NC State of Business

I love numbers, lists, and good writing. So I guess it isn’t surprising that I find myself merging these interests here with a “Top 10” post. Here are 10 of my favorite quotations about lean thinking, waste, and continuous improvement. I hope they challenge and inspire you.

1. “The most dangerous kind of waste is the waste we do not recognize.” – Shigeo Shingo
2. “When you buy bananas all you want is the fruit not the skin, but you have to pay for the skin also. It is a waste. And you the customer should not have to pay for the waste.” – Shigeo Shingo
3. “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 the time line by reducing the non-value adding wastes.” – Taiichi Ohno
4. "Where there is no standard there can be no Kaizen” – Taiichi Ohno
5. "Having no problems is the biggest problem of all." – Taiichi Ohno
6. "Costs do not exist to be calculated. Costs exist to be reduced." – Taiichi Ohno
7. “A bad system will defeat a good person every time.” – W. Edwards Deming
8. “If you can't describe what you are doing as a process, you don't know what you're doing.” – W. Edwards Deming
9. “There is nothing so useless as doing efficiently that which should not be done at all.” - Peter Drucker
10. “There are three kinds of leaders. Those that tell you what to do. Those that allow you to do what you want. And Lean leaders that come down to the work and help you figure it out.” – John Shook

Like any favorites list, you’ll probably see some of yours conspicuously absent. Please send me your favorite lean-related quotations so that we can expand this list.

My experiences during a recent trip have prompted me to ask how North Carolina’s companies can become more engaged in the global economy. I had the honor to be part of a North Carolina State University delegation to South Korea. This trip was part of a feasibility study considering a NCSU campus just outside of Seoul.

A couple highlights I learned and experienced during this trip:

• The Asian economies are expected to be 40% of the world’s GDP and will account for three out of four largest economies by 2040. The United States will remain relatively flat at 23% of the world’s GDP and go from the largest economy to the second largest.

• There are two billion people within a day’s trip from Seoul, South Korea. And there are 61 cities with one million or more people within a 3 ½ hour flight radius.

• While learning these statistics and many more aspects about the Korean economy, I stayed fully engaged with work because of my Blackberry, despite the distances and thirteen hour time difference.

So, while technology has and will continue to reduce distance through connectivity, we face dramatic changes in the global economy. This should prompt all of us to reflect and question how prepared are North Carolina small and medium-sized enterprises to engage the global economy. And how do we prepare even more? This thought was punctuated when an executive for a large Korean company explained the desire to find and grow their global supply chain.

I am very proud of an IES program called ExporTech, which is designed to directly tackle this question. It is an example of how partnerships form to support industry. However, I am asking myself and others at IES, how we can further support North Carolina companies to engage in the global economy. I welcome your thoughts....

And as industry leaders, I ask what more can you do to prepare your company for the global economy. 95% of the world’s population is outside the United States. They are all consumers and their economies are growing fast. How are you preparing for the opportunities?

I have noticed that I am less likely to take risks as I grow older. I’m much more conscious of the risks associated with climbing a ladder, speeding, or activities that might lead to injury or property damage. Life experiences have led me to understand the consequences of taking unnecessary risks.

I appreciate the value of risk assessment in the workplace, which is a step beyond identifying hazards. While hazard identification is a critical element in your safety and health management system, risk assessment is the process of evaluating the risks arising from a hazard. OHSAS 18001 defines risk as follows:

Risk is the combination of the likelihood of an occurrence of a hazardous event or exposure(s) and the severity of injury or ill health that can be caused by the event or exposure.

You may routinely review your workplace to identify hazards, such as a safety inspection or a Job Hazard Analysis. Consider taking this process a step further by determining the likelihood that a hazardous event will occur, the severity of the injury, and the frequency of the exposure. Assigning a numeric value to each of these parameters provides a quantifiable measure for the identified hazard. Implementation of appropriate controls allows you to determine if you have reduced the risk to an acceptable level.

Educating your employees to assess risk while identifying hazards is useful for improving safe behaviors and reducing injuries.

And possibly the avoidance of jumping off a bridge like the rest of the teenagers!

Many years ago when I was in the electronics industry, we congratulated ourselves for the great efforts that resulted in our reduction of inventory. We must have been pretty smart since we reduced raw materials by 25% while maintaining the same customer delivery service levels. What great things did we do to accomplish this?

Well, we implemented consignment inventory with several suppliers along with vendor managed inventory on site.
This resulted in a short term cash flow benefit, but long term degradation within our supply chain. We did not work with our suppliers on opportunities to be more efficient, we simply pushed inventory from our books to their books. The entire value chain did not realize any benefit and the system cost did not gain a reduction.

Real supplier development means just what the words say. Analyzing how cost and non-value added activities can be removed from the entire system. In defining the value stream, we look at all the value added and non value added activities that are required to bring product from raw material to finished goods. When we extend this raw material concept to include our suppliers (and sometimes their suppliers) we can really tackle a full set of system issues.

A very good lean manufacturing tool for identifying bottlenecks and non-value added activities is Value Stream Mapping (VSM). This is a visual representation of all processes from start to finish that analyzes the material and information flow. Many companies use this tool for their internal processes but to tackle the full supply chain, the tool can be extended through the supplier’s processes. Lead time and non-value added activities can be better identified and attacked. Sometimes suppliers are uncomfortable having their customer work with them through these activities. If a 3rd party support would be a better alternative, call us we can help.

The bottom line here is that the really good companies are working to reduce non-value added activities internally and externally. And VSM is one of the good tools that can analyze opportunities for improvement within the total supply chain.

Last week I visited a meeting in Williamston hosted by the Northeast Alliance for Agricultural Biotechnology. There was a buzz around this group as they received a check from the NC Tobacco Trust Fund and as we where shown some preliminary design and location analysis models for an area Pilot Extraction Facility. This project will allow the Alliance to attract research and development activities into the eastern NC area leading to important breakthroughs in agricultural biotechnology. From food to medicine to fragrance, we rely on the extraction process to convert the important ingredients from specialty grown plants to chemicals ready for use by production processes.

I was intrigued by the emphasis placed on establishing a formal quality management system in support of the development and operation of this new facility along with the interaction between local biotech growers and agricultural biotech companies to safely grow new genetically modified crops. We have been asked to support their efforts in creating the appropriate quality management system processes to align with the emerging USDA Biotechnology Quality Management System (BQMS) program.

It seems like just yesterday when business owners more often than not spoke of ISO 9000 and its quality management system standard requirements as a relic destined for extinction. As I look at the draft version of the BQMS, I see the familiar structure and basic quality management system requirements of the ISO 9001 standard as it was released in its new process-focused format during 2000. We now see the biotechnology industry join what now appears to be a worldwide consent that the fundamental guidelines of ISO 9000 represent a successful blueprint for consistency, quality, and safety.

So from the brink of perceived extinction, certified quality management systems based on ISO 9001 requirements now appear to have amazingly proliferated so much so that emerging industries are investing in establishing appropriate standards as part of new process commitments. What an evolutionary concept!