Lean Manufacturing: Thriving or Dying in Today's Automotive Supply Chain

[Transcript]

[00:00:00] Jan Griffiths: Welcome to the Auto Supply Chain Prophets Podcast, where we help you prepare for the future in the auto supply chain. I'm Jan Griffiths, your co-host and producer.

[00:00:13] Cathy Fisher: I'm Cathy Fisher, your podcast host. Our mission is to help automotive manufacturers recognize, prepare for, and profit from whatever comes next in the auto supply chain.

[00:00:23] Terry Onica: I'm Terry Onica, your podcast host. We'll be giving you best practices and key supply chain insights from industry leaders.

[00:00:29] Jan Griffiths: Because the auto supply chain is where the money is. Let's dive in.

[00:00:36] Jan Griffiths: Hello and welcome to another episode of the Auto Supply Chain Prophets podcast. Let's check in with my co-host, Terry Onica. Terry, how are you doing?

[00:00:44] Terry Onica: I'm doing great. How about you?

[00:00:45] Jan Griffiths: Good. Tell me, what's been going on with you lately with the running? Well, it's a bit cold to run out there. Are you still running?

[00:00:50] Terry Onica: I actually run all year round. I actually prefer the winter because you don't get hot or cold when you're running. I admit the first mile, when you start running, you're a little cold. If it's really freezing temperature might be two miles, but once you get going, there's no sweating. It just feels perfect. I love winter running.

[00:01:06] Jan Griffiths: Maybe I need to pick up some winter running. Actually, I've been focused on the book again. People have asked me lately, what's the title of the book? And the answer is, I wish I knew. I've changed it so many times, Terry, and I might be guilty of being a tad bit of a perfectionist. I will admit to that. It's a process, and I have to tell you, I love it when I'm learning something new.

[00:01:30] Terry Onica: Yes, it's a journey.

[00:01:32] Jan Griffiths: Yes. And talking about learning something new, let's introduce our guest today. Our guest today is Beth Crowley. She is the president of the Crowley Group, and she started her journey with LEAN way back in the early nineties, she was at the forefront of LEAN implementation at Bendix, which was then of course AlliedSignal and now Honeywell, and also at Maytag. And when I first met Beth many months ago, she literally crawled out from behind a machine at the St. Joe plant in St. Joe, Michigan. It was a brake caliper machining plant. And she was implementing a 5S program at the time, and she literally crawled out from behind the machine. And that's when I met her. And that is indicative of who she is and what she does. She knows lean inside and out, her career progressed into more of a consulting role, but she is the roll up your sleeves, get down on the shop floor and make it happen kind of person. There is nothing. That she does not know about lean. So, I am thrilled today, Terry, to welcome Beth to the show. Welcome, Beth.

[00:02:53] Beth Crowley: Thank you so much, Jan and Terry. It's great to be here.

[00:02:57] Jan Griffiths: We're going to start off with a very easy question for you, but I feel that lean is often misunderstood. So, let's ask you, Beth, what is lean?

[00:03:08] Beth Crowley: It's as big as a philosophy and a mindset and a way of thinking, which is really your strategy. We want to become a lean enterprise. And there's also tools and tactical things that you do on a daily basis that help you to become more lean. So, lean is really a lot of different things and I agree with you, it's really misunderstood. But the basic premise of everyone who's trying to get leaner is the elimination of waste. So, what does that mean? That can mean time. That can be energy. That can be material. That can be transportation. Even when you're doing a home improvement project and you're like, "Oh man, what a waste. If I had only bought this the last time, I was at Home Depot, I forgot to get it." Think about what that takes you out of what you're trying to do, right? It doesn't get you any closer to the outcome that you really want. You being your own customer at that time. So, you understand what the customer wants, but it's really understanding what the customer wants and finding the most effective way to get the customer what they want, to get the employees what they want, to get the shareholders what they want. It's hard for people to understand. I like to use just everyday examples that say, you know, I live in the Detroit area, and I run errands on Saturdays. So I am that nerd that I'll plan my route, so I'm only making right-hand turns. So, I don't have to go left across three lanes without a light because I always say that my objective is more time on the couch with the remote control, right? That's what I'm trying to maximize. So, sitting at a light waiting for somebody else to get by, that's lean. It's really a mindset. I think I got it from my grandfather because you hear about things that happened in my dad's family when they were growing up. You know, putting things on the stairs, going upstairs, meant take that with you when you're going, right? That's all of that is kind of a lean mindset. And it's really about how do we get the customer what they want in the most effective way possible.

[00:05:20] Jan Griffiths: That's a great explanation. And I know that often as you've seen me grow on my journey and I talk about authentic leadership, you've said to me many times, that's lean. And for me, that was a bit of a stretch. I couldn't really understand that. Could you just elaborate more about lean and leadership?

[00:05:38] Beth Crowley: Absolutely. lean, there are really two parts to it. There's the physical materials, getting something from A to B, as effectively and efficiently as you can, but then there's the whole people aspect of it. And you're really coming in and you're challenging conventional wisdom on things like how to run a shop floor at the basic level, how to do production planning, how to deal with your supply base. So, there's really there's a change element to all of it that 30 years ago we weren't really paying attention to that. We weren't smart enough to know that that's what was going to happen. If your leadership isn't with you, like even your standard metrics, some of them are going to dip, right? And that's what you report to corporate and maybe that's what your incentive is based on. All of a sudden there's all these conflicts. Because maybe the metric system, what you're measured on, doesn't match what it is that we were doing, right? So, leadership really has to say, I'm going to stick with this, even though it may get a little worse before it gets a little better. I have to have the guts to stick through the hard times and to keep supporting the people who I know are doing the right thing, even though the financial reporting or whatever it is that you're measured to may not be exactly what you're trying to get.

[00:07:02] Terry Onica: I have a question for you. What is not lean? And the reason I ask this to you is that there's a lot of new people to the industry. And oftentimes people say it's lean, but I don't think it's lean. I think they're abusing the word lean. And for example, a lot of people will cut people out and say, "Oh, we leaned out the process. We're just eliminating people." But did they really lean the process out by eliminating the people? Or were they just trying to cut costs?

[00:07:30] Beth Crowley: There's definitely a difference between cost-cutting and doing lean. When you're actually doing lean, you have an objective in mind like with your supply chain. Or let's, let's talk about what they call just-in-time. Okay? So, just-in-time, if everything worked perfectly all the time, if you knew that you had so little variance in your process that a truck could be rolling up and you know your equipment needs, that perfect world doesn't really exist. But that's what we're always trying to get to, right? That's what we're aspiring to be. When Lexus had their tagline, "The passionate pursuit of perfection." That's what the journey and continuous improvement in lean in just-in-time, just-in-time is an idea. Nobody could go one-piece flow throughout a whole global supply chain. That's impossible. So, so how do you start? Well, just-in-time, of course, we all want to get there, but you have to set up your process with buffers that allow the process to run. That's where inventory comes in. That's where warehousing comes in. But you're always striving; you're continuously improving to get closer and closer to that ideal of just-in-time. It's a mindset, it's a philosophy, it's a way of thinking to always have an organization trying to achieve more, getting better, better, better all the time. Knowing that we're never going to get to perfection. I'm certainly not perfect. Who's perfect? Nobody. But in lean, or whatever you want to call it, If you make a mistake, you learn from it, you put something in to make sure it doesn't happen again, and that becomes like your new normal. I wrote an article right around the pandemic when we were talking about new normals all the time. The title was Continuous Improvement: A Series of New Normals. That's all it is, right? You learn; that's what lean is. We learn a little bit more. Sometimes there's these tools to help us do it, sometimes not. It's not just cost-cutting. When we were at AlliedSignal, it was a hard time, too. 'Cause we were laying off people like crazy. And I went into some plants, and it would say lean, and it would say less employees are needed. And I was like…

[00:10:00] Terry Onica: No.

[00:10:01] Beth Crowley: Wow, have things changed.

[00:10:05] Jan Griffiths: What is the most difficult thing you have to face, Beth, when you're going through a lean implementation? What's the trickiest thing? I mean, you've gone through so many of them; every time you know this is going to come up, what is it?

[00:10:20] Beth Crowley: They're all the same. Exactly. It's, well, you don't understand what we do here. That is the number one. And what's also interesting and maybe misunderstood about lean is that I'm not trying to go inside the black box of how you process things to manufacture it, right? I'm not gonna go in and tell you how to cut metal or what material to use. That's not what we do. We're looking outside those process boxes where all the transportation's happening, where all the "we gotta go find our stuffs" happening, where all the warehousing is happening. We still use a tool called a spaghetti diagram, and you can do this in any warehouse. You get a layout, and you say, "Hey, just all day as you walk around, just kind of draw in here where you go." And people are running 10 miles a day where if we just organize stuff in a flow or something, we could get it down to two miles a day or whatever it is. It's things like that. It's so basic. I would say I'm not a rocket scientist. It's really, really basic. One of my original mentors told me out on the shop floor, he said, "Beth, you want to know where to find some real gems? Of where to get time or get money or get quality, go and find the laziest guy out there and watch what he does because he's got it figured out."

[00:11:50] Terry Onica: Interesting advice.

[00:11:52] Beth Crowley: Right? They're still hitting rate. How are they doing it?

[00:11:56] Jan Griffiths: I remember having a conversation with a lean guru a long time ago and he told me, he said, "You know, you can do lean all day long, but if you don't have parts to the line, forget it." That was one of the biggest problems that he faced was getting parts to the line. Now, I know Terry's got a lot to say about this, but so why don't we start, Beth? If you can respond to that, is that the case?

[00:12:28] Beth Crowley: Absolutely. I'll give you a Maytag story. You may, I may, I probably said this to you at the time because I was shocked. So, Maytag hired, I had just gotten there, and TBM had already been helping them set up an assembly line. We're making ranges, ovens. And I mean, this assembly line, they were worried about a quarter turn of a person. And I was like, wow, the rest of the supply chain, they must really have it. They hadn't touched even any of their internal operations. So, as an example, the thousand-ton presses that are stamping out the sides. They're still making thousand-piece lots, and at the assembly line, they want them to bring like two at a time. They're making these really nice carts to hold two at a time and they're adding people in the down by the presses to move parts from one container to another, but they hadn't made improvements anywhere else. In that case, they could get the parts of the line, but they couldn't get them in the any kind of quantities that they needed them. But if you can't get the parts from the supplier. Then it's all hands-on deck to the supplier.

[00:13:45] Terry Onica: Jan knows me, and she knows where I'm going to go with this. I hate spreadsheets. I really believe we need to start using tech, especially in today's environment. But often if you get with people in lean, they say, I need my spreadsheet. I don't need to use ERP. I don't need to use technology. A spreadsheet is all I need. What do you say to that? What is the intersection between lean and technology?

[00:14:08] Beth Crowley: I would argue with those lean people because spreadsheets are, it's just another data source, right? That may or may not link up with somebody else's or the ERP system that's ordering from your supply base. And there's all kinds of errors for fat fingers. These spreadsheets are the worst idea ever. Now, think about back, Jan, when we were at AlliedSignal, and there were no ERP systems. A lot of these people, and especially in small companies, spreadsheets is all they've ever known. I did this at my last project. They were like, we don't even know what you're talking about. They didn't even know what MRP was, let alone ERP. And that it could not be possible that a system could track what they were doing. I was like, you guys aren't doing anything that complex. Yes, we can. This is not that difficult. As long as the system matches where parts are physically, and that it gets scanned or whatever, there is no reason why we can't have lean in technology. The other thing is all the data that you get now. When I was on the shop floor, and this would have been in the mid-90s with AlliedSignal, we got our quality data for the month of January on February 15th or something like that. What do you do with that? I don't even remember where it was on January 10th. There's so much that you can do, even if it just was the data gathering, so you can prioritize your resources, so you can set your project teams. To get to that aspiration of just-in-time or Six Sigma or whatever it is.

[00:15:48] Terry Onica: Speaking of gathering the data, when you're working in lean, who should be involved at a plant? We're really big on our podcast about breaking silos. We want quality. We want supply chain. We want IT. We want the right people in the room. What are your thoughts? Who should be involved? And do you see the importance of breaking silos even in the lean environment? Have you seen that before, too?

[00:16:09] Beth Crowley: Oh my gosh, yes. Absolutely. That's one of the things we do. Cross-functional teams, automatically. Think about Kaizen events and pulling people out of their real jobs for a whole week. I mean, the first time you try to do that with an organization, they completely freak out. And then we get a couple under their belt and see what happens. And then they're like, what's our next one? Come over here. Come over here.

[00:16:33] Terry Onica: There's a couple controversies I want to talk to you about right now. I'm going to go with the first controversy. The one is a lot of people are saying right now with all these supply chain disruptions, and you alluded to a little bit in your conversation earlier with us, is lean and just-in-time dead? A lot of people think it's dead. We can't possibly have lean and just-in-time in an environment where there's so much disruption and we need to build inventory.

[00:16:54] Beth Crowley: Yeah, exactly what I said earlier. We're taking things too literally, right? It's where we're trying to get. I think using the words maybe just-in-time scares people, especially people who worked in automotive. In the 80s, 90s, or whenever it was that everybody was like, we have to get just-in-time, and then we ran out of material everywhere, or we were premium freight probably went through the roof because we couldn't get it exactly. Again, because we weren't working on the processes, we just all of a sudden, just let's get rid of inventory. No, no, no, you can't. You've already shown your current process isn't capable of running with no inventory. So now study your process, get data, find out where buffers need to be, and then start attacking the reasons for those buffers. It's that old "the ship on the river with the rocks underneath it." Here we are in a sea of inventory, just going along, no problem. But once you start taking that water level down, you start hitting those rocks that are— our process is incapable, our setup times are too long, our people don't feel empowered to solve problems. Jan and I were talking recently, and there seems to be a new buzzword, and it's called resilient. I like that word because everybody knows what that means. It's a regular word in the dictionary. But they're talking about being resilient now because of the pandemic and because of the supply chain, the huge supply chain disruptions. Well, resilient processes are just processes that work, that are continuously improved, et cetera, et cetera. So, is a strategy of resiliency different than a lean strategy? I'm going to say no. It can work in every function that you have. You've done projects in accounting, in human resources, in quality. Wherever there's a process, it can be looked at from the eye of continuous improvement.

[00:19:01] Terry Onica: In my career in automotive, we have push and pull systems, right? A lot of people want to do Kanban systems, you know, more of the pull systems. And a lot of people I noticed like back, I guess you want to say it was in the early 2000s; I was even on a team at AIAG where we were trying to really help people with Kanban. There's a lot of energy around it and then it just went away. So, why does Kanban fail in some organizations? And where would I look to do Kanban? Where would I look to do push versus pull systems when I'm in a plant? What would be your parameters where it fits, and it doesn't?

[00:19:35] Beth Crowley: Your best case for Kanban is going to be something repeatable, right? Because it says, I use about a hundred of these every week. So, I'm going to store a hundred right here. And there's going to be a trigger; it can be a physical trigger, it can be in your ERP system, whatever it is that says, "Hey, truck from there, I need more. I need my weekly now." That's all. Kanban is a min-max that's visual, normally. And the minimum is based on replenishment time. So, let's say that if I order parts today, I know I will get them in two weeks, right? And that's, they're pretty consistent on that. So, I'm going to hold two weeks’ worth. And then maybe when I get to 50 per, you know, whatever it is you set those Kanban’s based on, but it's really just a min-max with a visual trigger or it could be electronic. I like the visual. I like to be able to go out in the shop and understand. Where I am without going to my spreadsheet or even without going to my ERP system.

[00:20:36] Terry Onica: What do you need to do to successfully set up a Kanban? Because I see a lot of people try but then it just kind of fails for some reason. Is it the getting the data? What is it that causes people to start and then fail and then just decide to go back to pull system?

[00:20:52] Beth Crowley: It's like a lack of discipline. It's that leadership again like you have to have the structure. Everybody has to know how to do the new process. Otherwise, they will revert to the old process because that's the one that they understand. People don't want to look stupid. Just ask a question; it's fine. Nobody knows everything. Especially if you're in a manufacturing facility where somebody's been there a long time and now, you're changing things, and they don't know how it works. At that same St. Joe AlliedSignal Plant that Jan was talking about, we actually hired back a retiree who was the superintendent, and his whole job was to walk around that plant and make sure every one of our Kanban cards was where it was supposed to be. Scheduled all the physical things, containers, and everybody really respected him because he had worked there for, you know, 30 years. And so, he would also pull people over and go, all right, you know, do you know where this is supposed to be? I'm not sure I've ever had that since that time. Because if you think about it, you could do Kanban at home with your family. What are the things you always run out of? Toilet paper, ketchup, napkins. Just think if you had two containers of whatever it was, and you had when you finished this first container, you put that container on top of the refrigerator. And then the shopping list was already done because it was based on the empty containers on top of the refrigerator.

[00:22:18] Jan Griffiths: Our listeners are leaders in the automotive industry in supply chain, and they're wondering right now, what is the one thing that they could do to help them either gain more of a lean mindset or implement lean within their own supply chain processes?

[00:22:41] Beth Crowley: First thing that I usually do when I go into a facility for the first time, I look to see where the inventory is. Because where the inventory is will tell you where the problems are. Because the machine that you know you need to use all the time but is never running, you know is going a lot faster than the ones that, where it's piling up after that. You don't need to go into a system, you can just ask the people. And then you ask then, 'Well, what do you do to relieve that problem?' They'll tell you that, too. So, then you start following that chain and say, 'What is broken? This is all a workaround. What's broken?' I teach it at Oakland University, undergrads, Production and Operations Management. And I took them on a tour one time, and I'd always been talking about inventory, inventory— it's evil. And they, you know, they didn't get it. Because, how would you? So, we went into the factory, and I was like, 'Just look for the inventory and tell me what you think that means.' So, the next week, we were debriefing, and I'm like, 'All right, what'd you guys think about it? You thought I was crazy that I was taking you on this tour.' And they said, 'Everything that you said, all of a sudden it came to life. And we could see the inventory was in the way everywhere. Nobody could find what they were looking for.' So, I would say, 'Where's the inventory?' That's what's covering up your issues, your process issues. And it could be supply chain processes. It can be manufacturing. It can be your order processing system takes too long. Or somebody didn't know that they were supposed to click a box on something to let it go faster. You get those cross-functional teams in a room together, and you map a process that they all don't know the whole process, but maybe they're all a part of it. And all of a sudden they go, 'I didn't know that you needed that. I have that information. I can put that on that for you.' Or 'I didn't know I was holding you guys up because I'm doing ABC that it sounds like now maybe we don't need to do at this point in time.' The bottom line of lean is to get the people in the room who do the job to tell you how to improve it.

[00:24:53] Terry Onica: Can you help our listeners in today's environment where people want to add inventory and they can give you all kinds of reasons? Well, there might be this disruption, that disruption. To add to your point, what's your advice that you can help them to say? These are the questions you should be asking to make sure that the answer is correct.

[00:25:10] Beth Crowley: A lot of times, people either don't know the root cause of the problem, or they're doing smoke and mirrors, or both. Managers and leaders shouldn't necessarily have to get into the details of everything all the time. But sometimes, you need to know more details. So, it's not they said this, and she did that and went, no, no, okay, let's take this one issue that we had and let's map out what happened. It doesn't have to be a process for your quality manual. It could just be like, what happened here? And put it on a wall and find out what the truth is. Because you're never going to be able to solve that problem and get rid of that inventory if you don't know what the root cause is. And you might solve a couple symptoms on the way, right? But until you solve that actual problem, you can't make that change on your inventory levels because your current process isn't capable of running there.

[00:26:06] Terry Onica: I love that. Show me.

[00:26:09] Beth Crowley: It's the easiest way too.

[00:26:10] Jan Griffiths: There it is. Well, with that, that's a beautiful way to close today. Beth Crowley, thank you so much for joining us today.

[00:26:15] Beth Crowley: It was my pleasure. Thank you, ladies.

[00:26:18] Terry Onica: Thanks again, Beth. Love the conversation.

[00:26:22] Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how, or click the link in the show notes below.