It’s a common occurrence but a sad fact of life in the business world: Lured by cheaper wages and less red tape, a company uproots U.S. manufacturing operations and sends them to China or another country in an effort to cut costs.
Harry Moser has made a crusade out of asking those companies a simple question: “You sure about that?”
In a recent visit to Fisher, the founder of the Reshoring Initiative outlined how he’s working to broaden companies’ understanding of all the costs of offshoring – and the benefits, in turn, of keeping or moving it stateside. Sure, the price tag initially might look cheaper on paper, but factor in a host of other risks and costs that escape that first glance and the U.S. is much more competitive, if not less costly altogether over the long term (run the numbers with Moser’s handy Total Cost of Ownership Estimator).
“We’re much more competitive competing here than we are competing there,” Moser said.
At the forum, sponsored by the Center for Operational Excellence, CIBER and the Ohio Manufacturing Institute, I was thrilled to see Moser talk about the costs of offshoring from an operational excellence perspective. Based on evidence Moser presented, a compelling case can be made that running an operation offshore can create waste that would make any lean thinker shudder.
Just think about the impact the big blue ocean between your offshore plant and your customer can create. Bringing product back makes the most financial sense with large batch shipments, but what happens when demand shifts your product mix? And what about defects discovered after a product has been shipped from half a world away? Research in the pharmaceutical manufacturing realm by our own John Gray indicates offshore production – even by U.S. drug-makers – carries a greater quality risk than its American-made counterpart.
Advocates for bringing it back home, take heed: It’s easy to make the case for reshoring not just with dollars and sense, but common sense.
I got my first real taste of old-fashioned, machismo-fueled negotiation when I wrecked my car earlier this year. Thankfully, I wasn’t the driver to blame, wasn’t hurt and was driving a 15-year-old parental hand-me-down I secretly wished would suffer that fate. Nonetheless, one totaled vehicle meant finding another with a settlement check from an insurance company in tow – and both of those would put me face-to-face with people who assured me they were giving me the best deal they could but were clearly lying through their teeth.
In both scenarios, I (naturally) feel I came out on top in retrospect. Talking an insurance adjuster into a few hundred extra dollars is no small feat and my performance in the car salesman’s office would make Ryan Gosling jealous.
I thought about both of those negotiations last week, when the Center for Operational Excellence hosted a forum for our member companies’ administrative assistants. The brave souls that trekked through an unusually blustery and snowy Columbus day got a hands-on crash course in negotiation from Maggie Lewis, a lecturer in the Fisher College of Business. Unfortunately, that thinking led me to realize the kind of negotiating I did wasn’t that tricky. I cared nothing for the results or the feelings on the other end of the table, a classic “win-lose scenario.”
The kind of negotiating we do in our lives as lean thinkers is much tougher than balking at a sticker price. In a realm where responsibility is shared, blame is avoided at all cost and flow requires buy-in and cooperation from everyone involved, negotiation is a tightrope walk. On one end is the current state, riddled with problems and inefficiencies, and on the other is the future state your pursuit of operational excellence will take you. The last thing you need is a disgruntled colleague with a good pair of garden shears.
Lewis during her presentation made a few comments that struck me for their deep relationship to lean principles, chief among them: “Negotiation is just problem solving.” Any manager could tell you that sentence works in both directions.
Even if many of the speakers who come before COE members have lean-transformation success stories to share, all of those tales have to start with some gory details about problems at their organizations. In the spirit of quid pro quo, I’d like to share one of ours and fill you in on what we’re doing to make it better. Think of it as the Fisher College version of US Weekly’s “Stars: They’re Just Like Us!”
Our Dec. 2 seminar featured fantastic and well-received presentations from Cardinal Health Inc. and Starbucks Corp. (don’t believe me? Check out these pics). If you logged in to watch either of these events via a live webcast, however, you got a front-row seat to some technical problems we had in the morning and afternoon. Live audience members in the afternoon were privy to an audio glitch at the start of the Starbucks presentation as well.
In a world without lean thinking, we’d hoist the blame on the shoulders of the good folks at Fisher and the Blackwell Hotel who handle audio and video for us and be done with it. Easy? Sure. Fair? Not at all. So in the spirit of lean thinking, we spent a half-day this week creating cause maps with the audio and visual teams that revealed a number of issues that fueled the fire. And like the dutiful lean thinkers we are, we emerged with some proposed changes to our event planning and execution next year that should boost the quality of COE members’ experience and lower our blood pressure readings.
It’s disheartening and even scary to dig beneath the surface and expose the frayed wires in our process but they remain a problem waiting to happen until you do.
Discuss: How has operational excellence influenced the way you or your organization dissects problems after they occur?
Life brings bad problems and good problems, and the Center for Operational Excellence is happy to be right in the middle of a very, very good one.
To put it quite simply, we’ve grown our membership base at such a steady clip that a group once numbering four in 1992 has hit 34. This has translated not only to more people actively working with Fisher on their pursuit of operational excellence but more attendance at our quarterly professional development meetings. A lot more. Our Sept. 30 event that featured a retired Kodak executive and Harley-Davidson CEO Keith Wandell peaked at about 200 attendees, a record. This past Friday, when hosting executives from Cardinal Health Inc. and Starbucks Corp., we would have hit and potentially exceeded that record by opening the events to the public but invited members only because of space constraints. Once again, a very good problem.
In our member roster and the decision-makers who come to our programming, these aren’t just manufacturers with a shop floor. COE is embracing the notion of continuous improvement in the most inclusive way possible, paving the way for the entrance of Nationwide Mutual Insurance Co., Huntington National Bank, OSU Medical Center and others in the transactional and health-care spaces.
Not that we’re leaving our core constituency behind. We’ve come to recognize a growing contingent of members in the logistics and distribution sectors needs specialized attention. For that, we’ve brought on one of the brightest minds tackling logistics in academia today, and we didn’t have to look far. Prof. Tom Goldsby, PhD, of Fisher’s Department of Marketing and Logistics, has stepped in as an associate director for COE to work closely with several companies that will benefit greatly from his award-winning research.
Goldsby already has made his debut before our COE board. We expect you’ll see a lot more of him.
Our good friends at the Cambridge, Mass.-based Lean Enterprise Institute are giving operational excellence junkies a chance this week to learn from a few masters this week – without leaving the office.
Tuesday Nov. 29 at 2 p.m. EST, the institute is hosting a free webinar titled “Learning to See the Whole Value Stream: The Power of Extended Value-Stream Mapping.” It’s set to last one hour and will be led by Jim Womack and Dan Jones. Those of you brushed up on your lean reading might notice they’re the gents who quite literally wrote the book on some hallmarks of lean thinking including, well, Lean Thinking, Lean Solutions and Seeing the Whole Value Stream.
The cost? Your time, an hour of it to be exact. Click here to register for the webinar.
The concept of value-stream mapping will be fresh in the minds of a few of our member companies: Grange Insurance and Huntington National Bank. A group of employees from each company came to Fisher earlier this month for a day-long session on VSM led by COE Executive Director Peg Pennington. They’re part of a growing contingent of transactional companies in COE – and they’re making great strides in apply operational excellence strategies to new realms of the corporate world.
Amy Tomaszewski, Grange’s assistant vice president of operational excellence, told me the event was a great success for her company and “provided quite a few ‘Ah-ha!’ moments.”
“The instruction was excellent and tailored to the service transaction environment, which is often overlooked in lean training,” Tomaszewski said. “Through the real-life computer simulation of the movement of electronic work and the team exercises around value-stream mapping and a simulated Kaizen event, we were able to see the result of both positive and negative changes that can occur when a company looks for and acts upon improvement opportunities in a value stream.”
Hanging around operations professors for a few months has made me realize I think entirely too little about the small wonders in my everyday life. In short, I’m starting to feel like I should take a moment of awed silence with my iPod Nano before I shuffle to my running mix and hustle down the street. The supply chain for even the simplest product out there (a bottle of water, for one) is really anything but. On a global scale, it’s a tightrope walk of symphonic precision with a healthy dose of interpersonal diplomacy for good measure.
It’s that diplomacy that slowly took center stage at the latest supply chain forum hosted by Fisher’s Center for Operational Excellence and featuring Prof. Edward Anderson of the University of Texas. On the surface, Anderson’s presentation to dozens of COE members on campus and streaming live was about the potential potholes that form in distributed product development (COE members can view the webcast here). As he illuminated ways for determining the best strategy to avoid potentially costly problems, a prominent theme emerged: This globe-spanning process doesn’t come down to widgets and machines. It comes down to living, breathing human beings.
And we’re a complicated and costly bunch, Anderson told the crowd.
“People are the glue,” he said. “The problem is, we’re expensive glue.”
Central to Anderson’s presentation was the idea that with the right people in place to manage risks from one boundary to another in product development, the lower the risk of lost money, drained value and public embarrassment. And these crucial patches aren’t grand gestures – sometimes they’re as simple as hiring someone who knows how to tactfully ensure a supplier’s “i”s are dotted and “t”s are crossed.
A favorite example of mine: If only the titular rockers in the cult mockumentary This is Spinal Tap (pictured above) hired a designer who knew their Stonehenge replica should be 18 feet…not 18 inches.
How has your company used its work force to break down barriers in a supply chain? Have a “Stonehenge moment” you’d like to share?