March, 2007

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Article Index

Garbage In - Garbage Out: Selecting the Right Product Development Projects
Article by: Rod Greder
How many of you have made personal investments that did not perform the way you expected? I can sense many hands reluctantly rising. I listened to a financial advisor who sold me funds that tanked at the very time I needed them to be maxing out to help fund my children's college educations. I did not use all the tools available to select the funds with the highest probability of success. I am literally and figuratively paying for that lack of attentiveness today.
Compliance News Notes: In the Courts
Article by: Vija Kelly
The AFL-CIO, along with the United Food and Commercial Workers union, has filed a lawsuit to force OSHA to issue a final rule requiring employers to pay for Personal Protective Equipment (PPE). In their lawsuit the unions state that OSHA in 1997 "publicly acknowledged the need to adopt" a rule requiring employers to pay for a worker's personal protective equipment including protective clothing, gloves, and safety glasses. In 1999 OSHA issued a notice of proposed rulemaking. The agency subsequently stopped listing a target date for completing the rule. The unions are trying to force the issue.
2007 Wage Survey - Designed for you
Article by: Manufacturers Alliance
This year our Manufacturing Compensation and Benefits survey is bigger and better than ever. With over 165 participants reporting data for thousands of employees in the Twin Cities metro area you will be able to stay current in this changing labor market.
Manufacturers of the Year Awards: The Winners Talk
Article by: Justin Dorsey
It's been interesting to see how deeply rooted "lean" has become at every level of manufacturing - from small to large. And certainly, exemplary lean manufacturing is what identified these three winners, Tjernlund Products, in the small manufacturers category; Lexington Manufacturing, in the mid size category; and Wilson Tool International, in the large manufacturers category. Equally interesting, they don't expressly "credit" the Manufacturers Alliance for their successes. Rather, they pay it an even greater compliment. They simply discuss the Alliance in the "we," or the first person, as a partner. So, who are these winners?
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Garbage In - Garbage Out: Selecting the Right Product Development Projects
How many of you have made personal investments that did not perform the way you expected? I can sense many hands reluctantly rising. I listened to a financial advisor who sold me funds that tanked at the very time I needed them to be maxing out to help fund my children's college educations. I did not use all the tools available to select the funds with the highest probability of success. I am literally and figuratively paying for that lack of attentiveness today.

Selecting product development projects that provide acceptable returns to your business requires data-driven discipline and a process that is objective and robust. Too much is at stake to rely on someone else's pet projects that may be self-serving and half-baked.

The probability of taking a bad concept and turning it into a market-shattering product are not high. Your odds are higher at the local casino according to the popular commercial.

The obstacles we face as we try to choose the best product development projects are:
  • Uncertain and shifting market information

  • Sketchy and evolving insight on technical and commercial feasibility

  • Disagreement around goals and hurdles within the organization

  • Unlimited opportunities but limited resources

Simplicity can be very enlightening. Marketing expert Don Schrello identified "Three Big Questions," also known as "The Schrello Screen:" Is it real? Can we win? Is it worth it?These three simple questions can provide an illuminating spotlight on the viability of early stage projects. Google Schrello & Associates for more details.

Portfolio management theory and best practices for project selection have existed for many years. Robert Cooper, the noted product development guru, in Portfolio Management for New Products, wrote that the six major factors to consider in prioritizing projects are:
  • Strategic alignment and importance

  • Product and competitive advantage

  • Market attractiveness

  • Leveraging core competencies

  • Technical feasibility

  • Financial reward

A scoring system is used to rank projects based on the informed opinions of internal and external experts across the key functional areas that will bring the idea to realization. A scorecard is produced and referred to regularly to ensure the highest priority projects are the focus.

Dr. Cooper surveyed 205 companies in the 1990s on their portfolio management practices. The top 20 percent, based on portfolio performance, used "strategic fit" as their key criteria in selecting projects, while the bottom 20 percent relied heavily on measures of financial return like Net Present Value as their major driver. Ability to execute was crucial to success of a project.Choosing a robust set of project selection criteria is a key to success. Criteria should be based on reliability, meaningfulness, and practicality. Each criterion should:
  • Be relevant to the key functional outputs

  • Support business objectives and priorities

  • Reflect customer requirements/needs

  • Be meaningful to employees

  • Incorporate quality criteria

  • Be consistent with desired behavior

  • Provide actionable information

Use a formal methodology with objective criteria that engages the analytical power of your left brain while allowing flexibility to exploit the intuitive power of your right brain. When you consciously utilize this whole-brain approach, high returns and manageable risks are realized from breakthrough products.

My next article explores how we can create a portfolio of projects that align with your corporate risk/reward management strategy. If only I'd known these techniques ten years ago, my children wouldn't be paying most of their own college costs today. Nah! They still would. It's good for them.
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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Compliance News Notes: In the Courts
The AFL-CIO, along with the United Food and Commercial Workers union, has filed a lawsuit to force OSHA to issue a final rule requiring employers to pay for Personal Protective Equipment (PPE). In their lawsuit the unions state that OSHA in 1997 "publicly acknowledged the need to adopt" a rule requiring employers to pay for a worker's personal protective equipment including protective clothing, gloves, and safety glasses. In 1999 OSHA issued a notice of proposed rulemaking. The agency subsequently stopped listing a target date for completing the rule. The unions are trying to force the issue.

The lawsuit points out some interesting things:
  1. Many specific standards (among them, the lead, benzene, and blood-borne pathogens exposure standard and the confined space rule)require employers to provide PPE at no cost to employees.

  2. OSHA's general PPE rule (29 CFR 1910.132) is silent on the issue of payment.

  3. A 1994 memo written by former Deputy Assistant Secretary James Stanley to the heads of the OSHA directorates interprets 1910.132 to require employers to provide and pay for PPE.

  4. An interpretation letter dated August 25, 2004, written by Richard Fairfax of OSHA, explains that the agency "does not view 1920.132 as imposing an enforceable obligation on employers to pay for PPE."

AMBIVALENCE AT THE STATE LEVEL
The ambivalence in the standard is at the Minnesota state level, too. One clause in the state's Employee Right to Know law has traditionally been interpreted to mean the employer must pay for all PPE. However, this hasn't been the case in many instances.

PPE CHAMPION IN CONGRESS
There is pressure from Congress as well for OSHA to get the job done. Representative Lucille Roybal-Allard (D-California) is a strong champion of the rule and also a member of the Labor-HHS-Educations Appropriations Subcommittee. Under her leadership, the House of Representatives approved legislation telling OSHA that:

The Committee is disappointed with the lack of progress on the agency's regulation concerning Employer Payment for Personal Protective Equipment…. The Committee is concerned because the rate of worker deaths and injuries, which has decreased in the last decade for all American workers, has increased among Hispanic workers during that same time because they take on a disproportionate number of jobs in the nation's most dangerous professions.

With all of the pressure on OSHA right now, expect a final rule on this issue before the end of the year.
<img src="http://www.mfrall.com/newsletter/authorpics/vijakelly.jpg"align="left">Hazard Management is a consulting and training firm specializing in occupational safety and hazardous waste management. Call Vija Kelly at 651-697-0422 for more information.

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2007 Wage Survey - Designed for you
This year our Manufacturing Compensation and Benefits survey is bigger and better than ever. With over 165 participants reporting data for thousands of employees in the Twin Cities metro area you will be able to stay current in this changing labor market.

This 200 plus-page, all-in-one survey covers:
  • Hourly production, support, and management position wages

  • Executive, office, and new sales classification salaries

  • Performance and hiring bonuses

  • Over 175 job categories including new medical device positions

  • Full Benefit practices

  • Wage increases

  • Summary of general management practices


  • Plus! Participants who purchase the survey will get a customized, participant profile report ranking their wage data against other survey participants for each position reported (a real time-saver!)

The final survey report can be rushed to you in electronic .pdf format. If you are in local manufacturing, this wage survey is for you. To purchase this Expanded Compensation & Benefits Survey, contact the Manufacturers Alliance at 763-533-8239, ma@mfrall.com or visit www.mfrall.com.
The mission of the Manufacturers Alliance is to provide peer-to-peer training, education, and resources which inspire manufacturing companies to continuously grow, improve, and stay competitive.

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Manufacturers of the Year Awards: The Winners Talk
It's been interesting to see how deeply rooted "lean" has become at every level of manufacturing - from small to large. And certainly, exemplary lean manufacturing is what identified these three winners, Tjernlund Products, in the small manufacturers category; Lexington Manufacturing, in the mid size category; and Wilson Tool International, in the large manufacturers category. Equally interesting, they don't expressly "credit" the Manufacturers Alliance for their successes. Rather, they pay it an even greater compliment. They simply discuss the Alliance in the "we," or the first person, as a partner. So, who are these winners?

Tjernlund Products
Winner - Small Manufacturers Award


A fourth-generation Minnesota company, Tjernlund manufactures exhaust systems and draft inducers for the residential and commercial HVAC industry. In industry jargon, it is a high mix (300-plus models) / low volume (less than 20,000 annual units) manufacturer. Nevertheless, like nearly every manufacturer today, Tjernlund wanted/needed to overhaul the efficiencies of its processes. Many readers may relate to this story: when Tjernlunds lean journey began five years ago, it was still batch-running a year's inventory of various parts in the hope/expectation that customers would eventually call down that inventory. How unnatural does that sound today?

Tjernlund's own solution to its lean needs was to develop a formal written "map" for each SKU. That map now traces the life of a product from conception to marketing - and identifies at each step what processes need to be undertaken and, more formally, recorded. For Tjernlund, its mapping has paid off with remarkable results. On production lines for which this mapping has been established, turnaround times have been dramatically reduced with an accompanying reduction in labor of 30 to 40 percent.

Tim Hoyez, director of engineering, says that lean has been embraced at all levels of the company. On the shop floor, Tim points to Tjernlund's SS2 line. According to Tim, Greg Ackerman, lean coordinator, reworked all of the processes involved in that line with the result being a remarkable increase in production from 10 to 19 units per hour. Tim also notes that the company itself had to be open to taking a "chance" on lean in the first place, and that its president, Tom Tjernlund, never wavered in his support.

Lexington Manufacturing
Winner - Midsize Manufacturers Award


Lexington Manufacturing is great local success story. As readers may recall from a previous MA newsletter profile, the manufacturer started in a garage on Lexington Avenue in Shoreview and now operates four facilities (two in Coon Rapids and two in Brainerd) with nearly 250 employees. Its core business is to add value to wood and vinyl window and door components. In the short time since that profile article, Lexington has made the strategic move into "fire-rated" door components. Notwithstanding the downturn in the housing market, it is full steam ahead for Lexington Manufacturing.

Brian Swanson, technical support manager at Lexington, says lean is indispensable. He says, "Prior to our implementation of lean processes, our 'average' lead time was three weeks. Now, 90 percent of our products are turned around in 24 hours." Still, he sees more work to do in such areas as inventory reduction. Brian observed in the previous MA profile that lean paid the unintended benefit of increased job satisfaction; for instance, there was less worker turnover. "We found that our employees found it to be much more rewarding that their hard work actually made it out the door rather than into the 'waste' bin." He notes, "We have seen a dramatic reduction in workplace injuries. And, we cannot help but conclude that lean has played a part in that."

Brian attributes winning the award to one word-- "Sharing. We have been very purposeful about opening our doors - and going on others' tours. It just makes sense, doesn't it? We're not being falsely humble when we say we don't know it all. We don't. No one does. So, why not share and share alike about what we have all learned?"


Wilson Tool International
Winner - Large Manufacturers Award


Wilson Tool International has evolved from a simple tool and die shop into a leading tool supplier to sheet metal fabricators across the punching, bending and stamping markets. Located just off Highway 61 north of White Bear Lake, Wilson Tools extremely low-key façade hides a robust bee hive of activity. Chris Lawless, an articulate spokesman for lean manufacturing, who oversees Wilson's U.S. manufacturing operations, says, "Ultimately, it is our experience that lean won't work unless everyone involved has skin in the game. Our approach to any lean project is that it won't be undertaken unless there is complete - and I mean complete - participation at the front end. In other words, in our perspective 'lean' isn't some sort of slash-and-burn procedure that targets waste. Rather, it's a frame of mind. To make my point, we specifically have avoided 'big' lean projects because there is an inherent 'gamble' in them. Instead, we have focused on lots and lots of small improvements. And, for us that has worked - in a big way."

Like so many others, Chris relishes the Manufacturers Alliance company tours. "The Manufacturers Alliance has allowed Wilson to benchmark our own lean progress. To our surprise, we've found that our own progress is pretty good. And, we've opened our doors, too. Still, we are always mindful of the need to keep at it. Perhaps that's because we have our own facility in China that distributes to the Far East so we know what we're up against in terms of offshore competition. The net effect is that we prefer the term 'continuous improvement' to lean. And, as I said we take it bit by bit."
Justin Dorsey, Director of Sales & Marketing, Advanced Capital Group located at 50 South Sixth Street, #975 Minneapolis, MN 55402. call (612) 230-3009, email jdorsey@acgbiz.com, or visit www.acgbiz.com.

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