The Biggest Waste of All?

Perhaps not bigger than some government spending programs, but that is a different problem far out of our control. Let's focus for a moment on a spending pipeline we have direct control over: lean consulting and payroll dollars.

If you do a quick search on LinkedIn for the term "Lean" and filter for Industry: Management Consulting you will get a return of approximately 3,468 results.

Let's say for a moment that all of those results are for hire. And for a modest Lean Manufacturing Implementation Project, a consultant should reasonably expect to take in at least $100,000 per year in order to live to see another day. One way to look at this problem is that companies are spending somewhere in the neighborhood of $350M for Lean Consulting. Companies who shell out this cash readily admit that an estimated 75% of the time, their Lean Implementation is considered a failure. In other words, we are prepared to flush $268M down the toilet every year. Sounds wasteful, right? Hold on just one minute and look in the mirror.

That is just the cost associated with Lean Consulting companies. What about those of us working within industry itself?

There are approximately 1.8M LinkedIn users that return the word Lean back in their current or past job title, this author included. Let's say that on average, these individuals are paid $80K per year. That puts us into some serious spend territory that would put some politicians to shame. Before I claim $144B is spent on Lean payroll per year, let's whack that back to a conservative 25%, just for the sake of argument. This lands us on $36B per year of estimated spend on assigning people to seek out and eliminate waste. On top of an additional $350M. Let's round to $36B and throw in our 25% success rate: o.k., we waste $30B per year on Lean activities!

And that doesn't include yellow aisle tape! And we Leansters wonder why executives and workers get bent out of shape over the next flavor of the month! We are advocating for a clean flush of their dollars!

I suppose if you compare this number to excessive inventories, we are talking small potatoes. January 2014 durable goods inventories were 10x the value of labor - so definitely not the biggest waste of all. But if I look at that inventory number ($387B) and assume that Lean was successful 25% of the time (that is in achieving flow and thereby reducing inventories) then there must have been some payback, right? How many do you think were truly successful at fully utilized lean systems where inventory was drastically reduced and maintained as a flow system?

Very few, perhaps less than 1% if I had to bet. In fact, durable goods inventories rose 3.7% in one year, hardly an inventory reduction. Of course, I'm playing with fire and about to be smacked down by a real economist who knows precisely how these numbers work, right? But that isn't really the point of this post so I'll stop while I'm ahead.

I wonder what that payback is on all of these Lean skills we have been learning? Are we achieving what we really need to? How do you see the payback? How do you sell the need for continuous improvement? What is the value in your organization? What responsibility does each individual in your organization have to effectively spend this money wisely? What can each do? How do we maximize the potential of each and every person, and not waste it 3/4 of their time? Can you imagine the results?

TWI - A Basic Building Block in Economic Recovery

One thing is for sure about TWI - it is simple. And so are most things that are important in daily life. Managing money, family and community. Stick to the basics.

Some communities are using folding TWI into the offerings for those trying to cope with the everyday struggles in the economic recovery. Leadership failure is one of the root causes to the economic downturn and therefore should be refocused in our economic recovery. Clearly, the folks at Iowa State University extension understand this.

http://www.southwestiowanews.com/articles/2009/04/22/logan/doc49ef74337643a475708226.txt

Protecting the Worker

This leader tried to put himself in the shoes of his people. Then, he asked them for their ideas. Then he did the opposite of what most businesses are doing now - he is protecting the workers before he protects himself. And he did it in a way that most managers and professionals we see in the papers lack the courage to do. Read on...

Beth Israel's CEO May Have Found an Alternative to Layoffs

Overheard at the Airport...

One side of a conversation overheard at the airport:

"So, you will add a piece of cardboard?"



"O.k., right. Yes, but it can't be just a piece of cardboard, it needs to be one of those corner guards."



"Right, you should shrink wrap it too. Like we do for all other pallets."

I'm not even 10% sure what this is about. But a few unfortunate thoughts cross my mind:

1) Why is someone at the airport mandating shipping standards to someone else who is probably doing the work?

2) Are there not shipment standards in place?

3) Seriously, am I hearing a conversation over which cardboard to use to protect the skid?

4) Why do I need to tell somebody to do something that they do on every other job?

Not to jump to conclusions, but if I were a manager overhearing this conversation - I would have a lot of questions. Possible lack of standards being the main focus of my questioning.

When we talk about the competitive nature of U.S. industry and wonder out loud how we will recover - I have to consider how many millions of times per day this level of inefficiency occurs because of the sheer lack of standards. Again, I'm likely jumping to conclusions, but a line of questioning about what standards exist would reduce the level of possible micromanagement and grief that goes hand-in-hand with these overheard conversations.

Job Economics Training – What, How and Why?

A recent Personal Liberty poll suggests people don’t want the economic bailout, but don’t understand why.

The poll had over 130,000 online respondents. I personally took five minutes to participate in this poll through a Congress.org portal after writing to my Vermont leaders. I can’t speak for the demographic makeup of those polled – I wasn’t required to furnish any of that personal information.

81% agree that a government bailout is NOT the answer to America’s financial crisis.

77% believe the American taxpayers should NOT have to foot the bailout bill, because America “is too far in debt already.”

In addition to that, 14% do NOT favor the bailout because they do not feel taxpayers should be accountable for the private sector.

This is an overwhelming majority of sentiment. Yet, the bailout and stimulus packages will likely go through against the will of the governed.

What I found most interesting in this poll is that for all of the conviction against the bailout – a majority of these same respondents (63%) are “undecided” on whether or not the bailout will “ultimately rescue our country's financial system.”

I’ve observed this phenomenon throughout all of this bailout talk: people are against the bailout and government stimulus – but they don’t quite understand why.

This country has been through this scenario before. We keep hearing that this is the worst economic period since the Great Depression. Has anyone stopped to do a quick fact check? Did you know that in 2008 the GDP contracted by 3.8%?

When was there a worse contraction than this other than the Great Depression? It’s never been this bad, you say?

Believe it or not, 1982. That’s right, only less than thirty years ago we faced a contraction of 6.4% of GDP. Further history lessons of this period will reveal that a bailout did not help America recover from that situation.

Of course, that bit of GDP information is not the whole story, yet it serves as an example that helps us get to the heart of the matter: Americans don’t take the time to gather the facts and understand the situation when it comes to the economy. We tend to jump to irrational conclusions. This was a critical problem in the eyes of those who, after the war, founded the TWI Foundation. A problem so profound that TWIF felt its role was to ensure that every American understood, at a minimum, what the role of every individual actually is in the American economy. They did this by creating a Job Economics Training program, patterned after the other J-skill programs. Here is the link to a retyped version of the manual. I’ve recreated the manual in its original content. Nothing has changed. Pun intended.

Job Economics Training Manual

Whether you agree or disagree with the role each and every one of us must have in our economy, I encourage you to read through this manual and try to understand the basics of how our economy is designed to work – and how we are currently going down a road we know will lead us nowhere, but we just don’t quite understand why.

Research Note: I had originally found this manual in archives of Lowell Mellon (founder of TWI, Inc.) at the Western Reserve Library at Case Western University. Unfortunately, I wasn’t able to get copies of this at that time and have been wondering what little tidbits lie in that manual.

Thankfully, Mark Warren of Tesla2 spent much time and energy at the National Archives and struck gold. A very special thanks to Mark Warren for going above and beyond the call of duty and bringing this extraordinary manual to the public!

Grasp the Economic Situation - The Grandfather Economic Report

History has a funny way of repeating itself. I ask all of you to take a look at the following website with a compelling and exhaustive data that may help Americans grasp the economic situation we face.

The Grandfather Economic Report

You will not get through this in one sitting. Bookmark it. I'm putting up a permanent link on both my websites.

Publishing + Baseball = Bankruptcy and No Value Added

Here is an interesting article...

Tribune Considering Filing for Bankruptcy Protection, WSJ Says

A couple of things come to mind:

1) How many jobs have been shed by this member of the "mainstream media"? It's easy to pick on manufacturing, but this article fails to report on how "Big Media" is crushing the American dream...sorry for the sarcasm.

2) I'm failing to see how ownership of a Major League Baseball team taps into the core competency of a publishing company, or vice versa for that matter. Disclaimer: I don't have an MBA from Harvard.

3) The current credit crisis is preventing auto finance companies to lend. It is also preventing advertising revenue from filling this publisher's coffers. Why not bail them out?

Yugo - I had no idea.

The last ever Yugo will roll off the hand built production line today.

Remarkable. Hand built cars for the equivalent of US$5K and a cult following to boot. I thought these things were gone years ago. Scions they are not, but the owners in the video couldn't be more proud of their pimped out rides!

Video Links:

Pimp my Yugo!

Leading by Example - Deputy Prime Minister takes you for a ride in his Yugo - Convertible!