Did I get your attention? OK, it was a misleading headline, sort of. Certainly, productivity and quality are important, as are safety and on-time delivery (remember the mantra of Safety, Quality, Delivery, and Cost).
Look at this case here: the GM Oshawa plant in Canada is slated for closure in 2008. They are at the top of “quality” studies this year and were at the top of “productivity” charts in 2005.
Why do I keep putting productivity and quality in quotes? I'm doing that because productivity is really more than “hours per vehicle.” Productivity really includes total cost and other forms of waste in a factory. And not just the factory, it's really productivity of the “enterprise” (the entire company) that matters. How productive are you if you build cars quickly, but it takes forever to get a new model out on the market?
Some people are complaining and whining that it's “not fair” to close the Oshawa plant because the workers do such a good job (defined by “hours per vehicle”). Actually, a lot of that productivity could come from how the car is designed (“design for assembly”) and how the plant is designed and built. Is it fair to the engineers and managers?
What's not fair is that GM hasn't been able to design cars that people want to buy in numbers sufficient enough to keep the plants running. What's not fair is that the plants aren't designed to be flexible enough. GM just can't immediately and easily shift production of a popular vehicle from a “low productivity” plant to a “high productivity plant”. So is it unfair to the workers? Probably. But I don't know what you can do about it. Keeping the plant open to crank out cars that the market doesn't want, that would be the opposite of “productivity.”
Oshawa is also #1 in quality. Is it fair to close a “high quality” plant? Again, maybe not, but how are you defining quality? The linked study defines quality as “initial defects.” There's much more to quality than that. Entire books have been written on how to define quality. Let's look at Dr. Deming's examples of how to define shoe quality (from Out of the Crisis).
Different aspects of quality include:
- Is it good quality that it wears a long time?
- Or that it takes a shine well?
- That it feels comfortable?
- That it is water proof?
- That the price is right in consideration of whatever he considers quality?
- What is a major defect in a shoe? A tack in the insole? A heel that came off” Smudges?
So, this one study that measures ONE aspect of quality says they are doing a good job. The market is saying otherwise. Sure GM can complain about media bias (or blog bias) against them, but the market is speaking. The market is saying “you don't need as many plants because we don't like your products.” There are many many different quality studies that each car company can brag about. If you're good with “initial quality”, what happens if you car falls apart just after the warranty is up? What if the car is ugly? Is that not poor quality also?
I drove two GM products that I rented on Tuesday. I think my experience illustrates this point, that's why I've been thinking about quality. Why did I rent two cars, you might ask?
Vehicle #1: new Chevy Malibu, with ONE mile on the odometer. Not the trip odometer, but the odometer (I'll assume it hadn't been “rolled back”). I pulled into the checkout booth and the Malibu stalled. I started it again, it idled real rough and it stalled again. Damn. So much for that Malibu. I'm not a mechanic so I can't say what went wrong, but that seems like an initial defect to me. Crappy car, for that reason. Poor quality. Certainly would make me less likely to buy a GM product.
Vehicle #2: new Buick Lacrosse (built in Oshawa!), with 18,000 miles. It started and ran well for two days. It got me to point A and point B and back to the airport. Does that mean it was a quality car? No. Buick likes to think that they are going to be competing against Lexus. Some models with all the options actually look pretty nice. Not this Lacrosse. It was a stripped down rental car special. A co-worker laughed hysterically when I asked him if this competed with Lexus. It had cloth seats, a plastic steering wheel, and “the interior of a K-car“, my co-worker said. Bad quality, different definition. It certainly wouldn't make me want to go look at buying a Buick. That vehicle, which GM sold in the name of cash flow and keeping plants running was a horrible marketing ploy. From that single experience, I equate Lacrosse with LaCrap. How would I know GM could do better?
Is any of this fair to the workers? No. It's the result of bad management, pure and simple. Was it fair to shut down a world-class factory that built rotary-dial phones? Probably not, but hey, that's business. That's life.
Lean (and business in general) isn't just about the narrowly-defined metrics shown above. It's about success in the market — growing sales, being profitable, and building long-term success and an organization that people can be proud of.
What do you think?
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Hi Mark –
There’s always this temptation to find a few simple things to manage . . and then everything else will be OK.
This is great for a certain kind of consultant (don’t think that’s you, and it’s certainly not me!), looking to make a quick buck with silver bullet, panacea service.
But real life just ain’t like that!
I still think though that the SQDC mantra still has a lot going for it though, provided that people take the time to read between the lines, and add some subtlety to the measures:
SAFETY means not doing anything to endanger your customers, or your employees. With the former, it’s because dead customers tend not to be repeat buyers, and injured ones only come back with their lawyers in tow. (Interestingly enough, I’d class your problems with the Chevy Malibu as a safety defect – imagine stalling when you’re crossing a busy junction, or a railway line!) With employees, it’s more subtle, and mainly about retention (though of course, dead employees are also really bad). Lean advantages often come from the built-up tacit knowledge of the workers. If you put ’em in an unsafe environment, they’ll not want to stay with you, and you can kiss that knowledge good-bye.
QUALITY starts and finishes with the customer. Since Lean is all about PULL, it’s essential to find out what customers want and build just that. It’s no use building so-called quality products that there’s just no demand for. Too often, firms focus on the other sorts of quality, without any attention to actual customer needs. This results in products that are too expensive – either over-engineered, or paying for the vast overhead costs of the paper-trail style of quality systems that document everything while improving nothing for the customer. The new version of ISO9000 goes some way toward fixing this, but not nearly far enough.
DELIVERY has to be both prompt and on-time. In an interconnected world, there’s always another source of your product – either a competing manufacturer offering something that does the same job (although usually advertised as ‘better’), or a rival supplier selling the same items exactly. Certainly for firms based in western economies, delivery is a critical differentiator, although I note that even items produced in the Far East (that snazzy new MacBook I’ve been looking at . . . ) are available built to order within 5 days.
PRICE is the last of the four, and rightly so. If you get the other three measures right, competing on price is not such an issue. That doesn’t mean that you can charge what you want, but that you will have a degree of leeway – you needn’t be the cheepest to win the sale!. The best way to identify that you’ve got it wrong on Safety, Quality and Delivery is that you’re always competing on price.
So your attention grabbing headline that Lean isn’t just about Productivity and Quality was pretty close to the mark.
Karl.