June 19th, 2015 - How can Lean help with luxury production? Just visit Florence Italy to find out!

June 19th, 2015 - How can Lean help with luxury production? Just visit Florence Italy to find out!

Today was filled with subtleties. After 5 days in Germany touring various examples of precision manufacturing, we arrived in Florence Italy.  Now it may seem cliche, but what is so abundantly apparent in Germany as precision, accuracy and attention to detail, is on the surface replaced by a more casual, warm, easiness and appreciation for aesthetic beauty and grace.

Now I say "on the surface" for a few reasons.  First and foremost, it is foolhardy to try and typify an entire country or culture by a few, albeit well intentioned nouns and adjectives. But secondly, because while their appears to be a slower pace, with a greater appreciation for enjoying fine things that please the senses; food, wine, fashion, and conversation, the attention to detail and application of methodical production design and operation belie this casual 'amore della vita' (love of life). 

Now, given we have just settled into the geographic cradle of the Renaissance - where artistic masters flourished and spread their influence across Italy, and eventually the world, it is not surprising at all that the appreciation of "form" often seems to take precedence over "function".  And "passion" trumps "procedures" almost every time.  It is a sensory cornucopia. At every corner; the sights, sounds, fragrances, all contributing to a complete experience of being in a land of appreciation.  

And this was clearly the case at our first stop of the day - the Lamborghini Family Museum with our personal host, Fabio Lamborghini.  Signore Lamborghini was immediately charming, gracious, and filled with family pride and passion.  The way he explained the history of the family business, starting with his Uncle Ferruccio - born to a grape farming family in the Emilia-Romagna region of Italy.  His intense interest in farming machinery, as opposed to farming itself, led to his first real passion, designing and building tractors. His nephew explained that whenever Ferruccio came upon a challenge, he had a need to find a solution.  Whether is was narrow width tractor frames to allow running between the rows of vines, to creating a system for the tractors to use less gasoline when it was in short supply and expensive.  He was a "mechanical genius" Fabio told us. 

He went on to explain that in a strange way, it was Enzo Ferrari that started the Lamborghini high performance sports car.  Actually, it was when Ferruccio Lamborghini bought a Ferrari in 1962 and thought something  wasn't quite working right, and made a modification to improve it that the whole thing started.  Feruccio went to Enzo Ferrari just to show him what he found and how he made it better.  Enzo was a proud man, and insisted there was nothing wrong with the car, it was the driver!! It was at that point that Ferruccio made a decision, and told Enzo he would never buy another one of his cars, he would build his own and it would be better!!! And that set Ferruccio Lamborghini on the path to creating some of the most beautiful, exquisite high performance automobiles to come out of Italy. 

Fabio Lamborghini finished out tour with very gracious offers for individual pictures, and autographing some books for us all. Another testament to the warmth and passion of this part of the world.  

From the Lamborghini Family Museum, we moved on to the Lamborghini production factory. While the Lamborghini brand is typically thought of as an extremely expensive luxury sports car, the company has had its share of financial challenges. Founded in 1963 to compete with other established top performance luxury sports cars like Ferrari.  The company gained wide acclaim in 1966 for the Miura sports coupe, which established rear mid-engine, rear wheel drive as the standard layout for high-performance cars of the era. 

Lamborghini grew rapidly during its first decade, but sales plunged in the wake of the 1973 worldwide financial turndown and the oil crisis. The firm's ownership changed three times after 1973, including a bankruptcy in 1978. Chrysler Corporation took control of Lamborghini in 1987 and sold it to a Malaysian and Indonesian group V'Power Corporation in 1994. In 1998, V'Power sold Lamborghini to the Volkswagen Group where it was placed under the control of the group's Audi division.

As a high performance, luxury automobile, with absolutely top quality materials and craftsmanship, a challenge that Lamborghini had to overcome was both the rate at which they could produce quality automobiles, and the profitability of that production.  When Audi/Volkswagen acquired Lamborghini, they produced 2 cars a day.  All hand made.  One of the things that the new parent company began to introduce were a number of the production system improvements based on Lean that they have been using at many of their other brands, such as Volkswagen, Porsche, Audi, etc.  Today, the Lamborghini factory is producing approximately 19 cars a day.  Most of their production still has the attention to detail and hand made quality that they have been known for.  But they have added process and production improvements, and just enough automation support to help reduce cycle time and increase profitability. 

From there, we moved on to the Ducati Motorcycle plant and museum, a subsidiary of Lamborghini, and therefore an Audi/Volkswagen group company since 2012.  Ducati was established in 1926 and originally began by producing vacuum tubes and radio parts, and moved on to manufacturing radios, cameras, and other consumer products like electric razors.  During the second world war, Ducati developed a small gasoline engine that could be mounted on a bicycle, and began selling them in 1944, and so began the Ducati Motorcycle company.  

Today, Ducati sells motorcycles worldwide, with the USA as their largest market, with Europe (and specifically Italy) as their second largest market. Ducati is producing approximately 40,000 bikes world wide. 

While touring through the Ducati Factory, evidence of early adoption of Lean methods and production techniques were evident such as kanban systems and some kitting. But there was still a large amount of batching and inventory in place.  Relative to other Lean production facilities, it is still early for Ducati. It will be interesting to follow their progress over the next 3 or 4 years to see how much more is possible. 

So while the appreciation of the style, lines, and engineering of German automobiles is well deserved and shared by so many, the sense you get with Italian luxury motorcars is one of smooth curves, fast shapes, and passion for life. 

Two Worlds (don't exactly) Collide!!!

June 15, 2015 - Stuttgart, Germany

Today is an interesting day of contrasts.

Immersed in the old world charm of Europe. The history and architecture. Walking down cobble stoned streets seeing buildings and monuments that are hundreds of years old.  Seeing the landscapes and geography referenced in history books.  

 

All while the modern day Europe goes on all around us.  The bustling of people rushing through the train stations; coming to work, or travelling between cities. The large modern shopping streets. Everyone tethered to their mobile devices. And the constant humming background sound of any city, people in cars and buses going about their daily lives. 

Today, we spent the day touring through two automotive manufacturing plants. Starting at Porsche plant in Zuffenhausen on the north side of Stuttgart. Followed by a tour of the Mercedes plant in Sindelfingen. 

Both companies have a long history. From the early days of the atomobile in the early 1900's:

to modern, high performance complex vehicles:

Being able to tour both Porsche and Mercedes on the same day was a unique and enlightening experience. While there are the obvious differences in the two manufacturers vehicles themselves, the tours of the two plants exposed many very common and familiar Lean methods, though presenting differences in their implementation.  Seeing the visual signals of green, yellow and red lights to show the status of each workstation or cell; visual management boards to show those on the shop floor what their targets are, and how they are tracking; kanban systems everywhere for parts and inventory replenishment, all elements of Lean that are extremely familiar sights. We could have as easily been back in the Nissan Opama plant on the outskirts of Tokyo, 

Yet, there was clearly a difference in the way the two organizations embraced the Lean approach.  The Mercedes plant, albeit a busier and higher output plant than Porsche ( by a factor of 7 or 8 times as many vehicles per year), was much more like what we experienced in Japan,  Serious, focused, efficient - very much driving to efficiency KPI's.  It was palpable and clearly evidenced by the actions and behaviours on the line.  No-nonesnse keep things flowing to meet the planned output. 

The approach at Porsche was demonstratively different.  The carsu are spectacular. The quality exceptional. But there was a clearly higher "social" engagement within and between the teams. This at least appeared to create a more engaged and happy work groups and teams. All of the same Lean elements werer there. The Andons, the visual management, the huddle boards.  But the team members appeared to be able to do more socializing while building incredible cars. 

So the juxtaposition: Old world vs modern manufacturing; two different approaches to Lean adoption; two different outcomes/benchmarks - but consistently producing high quality, wonderfully engineered, aesthetically beautiful cars.  A pleasure to watch and experience today,

Followed by a wonderful opportunity to refelct and connect. All in all  - an incredibly successful and enlightening day!!  Looking forward to tomorrow!! 

Climbing Mountains in order to Rock

"Ain't no mountain high enough......"  (credit to Ashford & Simpson - 1966)

It was a few years after that song was made popular by Marvin Gaye and Tammi Terrell that a small group of west coast outdoor enthusiasts and mountaineers decided to throw conventional retail models to the wind. At that time, mountain climbing wasn't a mainstream sport in the Vancouver BC area.  

 Instead, they chose a model that was more familiar in the farming communities of the prairies - a Co-op model. Until then, the only reliable place to get quality climbing gear was from REI, a well established outdoor retailer from the United States ( www.rei.com ). This group wanted to make all forms of outdooring accessible and affordable to everyone, and wanted to create a business that more closely aligned to their environmental beliefs and principles. They wanted to share their enthusiasm for the outdoors. 

So in 1971, a new and thriving business was created called Mountain Equipment Coop, with 6 members and a whopping $65 of operating capital.  Three years later, by 1974, membership had grown to over 700 like minded outdoor enthusiasts.     

Fast forward to 2015.  From its humble beginnings in Vancouver BC, membership has now grown to over 4 Million with an annual sales revenue of over $336 Million in 2014. MEC is now Canada's largest supplier of outdoor equipment and clothing, with 17 stores in cities across the country. 

Through focused vision, leadership, hard work, and the dedication of the MEC team members, business has grown to a point where MEC has made a decision to open a second Distribution Centre (DC) in the greater Toronto area in Ontario.  Seems like a natural next step in order to simplify the logistics and stocking of their growing number of stores in the east.  

But wait! Start to peel back just one or two layers of that onion, and suddenly the intricacies and linkages all through the supply chain start to emerge. Realizing that the flow of goods from Asia, right from the selection of fabrics at the mills, to the logistics to deliver that cloth to over a dozen different clothing manufacturing factories, to the packing and shipping of finished goods to MEC were all tightly linked in the existing business practices and processes. 

Not insurmountable - but complex. Along with 4 other Master Blackbelt candidates, and working shoulder-to-shoulder with the Lean Sensei senior coaches, we set about to help the MEC team break down the complex supply chain to find ways to accommodate both the agility they need while maintaining a means for specific controls.  Working to facilitate a number of parallel activities, the MEC teams were able to identify many recommendations that would allow them to address two of the most critical issues identified.   

First, the uncoupling of each "order" from the process to "release" parts of the order on a demand basis while still meeting the negotiated "minimum order point" with the manufacturing factories. This was a critical change to their supply chain process that would allow them to move to more of a "pull" model, and avoid transporting and having to store stock that isn't all needed at once.  And second, implement a number of changes to the process at MEC that precedes the ordering of manufactured goods.  Changing the process to reduce the cycle time and eliminate unnecessary delays and errors by finding ways to consolidate a number of disparate data sources into a single version of the truth that can reliably be used to make better and faster decisions with, 

The real credit of course goes to the MEC team members that participated in the 2 days of Kaizen. All they really needed was to be given permission to make changes, the time to properly consider options and test assumptions, and some coaching in Lean supply chain methodology.  

It was such a treat to work with so many participants from MEC that all wanted to find improvements and make a difference.  I often reflect on how "Lean" isn't the tough part of a continuous improvement initiative - it's changing the culture of an organization and its team members that typically is the most difficult.  In the case of MEC, we were treated to an organization that had a clearly defined and positive culture already.  That made our jobs incredibly easy and extremely rewarding. 

All in all - a very positive experience - but so far, they all have been!