Evolving Excellence

Lessons from Japan: Rapid, Disciplined Problem Escalation

Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.

One of the most memorable parts of my trip to Japan was watching the Toyota Kyushu manufacturing lines, and especially how the auto assemblers handled problems.

If the operator has a problem, he pulls a cord that sounds a chime.  Another person in white gloves comes running.  The problem escalation method is something many of us struggle with, and the Toyota solution is to create very simple decisions and multiple decision points.  The operator begins with "is there a problem, yes/no".  If "yes" he pulls the cord.  The guy in white gloves comes running and has another simple decision "is it really a problem, yes/no".  The two of them have literally under a minute, one takt, to make that call.  If "yes" then the line stops and the supervisor comes running.  He has a simple decision of "can the problem be fixed within two takts (about two minutes), yes/no".  If "no" then the decision goes one more level to "shut the factory down".  Within three minutes a problem has been identified, attacked, almost always resolved, but potentially a decision has been made to shut down an entire factory.

How often does the chime sound?  About once a minute throughout the factory.  There is no problem reporting a problem.  The intent is to find it and get it fixed, fast.  As in within a minute.  How long does it take you to identify, report, and fix a problem?  I know what you're thinking, I'm embarrassed too.

There are about seven parallel assembly lines, running head-to-toe, to make each vehicle.  Each are synchronized but independent to allow for a three to seven vehicle buffer, which thereby allows for each individual line to be shut down for two takts two or three times per shift without shutting down the entire factory.  "Buffer" is probably a misnomer... remember that it represents about five minutes.

It really was happening literally every minute.  The chime, the running around, occasionally the line would stop for a takt, then it moves on.  Problem identified, investigated, and resolved in under a couple minutes.  Longer than that and a decision is made to shut down a $1 million per hour factory.

Pressure?  Not really.  The decision-making is so defined that it becomes easy.  The desire to find problems easily outweighs the potential cost.  Shutting down the entire factory is still better than letting a customer receive a quality problem.

How many of us get squeamish over a $5,000 problem, or a decision to shut down a line making a few grand an hour?  How many of us try to rationalize issues, subjectively decide if they are "acceptable" or "noticeable" or try to "reinterpret specification?"  How much time is wasted when a line is "almost ready" to start producing after a changeover?  Why do we let that happen?  We're all focused on quality and customer value, right?

Because we haven't made the decisions easy, and high impact decisions acceptable.  Because we are still concerned about cost over quality, not realizing (or accounting for) the fact that the eventual cost of poor quality far exceeds the cost of finding it early.

The key aspects of the Toyota system are:

1. Very clear and discrete decisions at each level: typically "yes/no"
2. Very defined escalation structure from line operator to support guy to line supervisor and above
3. Very defined time intervals in which decisions have to be made
4. Acceptance and outright desire for problems to be found and action taken, sooner rather than later
5. The root cause of problems is investigated and rectified so they don't occur again

That doesn't sound too hard, does it?  Top leadership must reinforce and support the identification of problems without repercussions. The escalation criteria must be agreed to, and people held accountable to executing the escalation structure within the criteria and defined time intervals.  Top leadership must become part of the escalation structure.

Of course not every problem can be solved in under three minutes.  But I bet we'd be surprised how many could be. 

Stand Up Desk - Update & More Science

I've now been working at my stand up desk for a few days, a concept I brought back from my trip to Japan, and I'm loving it.  Ok, I will admit the first couple days were pretty rough, and had it not been for a good pair of shoes and a hot tub, I might have even re-thought this idea.  But today was great.  I really do feel more productive and energetic.  And the steady stream of employees stopping by to see their "wacky president" has been entertaining.  Many of them leave wanting to join the wacky club... perhaps that's leading by example?

I have received a boatload of emails from people who have also taken the wacky plunge, every one of them positive.  I've also heard of several companies that have gone or are going stand up company-wide.  All positive again.  And there have been several emails from people relaying an apparently popular modification of the idea: a treadmill coupled with the stand up desk.   Here's just one example.

Shimon Rura pointed me to a few articles on the benefits of standing up.  You might also want to check out his own blog post on the treadmill-enhanced stand up desk, including a photo. 

The New York Times had an article a couple years back on some Mayo Clinic studies on standing versus sitting, which coincidentally convinced one of the study docs to go stand up himself.

The heavier ones tended to sit, while the lean ones were more restless and spent two more hours a day on their feet - standing, pacing around and fidgeting. The difference translated into 350 calories a day, enough for the heavy people to take off 30 to 40 pounds a year, if they would get moving.

30 to 40 pounds a year at just two more hours on your feet.  So going stand up for eight hours... hmmm... I should be ready for the beach in a month or so.  After which I'll keep my eye on the nearest pizza parlour.  Or pub.  Or both.

When it comes to this mission, Dr. Levine may be his own best guinea pig. "If anyone in the world is going to do this it's obviously going to be me," he said. At meetings, he stands instead of sitting. Talking on the telephone, he paces around. In his office he has a treadmill in place of a desk. He got it last year when he saw the data from the study comparing lean people and obese ones.

"He has installed a second treadmill alongside his own, and he encourages visitors to hop on and stroll while they talk to him. It takes some getting used to, but, he says, envious colleagues at Mayo have been clamoring for treadmill desks.

"Walking at work, first of all it's addictive," he said. "It's terribly good fun. I actually feel happier, particularly in the afternoon. You might think you come home exhausted, but you don't. You come home energized." For him, the treadmill has eliminated the afternoon slump, when a lot of people feel sleepy and crave candy bars or caffeine.

"I've become convinced we really can generate an office environment where people are on the move and are happier," he said.

So energy and happiness are other effects.  I like that.  Many years ago Fortune described how standing helps the brain work 20% faster and can even ward off Alzheimer's.  I like that, too.  Bernard Wechsler has an interesting article on the benefits of standing up, with a couple of the points being,

Did you know that Benny Franklin and Tommy Jefferson worked all day from their (vertical) Stand-Up desk? I checked and Ben lived to about 92 and Tom 81, both with all their marbles. Get a vertical desk and you'll cut sitting 65%. Now remember, the muscles holding up a 195 pound body burn twice the calories of the same sitting weight. Stand your way to weight loss.

Sitting all working-day affects our immune system and is disease causing. Sitting reduces fat and cholesterol metabolism and produces more of both. Standing and strolling around our desk and office awakens our enzymes activating good metabolism. Blood vessels to our leg muscles are shut-down after sitting a couple of hours.

I like my marbles.  I like energy and happiness and being able to wear a Speedo... not that I'd ever do that for other reasons. 

I guess I like being wacky.  Who else is joining the wacky stand up club?

Japan Kaikaku Experience - The Summary

I've received several requests to provide all of the links to posts on my recent Japan trip on one page, so here they are.  I still have a few more potential "lessons" posts bouncing around in my head, and if they see the light of day I'll add them to this page as well.

Factory Tour Reports

• Day 1: Toyota Kyushu (The Manufacturing Ballet)
• Day 2: Saishunkan Cosmetics (Customer Service Trumps a Factory)
• Day 3: TOTO Faucets (Cells, Cells, and More Cells)
• Day 4: Electronics contract manufacturer (5S Gone Wild)

Lessons From Japan

• Stand for Action
• Harmony, Chaos, & Ruthlessness
• The Speed of Change
• Rapid, Disciplined Problem Escalation

Implementing the Lessons

• The Stand Up Desk [Update 1]

Trickling Down on Detroit

Last month I wrote what I thought would be the last post on bailing out the Detroit Three automakers.  I should have known better, especially after last week's election.  Once you prime the government trough, it's very hard to turn it off.  There's already talk about another "stimulus package" and even, yes, yet another bailout for the Detroit Three.  Geesh... I wonder where all that money is going to come from.  Oh that's right... the fewer and fewer of us that actually pay taxes.

Obama said Friday he would push Congress to accelerate the delivery of 25 billion dollars in loan guarantees aimed at helping automakers develop more fuel efficient vehicles ahead of upcoming regulation. The Big Three asked for another 25 billion in loan guarantees for more general expenses during a meeting with top lawmakers in Washington Thursday.

Even NAM, that industry association that has spent most of the past two years criticizing everything even the slightest bit left-leaning, now weighs in on Obama's side.

"Automakers need immediate funding to stay on track during this difficult time," said National Association of Manufacturers president John Engler. "We're talking about close to a million jobs in America -- we're talking about a lasting impact on our industrial production in the United States. We simply cannot afford to let the auto industry fail."

Presumably Engler means "Detroit automakers" as although they're technically eligible, the foreign companies have turned down the handouts.  Maybe it's time to take another look at NAM... it's been a while.  Will subsidizing pathetic management really save those jobs long term?  Probably not.  The miscalculations of the Detroit Three have been pretty phenomenal.

But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products. As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with -- and with varying degrees of success.

Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars. And even where it has, lamented Consumer Reports' auto analyst David Champion, it has needed "more models that were exciting for people to buy."

Our friends in the hollowed ivory towers of Wharton recently provided similar comments.

I would just add that over the years, probably in the last decade or so, decade and a half, they made a lot of strategic mistakes. You know, basically, years ago, they had a very favorable industry structure. Industry forces were positive. They had power over suppliers. They had power over buyers. Buyers didn't know much about buying cars. They had size, they had market share. It was an oligopoly -- three firms. All of a sudden, the world changes. Competition comes in. The customer gets much more knowledgeable, because of the Internet. Suppliers become more powerful. The UAW had a history with GM of bad relationships. And that's not carrying over positively right now. And so when you put all of that in perspective, and given what John Paul also said -- that in fact, you can see some strategic errors, and just inability to manage their company well.

So why not give them more bucks?  A billion here a billion there... apparently it doesn't matter much these days. 

Let me get this straight: we have to bribe historically pathetic management to save a bunch of jobs that are supposedly protected by unions, while without any prodding Toyota is spending $35 million a month to save U.S. factory jobs when they don't even have unions breathing down their backs?  Yes I know Toyota has an incredible cash position.  Isn't that a function of leadership?  Which form of leadership do you want to ensure survives long term?  Who should really get the bribe?

And wait a minute... doesn't this latest auto bailout sound a lot like supply side economics?  From the same Democrats that complained about Reaganomics?  Trickle it down, baby!  Dump it on top and hope it helps the common folk.  I would have thought the Dems would at least focus on pushing on the balloon from the demand side.  Funny how politics works.

Factory Tour of the Week: Pepin Garcia Cigars

This week we'll take a trip down south to see how Pepin Garcia makes some fine cigars.  Sort of wants to make you leave the high tech world, doesn't it?!  Is one piece flow possible?  Should we care in this case?

Examples of Excellence: Stand Up Desk

Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.

This week I'm going out on a limb to show what I hope will become an example of excellence.  Earlier this week I wrote a "Lessons from Japan" on how standing up improves efficiency and speed.  I thought I'd better take my own advice, so over the past couple days I've radically changed my office.  So here is the "before" photo:

And here is the "after":

Am I nuts? Only time will tell.  But I do actually feel more productive!  And yes, I know there are a couple bottles of wine on my desk... when your office is in a region with 130+ wineries within 30 miles, that happens.

Shipping Water Across Water

Take a look at the bottle on the right.  Everyone's seen Crystal Geyser before, right?  Take a closer look.  See anything different?

Yes, there's Japanese on the label.

I took this photo while in Japan last week, and Crystal Geyser bottles were everywhere.  The label still says "Bottled at the source - Mt. Shasta, California" so we know where it came from. 

Crystal Geyser is shipping water thousands of miles across the ocean.  Across a Date Line even.  How do they do that?  In the U.S. large volume bottled water manufacturers have profit margins between 10 and 30% (specialty waters can be considerably more).

There's plenty of water in Japan, even a nice big volcano next to Tokyo that looks remarkably like Mt Shasta.  And there are plenty of Japanese bottled water manufacturers.  But Crystal Geyser competes, presumably successfully.

U.S. companies can figure out how to ship low margin water across the oceans and make money, but tech companies complain they can't compete against their global counterparts.  Go figure...

Now I guess I should try to figure out how Fiji makes money shipping water to the U.S., but I think that answer is easier.  For some reason we're willing to pay twice as much as other bottled water, and probably 100x the cost of tap water, to delude ourselves into thinking that Fijian water is somehow more pure and tasty and beneficial that basic tap water.  I guess, in some warped way, that delusion can still create value from the perspective of the customer.  Basic intelligence not required.

The Dilution of the Shingo Prize

It's been a long time since we've talked about the Shingo Prize, but some of our long-term readers will remember when we took the Prize to task exactly three years ago.  That was the year when the Shingo Prize, once called the "Nobel Prize of Manufacturing," was awarded to multiple Delphi plants.  Yes, Delphi.  As we put it back then,

Delphi was not lean.  Their inventory turned so slowly it was almost imperceptible.  Their cost did not improve.  They may have achieved excellent quality levels, but they proved unable to translate that to bottom line improvement.  We don't need to go over the same old ground.  They looked lean, but they weren't lean.  The legacy cost whining began after it was plain that their lean effort was not producing results.  They are back to the same old, worn out automotive industry solution - blame it all on the Unions, close plants, outsource work to Asian countries, blah, blah, blah.  They have a lawyer in charge who is trying to accomplish in Court and on Wall Street what they were unable to accomplish in their plants.

Clearly the bankruptcy of Delphi is evidence of a gaping hole in the Shingo Prize criteria, as well as in the lean body of knowledge.  That is no big deal - just learn from it, improve the Prize criteria, and move on.  It is what good manufacturers do every day - they make mistakes, they learn, they improve.  To take a defensive position, however, and repeat the self-serving rationalizations coming out of Delphi management does a disservice to manufacturing and to Shingo's legacy.

Apparently they did learn, as the Prize criteria changed a bit.  Unfortunately in more ways than one.  The Prize has evolved from a manufacturing prize to one broadened to "operational excellence."  Additional categories were added for public sector and research, and apparently there will be future categories for industries such as healthcare.  Multiple silver and bronze levels. Now it has extended the Prize to a bazillion regions, from the northeast to the northwest, multiple state level prizes, and it has even jumped the pond.

I like much of the Shingo Prize criteria; in fact I have used it as part of the model for guiding lean transformations at multiple companies.  I have many friends on the Shingo Board of Governors and the Shingo Academy, and there are many deep lean thinkers and innovators in those two groups that I have tremendous respect for.  I even have a quote from a prior Shingo Prize executive director in the header of this blog

But what is going on?  The Shingo Prize used to be awarded to very few companies, and even if the criteria were flawed it had a large measure of prestige.  Now the criteria have been revised but the Prize is awarded to companies in multiple industries, levels, and regions. 

If this isn't stopped it will become as diluted as the Oscar... there will be a Prize for the best donut shop within five miles of a medium-sized police station within the state of Alabama when the moon is full.  I can hear it now at the next Prize ceremony... "Earlier this evening the following prizes were also awarded..."

Who is the branding expert at Shingo?  He is obviously skilled at "fragmentation branding," perhaps gaining his experience at a toothpaste or detergent company.  It's sort of like Rolls Royce hiring a guy from Proctor & Gamble.

Of course there's the question of the fundamental value of the Shingo Prize, or any award for that manner.  Ever ask a true lean company like Toyota or Danaher whether they go for such awards?  Their answer will be "what value does it have for the customer?"  Good question.  Shouldn't a Prize devoted to excellence as measured by creating customer value automatically disqualify any company that applies because the act of applying creates waste, demonstrating the company doesn't understand customer value?  Now there's a statement that will require a couple aspirin if read twice! 

Conundrums can create interesting business models.

Lessons from Japan - The Speed of Change

Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.

I recently returned from a week in Japan, where I toured four world-class companies as part of Gemba's Japan Kaikaku Experience.  The company tour reports are here: Toyota, Saishunkan, TOTO, and an electronics company.  Although each company was radically different, there were also some commonalities that can provide important lessons.  Some are perhaps a little superficial, but still powerful, and others reach to the heart of lean.  As part of my attempt to process and record what I've seen, and to create some plans for future action, I thought I'd try to write about some of the common themes.

Todays subject: the speed of change

Each factory I visited in Japan executed a large number of changes extremely quickly.  As examples:

• Toyota production line operators escalated problems, identified root cause, and implemented solutions... within 3 takt times... about 3 minutes.  It happened somewhere on their line about once a minute.  They also average one suggestion per employee per month.
• Saishunkan reviewed 8,000 customer logs per day which created an average of 400 improvement suggestions per day that were handed out to improvement teams.  Yes, I said per day.
• TOTO changed from assembly lines to over 200 workcells in a little over a month.
• An electronics company performs over 500 5S improvements per month.

Those examples would have been unimaginable to me if I hadn't seen them myself.  Obviously there are other programs; for example Toyota also has some long-term improvement projects, but the sheer quantity of smaller changes adds up to significant improvements in productivity and quality.

In reviewing my notes I came across some commonalities that help explain the quantity and speed.

• Bureaucracy is minimal, approvals are minimal, documentation is minimal. 
• A large number of small rapid improvements is preferred over a small number of week-long (or longer) western-style kaizen events.
• The process of identifying and executing change, the creation of the mindset, is sometimes more important than executing the change itself.

Toyota documents suggestions on one-page A3's... and these suggestions can still be very small compared to what we're used to: for example, moving a bin from one side to another in order to reduce arm movement by two inches.  A small award is still given in such cases.   It is often more important to simply have a culture that creates change, than tracking the individual changes themselves. 

The key to rapid change is to reduce the endless discussions over inconsequential nuance and remote possibilities, to reduce the bureaucracy often created to track changes, and to allow individual authority to make changes.  How many changes get stifled because it would take too much effort to record them?  Or because the wording of a document change wasn't quite right or could be potentially misinterpreted by some small subset of the population?  Or simply get what-if'd to death?

Many organizations have problems managing exception documentation that can create improvement... NCMR's, CAPA's and the like.  Why does it take months and even years instead of hours or at the most, days?  Generally because they sit, like excess WIP inventory, relegated to a low priority.  One company had a policy: the NCMR could not be physically sat down until it was completed... it had to physically remain in someone's hands.  Execution time?  An hour or so.  It was a "non-negotiable" if you remember what I wrote yesterday. 

We need to support change and give individuals the opportunity to make it happen.  This takes a level of trust, as well as a recognition and acceptance that some of the changes may not work out.  If that happens, simply change again, always trying to improve.  There are very, very few changes that can't be recovered from.  Sometimes you have to just try it, just do it.

Lessons from Japan - Harmony, Chaos, and Ruthlessness

Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.

I recently returned from a week in Japan, where I toured four world-class companies as part of Gemba's Japan Kaikaku Experience.  The company tour reports are here: Toyota, Saishunkan, TOTO, and an electronics company.  Although each company was radically different, there were also some commonalities that can provide important lessons.  Some are perhaps a little superficial, but still powerful, and others reach to the heart of lean.  As part of my attempt to process and record what I've seen, and to create some plans for future action, I thought I'd try to write about some of the common themes.

Todays subject: harmony, chaos, and ruthlessness

The Gemba Research team did a great job of providing an initial orientation to Japanese history, culture, and key phrases.  I won't go into the details as some of the cultural side activities are very unique and are what makes their Japan Kaikaku Experience the best tour available, but the blend of factory tours and cultural awareness was perfect.

One of the major cultural points was the concept of "big harmony" or yamato.  To achieve such balance, Japanese society has refined a plethora of cultural traits: humility, loyalty, respect and consensus. Maintaining harmony can be more important than success or even truth.  How to greet a coworker politely is one of the first topics in a new employee orientation, and not following those expectations is a reason for dismissal.  It is truly that important.

This is why there can be significant misunderstanding and miscommunication between Japanese and western cultures.  The Japanese will forgive major transgressions if a simple apology is offered, but will hold a major grudge on even minor issues if there is no apology.  Similarly Japanese will go to great lengths to avoid confrontation, while their western counterparts prefer to vociferously discuss issues and will become agitated if they can't make their point.

In the field of business, however, this often results in a lack of leaders who are willing to stand out from the crowd, promote themselves and act decisively. “The nail that sticks up gets hammered down” is a common Japanese refrain; “the hawk with talent hides his talons” is another. Whereas American and European bosses like to appear on the covers of global business magazines, their Japanese counterparts are comfortable in their obscurity. Business in Japan is generally run as a group endeavour.

This is why, counter to popular perception, lean is not grounded in or even compatible with traditional Japanese culture.  Lean requires taking unpopular stands on concepts that can be decidedly counterintuitive.  Lean is often not ordered, instead it thrives on leveraging a certain level of chaos.

Part of our Japanese history lesson tied directly to this phenomenom.  During the 1500's Japan was fragmented and at war with itself.  Three leaders came along, the first being Oda Nobunaga, who is known for being ruthless.  He showed no mercy to his adversaries, but this heavy-handed approach helped end the wars and create a foundation for peace.  Vying for control and assuming the leadership after Nobunaga was Toyotomi Hideyoshi, who was known for his smarts.  He helped build social structure, and people saw him as a true leader.  And waiting all along and finally assuming control after Hideyoshi was Tokugawa Iyeyasu.  He had been waiting for his turn all along, and was very patient.  The rewards finally came.

Think about the lesson, or metaphor, that history provides to the lean transformation:

• Ruthless
• Smart
• Patient

The initial stages of a lean transformation are tough, with many counterintuitive concepts such as one piece flow instead of batch.  There needs to be some ruthlessness by a leader to get the process started.  One of the companies we visited called those types of things the "non-negotiables"... the leader had edicted that they would be implemented.  Period, end of discussion.  That saved the company from years of discussion.  5S was one of those non-negotiables, as was a requirement that everyone be open to change.

After the initial framework is in place, then it pays to be smart.  Educate the workforce, implement new tools and methods, and work on the key metrics.  Drive change.  Create the solid structure for lean to thrive.

Finally, on an ongoing basis, be patient.  Many of the rewards of lean take time, which is why public companies with their short-term outlook driven by the stock investor community have such a hard time implementing real lean.  Solid lean companies know that time is on their side.  This is one reason why Toyota has formal 50 year plans, 10 times greater than that of most companies.

One key lesson is that it doesn't pay to skip the ruthless stage.  Many of us prefer to lead via consensus and guiding a collective knowledge, but that can be counterproductive.  Leaders need to be willing to lay down the law and make those tough calls in order for the organization to move forward.