Outsourcing To America
Posted on May 30, 2008 Comments (0)
In addition to the manufacture of cars and trucks, Toyota runs four unit factories in the U.S., where they produce such parts as engines, transmissions and wheels. Toyota also has a wholly owned subsidiary, Bodine Aluminum, an aluminum casting company, which operates three factories in Tennessee and Missouri.
BMW began operations in the U.S. in 1994, when it opened a plant in Spartanburg, S.C. “Some natural hedging was always a part of the long-term strategy, but also we have a corporate strategy of having production follow the market,” says Robert Hitt, BMW’s manager of public affairs. “Our original plan was to have about 2,000 workers here by the year 2000. We are now at 5,400 people here on the site.”
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Besides the actual manufacturing of their cars and trucks, Toyota and BMW are using domestic suppliers to provide parts and services for their operations. BMW has over 200 suppliers in North America, 52 of which are located in South Carolina, and 41 of these are new companies started for the purpose of supplying the plant. In South Carolina alone, suppliers of BMW’s Spartanburg plant employ over 14,000 people.
Toyota uses roughly 500 major suppliers in North America. “We’ve always had the philosophy that we should build vehicles where they are sold, so it makes sense to have suppliers close to your manufacturing operations,” says Mike Goss, external affairs manager for Toyota’s engineering and manufacturing division in North America.
Foreign production in the U.S., however, is not limited to the automotive industry…. In fact, almost 1 million Americans get their paychecks from Mexican companies, says Ton Heijmen, senior adviser for outsourcing and offshoring for the Conference Board.
Related: Top 10 Manufacturing Countries 2006 – Moving Jobs to Silicon Valley from India – Global Manufacturing Jobs Data – Toyota in the United States of America Economy – China Outsourcing Manufacturing to USA
Tags: cars,Manufacturing,Mexico,Toyota,USA
Paying New Employees to Quit
Posted on May 25, 2008 Comments (2)
| Training new employees and then paying them to quit, sounds pretty bizarre; Zappos is not afraid of doing things differently. Why Zappos Pays New Employees to Quit – And You Should Too:
Zappos sells shoes—lots of them—over the Internet. The company expects to generate sales of more than $1 billion this year, up from just $70 million five years ago…
Zappos has also mastered the art of telephone service – a black hole for most Internet retailers. Zappos publishes its 1-800 number on every single page of the site – and its smart and entertaining call-center employees are free to do whatever it takes to make you happy. There are no scripts, no time limits on calls, no robotic behavior, and plenty of legendary stories about Zappos and its customers. This is a company that’s bursting with personality, to the point where a huge number of its 1,600 employees are power users of Twitter so that their friends, colleagues, and customers know what they’re up to at any moment in time. But here’s what’s really interesting. It’s a hard job, answering phones and talking to customers for hours at a time. So when Zappos hires new employees, it provides a four-week training period that immerses them in the company’s strategy, culture, and obsession with customers. People get paid their full salary during this period. |
About 10% of employees take them up on the offer.
Do any of you readers want to convince Zappo’s to buy a couple airlines (Jet Blue and Southwest don’t seem to go where I need to go, too often) a cell phone company, an internet service provider and a credit card company? I could appreciate the good service in those areas 
If I were them I would start with the credit card company – I really don’t understand why someone doesn’t provide good service in that area – with the huge profits it provides and competitors that treat customers like rubes to be fleeced. Airlines you have to be crazy to buy (so don’t try to convince them of that one first).
My friend, Sean Stickle, went to work for custom ink a few months ago. I don’t think they offer to pay new employees to leave but they are devoted to customer service and to not just saying customer service is important but focusing attention on delivering it. They publish “Uncensored Customer Reviews” on their home page. There are some companies that really do value customer service even while most companies do everything they can to provide horrible service.
Related: Respect for People – Understanding Psychology – Starbucks: Respect for Workers and Health Care – Company Culture – Enhancing Passion in Employees – Respect for Workers – Mistreated Customers Let the World Wide Web Know
Tags: customer service,respect for people
Why is Customer Service So Bad?
Posted on May 24, 2008 Comments (7)
Why is it? I really don’t know. It drives me crazy though – having to put up with horrible service again and again. Is it possible that only a few people actually care about service? I know I care about it, but given the preference of business to continually provide horrible service it should be that you can just provide plan mediocre service and take their business. Yet these companies providing what seems likes worse and worse service somehow stay in business.
Related: Is Bad Service the Industry Standard? – Customers Get Dissed and Tell – Poor Customer Service from Discover Card
Some Posts from May 2005
Posted on May 22, 2008 Comments (0)
Here are just a few posts from 3 years ago this month on the Curious Cat Management Improvement blog: A Traffic Congestion Non-Solution – Brain Joiner on Dr. Deming – Open Source Management Terms – Google: Good Service not Arbitrage – Annual Report by Warren Buffett
Deming Auto Repair
Posted on May 20, 2008 Comments (7)
Here is an interesting example of an auto repair shop applying Deming’s ideas, AGCO Automotive in Baton Rouge, Louisiana:
The site includes several interesting articles including, Motivating Our Staff:
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I also believe this is a far superior state with regard to production, quality, efficiency and human relations than the one that commonly exist in the incentive driven system. It requires management that trust people to do what is best, rather than rely on a system of punishment and reward. It requires management that trust its own ability to share vision and remove obstacles to joy in work. Management’s job shifts from a controller of reward to a leader of an inwardly motivated team of people.
Related: Deming Companies – Stop De-motivating Employees – Deming Management Thoughts – At Ford, Quality Was Our Motto in the 1980s
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Well Managed Companies
Posted on May 18, 2008 Comments (2)
If a company is dependent on one (or more) people to perform then it is in danger. Processes should be in place that don’t risk the success of the company on the performance of a specific person. If your organization is dependent on a person start taking actions to place the success of the company in reliable processes instead of individual stars.
In many instances the start is as simple as starting to document processes using flowcharts. Another benefit of doing this is that you can then make sensible improvements. It is hard to make reliable improvement hen processes are not documented and instead remain the mysterious realm of individuals within the organization.
Do your outstanding people think their importance is in getting through another day with through hard work and individual expertise. While those qualities are good most important to the success of the organization is improving the system not getting through one day. If those seen as the stars are not improving the system and processes then get them to work doing so. They might miss the feeling that the organization is dependent upon them. But it is more important that the organization not improve. And there contributions will still be worthwhile but the organization will be much stronger.
Performance dependent on specific individuals is not robust and not capable of continuous high quality performance.
Related: Bring Me Problems and Solutions if You Have Them – How to Improve – Management is Prediction
Management Improvement Carnival #35
Posted on May 15, 2008 Comments (0)
Kevin Meyer is hosting Management Improvement Carnival #35 on the Evolving Excellence blog, some of the highlights include
- Hidden Problems from TPM Log. "We must encourage people to speak up and identify problems. We must
also develop avenues for people to do so in a comfortable manner." - It’s the People, Not Just the Tools from Shmula. “what most folks forget is that ‘Kaizen’ was truly build upon the philosophy that ‘Toyota builds people and then cars’ – that is, Kaizen came from the notion that the collective intelligence of your line workers is valuable and that people, if given the training and the
chance, can truly do amazing things.” - True Work, Apparent Work, and Busy Work from Gemba Panta Rei. “True work is of course the small amount of work in any process which changes form, fit or function as the customer desires.”
- Innovation on the Edge from Edge Perspectives. “Why bother about the edge when everyone knows that all the profit is in the core?”
- Why Do Employees Underperform? from the Lean Six Sigma Academy. “Muri means to overburden equipment or operators. In many cases, muri can be avoided by the implementation of some basic forms of standard work.”
Read past management carnivals.
Fed Funds Rate Changes Don’t Presage Mortgage Rate Changes
Posted on May 13, 2008 Comments (0)
The recent drastic reductions again emphasize (once again) that changes in the federal funds rate are not correlated with changes in the 30 year fixed mortgage rate. In the last 4 months the discount rate has been reduced nearly 200 basis points, while 30 year fixed mortgage rates have fallen 18 basis points.
I have update my article showing the historical comparison of 30 year fixed mortgage rates and the federal funds rate. The chart shows the federal funds rate and the 30 year fixed rate mortgage rate from January 2000 through April 2008 (for more details see the article).
It is surprising to me how incorrect beliefs about what predicted federal funds rate cuts will mean for mortgage rates are so common when the data makes it clear that such beliefs (I should wait because the fed is going to cut the fed funds rate and so if I wait my mortgage rate will be lower) are unwarranted. But I should not be this type of behavior goes on all the time, inside organization and outside them.
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China Outsourcing Manufacturing to USA
Posted on May 8, 2008 Comments (1)
Chinese firms bargain hunting in U.S.
Liu spent about $500,000 for seven acres in Spartanburg — less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn’t have to put up with frequent blackouts.
About the only major thing that’s more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.
“I was surprised,” said the 63-year-old president of Shanxi Yuncheng Plate-Making Group. “The gap’s not as large as I thought.” Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.
True this is still a relatively small macro economic factor. However, it is growing. The primary push so far is economic – not a move to lean manufacturing (as far, as I can tell) to put manufacturing close to the customer. What is the biggest factor? The USA is spending more than $400 billion every year more than it produces. The only way to consume more than you produce is to borrow (and take an obligation to pay back those that lend you money) or sell the stuff you own to those that are producing more than they are consuming. China is producing more than $200 billion more than it consumes every year.
For decades foreigners have taken debt from Americans that promise to pay back later (to pay for what they consumed). Now many are deciding that these debts are not attractive investments and are looking to own productive assets in the USA (companies, factories…). Which is smart on there part in my opinion.
Related: The Budget Deficit, the Current Account Deficit and the Saving Deficit – Moving Jobs to Silicon Valley from India – $2,540,000,000,000 in USA Consumer Debt – How to Keep the USA Manufacturing – Top 10 Manufacturing Countries 2006
Warren Buffett’s 2004 Annual Report:
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Toyota Execution Not Close to Being Copied
Posted on May 7, 2008 Comments (2)
At the core of the company’s success is the Toyota Production System, which took shape in the years after the Second World War, when Japan was literally rebuilding itself, and capital and equipment were hard to come by. A Toyota engineer named Taiichi Ohno turned necessity into virtue, coming up with a system to get as much as possible out of every part, every machine, and every worker. The principles were simple, even obvious – do away with waste, have parts arrive precisely when workers need them, fix problems as soon as they arise. And they weren’t even entirely new – Ohno himself cited Henry Ford and American supermarkets as inspirations. But what Toyota has done, better than any other manufacturing company, is turn principle into practice. In some cases, it has done so with inventions, like the andon cord, which any worker can pull to stop the assembly line if he notices a problem, or kanban, a card system that allows workers to signal when new parts are needed.
Very true, except one thing. Toyota’s innovation is not limited to process and execution. Toyota’s long term vision results in very dramatic innovation (that granted is not getting the press today – check back in 20 years, I think you will be reading about it then). For some examples see: Toyota’s Partner Robot, Toyota as Homebuilder, Toyota Engineers a New Plant: the Living Kind and The Birth of Prius.
A company truly driven by a focus on continual improvement, respect for all employees and reasonable executive compensation might be a company serious about adopting Deming and Toyota management principles. It is hard for me to imagine such a situation that doesn’t truly seek, as the primary aim of the organization, to benefit many stakeholders (workers, owners, suppliers, customers…) not just executives (or just executives, board and owners…).
Related: Toyota Management Develops the New Camry – Better and Different – Deming and Toyota – Toyota Keeps Improving – More Positive Press for Toyota Management – Good Execution is Important
Tags: commentary,Innovation,Toyota
I Don’t Know
Posted on May 5, 2008 Comments (3)
Guest post by David Kerridge (originally posted to the Deming Electronic Network):
This is part of a series in which I recall striking or thought-provoking things that W. Edwards Deming said, but did not put into his books.
I remember taking a manager to his first Deming 4-day seminar. Afterwards my friend said to me “I was very impressed with that man. He said ‘I don’t know.’”
Something in our culture makes us ashamed to admit ignorance. We expect quick, slick answers, whether from politicians, managers, or consultants.
Deming said “I don’t know” more often than anyone I have ever known. Sometimes you heard the answer about two years later, in his seminar.
I also remember him saying “I have learned more in the last six months than in the previous ten years.”
Maybe one quotation explains the other.
Related: Dr. Deming quotes – Instant Pudding – Deming on being Destroyed by Best Efforts – Where to Start Improvement
Clifton Gorge State Nature Preserve in Ohio
Posted on May 4, 2008 Comments (0)
The Clifton Gorge State Nature Preserve in Ohio is quite a nice short hike. Photos by John Hunter. If anyone knows what the green beetle is please add a comment.
I visited the preserve last year. Other sites from the trip include: Rocky Gap State Park, Maryland and Coopers Rock State Forest, West Virginia.
More photos: Rocky Mountain National Park – Mount Rainier National Park – Capital Crescent Trail (Washington DC) – travel photo directory
Management Improvement Carnival #34
Posted on May 1, 2008 Comments (0)
Please submit your favorite management posts to the carnival. Read the previous management carnivals.
- Introduction to Factorial Designs by Jonathan Mendez – “I like the idea of velocity in marketing — test, learn, test, learn, test. Instead of one large test I prefer focusing attention on certain areas or elements to achieve deeper understanding.”
- MIT’s Message about Lean Enterprise Transformation by Mark Edmondson- “1. Market leaders are good at embracing enterprise change; 2. Enterprise change requires a holistic approach that engages all stakeholders. This includes employees, suppliers, customers, unions, and investors/owners”
- Two Types of Bottleneck by David J. Anderson – “I now teach that there are two types of bottleneck: capacity constrained resources CCRs; and non-instant availability resources”
- Oranges, Pebbles, and Sand by Ron Pereira – “In this video my daughters and I demonstrate how meeting an objective is just the beginning to improvement.”
- Why errorproof when you can double-check? – “If you are in the position to prevent the error in the first place, why wouldn’t you? And, I’d argue, if you can write a tool to detect the screw up – ie, it is possible to programmatically figure out that the template is wrong,”
- Systems and Improvement by John Dowd – “Thus did Deming, over sixty years ago, show a basic model about how to think about quality and improvement.”
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