Competing June 2005

“The Enemy”

When I first arrive at a new client’s facility I typically find the following:

  • Confusion and disorder
  • Too much inventory, raw material, WIP and Finished Goods
  • No obvious, visible product or process flow
  • People and material waiting
  • Disconnection between customer requirements and the “supply mechanism”
  • Ineffective communications
  • High scrap and rework
  • Poor training
  • Less than 1% value added time

Yes, that is 99+% of the time, the product or service is waiting for value adding attention.

Typically, we do not get paid (or cannot invoice) until the product or service is complete.

That means our cash-to-cash cycle is being increased!

How can this be?

What is in the way of improvement?

The answer is waste or MUDA. If we are clear that this is the enemy we can begin to focus our efforts on identifying and eliminating waste, which, quite frankly, often is our process. Taiichi Ohno, founder of the Toyota Production System, succinctly said: “All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes”.

First, purchase a copy of Bruce Hamilton’s video “Toast Kaizen” (Greater Boston Mfg. Partnership (617) 287.7648). One of the best, most practical lean videos I have every watched, Bruce walks us through the process of making toast, with wonderful examples of waste and simple improvements that have huge impact. Use it to train, provoke thought or encourage questioning existing practices. On Gemba (“where the action takes place”) Bruce talks of “direct observation as the most effective means of identifying waste. It’s been claimed that Taiichi Ohno trained by drawing a chalk circle on the floor in front of a machine and instructed the trainee to stand there until he or she had an improvement to suggest. Whatever you do, recognize that waste is costing you money and only you and your team can implement counter-measures.

Then go “muda hunting”…


  1. Overproduction
  2. Inventory excess/storage
  3. Repairs/rejects
  4. Unnecessary motion
  5. Process inefficiency
  6. Waiting
  7. Transportation (parts and materials)
  8. Underutilizing people – skills, experience, creativity…

Competing April 2005 Edition

Are you happy with your ERP (Enterprise Resource Planning), MRP (Manufacturing Resource Planning), WMS (Warehouse Management System), or SCMS (Supply Chain Management System)?

* Is data easy to find and use?
* Is you data complete and accurate?
* What about your perpetual inventory accuracy?
o Are your inventory cycle counts on the money?
o What do you do when they are wrong?
* Does you system effectively support your needs, or do you spend too much time “fixing errors so that you can run and report, batch update etc”?

After years of evaluating and implementing information systems and then two plus years of demonstrating an ERP system (Made2Manage) I believe the following to be true:

Too much data is waste.

The more data you have the more it costs to enter, fix errors (the more transactions the more errors), maintain and report.

In my career I have suffered from the too much data syndrome. That means a pile of “so what” reports. “So what” is information I cannot act on in a timely fashion.

Apply lean concepts; such as 5S or 6S (safety added), to information systems can look like this:

Sort your data, eliminating all but the absolutely necessary.

Straighten your data simplifying transactions, making it easy to enter, find and use.

Shine your data – error proof transactions, fix all existing errors.

Standardize your data transactions – variation is the enemy of accuracy.

Less is better… or when in doubt throw it out. Determine what critical data you really need. Organize and mistake proof what is left. Shine existing data and Standardize all data transactions.

Start small, but start now… plan-do-check-act.

Competing March 2005 Edition

8.5 ways to improve inventory accuracy

1 – 5S – sort, straighten, shine, standardize and sustain your inventory

• Classify and sort inventoried goods according to their turnover (Pareto or ABC analysis).

• Get rid of all the obsoletes. Sell them, give them away or throw them away! Why wait?

• Create a routine so that poor (dirty and untidiness) conditions are not tolerated.

2 – Create your own way of measuring inventory accuracy.

3 – Implement a way so that cycle counting (daily, no more than one man-hour) tells you the current inventory accuracy.

4 – Constantly measure and post inventory accuracy

5 – Meet daily with inventory accuracy champions (15 minutes) to talk about the root cause of inventory inaccuracy (like incorrect Bills Of Materials, lack of discipline while closing shop orders, inaccuracy in the receiving area, etc). It is not okay to have inaccurate inventories; you must do something about it!

6 – Continually identify root cause and use the kaizen process to implement and measure progress.

7 – Continually sell the value of the process to key employees (your “list”). Show the importance of an accurate stock (factory stopping, sudden changes, poor customer service,…)

8 – Give visible recognition when something has been fixed

8.5 – Keep on improving (move to bar-coding if possible, Automate as many steps as possible in the information flow).

Competing January 2005 Edition

A new year, a clean slate and a challenging economy…..what an opportunity!

At some level, we all think we are doing our best for our shareholders, customers, employees and vendors, but will the same old way still work? The world economy continues to change so fast it’s frightening.

• Do you expect change will slow down anytime soon?

• Do you believe you need to make changes to grow or maintain your business’ competitive position?

• Do you believe you can improve your company’s effectiveness and competitiveness?

• Can you lower your costs?

• Can you get faster and more responsive to ever changing demand?

• Can you gain market share?

• Can you increase sales?

• Can you improve profitability?

Late in 2004 I had the opportunity to see two wonderful presenters at TEC meetings ( ). With apologies to the speakers, this is the primary message I heard:

Make a list of those who can withhold support and impede success, then include key members of that group in the development of the improvement plan. If it’s their plan they will make it work.

It’s becoming a Wal-Mart economy that means customers will begin to analyze your P&L and strike items such as Sales, General and Administrative from fixed overhead. They don’t need or wish to pay for your sales staff…….just cut the price.

Define the role of your strategic management team to assure focus on:

• Continually evaluating the present and future needs of your customers

• Satisfy those needs profitably

• Continually monitor your competition

• Keep your competitive advantage appropriate

Like the Godfather said, “Keep your friends close but keep your enemies closer.”

I am excited about the challenges 2005 will put in our path. Life is about challenges and how we deal with them. It is very possible 2005 will be a tremendous year for your company. Keep a careful eye out for the “Tipping Point” that may create rapid changes in your industry or the overall economy. Be ready to respond to those changes fast. Flexibility and the ability to turn on a dime are requirements for the new economy. Just ask U.S. Airlines, IBM or Polaroid.

Brilliance is a wonderful thing, but I’ll take courage and resilience. Brilliant ideas that cannot be implemented are a waste. Courage and resilience along with the practical, disciplined application of common sense will serve your company and our economy well.

The Lean Network of South Central Pennsylvania will be focusing on these and other challenges through 2005.

Happy New Year and my best wishes to each of you.

– Dwight Bowen


Competing November 2004 Edition

“It’s Not Fair”

• It’s not fair that our competition’s labor costs 10% of ours.

• It’s not fair that our health care costs rise 20% or more each year

• It’s not fair that our raw materials (steel, petroleum products) are sometimes scarce and their costs are rising by double digits.

• It’s not fair that my competition out sources administrative, technical and even customer support service functions to India and/or China for 10% to 20% of our domestic costs.

• It’s not fair that we have so many regulations on our business.

• It’s not fair that our taxes are so high.

• We are no longer competitive and it’s not fair

We all hear these comments almost daily and sometimes we hear ourselves saying them. It doesn’t matter what part of the United States your business is located or what your products or services your business provides, it’s basically the same situation.

We all wish there was a way to level the playing field. I know many of us feel like a football coach with 9 players on the field competing against 11 players. It’s clearly not fair.




Well…what can you do about it? First of all, forget about feeling sorry for yourself. The current business climate is reality and you have to respond to that reality.

The best source of information regarding what makes your customers and prospects buy are your customers, prospects and even your competitors. In the “Little Red Book of Selling” Jeffrey Gitomer says selling is about value creating relationships, and that it’s more effective to compete on value than on price. One of my favorite Gitomer quotes is: “If you offer no value, all that’s left is price”. My experience over that past few years is that if you compete with China or other low wage economies, selling on price is the kiss of death.

Here are some suggestions as to how to move from price-based competition to value creating competition:

1. Ask your customers to talk about their operational problems. If you can, audio or video tape the conversation. Play it back at least SIX times……..take notes…….this information is gold.

2. Value Stream Map your process. This should result in the identification of overproduction, excess inventory, repairs/rejects, unnecessary motion, process inefficiency, waiting and excessive transportation and other wastes in your process. Waste is your enemy.

3. Implement your “waste reduced” (working towards waste free) Future Value Stream Map.

4. Measure and monitor key results. You will make mistakes. Make the mistakes short lived and obvious by auditing critical functions frequently. Meet with your continuous improvement teams frequently and adjusts your plan as required.

5. React more effectively to customer demand. Focus on money, yours and your customers. Make it flow as fast an often as possible to collectively build trust and wealth. It is possible you can work with them, and your vendors too, on a mutually beneficial, and profitable, partnership.

6. Keep your eye on the target! Continuously improve or die. Competition will continue to be fierce. A company with a continuous improvement culture will win most competitive battles. Become that company.

Creativity is key to winning in today’s competitive marketplace. I am sure you can add to my suggestions. Please do. In fact, do whatever it takes (if it’s safe, legal and moral that is) to create value in your customer’s eyes. Work hard to outpace your competition. I believe, creativity, hard work and clear thinking are competitive advantages. Get started by putting these advantages to work for you today. What good will it do you to wait?

Competing January 2004 Edition

“Selling Change”

So… few of your employees really believe the newest operational changes you are suggesting are worth their effort. Well, after nearly thirty years of experience as a change agent I have some hints for effectively managing change that you may find useful.

You have to believe that it is possible to make major changes in your organization and involve your employees in the change process. Most of us want to be associated with positive progress; it’s good for our personal economy, self-esteem and the overall health of the enterprise. In short, everyone can win. This approach can work for you, it has been and is being done all over the world, including our region of south-central Pennsylvania. Before you sell anything you have to believe in it. Selling change is fundamentally no different than selling light bulbs; if you truly believe in your product/process there is a chance you can sell it to others. One key to effectively communicating is your obvious belief in what you are selling, your audience will notice. In most companies it is nearly impossible to make operational changes by yourself. Inclusion is one of the foundations of effective change management. Selling the value of the changes to others is necessary for them to buy in and then help develop and implement the planned changes. That means you must be prepared to answer this question, immediately, honestly and effectively. “What’s in it for me”?

Some hints on selling the process:

Explain the pending changes to everyone so they all hear the same words. Make sure to carefully say the truth, clearly and to the point. Remember, it’s not what you say, but what the listener hears that’s important. Take time to create a positive environment and then deliver your message, spending an hour with your people discussing why upcoming changes will be made and what they might expect as a result is a wonderful investment in the future of each employee and the overall company.

I believe everyone loves to win and hates to lose. Structure teams with this in mind. A focused, measurable objective that can provide the team with constant feedback is critical to success. Informing those effected of their collective success or need to modify their plan allows them to make necessary changes immediately. Some of you may think this sounds like “Kaizen” the Toyota based process of rapid, continuous improvement. If you thought that you are right. Call it what you wish, the process works.

Mention that no process is perfect and that mistakes will be made.
This statement alone can win allies and credibility for your process change. Significant operational change will have mistakes. Your credibility and the credibility of the project will grow if you initially announce that mistakes are likely, but will be measured and solutions developed quickly.

Plan, Do, Check, ActMeasuring the performance of any new system is critical to its success. What gets measured gets done. If I know you are measuring my performance, you clearly have my attention. Shugart or Deming’s “Plan-Do-Check-Act” works.

In order to change outcomes the process must be changed. Change is challenging, but necessary. Remember, to be competitive you need to continually improve. That means change is not optional. Successful companies are ready, willing and able to change rapidly and do it constantly.