November, 2007

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Article Index

Driving Lean through Your Supply Chain
Article by: Rob Tracy
The cultivation of a more efficient supplier network.
I see a yacht in my future! How about you?
Article by: Rod Greder
Massaging my temples just right I can see myself sailing a yacht across the Mediterranean. I don’t have the slightest bit of data that says I will ever own a yacht. But I’d love it to be true.
Measuring the 'Impact of Lean'
Article by: Chuck Lindberg
I am a self-described businessman with an admitted bias that people make the difference in an organization's success. So when I recently reviewed the article "Lean at Wiremold: Beyond Manufacturing, Putting People Front and Center" 1 I was easily sold on its central premise - that the use of mechanical techniques is not enough for transforming a company to Lean.
MN Economic Outlook
Article by: Dr. Ernest Goss
For the month of November 2007, reported December 3, 2007. For the second straight month Minnesota's Business Conditions Index declined, dropping to 50.8 from October's 54.1.
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Driving Lean through Your Supply Chain
The cultivation of a more efficient supplier network.
Imagine that you own a local restaurant. You run a tight ship with great food, a well-trained staff, and a welcoming ambiance that has brought your growing business praise and awards.

Despite your success, a few problems have come up. Your primary meat supplier is struggling to keep pace with demand for fresh Black Angus beef, and you've had to disappoint several hungry customers when you ran out.

With supplier shortcomings like these, you wouldn't be surprised to learn that your reputation is eroding and you're losing business. No matter how good you are internally, the quality of your supply chain is vital to providing value to your customers. Long-term success requires that all links in your supply chain provide quality, consistency and efficiency.

Lean manufacturing operates in the same way. If lean efforts are confined within the walls of your plant, the success of the program will be limited. In fact, an organization can only become 25-30% leaner using in-house initiatives if its suppliers are not equally lean1. To flourish, lean must be implemented enterprise-wide – including your supply chain.

What will I gain by choosing lean suppliers?
While it's impossible to force lean on the unwilling, you can make intelligent choices when selecting suppliers. When you select a supplier that has fully integrated lean, you enter a mutually beneficial relationship in which both parties stand to profit. What exactly will you gain from this lean partnership?

Value Added Manufacturing.
The ultimate goal of lean is not cutting, reducing or taking away. It's about determining where value lies and then redirecting resources to add value. Waste reduction is simply a means to achieving this goal. A lean supplier finds ways to increase the value you receive, whether that's providing ready-to-use parts, design engineering assistance, or reduced lead times.

Demand Flow Manufacturing.
Does your supply chain push inventory out on a preset schedule, or do you pull in inventory based on current demand? True lean suppliers utilize Demand Flow Manufacturing to keep their product constantly moving (flowing), giving you only what you need when you need it. They use a multi-skilled workforce, flexible manufacturing capabilities, and short cycle times to achieve flow. You benefit by reducing your inventory and the related waste of time, space and resources, as well as gaining a greater ability to make change orders and reduce defects.

Continuous Improvement.
Lean suppliers understand that lean is not a one-time fix. There are always more ways to reduce waste and enhance value, and even a process that has been "leaned out" once will become more efficient in subsequent passes. A lean supplier embodies Kaizen through continual improvements that make you a more successful manufacturer.

Learn more about implementing or improving a Lean MRS program, supermarkets, material movement systems, and metrics at the new Supply Chain Management Mini-Series.

This is an Excerpt from Driving Lean through Your Supply Chain, a free white paper from Intek Plastics. To read the complete article, please go to http://www.inteklean.com.

Footnotes
1. Womack, James P. and Jones, Daniel T. Lean Thinking: Banish Waste and Create Wealth in Your Corporation. (New York: Simon & Schuster, 1996), 266
Rob Tracy is the Chief Executive Officer of Intek Plastics, Inc. To learn more visit www.intekplastics.com

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I see a yacht in my future! How about you?
Massaging my temples just right I can see myself sailing a yacht across the Mediterranean. I don’t have the slightest bit of data that says I will ever own a yacht. But I’d love it to be true.

I also surrender to wishful thinking when I look at the future of my business’s products and services. It isn’t wrong to dream but it is chuckle-headed to think a certain way if there’s no supporting evidence and no action plan to get there.

“It’s tough to make predictions,” Yogi Berra is supposed to have said, “especially about the future.”

Proven tools and models exist to help us plan. Tools like road-mapping, technology forecasting, scenario-thinking, trend analysis, consumer value maps, interactive future simulations and futuring can be very powerful.

Let’s take a deeper look at scenario-thinking. Its significance lies in its ability to help overcome thinking limitations by constructing ‘multiple’ futures. The challenge then becomes to develop strategies that are robust enough (contain contingency plans) to succeed in various scenarios. Your focus should be on your capabilities and your realistic options as much as it is about nailing the exact future outcome.

I worked with a company several years ago that used scenario-thinking very effectively. One of their business units, in an otherwise commodity-oriented enterprise, was in a high-tech sector where the stakes of competition were becoming cost-prohibitive with lengthening product development times. The company tapped into some of the best minds in the public technology arena and consulting worlds for data and then built several likely scenarios that all would have required the company to radically change its approach to the business (read make hefty investments). They didn’t have the capabilities or competencies or the stomach for what needed to be done. They divested the business based on their scenarios. While selling the business is not a choice most of us want to consider, their decision has proven to be a wise one.

You should address the following questions as you develop future scenarios:
  • How will customers' value systems evolve?

  • Who are existing and potential competitors, and how are they changing?

  • Will business continue to be conducted as it is today? Analyze the STEEP variables; Societal, Technological, Economic, Ecological and Political factors to understand your future working environment.

  • Is it possible for new invaders to come in with an alternative product or substitute that will be even more attractive to the customer than the current product?

You can get data to help answer the above questions, foresee megatrends and to construct scenarios from the following sources:
www.trendwatching.com/trendreport/
www.faithpopcorn.com
www.wfs.org
www.futurist.com

Trends, competitors, customers and scenarios all can change after we think we have them pegged. Learning faster than your competitors is really the only sustainable competitive advantage in an environment of rapid innovation and change. Now back to my fantasy on my 60 foot, no make that 160 foot, yacht. It’s not a likely scenario but it brings great pleasure to dream.
Rod Greder, Ph.D. founded Breakthrough Forum, an innovation dialogue and accountability group, for product developers and marketers to tap the collective intelligence of their peers who have been there and done that. rgreder@improveproducts.com, (763)443-1531.

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Measuring the 'Impact of Lean'
I am a self-described businessman with an admitted bias that people make the difference in an organization's success. So when I recently reviewed the article "Lean at Wiremold: Beyond Manufacturing, Putting People Front and Center" 1 I was easily sold on its central premise - that the use of mechanical techniques is not enough for transforming a company to Lean.

Lean is very much about the people, and everything - organization structure, culture, job design, and human resources policies and programs - has to drive and support Lean behavior to create the highest chance of success.

But what organization structure changes are we talking about? Which human resources policies? What needs to be different about employee communications programs? How should employee recruiting practices change? What parts of the pay program need revision?

Wiremold changed everything, starting with a total commitment to Lean manufacturing as a business strategy, backed by a "Lean way or the highway" type of requirement that everybody get on board. What further changed is too long to detail here, but suffice to say that every policy and practice was examined and, if found to be out of alignment with Lean principles, was either changed or discarded. The results were astounding: sales increased 450%. The company's value soared from $30 million to $770 million. Employees' trust in management increased to the 90th percentile of companies using a common evaluation scale.

How are Minnesota companies doing? Are they making these changes, and are the changes being made resulting in an operational difference? Stay tuned. An initial attempt at finding answers will soon be launched. A special "Impact of Lean" section is included in the upcoming "2008 Manufacturing Compensation & Benefits Survey" to gather data on these topics. The section will include a series of questions in three areas:
  • The use of Lean manufacturing techniques

  • Implementation of human resources and cultural changes

  • The operational and business results being produced by these changes.
Analysis of the responses to this section of the survey could provide insights into how Minnesota manufacturing companies view Lean, how significantly they are changing their organizations, and what payoffs they are experiencing. It can also help you benchmark how your company's progress compares to your peers.

Watch for your invitation to participate in the 2008 Manufacturing Compensation & Benefits Survey and take the opportunity to share what your company is accomplishing.

Footnotes
1. Authored by Orest J. Fiume, Wiremold's former Vice President of Finance and Administration. Published in Journal of Organizational Excellence. Spring 2004.
Chuck Lindberg is President of Denarius Human Resources Inc. and may be reached at (651)482-8606. Learn more about Denarius Human Resources at - www.denariusinc.com

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MN Economic Outlook
For the month of November 2007, reported December 3, 2007. For the second straight month Minnesota's Business Conditions Index declined, dropping to 50.8 from October's 54.1.



Components of the overall index for November were new orders at 50.0, production at 54.8, delivery lead time at 57.1, inventories at 50.0, and employment at 42.9. "Two of the nation's weakest industries, housing and domestic transportation equipment manufacturing, have accounted for a large portion of the pullback in Minnesota economic growth. Food processing firms also reported reduced economic activity. A strong Canadian dollar, making U.S. goods cheaper in Canada, will tend to boost Minnesota exports in the months ahead. The state's new exports orders index was well above the region with a November reading of 53.0," said Goss.
Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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