Power to the people

After World War II, the defeated Japanese nation faced a hostile world with two major cities destroyed, and its manufacturing base in ruins.

It was overpopulated, and lacked natural resources. Immediately after the war, its economy was run by the Occupying Forces (Americans), and this led to the importation of ideas such as Statistical Process Control, Method Study, and guidance on Quality from people such as Deming and Juran (both Americans). Japan therefore began competing from a position of weakness, using lessons taught by a major competitor. Failure had to be the obvious outcome.

For those of us who live in a world dominated by high-quality Japanese products, often made in UK factories, this transition is little short of baffling: particularly since we have seen our share of the world’s trade dwindle, and major industries evaporate. This, in a nation that invented the Industrial Revolution, and that continues to produce, per head of population, far more Nobel prizewinners than any other country.

Many books have been written on this transformation. They tend to look for complexity (the Toyota Just-in-Time system, or the character of the people), but the answer is quite simple: they set out to create factories that fully utilised the humanity of the workforce.

What this means in practice is that the incredible creativity and enthusiasm of all employees is harnessed to find ways to reduce costs. People like Shigeo Shingo (credited with creating the second Industrial Revolution) did no more than apply British and American ideas on Method Improvement with the help of a willing and co-operative workforce. His great contributions in set-up reduction often arose from a simple challenge issued to those who daily faced the problem of time lost to changeovers. Over his lifetime he built an intellectual approach to reducing time lost, but in the end, all of his success depended on the attitudes towards continuous improvement that he could engender in the shopfloor workers, and their managers.

Revealingly, in one of his books, Non-Stock Production, he dwells on the difficulty he had in one plant, in instituting change, until he thought to ask the foreman for advice and help, instead of telling him what to do.

He applied his approach to problem solving to all manner of industries.

He was, for instance, instrumental in developing the Toyota Production System: invented a new way of scheduling ship-building which halved hull construction time to two months (versus the 10 taken in England), and shrank die manufacture at a tyre plant from 42 days to four. Towards the end of his life he maintained that any machine (including the largest presses) could be set-up in under 10 minutes. His book, The Single Minute Exchange of Die (SMED), should be required reading for every manufacturing man, but is little known in this country, to judge from responses at seminars we give. Curiously, from the Western point of view, this radical statement has been challenged by his disciples, who call for a target of less than three minutes (see, for instance, Kaizen for Quick Changeover by Kenichi Sekine and Keisuke Arai). These books, and others equally significant, can be obtained from Productivity Press. All preach the message that ordinary mortals, if given the freedom, can transform a business.

The significance of Shigeo’s work on set-up reduction, and the reason why he made it the centrepiece of his life, is that short set-ups allow short runs of product, with no cost penalty, and this offers the basic route into Just in Time. Trying to run a factory on a JIT basis without small set-up times is a recipe for failure.

Another prominent leader in the re-creation of Japanese manufacturing skills was Kaoru Ishikawa. Ishikawa taught that Total Quality Control is a “Thought revolution in the minds of management”. We return, here, to the basic theme that excellence in anything begins with the attitudes engendered in people. Management’s major role is to create a working environment in which enterprise and creativity flourish, and are expected.

Contrast this with the normal UK company.

Most of the UK businesses we advise are primarily driven by a desire to make profit, and indeed, to see this grow year on year. The newspapers show that this is the culture in which we live: any hesitation in steady (and considerable) growth in profits, year on year, is treated as a failure.

Leaps in profit of 40 per cent from one year to the next are seized upon as evidence of excellence, and more is asked of subsequent years. “What is wrong with this attitude?”, I hear you say. “Surely profits are needed as the seed corn of growth?”

Profits are indeed the life blood of business, but simply calling for increases focuses attention on the end result, not the means needed to achieve it. By contrast we believe that profit emerges as a consequence of attitudes, in the first place, which drive actions. If you set maximising profit in the short term as a goal, we recommend branching out into drugs and prostitution. These are both high profit, and need little in the way of capital investment. Alternatively, you could sell the assets of the business, or fire lots of people.

In a company driven by a simple profit maximisation objective, people are often seen as mere units of production, not as individuals with hopes and fears of their own. Personnel policies may be liberal (though often in areas that fall outside the workplace: for instance, in extra holidays, greater pension, shorter working week), but the enthusiasm of the employees is neither sought, nor desired. In such an environment, people quickly learn to do as they are told, whatever they think. Indeed, thinking is not required of them: brains can be left in the locker, together with outdoor clothing. Without job security, people find ways to make themselves indispensable. From a trade union point of view this has led, historically, to demarcation, and fierce resistance to ideas such as flexibility. Indeed, one trade union negotiator was heard to say: “If work was any good the bosses would keep it all.”

In this environment, waste and inefficiency abound. Indeed, they are perhaps seen as a protection for the workforce: a more efficient way of working will surely require fewer people … Managerial initiatives are therefore resisted, in subtle ways, or difficulties invented that make change impossible.

Over the last 14 years we have found that there are ways of shrinking manufacturing costs to a degree that most people would find unbelievable.

We do this very largely by analysis, diagnosis of causes, changing attitudes and expectations at every level, and by enlisting the active support of shopfloor staff. This requires a very large dose of training in new ways of thinking, and the application of these concepts to real life examples drawn from the client and elsewhere. The lessons we apply have, for the most part, been tried and tested for decades in many industries. Sadly, some management teams fail to take up the challenge, and look for some nostrum that will solve all of their problems at a stroke, instead of recognising that change begins with them.

One computer manufacturer recently won the European Quality Factory of the Year, and UK Factory of the Year Awards. It consistently makes profits in a worldwide cut-throat marketplace, yet 10 years ago it was on the point of collapse. Its product range was uncompetitive. Expensive mainframes were normally dead on arrival at client’s premises, and it was fighting on all product fronts with giants like IBM.

Changes at the top gave rise to a new attitude to quality, and product variety. All of the staff employed were trained in TQM, using the Crosby methodology, at a cost of #3m. We were involved some eight years ago, to begin a continuing programme of productivity improvement training, for all staff in the manufacturing plants. So far, this has saved in excess of #4m, through improvement projects undertaken by those who have attended training.

For example, one of the shopfloor delegates recently returned to give a case history of her project: even I was astonished when she demonstrated how her improvement team had increased output 45 per cent, by applying simple Kanban and Method Improvement ideas, giving cost savings of #1,680 a week for one line only. The factory has several lines to which the idea is being applied.

This client has learnt the lesson of continuous improvement, building upon the individual efforts of every employee. It is now part of the air they breathe.

Early in 1994, a steelwork fabrication firm, which made the biggest suspension bridge in the world, set out to train all of its 500 employees in the manufacturing area, in an attempt to change attitudes to process and product improvement. Problems of cost and delivery performance made such a move imperative. The firm had failed to make a profit in any of the last 10 years, and was being propped up by the erection side of the business.

In a six-month blitz, we trained 300 personnel, mostly from the shopfloor, though directors were also exposed to the course. Each group of delegates was given three days of mixed theory and practice, and then tasked with changing something for the better. They responded magnificently, halving man-hours and costs per tonne of structural steel produced, and preserving output. In addition, their ability to meet due dates improved out of all recognition, within six months of the start of training. They continued the programme under their own steam, and made improvements of the same magnitude in the next six months.

Our work in the food industry over the last five years has covered six factory improvement consultancy studies for one large group. In each factory, hard targets were set for the outcome of the work, in terms of bottom-line improvement. Bearing in mind that these factories were, for the most part, fully automated, and tight budgets were already in place after years of operation, the scale of the challenge can be seen.

In every case, a combination of analysis, diagnosis and training, and active involvement of shopfloor and other personnel yielded remarkable results. In one fully automated bakery, setting up task forces drawn from the shopfloor and engineering, combined with diagnostic Statistical Process Control, and Failure Mode and Effect Analysis, gave a 30 per cent increase in output in 16 weeks.

In a large pizza factory targeting one million pizzas a day, a series of consultancy and training projects gave rise to much reduced waste, better quality, increased output, and significantly enhanced profits.

The technique works just as well in small factories: we are currently helping an ice cream manufacturer with a turnover of about #30m, to become World Class. Our input has been one day a week, of training, facilitating, and developing managerial competence and attitudes, for the last year and more. The factory has declared record output levels (when we started they were failing to meet demand), flawless service level, and recently took #100,000 a year out of packaging costs after a 12-week improvement group study.

These methods were also applied in a pipe factory manufacturing steel and ferrous pipes for ships. Over a period of 18 months, the factory saved the ship assembly process #10m: improved quality from 30 per cent defects to less than 1 per cent, reduced the overdue pipes from 1,000 a week to one, brought the delivery time down from 16 weeks to two days, and shrank man hours per pipe from eight to 3.5.

These businesses have all learnt the basic lesson of the Japanese economic revival: the overriding need to release the full creativity and enthusiasm of the workforce.

Yet none of this is new: Statistical Process Control, which is at the heart of our process improvement efforts, dates back to the ’30s. The ideas of Method Study (“There must be a better way”), reach back to the turn of the century. Quality basics emerged after the war, while Value Analysis (“Does it add value?”), was created during the war itself. What is new is the belief that these old techniques can be the foundation of a new surge of improvement, driven by every person’s desire for recognition and significance.

The next step is for you to try it. If you are a manager, or in a problem-solving role, simply invite people from the shopfloor to work with you.

They will need some support and training, but will astonish you with their insights and enthusiasm. Indeed, some companies which do this allow their teams only two days solve the problem, (the “Action Workout” approach), but they take them off the job for that time, and surround them with facilitators.

Try it. What can you lose compared with what you might gain? And if you still feel unsure, send for our 10-point guide. It’s free.

Barry McTernan is managing director of McTernan, Garland and Associates.