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What’s Killing U.S. Manufacturers

By Joan S. Adams <adams@pierian.net> +1-212-366-5380

It is time to change focus.

There are plenty of things U.S. manufacturers can do to effectively compete. Unfortunately for all of us, many aren’t making the needed changes.

U.S. manufacturers of every stripe are certain that all the odds are stacked against them. Being so sure of this has prevented them from totally rethinking the manner in which they manufacture goods.

The lack of flexibility in our industry today traps manufacturers into the devastating combination of stock outs, excess inventory of the wrong stuff and long lead times for many orders. U.S. manufacturers are locked into long manufacturing runs—and this, not unions, not Chinese competitors, not the high cost of labor or overhead, is what’s killing them.

The first wrong-headed thought found in today’s manufacturing community is the concept that long manufacturing runs save money. Indeed, long, laborious change-overs are expensive—making it imperative to make the most product possible before changing over again. Even if new large orders come in while the company is up and running a different product, the standard response is, “We can’t start making your stuff for another X weeks/months.” This is the wrong response. Why be a slave to set-up times? Cut those times in half and then in half again and magically, lead times get shorter and shorter—giving a company the flexibility to manufacture a mix of products every month, then every week, and ultimately every day.

Another common misconception in manufacturing is that the workers are lazy and not terribly productive. Similarly, folks seem to think that American workers can’t compete due to their high cost. Having visited at least a jillion plants these past 20 years, I can tell you that 95% of production lead time is caused by waiting, unnecessary movement, rework and other wastes, meaning workers only work on the product (adding value in Lean Speak) a mere 5% of the time that product is in the factory. So, let’s do the math. If by some miracle, the employees worked twice as fast (an unlikely proposition, given labor laws protecting employees from the lash), the best result of their doubling their efforts would be to reduce the total lead-time by 2.5%. Product would not get out the door any faster. In short, the workers are NOT the problem.

Try it for yourself. Follow a handful of items through the plant. Draw a flow chart showing the path and the various stops. Measure all the productive time. You will quickly discover that it doesn’t take 3-plus months to make that product (or any of your other products).

That’s the goal. When the set-up times are short and the plant is flexible, you manufacture what the customer wants and ship it in a very short time. The thinking has to be, “How do I make what my customers want?” not “What’s the most cost-efficient way of making this thing?”

Shorter runs means carrying less inventory. Order response time will be lightening fast. It can be done. I have reduced three-day change-overs in heavy industry to less than an hour. It is time to change focus.

If you don’t know where to start or how to do it, call in a Lean expert. You will keep your customers—they will become even more closely tied to you. And you will find new customers, many of whom are dying to buy from a U.S. manufacturer that can respond to their needs.