Regarding Manufacturing

Alot has been said about the auto industry over the past couple of weeks, the majority of which has been negative. I thought I would spend a few moments discussing the broader manufacturing industry, from suppliers to end-manufacturers figuring out what is wrong (and right) with today's domestic manufacturing scene.

First, let's think positive, what is right about the domestic manufacturing industry?
Domestic manufacturers are realizing the changing climate in manufacturing, they are adopting new ideas and new technologies to help them take advantage of the opportunities that face manufacturing:

1. Global marketplace to sell manufactured goods due to free trade and other arrangements
2. The demand for specialized manufacturing needs (low production run, high variety production)
3. The increasing demand and need for a supplier market (think supplier/manufacturer integration)

As a result there is a huge opportunity for manufacturers to suceed globally, however there is alot of competition between foreign and domestic manufacturers. This is precisely the challenges and for that matter what is wrong with many domestic manufacturers.

The problem is that some domestic manufactueres, "get it," when it comes to 21st Century Manufacturing. Others (such as GM or Ford) as still trying to figure out what 21st Century manufacturing means. These players are still using the same tools and techniques that they have used 20 or 30 years ago to secure only a domestic marketplace. Obviously times and markets have changed, and those manufacturers who cannot produce effectively will not survive. In other words it is do or die for these manufacturers. I don't feel depressed by this fact because I have seen many smart domestic manufacturers (think Magna International) who have accepted the 21 Century Manufacturing standard, and who continue to innovate the way they produce to become world leaders.

Therefore, the question arises, what defines 21st Century Manufacturing (the Big Three please take note):

1. The need to improve quality. Quality to many manufacturers means removing defects. That is the wrong way to interpret quality. Quality should rather be defined as running all manufacturing systems at optimal, "settings,". Every time there is the slightest variation in parts, manufacturers will lose money in wasted material. Furthermore if the variation is significant enough, the parts will likely fail prematurely causing warranties to be used, and customers losing faith in the manufacturer's ability. Warranty servicing costs tend to be expensive so the new motto in manufacturing should be, "Do it optimally the first time", rather than the usual, "Try and do it right the first time".
2. The need to improve productivity. Often times operators on the line cannot do their job correctly due to the design and training of the system they are responsible for. Toyota has realized that and has made workstations that are customizable for each worker. But we must go way beyond that and consider the manufacturing environment. That is the experiences that operators face on a day to day basis. Manufacturers must be confident that at all times operators are empowered to make the right decisions to keep production operating at full steam, with zero downtime. Unfortunately, experience has shown me that manufacturers lack such tools and all too often operators on the front lines of these processes are left with nothing to do but let problems occur on their lines.
3. The need to reduce downtime. If you ask the manager of any plant what their number one fear is, they will likely state downtime. Numerious statistics (check any manufacturing journal), have shown that on average manufacturers can lose millions of dollars per hour due to downtime in processes. This is caused directly by the interruption of production, that is inventory piles up in certain places, operators aren't working, production does not run to schedule. Unfortunately while the manager acknowledges the problem, they believe that this is a fact of life, that downtime on average must occur frequently in a year and it is just part of the natural manufacturing process. However, nothing could be further from the truth. Manufacturers must realize the significance of downtime - not only the expense but how it threatens their day to day operations. Manufacturers cannot continually put out fires in their plants if they want to have a functioning shop. They must prevent the fires from ever occuring lest we want further damage. In order to stop downtime manufacturers can use data analysis (such as that found in Tracking 1-2-3) to pinpoint downtime before it ever occurs and find a solution to minimize its effects. Imagine finding the cause of downtime in 15 minutes rather than hours? How much time, money and hassel would be saved by this? How much more competitve can you be? Simple solutions like recording the frequency of downtime events at each part of a manufacturing processes - a simple paper based solution, could allow manufacturers to crudely determine downtime and correct it in less time than traditional means.
4. The need to stay in touch. How can you run a plant if everyone involved (operators, supervisors, engineers, and management) aren't communicating the issues and observations necessarry to facilitate a manufacturing system that can compete with global players who do exactly that (think Toyota again!)?
5. The need to stay informed. Most manufacturers lack the essential communication tools neccessarry to track the progress and status of all of their various plants, systems and processes effectively. How can you understand the effectiveness of your plants if you don't have reports that tell you the overall health (uptime, levels of variation, etc.) of your plants? How can you be sure you meet the production schedule if you don't know at what rate your workers are producing parts? How can you remain competitive if you don't know how much waste is being produced in your organization? Key information - statistics, are not being produced by domestic manufacturers because they don't see the value or the need to stay ontop of their manufacturing system. Without information how can you make rational decisions?

It is for these reasons why I feel that manufacturers must take a Toyotaesque approach to manufacturing and progressively adopt these five qualities into their manufacturing approach. They must be able to adapt to these new ideas (which have become standard for successful manufacturing operations), as well as to find ways to always improve these systems. They must also innovate they way they produce and handle operations if they want even a hope of staying competitive globally.... or domestically for that matter.