Shipulski On Design

Archive for the ‘Fundementals’ Category

The stalled world economy will make growth difficult, and companies are digging in for the long haul, getting ready to do more of what they do best – add more function and features, sell more into existing markets, and sell more to existing customers. More of the same, but better. But growth will not come easy with more-on-more thinking. It will be more-on-more trench warfare – ugly hand-to-hand combat with little ground gained. It’s time for another way. It’s time for less. It’s time to create new markets with less-with-far-less thinking.

Real growth will come from markets and consumers that don’t exist. Real (and big) growth will come from the developing world. They’re not buying now, but they will. They will when product are developed that fit them. But here’s the kicker – products for the developed world cannot be twisted and tweaked to fit. Your products must be re-imagined.

The fundamentals are different in the developing world. Three important ones are – ability to pay, population density, and literacy/skill.

The most important fundamental is the developing world’s ability to pay. They will buy, but to buy products must cost 10 to 100 times less. (No typo here – 10 to 100 times less.) Traditional cost reduction approaches such as Design for Manufacturing and Assembly (DFMA) won’t cut it – their 50% cost reductions are not even close. Reinvention is needed; radical innovation is needed; fundamental innovation is needed. Less-with-far-less thinking is needed.

To achieve 10-100X cost reductions, the product must do less and do it far more efficiency (with far less). Product functionality must be decimated – ripped off the bone until only bone remains. The product must do only one thing. Not two – one. The product must be stripped to its essence, and new technology must be developed to radically improve efficiency of delivering its essence. Products for the developing world will require higher levels of technology than products for the developed world.

Radical narrowing of functionality will make viable the smaller, immature, more efficient technologies. Infant technologies usually have lower output and less breadth, but that’s just what’s needed – narrow, deep, and less. Less-with-far-less.

In the developing world, population density is low. People are spread out, and rural is the norm. And it’s not developed world rural, it’s three-day-hike rural. In the developing world, people don’t go to products; products go to people. If it’s not portable, it won’t sell. And developing world portable does not mean wheels – it means backpack. Your products must fit in a backpack and must be light enough to carry in one.

Big, stationary, expensive equipment is not exempt. It also must fit in a backpack. And this cannot be achieved with twist-and-bend engineering. To fit in a backpack, the product must be stripped naked and new technology must be developed to radically improve efficiency. This requires radical narrowing, radical reimagining, and radical innovation. It requires less-with-far-less thinking. (And if it doesn’t run on batteries, it should at least have battery backup to deal with rolling blackouts.)

People in the developing world are intelligent, but most cannot read well and have little experience with developed world products. Where the developed world’s solution is picture-based installation instructions, less-with-far-less products for the developing world demand no instructions. For the developing world, the instruction manual is the on button. And this requires serious technology – software algorithms fed by low cost sensors. And the only way it’s possible is by distilling the product to its essence. Algorithms, yes, but algorithms to do only one thing very well. Less-with-far-less.

The developed world makes products with output that requires judgment – multi-colored graphical output that lets the user decide if things went well. Products for the developing world must have binary output – red/green, beep/no-beep. Less-with-far-less. But again, this seemingly lower-level functionality (a green light versus a digital display) actually requires more technology. The product must interpret results and decide if it’s good – much harder than a sexy graphical output that requires interpretation and judgement.

Creating products for the developing world requires different thinking. Instead of adding more functions and features, it’s about creating new technologies that do one thing very well (and nothing more) and do it with super efficiency. Products for the developing world require higher technologies than those for the developed world. And done well, the developed world will buy them. But the crazy thing is, the less-with-far-less products that will be a hit in the developing world will boomerang back and be an even bigger hit in the developed world.

If lean has taught us anything, it’s smaller is better. Smaller machines, smaller factories, smaller teams, smaller everything.

The famous Speaker of the House, Tip O’Neill, said all politics are local. He meant all action happens at the lowest levels (in the districts and neighborhoods), where everyone knows everyone, where the issues are well understood, and the fundamentals are not just talked about, they’re lived. It’s the same with manufacturing. But I’m not talking about local in the geography sense; I’m talking about the neighborhood sense. When manufacturing is neighborhood-local, it’s small, tight, focused and knowledgeable.

We mistakenly think about manufacturing strictly as the process of making things—it’s far more. In the broadest sense, manufacturing is everything: innovation, design, making and service. It’s this broad-sense manufacturing that will deliver the next economic revolution.

Previously, I described how big companies break themselves into smaller operating units. They recognize lean favors small, and they break themselves up for competitive advantage. They want to become a collective of small companies with the upside of small without of the downside of big. Yet with small companies, there’s an urge to be big.

Lean says smaller is better and more profitable. Lean says small companies have an advantage because they’re already small. Lean says small companies should stay small (neighborhood small) and be more of what they are.

Small companies have a size advantage. Their smaller scope improves focus and alignment. It’s easier to define the mission, communicate it, and work toward it. It’s easier to mobilize the neighborhood. It’s clearer when things go off track and easier to get things back on track. At the lowest level, smaller companies zero in on problems and fix them. At the highest, they align themselves with their mission. These are important advantages, but not the most important.

The real advantage is deep process knowledge. Smaller companies have less breadth and more depth, which allows them to focus energy on the work and develop deep process knowledge. Many large manufacturers have lost process knowledge over the years. Small companies tend to develop and retain more of it. We’ve forgotten the value of deep process knowledge, but as companies look for competitive advantage, its stock is rising.

Lean wants small companies to build on that strength. To take it to the next level, lean wants companies to think about manufacturing in the more-than-making sense and use that deep process knowledge to influence the product itself. Lean wants suppliers to inject their process knowledge into their customers’ product development process to radically reduce material cost and help the product sprint through the factory.

The ultimate advantage of deep process knowledge is realized when small companies use it to design products. It’s realized when people who know the process fundamentals work respectfully with their neighbors who design the product. The result is deeper process knowledge and a far more profitable product. Big companies like to work with smaller companies who can design and make.

Tip O’Neill and lean agree. All manufacturing is local. And this local nature drives a focus on the fundamentals and details. Being neighborhood-local is easier for small companies because their scope is smaller, which helps them develop and retain deep process knowledge.

Lean wants companies to be small—neighborhood-small. When small companies build on a foundation of deep process knowledge, sales grow. Lean wants sales growth, but it also wants companies to reduce their size in the neighborhood sense.

Lean has rolled through our factories and generated profits at every turn.  Now it’s time to get serious about savings and realize the next level of savings. Companies are pushing lean into the back office, but that won’t get it done.  The savings will be good, but not great.  After picking low-hanging factory fruit, there’s uncertainty around what’s next for lean. 

Make it where you sell it, that’s next for lean.  Like a central theorem, this simple phrase will become lean’s mantra, and it will change everything, including our organizations themselves. The big multi-national companies have already started their journey, and we can take our cues from them.

The major automakers have assembly plants on all continents – objective evidence of make it where you sell it.  There are many benefits to make it where you sell it, but the top three are: speed, speed, speed.  The automotive value stream without make it where you sell it: make a car, put it on a boat, deliver it to a dealer, and sell it.  Make it where you sell it eliminates the boat: make it, deliver it, and sell it.  Inventory is proportional to cycle time and eliminating the long boat ride shortens the value stream, improves response time and reduces inventory. 

Make it where you sell it starts closest to the customer, and final assembly is the first to be established in-market. Engines and transmissions still ride the boat, but not for long.  After final assembly, make it where you sell it targets big, heavy, expensive subassemblies, so expect in-market engine and transmission plants.  (However, big ones like these may stay put for while due to technological, political, or cultural reasons.)

With one piece flow, right-sized machines, and short product runs, lean has taught us the most economic scale is far smaller than we’d imagined.  We’ve learned for our factories smaller is better, and make it where you sell it extrapolates smaller-is-better to the organization itself.  Here again, the big guys lead the way.  Multinationals are breaking themselves into smaller units, right-sizing into smaller regional companies – still big, but smaller.  Their in-country manufacturing creates nice tight feedback loops between customer and factory.  And there’s an important benefit to the brand – it becomes a local brand.  Not only can the brand better serve regional tastes, it provides goodwill in the form of jobs.

[Disclaimer: I don’t advocate outsourcing.  I’m simply explaining the forces at work and their consequences.]

Lean cares about speed, not countries, and make it where you sell it causes jobs flow across company boarders.  This is especiallylevant as countries compete for manufacturing jobs like their survival depended on them.  For those countries that understand manufacturing jobs are the bedrock of a sustainable economy, make it where you sell it can be threatening.  If you’re a country that doesn’t buy a lot of manufactured goods, you and your economy trouble – jobs will flow to where products are sold.

Make it where you sell it won’t stop at making, and will extend up stream.  The next logical extension is design it where you sell it, R&D it where you sell it, and innovate it where you sell it. (The biggest companies are already doing this with regional R&D centers.) More jobs will flow across borders, but this time they’ll be the coveted thinking jobs.

Make it where you sell it is the guiding principle companies are using to become more responsive, more productive, and local.  It has already broken the biggest companies into smaller ones. They’ve realized that the most economic scale is small, and they’re getting there using make it where you sell it.

Make it where you sell it will change all companies, even small ones.  And the mantra for small companies: think narrow and deep.

I will hold a half-day Workshop on Systematic DFMA Deployment on June 13 in RI.  (See bottom of linked page.) I look forward to meeting you in person.

If I was a company, the first thing I’d do is invest in my engineering teams. But not for the reasons we normally associate with engineering. Not for more function and features, not for product robustness, not technology, and not patents. I would invest in engineering for increased profits.

When it comes to their engineering divisions, other companies think minimization – fewest heads, lowest wages, least expensive tools. Not me. I’m all about maximization – smartest, best trained, and the best tools. That’s how I like to maximize profits. To me, investing in my engineering teams gives me the highest return on my investment.

Engineers create the products I sell to my customers. I’ve found when my best engineers sit down and think for a while they come up with magical ideas that translate into super-performing products, products with features that differentiate me from my cousin companies, and products that flat-out don’t break. My sales teams love to sell them (Sure, I pay a lot in bonuses, but it’s worth it.), my marketing teams love to market them, and my factory folks build them with a smile.

Over my life I’ve developed some simple truisms that I live by: When I sell more products, I make more profits; when my products allow a differentiated marketing message, I sell more and make more profits; and when my product jumps together, my quality is better, and, you guessed it, I make more profits. All these are good reasons to invest in engineering, but it’s not my reason. All this increased sales stuff is good, but it’s not great. It’s not my real reason to invest in engineering. It’s not my secret.

When I was younger I vowed to take my secret to the grave, but now that I’ve matured (and filled up several banks with money), I think it’s okay to share it. So, here goes.

My real reason to invest in engineering is material cost reduction. Yes, material cost reduction. My materials budget is one of my largest line items and I help my engineers reduce it with reckless abandon (and the right tools, time, training, and teacher.) I’ve asked my lean folks to reduce material cost, but they’ve not been able to dent it. Sure, they’ve done a super job with inventory reduction (I get a one-time carrying cost reduction.), but no material cost reduction from my lean projects. I’ve also asked my six sigma organization to reduce material costs, but they, too, have not made a dent. They’ve improved my product quality, but that doesn’t translate into piles of money like material cost reduction.

Now, I know what you’re thinking: Why, Mrs. Company, are you wasting engineering’s time with cost? Cost is manufacturing’s responsibility – they should reduce it, not engineering. Plain and simple – that’s not what I believe, and neither do my engineers. They know they create cost to enable function, good material cost – worth every penny. But they also know all other cost is bad. And since they know they design in cost, they know they’re the ones that must design it out. And they’re good at it. With the right tools, time, and training, they typically reduce material costs by 50%. Do the math –material cost for your highest volume product times 50% – year-on-year. Piles of money.

I’ve learned over the years increasing sales is difficult and takes a lot of work. I’ve also learned I can make lots of money reducing material costs without increasing sales. In fact, even during the recent downturn, through my material cost reductions I made more money than ever. I have my design engineers to thank for that.

Company-to-company, I know things have been tough for us over the last years, and money is still tight. But if you have a little extra stashed away, I urge you to invest in your engineering organization. It makes for great profits.

It’s tough out there. Last year we threw the kitchen sink at our processes and improved them, and now last year’s improvements are this year’s baseline. And, more significantly, competition has increased exponentially – there are more eager countries at the manufacturing party. More countries have learned that manufacturing jobs are the bedrock of sustainable economy. They’ve designed country-level strategies and multi-decade investment plans (education, infrastructure, and energy technologies) to go after manufacturing jobs as if their survival depended on them. And they’re not just making, they’re designing and making. Country-level strategies and investments, designing and making, and citizens with immense determination to raise their standard of living – a deadly cocktail. (Have you seen Hyundai’s cars lately?)

With the wicked couple of competition and profitability goals, we’re under a lot of pressure. And with the pressure comes the danger of seeing things how we want them instead of how they are, like a self-created optical illusion. Here are some likely optical illusion A-B pairs (A – how we want things; B – how they are):

Competition is severe and the pressure is real. And so is the danger to see things as we want them to be. But there’s a simple way to see things as they are: ask the people that do the work. Go to the work and ask the experts. They do the work day-in-day-out, and they know what really happens.  They know the details, the pinch points, and the critical interactions.

To see things as they are, check your ego at the door, and go ask the experts – the people that do the work.

It’s been a long slide from greatness for US manufacturing.  It’s been downhill since the 70s – a multi-decade slide.  Lately there’s a lot of hype about a manufacturing renaissance in the US – re-shoring, on-shoring, right-shoring.  But the celebration misguided.  A real, sustainable return to greatness will take decades, decades of single-minded focus, coordination, alignment and hard work – industry, government, and academia in it together for the long haul.

To return to greatness, the number of new manufacturing jobs to be created is distressing. 100,000 new manufacturing jobs is paltry. And today there is a severe skills gap.  Today there are unfilled manufacturing jobs because there’s no one to do the work. No one has the skills. With so many without jobs it sad.  No, it’s a shame.  And the manufacturing talent pipeline is dry – priming before filling.  Creating a sea of new manufacturing jobs will be hard, but filling them will be harder.  What can we do?

The first thing to do is make list of all the open manufacturing jobs and categorize them. Sort them by themes: by discipline, skills, experience, tools.  Use the themes to create training programs, train people, and fill the open jobs. (Demonstrate coordinated work of government, industry, and academia.)  Then, using the learning, repeat.  Define themes of open manufacturing jobs, create training programs, train, and fill the jobs.  After doing this several times there will be sufficient knowledge to predict needed skills and proactive training can begin.  This cycle should continue for decades.

Now the tough parts – transcending our short time horizon and finding the money.  Our time horizon is limited to the presidential election cycle – four years, but the manufacturing rebirth will take decades. Our four year time horizon prevents success. There needs to be a guiding force that maintains consistency of purpose – manufacturing resurgence – a consistency of purpose for decades.  And the resurgence cannot require additional money. (There isn’t any.)  So who has a long time horizon and money?

The DoD has both – the long term view (the military is not elected or appointed) and the money.  (They buy a lot of stuff.) Before you call me a war hawk, this is simply a marriage of convenience.  I wish there was, but there is no better option.

The DoD should pull together their biggest contractors (industry) and decree that the stuff they buy will have radically reduced cost signatures and teach them and their sub-tier folks how to get it done.  No cost reduction, no contract.  (There’s no reason military stuff should cost what it does, other than the DoD contractors don’t know how design things cost effectively.) The DoD should educate their contractors how to design products to reduce material cost, assembly time, supply chain complexity, and time to market and demand the suppliers.  Then, demand they demonstrate the learning by designing the next generation stuff.  (We mistakenly limit manufacturing to making, when, in fact, radical improvement is realized when we see manufacturing as designing and making.)

The DoD should increase its applied research at the expense of its basic research.  They should fund applied research that solves real problems that result in reduced cost signatures, reduce total cost of ownership, and improved performance.  Likely, they should fund technologies to improve engineering tools, technologies that make themselves energy independent and new materials.  Once used in production-grade systems, the new technologies will spill into non-DoD world (broad industry application) and create new generation products and a sea of manufacturing jobs.

I think this is approach has a balanced time horizon – fill manufacturing jobs now and do the long term work to create millions of manufacturing jobs in the future.

Yes, the DoD is at the center of the approach. Yes, some have a problem with that.  Yes, it’s a marriage of convenience. Yes, it requires coordination among DoD, industry, and academia.  Yes, that’s almost impossible to imagine. Yes, it requires consistency of purpose over decades. And, yes, it’s the best way I know.

The Founding Fathers got it right with three branches: legislative to make laws; judicial to interpret laws; and executive to enforce them. Back then it was all about laws, and the system worked.

What the Founding Fathers could not realize was there was a powerful, pre-chrysalis force more powerful than laws, whose metamorphosis would exploit a gap in the three branch system. Technology has become a force more powerful than laws, and needs its own branch of government. We need a Supreme Court of Technology. (Think Ph.D. instead of J.D.)

Technology is the underpinning of a sustainable economy, an economy where citizens are well-educated, healthy, and happy, and where infrastructure is safe and supports the citizens’ needs. For countries that have it, technology generates the wealth to pay for education, healthcare, and bridges. Back then it was laws; today it’s technology.

The Founding Fathers knew interpretation of laws demanded consistency, consistency that transcended the election cycle, and, with its lifetime appointment, the Supreme Court was the mechanism. And it’s the same with technology: technology demands consistency of direction and consistency of purpose, and for that reason I propose a Supreme Court of Technology.

The Chief Justice of Technology and her Associate Justices set the long term technology policy for the country. They can be derided for its long time horizon, but they cannot be ousted for making the right decisions or their consistency of purpose. The Justices decide how to best spend their annual budget, which is substantial and adjusts with inflation and population. Since they are appointed for life, the Justices tell Congress how it goes with technology (and to stop with all this gridlock gamesmanship) and ask the President for her plan to implement the country’s technology policy. (Technology transcends political parties and election cycles.)

With the Supreme Court of Technology appointed and their first technology plan in place (think environment and energy), the country is on track to generate wealth sufficient to build the best educational system in the world (think creativity, art, science, math, and problem solving) to fuel the next generation of technology leadership.

There’s a big push to be green. Though we want to be green, we’re not sure how to get there. We’ve got high-level metrics, but they’re not actionable. It’s time to figure out what we can change to be green.

One way manufacturers can be green is to reduce their carbon footprint. That’s one level deeper than simply “being green,” but it’s not actionable either. Digging deeper, manufacturers can reduce their carbon footprint by generating less greenhouse gases, specifically carbon dioxide. Reducing carbon dioxide production is a good goal, but it’s still not actionable.

Looking deeper, carbon dioxide is the result of burning fossil fuels,

Click link for the whole story.

We all want to increase profits, but sometimes we get caught in the details and miss the big picture:

Profit = (Price – Cost) x Volume.

It’s a simple formula, but it provides a framework to focus on fundamentals. While all parts of the organization contribute to profit in their own way, engineering’s work has a surprisingly broad impact on the equation.

The market sets price, but engineering creates function, and improved function increases the price the market will pay. Design the product to do more, and do it better, and customers will pay more. What’s missing for engineering is an objective measure of what is good to the customer.

To read the complete article, click this link.

More with more doesn’t cut it anymore, just not good enough.

The behavior we’re looking for can be nicely described by the old TV game show Name That Tune, where two contestants competed to guess the name of a song with the fewest notes. They were read a clue that described a song, and ratcheted down the notes needed to guess it. Here’s the nugget: they challenged themselves to do more with less, they were excited to do more with less, they were rewarded when they did more with less. The smartest, most knowledgeable contestants needed fewer notes. Let me say that again – the best contestants used the fewest notes.

In product design, the number of notes is analogous to part count, but the similarities end there. Those that use the fewest are not considered our best or our most knowledgeable, they’re not rewarded for their work, and our organizations don’t create excitement or a sense of challenge around using the fewest.

For other work, the number of notes is analogous to complexity. Acknowledge those that use the fewest, because their impact ripples through your company, and makes all your work easier.

Today’s biggest problems are difficult to solve and our approach to solving them isn’t helping. Whether it’s healthcare, education, infrastructure, defense, or the economy we never get past the wrong question: “Who’s going to pay for it?

With healthcare we argue about costs and taxes – who pays and how much. But we’ve got to move past that argument. The real deal is we create insufficient wealth. (Our inability to pay for healthcare is a symptom.) So the real solution must focus on work that creates wealth, real wealth. I’m not talking about merger and acquisition wealth. I’m talking about real wealth generated by inventing, designing, and making products. I’m talking about manufacturing – creating products out of dirt, rocks, and sticks and selling them for more than the cost to make them. With more manufacturing we can fix healthcare. (I also think we should look deeply at the work of providing healthcare and improve the work.)

With education we argue about costs and taxes – who pays and how much. But we’ve got to move past that argument. The real deal is we create insufficient wealth. (Our inability to pay for education is a symptom.) So the real solution must focus on work that creates wealth, real wealth. I’m not talking about merger and acquisition wealth. I’m talking about real wealth generated by inventing, designing, and making products. I’m talking about manufacturing — creating products. With more manufacturing we can fix education. (I also think we should look deeply at the work of providing education and improve the work.)

With infrastructure we argue about costs and taxes – who pays and how much. But we’ve got to move past that argument. The real deal is we create insufficient wealth. (Our inability to pay for infrastructure is a symptom.) So the real solution must focus on work that creates wealth, real wealth. I’m talking about real wealth generated by inventing, designing, and making products. I’m talking about manufacturing — creating products. With more manufacturing we can fix our infrastructure. (I also think we should look deeply at the work of creating and maintaining infrastructure and improve it.)

With defense we argue about costs and taxes – who pays and how much. But we’ve got to move past that argument. The real deal is we create insufficient wealth. (Our inability to pay for defense is a symptom.) So the real solution must focus on work that creates wealth, real wealth. I’m talking about manufacturing — creating products.  With more manufacturing we can fix defense. (I also think we should improve the work of providing defense.)

Pulling it all together, with the economy we argue about taxes – who pays and how much. But we’ve got to move past that argument. The real deal is we create insufficient wealth. (Our economy’s health is a symptom.) So the real solution must focus on work that creates real wealth. I’m talking about manufacturing. With more manufacturing the economy will fix itself.

Thankfully we all have different views on healthcare, education, infrastructure, and defense, and I want to preserve them. (That’s what makes our country great.) However, I think we can all agree that creating more wealth will improve our chances of fixing our big problems.

Let’s do more manufacturing.