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How to Run a Factory: Timeless Advice from the Late Jim Harbour

By SME Media Staff

Editor’s note: Early lean advocate Jim Harbour, whose Harbour Report prodded the US automotive industry into improving the way it designed and made cars, passed away on September 6th. In his memory we offer the following excerpt from his book, Factory Man, which SME was proud to publish in 2009:

Here’s something you can cut out and hang on your bulletin board if you run a manufacturing company, large or small. I’ve spent nearly 60 years thinking about the factory floor, and here’s how I believe it should be run.

Focus on today’s technology before buying something new.Chances are you can make the older equipment work well enough to meet your need for continuous improvement. I’ve seen hundreds of examples of this, but none better than Capsugel, my first big consulting job with Harbour & Associates. Remember, it was considering a $150 million investment in new technology to replace under-performing gelatin capsule manufacturing machines whose design dated to about 1916. Today, the output of these machines has been multiplied by about 300 percent since 1982, thanks to technical modifications and new quality processes.

When possible, never do “all new.” There are always exceptions. Sometimes technological change is so great that nothing less will work, such as the use of new composite materials in airplane construction. But it should never be done for its own sake. Automakers have tried many times to do “all new” with such famous results as the Edsel and the Chevrolet Vega. The Saturn® car is another case. It included an all-new car, several new plants, new technology, new tooling, and a new way of managing the workforce. This kind of approach is guaranteed to create more problems than can be reasonably handled. As I’ve said, you’ll never see Toyota or Honda doing it.

I think the world loves “all new” because that phrase has been used in just about every advertising campaign in the past 75 years. The world loves it: all-new cars, airplanes, and computers; the list is endless. Nobody likes “all new” better than the Pentagon. Just look at the U.S. Air Force F22 Raptor fighter jet with its delivery price before development costs of $138,000,000 (yes, that’s millions). That’s $16.8 billion for the 122 planes already delivered. Just imagine. That sum would buy 675,000 mid-sized cars. As I understand it, the F22 total program cost is $62.5 billion or approximately $250 million per airplane counting development costs. This all-new, totally unique plane started in development in 1992 and wasn’t completed until 2002. So we’re willing to bill the taxpayers $62.5 billion for a couple hundred aircraft. This is absolutely frightening: all-new fuselage, wings, landing gear, engines, avionics, and weapons systems. It’s insane. Was there just no way that an existing plane could have been modified to incorporate the new technology? Did we really have to start at zero on the learning curve for design, product and manufacturing engineering, and sourcing from suppliers? The military obviously lives in a different world, unaware that the auto industry has learned the hard way to keep away from “all new.”

Pay attention to detail. Don’t assume. Management staff frequently takes it for granted that workers will carry out assignments, even without rigid discipline. But something will always slip. A follow-up system is necessary—for everything. I learned from a U.S. Marine Corps drill sergeant that every directive must be religiously followed up, from making up your bunk correctly to getting a haircut regularly. In the auto industry, it used to be normal to take three months or more to get an assembly line up to full speed on a new product. This was mostly because plant management didn’t insist on a more disciplined approach. Discipline means getting it right on time. This is why Honda likes auto racing: it builds team discipline. You can’t win the race if you don’t show up at the start gate with everything ready.

Adopt a “common” focus. My prime example of the wrong way to meet a quality and productivity challenge is the 1984 GM reorganization. It created two car groups, each one focused on unique products, engineering, tooling, and processing. Billions of dollars were wasted in duplicate tooling investment and engineering cost. Quality and productivity got worse. The two-division structure was abandoned in 1994, and GM has just recently begun to gain benefits from its rededication to the three C’s: common, common, common. In effect, 15 years or more were lost and GM had nothing to halt the rapid increase in U.S. market share by Japanese automakers.

Be extremely wary of expanding by acquisitions. I saw firsthand how Chrysler’s purchase of failing auto companies in Europe drove it to the brink of insolvency and forced it to beg for a government loan guarantee. When you’re conducting your due diligence review of a company you want to buy—whether it’s a billion-dollar parts supplier or a small shop down the street making washers—send your best manufacturing people to scour the operation and gauge its true value and potential.

Think twice before reorganizing your shop to make it more competitive. If your competitors are gaining on you, make certain you’ve done everything possible to improve basic productivity and quality before you disrupt the flow of the plant.

Lean manufacturing is not the total solution. Many corporate CEOs and manufacturing executives are embracing lean as the ultimate solution to massive improvements in quality, productivity, and cost. The lean ethic, while absolutely necessary, will only take you so far. Don’t forget the front end! Designers and product engineers are the direct source of 85 percent of the total cost of a product or component. Their designs also substantially affect product quality and reliability. Responsible management must focus on the design and product engineering staffs, demanding continuous improvement in quality, productivity, reliability, and the reduction of complexity.

I don’t know if I have a final, all-encompassing recommendation. Manufacturing today has gone back to simple principles. Keep it lean; keep it flowing. Never stop; and don’t chase magic bullets. That’s a solid formula for success in the factory, but somehow it doesn’t seem like a big enough statement to mark the end of an era.

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