growth and success of Wisconsin manufacturers.

“Many Wisconsin manufacturers have not sat still (in recent) years,” Klosinski said. “Putting in place lean (principles) has been the biggest strategy. And by taking on more services around their product, understanding their customers’ customers and being more innovative and creative about developing new products, they’ve turned into value suppliers. As a result, those companies’ large customers are electing to source with someone they can trust instead of sourcing overseas.”

An example?

Signicast [investment castings] has seen significant work increases, said Robery Schuemann, executive vice president. And much of that work is coming back from China.

“We are definitely feeling the boomerang effect,” Schuemann said. “The playing field is changing. Many of the rebates given to Chinese manufacturers have been taken away. The yuan (the Chinese dollar) has gone up, and labor costs have gone up there. You’re seeing the people that went there for price coming back for quality, delivery and price.”

Yes, price.  In the past companies have competed against supposedly lower-cost offshore manufacturers by promoting quick delivery and high quality.  Now thanks to rising foreign labor costs, a weaker dollar, and especially internal process improvements, you can compete on price from U.S. factories.

But now I'm going to shift gears and say this isn't that great of a story after all.  I do have one major drub against the various companies mentioned in the article: almost all of them have leveraged large amounts of automation.  Automation can be a good tool when applied properly, but it can also be dangerous in the long term.

Plastic Components Inc., a manufacturer of injection molded plastic components based in Germantown, competes directly with the Chinese and other emerging markets. The company produces components that are used in a wide variety of manufactured products and has customers around the globe. “We can go head-to-head with any molder in the universe with our universe,” said Thomas Duffey, president of Plastic Components.

“When we started the company in 1989, the concept was a fully automated plant. The idea was to take human involvement out, and taking cost and variability out.”

Ah yes, the dream of the "lights out" plant.  Companies have been chasing that concept for decades.  Some have woken up to the reality that it can't be done but still try to get as non-human as they can.  Humans, in their view, simply create "cost and variability."

Others, when they get their noses out of traditional P&L's and balance sheets, come to a different realization.  Humans actually add value.  Knowledge, experience, creativity, and ideas are worth something.  Processes and methods create variability, not necessarily humans.  And robots can simply "automate waste."

Last time I checked, a robot working in a lights out facility had never submitted an improvement suggestion.  Meanwhile a lot of Chinese workers, even with increasing labor rates, are working to improve their operations.  Who will be around in another ten years?

Nowhere To Run, Nowhere To Hide

Let's start right off with a quote from a recent news story.

Jim Issler, president and CEO of H.H. Brown, said the footwear industry is entering a new era, where cheaper labor will no longer be an alternative to raising wholesale prices. “It’s definitely a turning point in our industry and it’s not going to be solved easily,” he said. “We chased labor around the world. Now, we’re at the end of the maze and there is nowhere else to go.”

Funny it should be a footwear company that said that, as almost a couple years ago we predicted that would happen, using the phrase "time to strap on the sneakers again."  Chasing cheap labor can work for a while, but some competitors will be looking deeper into their organizations and creating change that saves more than cheaper labor ever can.  But this article tells a story of woe that goes beyond just rising labor costs, and basically indicts the entire offshore outsourcing mantra.

Many firms are bracing for steep increases in the costs of raw materials, labor, ocean freight and transportation. Skyrocketing petroleum prices, the weak dollar, new labor policies in China and increased competition for workers in the Guangdong region are all pinching the bottom lines of many companies.

Let's see... if you manufactured in the U.S. you could take advantage of the cheap dollar and significantly reduce transportation costs.  Which is why some foreign companies are outsourcing to America.  Now where are all the protectionists that want to erect artificial trade barriers?  In which direction?

Some companies expect the customer to just absorb the cost if their inherent inefficiency.

Skechers CEO Robert Greenberg said prices at Skechers could rise 3 percent to 8 percent. However, he won’t be looking for ways to substitute lower-cost materials. “We’re certainly not going to sacrifice our product just to make them cheaper,” he said. “[If the product is right] consumers will pay the prices and retailers will make more per pair.”

But perhaps the end of the cheap labor road is going to force some companies to see the light.

Wolverine is also reexamining its sourcing strategy and looking for savings wherever possible. “Competitively, we constantly have to try to find ways to do things better because it’s very difficult to pass it along to the consumer,” [President Ted Gedra] he said.

And some companies have already been working toward lean.  We told you about Nike's lean efforts in China just last month.  They aren't the only ones.

Adidas AG CFO Robin Stalker said the company was well situated. “We believe we are extremely well positioned competitively, vis-à-vis our competitors, in terms of lean manufacturing and engineering of our product."

Nike likewise said its efficiencies would mitigate cost increases. “Continued progress on gross margin initiatives and favorable selling currencies more than offset the impact of sourcing cost pressures such as higher oil prices, labor rates and stronger Asian currencies,” said VP and CFO Donald Blair.

I never thought I'd sound like a pompous diplomat and use the term "vis-à-vis" in this blog.  Oh well.  What's really sad is that the best option is completely outside the blinders of some of these execs.

While many footwear firms are tweaking sourcing plans for China, few plan to leave the country anytime soon.

“Going farther north may be an interim approach, but the reality is that as we see economies changing in China, it’s what the future is going to be, and we’re going to have to adapt as an industry,” said [Deckers exec Pat] Devaney. “Everybody has looked at India and talked about India, but there isn’t an infrastructure of support there to make it more cost effective. Yes, they make shoes and there are leather suppliers, but it’s not up to where it needs to be.”

At H.H. Brown, Issler said the economics of relocating manufacturing to India and Vietnam wouldn’t likely yield any significant savings.

[Sketchers CEO Robert] Greenberg agreed. “There is no moving to another country,” he said. “People talk about India, but that is light years away. There’s nowhere to hide anymore.”

Why hide?  Instead of devoting so much energy to finding the next cheap labor outpost in Timbuktu, setting up a new factory, training new people, enduring initial quality problems, and then doing it all over when labor inflation ruins your business model (again)... why don't you look internally to drive process efficiency?  You might find and remove so much waste that you could be competitive from North American factories.

New Balance and Allen-Edmonds do it.  Why can't you?

da Vinci - The First Lean Thinker?

I've been reading a fascinating book titled How to Think Like Leonardo da Vinci: Seven Steps to Genius Every Day.  I originally picked it up to learn more about the guy, but it really isn't that great of a historical text.  However the analysis of da Vinci's thought and analytical style was great.  There are even a few exercises to develop that style, and apparently an accompanying workbook.

Author Michael Gelb's seven steps to da Vinci genius are:

• Curiosita: An insatiably curious approach to life.
• Dimonstratzione: A commitment to test knowledge through experience.
• Sensazione: The continual refinement of the senses, especially sight, as the means to clarify experience.
• Sfumato: A willingness to embrace ambiguity, paradox, and uncertainty.
• Arte/Scienza: The development of the balance between science and art, logic and imagination ("whole-brain thinking").
• Corporalita: The cultivation of ambidexterity, fitness, and poise.
• Connessione: A recognition and appreciation for the connectedness of all things and phenomena; "systems thinking."

Sound familiar?  Think about the lean manufacturing analogies.

• Curiosity and testing knowledge through experience... going to the gemba. 
• Using sight as the means to clarify experience... visual factory and 5S.
• Embracing paradox... the counterintuitiveness of pull manufacturing and one piece flow.
• Ambidexterity... cross training.
• The connectedness of all things... the value stream.

Was Leonardo da Vinci an early lean thinker?

Poka Yoke Where the Sun Don't Shine

A fellow AME'er just sent me this YouTube video by Bob Hafey.  He does a good job of conveying the confusion the lay folks must experience when we deluge them with Japanese lean manufacturing terminology, and then plugs the AME Annual Conference, the world's largest lean conference, to be held in Toronto this October.  For good reason as it is always a great conference, for practitioners by practitioners.  Bob's last line of "now I'm going to go expedite some non-existent orders" is a classic and pretty much sums it up.  If you actually do that, you better register for the conference today.