When I saw the article I thought surely one of the other Lean bloggers would jump all over it. Perhaps it was too easy. So I let it slide for a few days. Then I changed my mind.
What’s next after Lean? Asks the interview with author, consultant and blogger Patricia Moody in Supply & Demand Chain Executive Magazine. Says Ms. Moody:
Patricia Moody: I had a feeling as I went into this that people had reached their limits working on Lean Manufacturing on the production floor. Many companies had reached what they thought was the limit of their savings, and they didn’t know where to go next. That’s why I wrote this book: I knew that there were opportunities out there — I call it Beyond Lean
Oh boy. Why don’t we just all get beyond pervasive problem solving, PDCA, and relentless and endless elimination of waste, shall we? That’s all so industrial age… I have news for Ms. Moody: the vast majority of manufacturers have not yet tapped into savings from Lean manufacturing, much less the savings possible through supplier development efforts by extending kaizen into logistics and the operations of their suppliers.
Ms. Moody’s example from beyond Lean cost savings:
A woman from a recycling company in Texas achieved 20 percent savings by standardizing her whole company of 9,000 people in the United States and 12,000 people worldwide on five varieties of uniforms.
Brilliant, but this is neither pre-Lean nor post-Lean. It’s just basic materials management.
It’s a lot quicker than building a kaizen team to try to figure out how to take a Lean initiative out to the supply base. That usually takes months, but many companies out there right now don’t have a lot of time left.
Months to deploy a kaizen team? Are we making them walk to the supplier?
They have spent a lot of energy working on the manufacturing and assembly side, but if 60 to 70 percent of their costs are in materials, they really have to focus more on the procurement side.
Very true, and these materials are manufactured, distributed and sold by suppliers who have operations that need to be kaizened in order for costs to be reduced.
Manufacturing used to be more of an art than a science, but we know how to do this stuff now. We know how to organize flows so that we don’t have piles of inventory sitting all over the place. We know how to do quality so that we have zero defects. We’ve been doing all that for 20 years.
I suppose this is true if by “zero” you mean something between 1% and 5% or if by “20 years” you mean “not yet”.
I’m a technology freak. It’s the advantage that we have in the United States, the fact that we have technology that we can use to be more flexible and responsive. We’ve been slow to admit that because, again, we’ve been very preoccupied with Lean. One of the jokes in the back of my book is that even Toyota uses computers now. For a long time they really didn’t; they had a kind of anti-computer bias. But I think technology is the answer; it’s the advantage that we have.
I guess I’ve been so busy doing kaizen for the last decade that I missed a) the arrival of zero defects manufacturing in the USA and b) technological solutions to logistical problems. I must have been distracted by the rattling of the abacuses at Toyota.
Technology is a commodity. Everyone has access to it. The answer is the process and people who use technology is only an enabler. The process she describes that generates cost cutting ideas, without fully understanding, is kaizen.
The Manufacturer ran an article titled Supplier Development in a Lean Age also featuring the expert opinion of Ms. Moody on July 10, 2006. The article asks:
Lean organizations have begun to apply continuous improvement and kaizen to their supply chains, but is that simply complicating supplier development?
Are suppliers expected to achieve excellence on their own, or must they be taught to be the right kind of supplier for a customer, and taught by the customer?
To tell us that we’ve done that already, and to tell us what’s next…
Such supplier development activities can both raise the performance of the entire supply base and foster closer relationships within the supply chain. Supplier development is often used for process improvement, but author and lean expert Patricia E. Moody, CMC, observes a trend away from continuous improvement and six sigma, to a more gut-level focus. “It’s all about profit,” says Moody.
“Most companies, especially those engaged in lean, are very much process oriented, which is necessary to a point,” says Moody. “But they need to look beyond process and focus on the health of their suppliers in order to sustain the gains made with lean.
“We need to keep in mind why we are doing supplier development and relationship management, and profit needs to be the focus of our efforts. Profitable suppliers will tend to be happier suppliers, and happier suppliers will ultimately perform better.”
Ms. Moody gets it right when she is quoted “we need to make sure that suppliers are doing well. Strong supplier relationships, especially where companies are incurring 85-90 percent of costs from suppliers, are critical, and I equate relationships to profits.”
If it is process vs. profit that is a problem since the entire purpose of process and continuous improvement is profit.
The rest of the article talks about the observations of the lack of Supplier Development in the industry, based on observations from people at Boston Scientific, which contains some good points.
Some good practical examples of cost savings are given in the article in Parcel Shipping & Distribution magazine from Ms. Moody’s book The Big Squeeze: Ten Ways to Cut Your Spend 10% Right Now!:
• Milk runs. [Such] runs save transportation money and build more consistency into your supply network. If you are a small company, consider buddying up —consolidating — with another small company with similar needs, and the two of you will save money.
• Keep that driver moving. Carriers want to do business with “easier or friendly freight”—easy delivery, easier pickups that don’t tie up the driver and no last minute changes. Freeing up a driver’s time is paramount.
• Electronic interchange. Only do business with providers who are reliable and provide electronic interchange. When you tender a load to them, do they accept it electronically? Do they follow through on that commitment and then provide status [reports] along the life cycle? Do they report once the shipment has been delivered in a timely way?
• Drop-trailer. Another money-saving solution is the drop-trailer program enabling the driver to come in, pick up a preloaded trailer, and move on.
• Order picking. Pickers spend more time traveling, whether walking or riding a vehicle, going up or down than they spend doing everything else combined, including handling products, referring to paperwork, using a computer and scanning. So if you’re going to do one specific thing in your distribution center to reduce your costs, attack order pickers’ travel.
• Packaging. You can cut transportation costs in half if you make the package half the size.
• Substitute plastic for cardboard. Cardboard is not a world-class material! Have suppliers use plastic totes for transporting inside the plant. Cardboard is expensive, and it is the number one cause of dust and some quality issues in plants. The initial investment for plastic will pay for itself.
I haven’t read Ms. Moody’s book so I can’t comment on it other than to say that it has an attractive cover. Based on the description of it in the article above, and that she wrote the book around the cost savings ideas from her blog readers, it sounds interesting and I plan to pick up a copy. I’d like to find out what’s next after Lean, for career planning purposes if nothing else.