It seems not too long ago, many businesses were only local and could be managed directly. However, in a quest to reduce costs and grow sales, businesses have graduated to global status. You might say this is great because the limited market once covered has now expanded exponentially and many more sources of supply have developed.
This expansion into the global arena comes with many good things, as well as other things that have to be carefully digested and considered if we want to ensure operational excellence which once was dealt with at a local level.
I refer to a process called “complexity creep” and will expand specifically on its impact on engineering drawings, IT systems and some cultural nuances that present new opportunities for waste and also impact operational excellence.
Over 60 years ago, a continuous improvement phenomenon was started in Japan by Toyota. The scope then was focused deeply on shop floor, component manufacturing and assembly operations. Most, if not all, suppliers were Japanese so lead times were relatively short. Communication was easy and intercultural problems were nonexistent. These two factors aided Toyota in concentrating on local shop floor issues and consequently the development of the seven wastes. At the time, cause and effect occurred in a short timeline which also allowed for rapid solutions.
The reality today is much different.
Suppliers are on all continents with people of many different cultures and languages trying to get things done. Lead times are very long and complexity has crept into our operations. This complexity has created opportunities for waste beyond the original ones pointed out by the early Toyota Production System contributors. It is possible that we are overlooking some potential muda and taking costs for granted that could otherwise be reduced or removed.
Consider for example, how the Japanese might have communicated an expectation on an engineering print in the early 1950’s for a component that was meant to be assembled on a car. For sure there were standards being observed, but at the same time, any doubts or questions could be resolved directly, in a matter of hours or days. The originators were close by and spoke the same language.
Because of the global nature of our business today, engineering drawings must call out more standards and specifications to ensure that an accurate and complete meaning is conveyed to whoever is reading the print and planning to use it as the strict way that a component needs to be manufactured. In my experience, at times this presented some interesting challenges: when the specifications were translations from another language, the meaning was not the same. One must remember that any translation is interpretation. Typically, we would see notes such as: “…when in doubt consult the original German version”. The solutions were easy if you had an Expat or, access via telecoms to a plant or headquarters in Germany to resolve the matter and ensure absolute understanding.
So in order to ensure that an expectation for a print is met, the current complexity requires: (1) Development of additional specification; (2) Translation; (3) Expats; (4) Telecoms; (5) Verification.
One might consider all of the above non-value added activities that today we are accepting as must haves.
Since we love acronyms let’s call this CCOM: the Cost of Clarification of Original Meaning.
This is an example of a cost that has crept in because of complexity.
Yet another area complexity creep has impacted global operations today is in the high dependency on IT systems.
In 2006, when Airbus Industries experienced their historic delay in the launch of the AB 380 at a premium cost of 6.1 billion dollars, the root causes for this very expensive (and embarrassing) fiasco were attributed to cultural issues, politics and miscommunication. The story, however, helped highlight what can happen when potential communication problems are not regarded with the highest degree of importance.
In this case it was not only verbal communication but actually communication between IT systems that spoke different languages (Catia4 vs. Catia5) – which resulted in the manufacture of wiring harnesses that were too short and could not be assembled on the fuselage.
In my 30 short years in operations, I have seen more than a handful of instances where ERP systems and their corresponding interfaces spat out data that was then downloaded and manipulated, filtered and corrected by humans only to be subsequently manually entered into another ERP module. A lot more of this seemed to be happening when data was being transmitted between sister plants in different parts of the world.
While it is possible that many companies take care of this in very efficient ways, I suspect some smaller and midsize companies suffer the costly consequences of miscommunication between IT systems- and the unbudgeted costs that come with this.
If for instance, at one time we had only one local person in our logistics department ensuring data accuracy; and today, due to global complexity creep we have three or four, the cost associated is a good example of muda when we consider the use of their time in non-value added activities from the customer’s perspective: handling and rework due to ERP interfaces that don’t speak to each other.
Sure, we can try to justify the cost when this is happening in a “low cost” country and it is not considered a huge problem. However, one would be violating the continuous improvement potential and our implicit responsibility to the customer to maintain only value-added operations.
And what will you do when the “low cost” employee makes a small data handling error when entering it manually into the ERP system and your customer receives the wrong part number and their line is at a standstill?
IT systems and their implementation on a global basis pose new challenges with potential costs that need to be taken seriously.
Global companies would love to copy/paste systems and use corporate standard operating instructions across all continents. After all, it makes sense that every unit of the company does everything in the exact same way.
This is unrealistic in many cases when realizing that every country may have minor differences that can create a big difference in the way things get done.
Consider for a moment the reality of doing business in a country where operators must stop to pray several times a day or one with a customs system so complicated that the spare parts you need to keep your equipment running cannot be imported within a reasonable time.
Each variation and difference to the original corporate “standard” way things should be done creates more complexity. Some examples are: unique work instructions for every location, different quality assurance steps and production forecast filtering to account for local national holidays that can impact your customer’s on time delivery.
Continuous improvement methodologies still apply in all the cases mentioned with the goal of reducing or removing non-value added activities. However, in order to begin this process it is indispensable for leaders to acknowledge that these situations exist and that they are in fact a form of muda that has to be accounted for and dealt with.
The rate of complexity creep might be analogous to the frog thrown into a pot of water where the temperature is raised ever so slowly that it does not realize it is being cooked.
As responsible global leaders we should predict the rise in temperature and jump out of the water before our competitors (and perhaps our customers!) boil us.
Actually, the great thing is that there is no cookie cutter way to implement operational excellence systems and since globalization continues to present us with new situations and new opportunities, each detail of our “standard” processes should be revisited to check for differences and complexity creep.
What an awesome challenge this new world brings us.
By Sam Yankelevitch
Sam Yankelevitch has successfully championed lean thinking for most of his 30 years in manufacturing and operations management. Thanks to a diverse education and a career spanning Latin America, Europe, the Middle East, and the USA, Sam is fluent in several languages, and excels at driving cross-cultural understanding in corporate settings.
A native of Colombia, he started applying lean concepts in his manufacturing business in the mid 1980’s and continued to use lean methodologies throughout his business career. In his most recent role, Sam led the North America operation for a German based, Tier 2 supplier in the automotive sector and was responsible for operations in the US and Mexico. Sam is the founder of Xpress Lingo a specialty language consulting company dedicated to companies doing business internationally and the author of : Lean Potion #9 – Communication: the next lean frontier.
Contact him at firstname.lastname@example.org