Publish date: September 2008
Superfactory
www.superfactory.com
By John M Rubio and
George Koenigsaecker
Long article and highly recommended to read, a few key points:
Manufacturing company leaders cannot wait for the economists to officially declare a recession, as defined by two or more consecutive quarters of negative GDP growth.
Now is the time for business managers to assess the direction of their lean efforts and respond to recessionary pressures. If they wait until it is painfully obvious that they have to make changes, company performance will inevitably follow the sales line down and struggle throughout the recession..
Leading Lean Indicators
Toyota’s four “true north” metrics center around
1) human development,
2) quality,
3) lead time and cycle time (delivery), and
4) cost and productivity.
As a word of caution, the key metrics that managers let slide are always the ones that lead to serious problems in a couple of years. The four true north metrics are all related, improving one supports gains in the others.
Following traditional cost-cutting methods, when sales begin to slide most executives will evaluate each line item on the budget and cut those that don’t seem to have an immediate impact on the business. Training programs and continuous improvement efforts are typically the first to go.
It’s not easy for company leaders to see the immediate impact of such cuts on the business.
If they truly regard employees as their most valuable asset, then leaders must invest as much in employee development as they do in any hard assets. Such investments typically deliver a 10:1 return or better, which is far above other investments. This is as true in boom times as it is during a recession.
“Too many company managers embrace popular programs, like Six Sigma, ignoring waste reduction and other variability reduction methods that can also provide huge improvements.
Unfortunately, quality gains can take a long time for customers to notice, and even longer for customers to believe that they will be sustained. In fact, it might take up to three or four years for a company to reap the full market benefit of any quality gains. Even though managers cannot count on such improvements to pull them through a recession they still need to keep grinding them out.