Focused Factory Discussion   

Bob A. writes-

The Big 3 auto makers are in trouble. Honda and Toyota and are eating up the market ...

Just recently, Ford and DC (Daimler-Chrysler) changed their manufacturing strategy from making a couple of different models in a single factory to expanding their product mix (a.k.a. Flexible Manufacturing) within a factory to reduce their overall costs.

Currently, DC is producing the PT Cruiser in Mexico, with the Neon built in Belvedere, Ill. They admit this is a mistake and will be changing.

Ford and DC feel 'flexible manufacturing' is a strategy they must and will employ to survive. GM has already begun the process of implementing 'flexible manufacturing'

So, is the 'focused factory' a good strategy? I think the Manufacturing person employing this concept better know his customers and the market.

QL Comments

Flexible Manufacturing

Focus, product variety and technology are all inter-related. I think the key to effective thinking on this is to ask "What makes a product different?"

For example, the consumer would consider red and black cars as different and hardly interchangeable. From a manufacturing perspective, they are different if your paint system requires hours to cleanup and changeover. But, with a quick-change paint system, there might be no significant manufacturing differences and, therefore, we have only a single product.

Flexible manufacturing is all about using technology to reduce the effective differences between products. To the extent that this is feasible, we can have a highly focused factory that still produces a wide (customer-perceived) variety of products.

The key questions for Ford and DC are: "Can we make the technology work?" and "Will the infrastructure cost to support flexible manufacturing outweigh the apparent savings." In my view, this is an open question. There are examples of highly successful flexible manufacturing and other examples of disaster.

Automotive Manufacturing Strategy

Detroit has attempted several drastic changes in manufacturing strategy over the years. Remember Roger Smith? He was going to leapfrog the Japanese with high-tech, flexible manufacturing. It almost destroyed the company. And, all the auto companies have attempted to emulate Toyota with limited success.

Culture and organization are important. Any Manufacturing Strategy is "wrong" if the company and organization do not have the wherewithal to execute it.

I am quite familiar with the automotive industry, especially the Detroit branch. It has a very strong culture rooted in history and long-past success. Each of the carmakers have also had their own subculture. The Detroit culture is resistant to meaningful change and does not fit well with Lean Manufacturing. For insight on this, check out "Ford: The Men and The Machines" and compare it to "The Rise and Fall of The Packard Motorcar Company" and "Decoding The DNA of The Toyota Production System."

The Smith regime at GM did have several notable successes. Saturn did very well in the early years. All of its people were hand-picked for both technical and interpersonal capabilities. They were sent to the backwoods of Tennessee and isolated from the parent corporation with complete freedom.

Another GM success from this period is little-known. Their factory in Saltillo, Mexico was a truly world-class facility. Some of the knowledgeable people who worked there attributed that success to both the local leadership and their physical isolation by desert, distance, mountains and culture.

For the current Detroit group, my personal bet is on Ford. Bill Ford seems to have the right attitude and leadership ability. His name is also on the front door and this carries tremendous weight in the Ford culture. Moreover, the Ford family has twice before produced leaders that rescued the firm from near-disaster. It might happen again.

I especially agree with your final comment. I would add that the manufacturing person must also know his technology and organization.

---

Greg M. writes-

What kind of article is this?

I thought Strategos was a LEAN consulting resource. I have enjoyed your article in the past, so I was surprised when I saw this article touting "Focused Factories".

Everything I have learned about Lean Manufacturing and Flow is contrary to this narrow minded strategy of Focused Factories.

I am often amused by people that want to "focus" on a particular metric as a manufacturing strategy.

 Customers these days want it ALL: on-time, high quality, low cost, reliability, safety, service, etc. In my opinion, I think the author is myopic in thinking that if a factory is narrowly focused they are more likely to excel in business.

1) "There are many ways to compete besides low cost." Really? You don't say. That's brilliant!

2) "A factory cannot perform well on every measure." What do we consider "well" and whom do we benchmark ourselves from? This statement seems to say: 'Let's focus on two measures and let the rest go to pot.' This is ludicrous! I believe (sic) it is also the reason that many factories are lost in a sea of misdirection today.

3) "Simplicity & repetition bring competence." I do agree with the underlying principal that Simplicity and repetition bring competence. We as manufacturers tend to make things entirely too complicated.

Thanks for your time,

Greg

Q's Commentary-

Focused Factories & Lean Manufacturing

The Focused Factory concept is highly compatible with, and often essential to Lean Manufacturing. The literature in the past few years has not emphasized focused factories but the earlier literature on Toyota, JIT and WCM does. Toyota was and is a strong advocate and practitioner of Dr. Skinner's concept. Their factories, particularly their supplier's factories, are highly focused.

This is not the only aspect of the Toyota Production System that has gotten short shrift in the transformation to Lean Manufacturing. The Toyota "Suggestion" system has had a similar fate. Norman Bodek, who met Taiichi Ohno and was a close friend of Shigeo Shingo is attempting to correct this oversight with "Quick & Easy Kaizen."

Metrics

The focus in a Focused factory is not on a particular metric but on a "Key Manufacturing Task." This is usually the task that, executed well, wins orders in the marketplace. Upcoming issues of Lean Briefing will discuss this in more detail.

Neither I nor Dr. Skinner advocate total reliance on a single metric. First, one needs to distinguish between Process Metrics and Results Metrics. "Results" Metrics tend to measure a final outcome. "Process" Metrics measure aspects of the process which affect the final outcome. Process metrics measure phenomena that are often far removed from the result. An organization must often track many metrics to produce an intended result.

The topic of metrics is a wide one and there are several good books devoted to it. (See: "Performance Measurement for World Class Manufacturing").

Underlying Concepts

While the underlying concepts may seem like simplistic truisms. the same might be said of Sun Tzu's and von Clausewitz'' Principles of War. It is surprising how often they have been ignored by supposedly competent people. For example, Eisenhower and Montgomery pretty much ignored von Clausewitz' principle of concentration during the WWII European campaign. It cost thousands of Allied lives and drove Patton to apoplexy. It also opened the door for the German Ardennes offensive. According to Stephen Ambrose, it prolonged the war by nine months.

Customers & Markets

Customers may say they want it all but they seldom get it. We must often  infer market criteria from customer behavior rather than assertions. For example, examine your own buying behavior with respect to an automobile. Do you own a car with the gadgetry of a Cadillac, the quality of a Toyota, the styling of a Jaguar, the prestige of a Mercedes and the price of a Kia? At some point, you made a buying decision that favored one or two factors over others. This is all part of marketing strategy planning from Marketing 101:

1. Identify Target Markets

2. Develop A Marketing Mix

This is why Manufacturing strategy is intimately intertwined with Marketing strategy. The idea of the Focused Factory is to find a set of target markets with similar requirements and design a manufacturing system that addresses common needs with common approaches and systems. Simple but not easy.

Misdirection & Multiple, Competing Goals

Neither individuals nor organizations are very good at achieving many goals simultaneously, especially when the goals compete. What happens in practice is that one week they work on cost, the next week quality, next delivery and then back to cost for a few days before going on to inventory. Without a sustained, concentrated effort on just one or two goals, not much gets done. Check out "The Great Nuclear Fizzle" for an example of what happens when objectives are ill-defined.

The paradox is that by focusing on one or two common "Order-Winning" criteria (for example, delivery reliability) cost, quality and other metrics improve as well.

Too many competing objectives is also a common reason for the failure of many Lean Manufacturing initiatives-- the company tries to do too many things simultaneously. Setup Reduction competes with SPC and before either one is digested, cellular manufacturing comes along and tears everything up. Before the cells get started, meetings start on kanban and teamwork. People are torn between competing projects and make progress on none. A critical part of any Lean Manufacturing strategy is the priority and timing of each element.

Tradeoffs

This business of "collateral competency" is also a source of confusion when discussing tradeoffs. Tradeoffs are inherent to any engineering design. In some systems, the tradeoff curve is very sharp with steep slopes and a clear optimum. This is much like the EOQ curve when setup cost is high.

If the system can be redesigned, the tradeoff curve may change drastically in character with gentler slopes and a lower overall location. This is what happens when we implement setup reduction. The tradeoff still exists but it is less critical and the overall improvement makes the tradeoff less critical.

Business Success

Finally, focus by itself does not guarantee business success. One might, for example, focus on the wrong thing or an unsustainable market segment. Again, the manufacturing strategy must integrate with marketing and business strategies.