Has productivity peaked?

Employees are expected to take up the slack whether they like it or not. Keeping their jobs is enough incentive to carry the extra load. I think this is true in any business except possibly for those that have strong unions. Unions set the amount of work an employee may do in a day and any extra work has to be compensated by overtime pay, increasing the overall cost. Bricklayers can only set so many bricks in a day and that's it. If they can lay their quota of bricks in 6 hours, they cannot do anymore work for the remainder of the work day. I think that was the case, but don't know if that is still true.

Actually, that is turning out to not be true... efficiency can be improved, but more often than not, it involves a fundamental change to the methodology. With an improved system, the same employee can get a lot more done.

The employer that refuses to pay attention to the massive innovation going on around them will be left behind. period.

Productivity has not peaked, nor has innovation. What is happening however, is that the fruits of the labor are being tapped off, and it is not the workers or even the small companies who will ultimately benefit from these improvements. In the 70's and 80's, it was apparent that massive productivity gains could be had by automating production in manufacturing. (as well as applying technology to agriculture and construction) Well we have certainly seen massive changes in these fields, but the workers and small companies struggle to make ends meet as much as they ever did... so where do you think the added value is going? Have prices come down? nope... etc., etc., etc... I'm sure you have heard it all before.

Chris

Hi Chris,

Yes improvement can be made everywhere when we want to be different from others, and seeing work and processes with new and different eyes. New methods are available everywhere. It's important to think about, try to adopt to the system we are in, and do it. Again, being new and different is everything.

Employeurs and managers responsible for production don't have the education and the will to do something new and different. Changes are hard to accept. Human being feels jealous or just moron that cannot accept that someone else can do something differently or/and better.

This is the answer why many manufacturing products started here and actually made out of North-America. I was in China and see the workers, their products, and productivity. They have the advantage, the necessary ability and courage to make modification practically daily on a process and/or equipment. We don't do that. We have twenty-five meetings before we go to see the financial group for money. There, they do without meetings, just do. They know they will get compensations when something goes better than before. If someone fails, it will be punished or fired like here.

We, North-Americans, initiated quality, statistical processes control, and other improvement and productivity innovations but teached to others because they were not accepted for good here. At home just starts to come because we see the danger for Japaneses, Koreans, and other newcomers in this global economy.

We have to create schools to teach production, productivity, process control and other statistics for improvement. We have to teach to create real production managers as we do for financial, marketing, and other professionals.

Nice to talk to you, Gil.

"We have to create schools to teach production, productivity, process control and other statistics for improvement."

I agree.

It's called "Production Engineering" or sometimes "Lean Engineering".

Lean engineering is exactly what the manufacturers do: they cut all Muda.

What they don't understand is that it only counts for unnecessary actions but: Financial controls are up and even growing -> so they need more people. As they grow in importance they need to be paid more. So the total cost goes up.

Then the Financial department is asked to do an audit of the company to determine any cost cutting options. the next big thin is outsourcing. At the end of the road companies are reduced to financial departments, squeezing Asiatic suppliers. (Oh yes, they didn't know that child labor was involved in the next cost reduction)

Hi 34/5,

Lean means less than full or entity, so it's lacking something. Lean manufacturing was a fad or crazy initiative in business. Many companies suffered of it or disappeared.

A "production engineer" must follow E. Deming's recommendations, and make sure "if it doesn't add value, it's waste". I talk about waste of inventories, processing, production and overproduction, motion of workers and objects, transportation, waiting time, waste from product defects. Also, housekeeping is everybody's job to maintain workers' moral high, good and efficient working relationships, higher level of improvement activities, lower or eliminate machine breakdowns with good maintenance!

Lean manufacturing was created by financial people to eliminate working people from the factory floor but allowing bean-counters to have meetings. Factory floor workers create revenue but cost money for financial people. Simple as that! So, forget "lean" and initiate Deming, Gil.

Elements of Deming are certainly in Production Engineering, in fact he is on the reading list. But his contributions are more useful for convincing management to let the design engineer and production engineer, do their jobs, than explaining how to do the jobs.

And Hey - it's not my fault they decided to call one bit "Lean" and it became a buzzword wielded by morons.

But if you look at top companies like BMW, Nikon, Wild, there will be a real Lean Engineer lurking, trying to find 'a better way to do it' - it's why they're 'top'.

Hi 34/5,

You did not already read Deming's books? So, you jumped to lean from nothing. It's interesting that you talk about manufacturing, productivity, capability, wastes of this and that and other things related to factory floors, and did not consulted the most important person about what we talk? It's something but I don't disturb you more because you need time to read the "on your list" book!

Enjoy the reading time, Gil.

NB: I understand why the Japaneses listened to Deming and he was rejected in his own country, and still not consulted in 2010. This is the difference between GM and Toyota. One listen to drive and other driven by ego!

Hi, it's me again 34/5,

Just want to add something and shortly what I forgot because you need lots of time to absorb your reading.

You are right no one does your job. Deming don't tell nobody how to work. He explains what to do to be efficient. You have to apply his theories to your occupation, at home or at work. Use some simple statistics and you can discover that it's possible to improve certain working motions or simply eliminate some wastes, material or time. It's in the book!

Have a good reading, Gil.

Gil, I meant it was on the reading list when I did the qualification - I.e. I read it back then. Hence my comment on what Deming's approach is most useful for is an informed one.

Sorry if you disagree, but I should point out neither you nor Chris knew what "Production Engineering" was, prior to my telling you "it exists".

When you get to P. Eng 102, it may occur to you the "starting point" is the question "So why are we doing this?"

That "this", is 'this way', or 'to what end', and all alternatives flow out from that questioning.

I disagree. Lean has not disappeared, nor will it. It is not a fad, but a fundamental, when one understands that it simply is continuous improvement combined with a focus on eliminating waste. It doesn't matter what you call it.

What you have done in the past, is Lean... no matter what you call it.

Chris

In essence Lean is doing exactly what is needed to do the job correctly.

The most important word here is correctly.

For many organisations this last word is forgotten and they leave out control steps as they are easily seen as not necessary.

The most important person in the accountancy is the one checking whether all customers paid their bills. It might look stupid but it is better to send out bills at a lower rate but get them all paid in time.

Hi Ron,

I agree on your union remarks. They are limiting productivity. However, after my 50 years in the paint industry in 3 continents, I observed that entrepreneurs, managers forget maximum load for human beings and don't use the fitting equipments for higher productivity. I explain: They create numbers about productivity without seeing the long-term effects on human and machines ability, capacity of concentration on the project or work, and specific machines for specific work. They install machines that cannot function the way supposed, producing what they projected. For example: Filling paints, most company has a multiple headed filling machine, two-,four-, 12-heads) which creates variations container by container, and cannot fill 4,000 can per head (US gallon or 3.78 litres containers) per 8 working hours. Miss-communication between filling, cover and handle installing, and palletizing machines creating multiple stoppages every hours that reduces productivity by more than 50%. Imagine, most company label already filled containers. It's ridiculous but this is the way it is. It's well engineered! A single spillage, happens often with multi-head filling or with the labelling machine, creates 15 to 30 minutes un-productive time.

No one manufacturer adopted a "single-head filling machine". Why? This is a no-brainer. It was proven to be the best system without any variation, excellent flow through the system, and no vaste of time. This system can fill 4,000 containers per 6 to 8 hours any day for years without any problem, and workers never complained about the working conditions.

The number of US gallon per minute was set by the workers and the production manager, together, tested and approved by both parties, and workers were paid similar or better than the big unionized paint manufacturers did. The workers, 28 men and women, refused to be unionized. Each worker worked with two single-head machine to fill 28 US gallons per minute with one or two different paints at the same time.

One of the biggest unionized global paint manufacturer fills 90 US gallons per minutes with a 12 headed filling machine for an average of 7.5 US gallon. A single headed filling machine can easily fill 14 US gallons per minute. This is productivity! However, no one paint production manager will want to talk about or try it.

This attitude to imitate others, and use what is made by machine makers. It's in the minds of responsible for productivity, quality, and human being who must change their attitude towards improvement and innovation. In business the difference is everything! Forget imitation because you are like everyone.

Good luck in the new global competiton, Gil.

Hello Guest,

Never ask a salesperson or selling agent what is good or what is bad in the concerning industry. First, they know nothing and understand less. Second, if you are a good customer you are good and everyone else is wrong. Third, your evaluation is the best concerning the efficiency of your business or operation. You know the exact numbers at the end of every day, isn't it? Continue and do "your best", Gil.

What happens mostly is outsourcing and reducing to what is really needed to deliver now.

It will bounce back into the face in some years: some competitors which are called stupid now, keeping the engineers and development people, will have new products and will be able to deliver at lower rates and improved performance.

Or how to plan a next recession.

Layoffs at companies who want to make their "productivity stats" and profit margins look good on paper without regard to service cause me problems every day. It seems that these days the "top brass" at supply companies prefer to ship late rather than "risk becoming less competitive due to over-staffing."

Lately when I've needed to purchase a specialty mechanical or electrical device I have been given 2-3 week delivery times by sales people instead of 4-5 days which was common only a year ago. Then, to make matters worse, those 2-3 week lead times turn into 4-6 weeks due to back log at the supplier's manufacturing plants. When I call the plants to request that parts be expedited I am told that only 1 or 2 people are actually employed on the shop floor for building such devices due to plant layoffs, so parts cannot be expedited.

The really frustrating thing is that there doesn't seem to be anywhere to turn for better service. When my regular supplier missed a delivery date by 100% I decided to take my business elsewhere. The sales guy at the alternative supplier promised faster delivery and stated that his company never has trouble with backlog. Of course when that part arrived 4 weeks late I was given the same excuse for lousy service!

Productivity might have peaked by squeezing people to their last drop of sweat.But service and quality has declined.Here in the Banks there are long queues for depositing or withdrawals of money as many employees have been given VRS. In the factories inspection staff is drastically reduced and complaints from the customers have increased.This result of globalisation and downsizing.

Hi Suresh,

I never was involved in human exploitation or slavery. I respected workers and they respected me too. First, I did my-self everything I wanted to change. I evaluated that my speed was superior of average people's speed of work. I said I was physically stronger that most workers around me.

I am the only production manager who put in action 45 minutes is "one hour" at work as productivity calculation. I am the only production manager who imposed 6 hours to work for productivity estimation and paid for 8 hours.

The productivity was 14 US gallons or 3.78 litres containers filled per minute with paint. I imposed 45 minute per hour and just work 6 hours a day which filled close to 3,800 containers. The close to 4,000 containers filled per single-head filling machine still unbeaten in the paint industry. This was made in Canada where we cannot push people to die, and they were no-union workers but respected as a large collaborators to the entreprise's profitability.

We can produce at low price with high productivity everywhere in the World. We don't have outsource and transfer productivity elsewhere.

Important to understand that to make something we have a problem or a need. In the other side, we have an individual, an idea, and a solution. The best solution wins and succeeds. They way you do it the solution is another questions and answers. Sometimes, there is no needs for productivity, we just need to make the solution.

When we have to produce something and achieve peak performance with high profitability, we have to improve productivity. One industry has a collective experience and view about production of the same or similar objects. They have certain research in technology and innovation about these same or similar objects. Equipment manufacturers have definite collaboration to evolution of the production of these objects. Also, we have shareholders and Wall Street opinion, and the market size and value of these objects. All these drive sustainable innovation and higher productivity to capture competitive advantage. I am not want to talk about Kanban and other improvement processes, I just want to tell, to make something and involved productivity, we need end-use customers, learn and understand their needs and problems, create the solution, be on time to the market which allow to control better the market and profits. Entreprises looking for ways to achieve an advantage, need to learn how to capture this advantage, and move on to the next opportunity.

When many companies making the same objects, competition is pushing for better productivity to maintain the competitive advantage and/or stay alive. All these explanations tell us that productivity is important and constant innovation and improvement of this productivity is vital for survival of any business.

Globalization is real but downsizing or be lean is not a good think to do. Become simpler and do everything the simplest ways is already a better productivity, Gil.

what you are saying is true for when a company is run by a person like you, with iniative and empowerment.

It is a different story in most other companies, and having an eye to waste reduction in processes is a good idea. (especially in the service industry. I don't like to wait for my timmies coffee)

Chris

Hi Chris,

You are right and we have to accept Paretto's numbers, we have at least 80% of entrepreneurs and/or company owners who are ego driven and cannot honor other's knowledge. So, it's hard to innovate, improve, and sometimes work with those people.

Personally, I was lucky to get with my boss who became a friend and operate my way. The reason was this was occured, I have a small paint manufacturing making only primer latex sealer for contractor, exclusively in 5 gallon pails. The product became a leader and a paint and wallpaper retailer wanted to go for the contractor business and he came to buy my formulation with another finish coats I already developed for the future, and became his technical consultant. He discover that I made paints differently from other companies, mainly big boys. The brand-new contractor division sold over 96,000 gallons the first year and became an important supplier to them. Profit was excellent after his accountant and asked if I can build a plant and make all paints, retail bought from major big boy under his labels. I rresponded yes and he let me design, negotiate with governments and architects, buy and install everything needed for paint production. We, the owner and me, established what will be on shelves in the stores (around 150 cross the country) and cancelled the obligation to buy from the big boy. Within 6 months everything rolled as predicted.

To improve productivity, we have to learn what was done by successful companies as Toyota, Microsoft,... and understand what directs them to success and also understand why another companies vegetate but don't improve what they do. Know very well what you do, and establish how you can make things differently, "your way". How to formulate what you want to do and how to do it. What raw materials to use and why. Find what equipment will satisfy improvement now and in the future. Design them for your purpose. Hire only people who never worked in your areas of business, that way you never get other direction proposed or worst opposed to your idea. Propose a good salary to everyone but uniform. You explain, show, and write down what and how to do things around and tell people that this is the only way to work here. Because I put down everything my way, I was the only responsible for everything on floor. People understood well and did everything following the written "standard operating procedures". I fired 3 person over 5 years and have only one individual who already worked as batchmaker. Every batch was made by one single individual from collecting raw materials, to dispersing, to mixing and QC which was checked by another person, and filling. All this work was a day of work. Also, I refused one woman who wanted to replace man in production but we handled to many 50 lbs bags and 45 gallon drums, being heavy for her, just above 110 lbs, you can imagine. The salaries were the same for man and woman, except every year we have automatic $5,000 salary increase.

This method, one man from A to Z make him responsible to do what was written on the batch card. We made wrong but sellable only one 850 gallon batch from a total production of over 7 million gallons over those years.

Machines were modified or completely redesigned for us. I have a longtime friend who make all equipment for the paint industry. We have difficult times to change what was establishe in the industry. The differences, using new design in equipment, their form, strength, size, and location on the floor. Using people don't have bad experiences in the same industry. Buying very low number of raw materials to make everything. The smart use of raw materials, only 48 including pigments, extenders, water and solvent based resins, additives, in truckload delivery. Making one paint and have 2 or 3 labels for it give us low finished goods inventory from 175,000 to 36,000.

The explosion-proof production area for solventbourne paints became a constant visit par the class future safety inspectors for both governements, federal and provincial.

Improvements are possible in every area of business, making products or supplying services but first, we have to know what is already done, and from this point we have to initiate new ideas, designs, and doing to prove the value of the changes. Without changes there is no improvement.

If someone discover that the company don't accept changes, leave and find a company that want changes. Other way, the person accept stagnation. I personally worked for 23 companies during 54 years, fr4om 3 hours to 4 days to 3 months to many just 1, 2 to 3 years, and only one close to 6 years. Again, Paretto put down the 80/20 rules, so use it and everyone can find a company promoting changes, Gil.

visionary! Reminds me of stories by Robert Heinlein. GA.

Nice explication on how to think about running a business:

• Dare to change when the technique is used for a long time
• uniformity in each action
• give the workers something to look out for
• give the workers responsability and accountability
• Dare to tell the truth

I have now worked in different companies and more and more I have the feeling that it is the basic education of responsables where is goes wrong: they are all well educated financials. Even the engineers do base all their decisions on the MBA they did follow to become a manager.

No decisions are taken without financial grounds.

In doubt, simply don't take any decision.

And it goes wrong in the simple fact that the overview of the actions is lost by to many workers in the plant. They simply don't know anymore what happens at other places in the company. The only communicated information is financial.

Lean and six sigma methodology is also based on this: let the financials take the lead.

I'm running LSS projects here as a Green Belt, every time I get the question: what is the financial impact? Sometimes I refuse to start on calculating it: it is horrible to calculate the financial impact of a quality problem.

At the end we arrive where Toyota is now: the made it so lean that they lost control over the suppliers, who were not aware that they delivered a product which could evolve badly. As they were also structured very lean they never figured out.

Job rotation is used in may German companies to keep the overview for the majority: surprisingly they do very well now. If you propose it in other countries it is each time rejected: I don't know how to do his job. But this is simply why the idea is invented.

"Lean and six sigma methodology is also based on this: let the financials take the lead"

No; Lean is as good as the 'ranking skills' of the Designer and/or Production Engineer doing it.

And Six Sigma is what happened to the "Value Analysis" part of Production Engineering, when HR and accounting, re-wrote how to do it.

Hence the old adage; there is never enough time/money to do it properly - but always enough to do it again.

And the math on a "recall" is easy - whatever $'s it sold out the door for, times 3 (assuming you are not also sued)

Hi Gwen,

The problem as you try to explain is size and financial involvement. The size become a problem because bureaucracy is installed and dominate, financing people explain what must be done to make everything more profitable. No one want to accept that marketing, selling, and production crreat the revenue and others like financial is an expenses. Accounting must be never a department of any company. Outsource financing. Some companies in the US operate without financial department and they doing well.

Productivity is a Bell-curve. Respect the top status and don't grow because the bigger company cannot handle higher productivity. When a company has too many people, communication is impossible and maintain excellent communication between each person in the company is vital for the good progress.

Also, it's important to be able to accept changes. Without change there is no evolution in any direction.

Ask: Why Illinois Tool Works maintain or limit the size of each company they own? Control, communication, and productivity are the answer. They control the communication and the production, through communication they control and produce more efficiently what they do, and the production can be controlled with good communication through the whole system established in the company.

I remember in a big incumbent in the business, the financial department became the ruler and I went out. I learned that you cannot be efficient when someone else put a number befire the item. Many item, perfectly identical, sold for $12.49 and $64.99. The difference in the two prices wasn't the raw material costs, the product itself, the perception of the buyers made the differences.

Lean and six-sigma system can work without financial but never with it. Numbers must come later, never before.

Just to establish productivity never involve financial expertise, it will become a financial issue, not any more production with peak productivity. However, every process can be improved so the peak of this process is not yet here, Gil.

Even if productivity of American worker may be higher than other workers but cost of labour is very high in U.S. Already Dollar is over valued compared to Chinese Yuan so the labour cost works out to be much more. Chinese worker may live a simple life with limited means but standard of living of American worker is much higher and so is his wages. This leads to outsourcing of mfd products and other services.

Hi Suresh,

You think that the price si the important thing in valuation of a good made here or somewhere else? No. I was one full year minus 2 days in China and worked in the company who bought a 15 years old machine to make what was there principal products. PE and PU varnish to coat tables and chairs for export.

The people don't have any written procedures and the variation from batch to batch was horrible for me. Within months, variations were eliminated, production was double and business growth.

One difference is the reality: There, companies need to improve equipment, people's knowledge about the work to do, quality of products, higher productivity to make them, and offer them more attractively to the market. And the "price" is the most attractive attribute of many products!

The value of a US or Canadian dollars are appearently high or "more" as you said. In reality, when you are in the country, Canada or China, when you buy something made in the opposite place, the cost is prohibitive for Chinese for Canadian goods, and low cost when we buy Chinese in Canada. It's appearant only. In China, they need to clean what is dirty all around and it cost and will cost money to them but is not in the selling price actually. It's the same for us too, in certain areas.

The difference of standard of life is the big difference. Most of North-American owns many things around but not the Chineses. The difference is the same as was in the 50s, every North-American house has a telephone and a fridge. Check how many European house was accomodated with a telephone and a fridge at the same time? Please, check it. Now, you understand the difference.

Yes, the value in dollars of Americans is higher but the buying power of the money is the same in both places.

Outsourcing is, for me, escaping responsibilities to make things, have to handle people and it's hard between you and me, don't buy raw materials (RM) and have two warehouses one for RM and another for finished goods (FG). Pay expenses and insurances for a factory and maintain it in good shape. This is rather a gain by not having to pay for all those things. This was the motivator for outsourcing, money to keep in the pockets.

Imagine, a few people controlled or still control entry of raw materials to Chine by Singapour, Taiwan, and Hong Kong. The controllers became rich by using a telephone from their houses, renting a warehouse to stock, and be "paid cash" on delivery. I saw it to go in the bank first to get the money and delivered to our place after.

Be a Canadian and buy Chinese and sell it is more economical because the expenses are much higher here than there. This is a problem but will be equalled within a few years as did the Japaneses. The outsourcers looking and get easy earned money as do the controller of raw materials to China. There is good both sides, Gil.

I believe for many US companies productivity has peaked, especially for large mature companies trading on the stock markets. Their managers considered labor a flexible comodity that could be used to manipulate stock prices and in the process decimated the ranks of staff capable of true innovation. At the same time they swelled the ranks of staff whose primary function stifles innovation (purchasing agents, accountants, and financial advisors averse to risk).

I see every day business contacts who only have the time and resources to accomplish what MUST be done to just keep up. Their innovation comes only in finding new ways to bandaid the same recurring issues. They don't have the time to do any of it well either.

There is need to balance increasing profit by doing more with less (not including mortgage fraud) with risking capitol and profit to develop new businesses (not including mortgage fraud).

Hi Rivers,

Please, don't involve Wall Street. They bankrupt every businesses. Do business without involving any idea from WS. Lok around, they told GM that they were good but finally we pay them to buy another car from them, so, we pay twice, Gil.

Are decision makers listening to this blog?

I seriously doubt they would bother.

I have read a lot of generic complaints and not much substance.

I made a decision just yesterday... but now I forget what it was...

are you seriously awake?

Just decide on going to bed

Hi Chris,

You have very sharp memory. Do you eat lots of almonds?

Hello in Belgium,

You have the same problems like we have everywhere? We all are humans and we have ego high or lower than should. Again, I mention the Paretto rules, we have 80% where innovation, improvement, and productivity stagnate or its improvement not allowed or must be given to the boss. To establish peace in your mental situation, find to work in the other 20% and apply again the Paretto rules to find the best 80% of this 20% that became 4%, which allow or do everything to get peak productivity to survive or progress in the business.

The initial goal of individuals and companies is be better than before. The difficulties are when is question of how and what to do because then, after the action, we have a winner and many losers. You can be the winner but the boss must be, and when the boss is the winner, you become the most of the time the loser.

I hope your moral will be better after reading what was written so productively, Gil.

NB: Listen and take a double espresso now because I do. This could be "collaboration " for better future as proposition for higher productivity, which most be heard by someone.