Manufacturers Explore Avenues to Efficiency

Manufacturers Explore Avenues to Efficiency

While some industrial managers have become aware of the inefficiencies that are perpetuated in factories, and are aware that manufacturing isn't as profitable as it could be, resistance to change is strong. By Jeremy Heiman

Today's manufacturing plants leave a lot of room for improvement. Products are still rolling off assembly lines designed in the 1950s and ‘60s, a time when energy and raw materials were cheap and environment was free. While some industrial managers have become aware of the inefficiencies that are perpetuated in factories, and are aware that manufacturing isn't as profitable as it could be, resistance to change is strong.

What to do about it? A few of the more progressive manufacturing managers, along with a handful of industrial consultants, assembled a discussion group last year to haul the twin ideas of efficiency and profit into the open and allow them to mature. That group, known as the Evolutionary Manufacturing Discussion Group, convened at Rocky Mountain Institute in mid-August.

The gatherings began in May 2001, when Robert "Doc" Hall, professor emeritus of business at Indiana University, and Charlie Colosky, a consultant and President of Operations Development Associates, Inc., of Mooresville, Ind., convened a discussion group "to look into the future of manufacturing and management in general," as Colosky put it. Members of the group deemed the initial meeting productive and decided to continue. The August meeting at RMI was the group's fourth.

Many RMI Solutions readers have heard the term "lean manufacturing" -- the systematic identification and elimination of waste from industrial processes. The challenge for Hall, Colosky, and their colleagues in industry is to see what the future possibilities might be for slashing waste in manufacturing systems.

Evolutionary Manufacturing Discussion Group events begin with a guest speaker in the morning, followed by an afternoon of discussion of the ideas inspired by the speaker. RMI CEO and cofounder Amory Lovins kicked off the meeting with a presentation of his popular parable about parachuting cats into Borneo, a classic example of how a lack of whole-systems thinking can lead to unintended consequences. In the early 1950s, the Dayak people of Borneo suffered from malaria. The World Health Organization had a solution: the WHO sprayed large amounts of DDT to kill the mosquitoes that carried the malaria. The mosquitoes died; the malaria declined -- so far, so good. But there were side effects. First, the roofs of people's houses began to fall down on their heads. It seemed that the DDT was also killing a parasitic wasp that had previously controlled thatch-eating caterpillars. Worse, DDT-poisoned insects were eaten by geckoes, which were in turn eaten by housecats. The cats started to die, rats flourished, and the people were threatened by potential outbreaks of typhus and plague. To cope with these problems, which it had itself created, the WHO was obliged to enlist the help of the British Royal Air Force to air-drop 14,000 live cats into Borneo.

This tale about a lack of whole-systems thinking underscores that if we don't understand how things are connected then often the cause of problems is solutions. But if we harness hidden connections, we can often solve or avoid a problem in a way that also solves or avoids many others without making new ones -- before someone needs to parachute more cats. Getting multiple benefits from single expenditures is the core of integrative design. Because current manufacturing systems are not based on whole-systems thinking, humans generate a lot of waste. In the United States, we each daily generate about 20 times our body weight in waste. And that massive flow of materials to no purpose, Lovins pointed out, is a vast business opportunity.

Lovins explained the four principles of natural capitalism (1. radically increase the productivity of resources; 2. shift to biologically inspired production models; 3. move to a solutions-based business model; and 4. reinvest in natural capital), and used real-world examples to show how nature uses raw materials in ever-evolving but virtually perfect processes.

The Challenge of “Lean”

Inspired by Lovins's talk, the EMD Group started applying its challenging message to business. The root of the task with lean manufacturing is implementation -- etching nature's impeccable, life-nurturing processes into the hearts and minds of corporate leaders, shop floor supervisors, and employees at every level. There are multiple reasons why resource efficiency isn't standard operating procedure for most firms.

One of the facts of corporate sustainability is that the companies that achieve it generally have an enlightened CEO or leadership team. While solutions might sometimes come from the bottom or the side, top-down conversions are most likely to survive. Worker-initiated advances in waste-stream utilization are often swept out of existence during periodic corporate restructuring.

RMI's Catherine Greener, who organized the August meeting, noted that General Motors at one time hired a bunch of "out-of-the-box" engineers and "salted" various departments with them, ostensibly to bring more new ideas into the design process. The plan was foiled, however. Every one of the new engineers quit within a short period of time, because of resistance to their ideas exerted by the old employees. "Antibodies," remarked John Wallner, a former Apple Computer manager who's currently responsible for instrument assembly at Tektronix. Institutional resistance to change is sometimes known by that term.

Trent Spear, a manager with ABB, a multinational manufacturer of electrical systems and components, observed that a kind of corporate inertia stands in the way of the implementation of efficiency measures. Executives often feel that an engineer who is experienced in the particular field where he will be working is the only sound hire to make. But the experienced engineer, more often than not, has a preconceived idea of how things should be done, making efficiency innovations harder to achieve. A bright engineer hired from another field might see more readily the inefficiencies in a process because she's inexperienced in that industry, and hasn't become blind to the waste.

Colosky observed that trying to find a way for people to embrace change, a way that interests them and doesn't overwhelm them, isn't easy. Management exhibits a lot of resistance, for example, to leasing or other conversions from product-oriented business to a service-oriented mode. Many are not even comfortable with leasing a car, he said, noting, "We feel ownership is more secure."

Other ways of bringing about corporate change may work better. With the modified architectural design charrette process that RMI uses, Lovins said, innovations can be established more firmly by involving more personnel at more levels of the corporate structure. "Once they approach the design fearlessly, with a clean sheet, it's pretty amazing what happens," he said.

After lunch, the group broke into three smaller discussion panels for the afternoon, and took up the challenges of education, employee retention, and management changes. Education might be one of the root causes of unlean manufacturing. Peter Senge, founder of the Society for Organizational Learning and a friend of RMI, noted that a major flaw in the education system in general is that adults train young people for the current world, not the very different world that will exist when they become adults. The factors that will shape the future must be considered along with the basics of business. Tom Johnson, a professor in the MBA program at Portland State University, observed that business schools in the United States are too often used primarily as a device for screening and recruiting executives.

Hiring and retaining talented young employees, whose energy and new ideas are infectious, is also problematic. Harry Ott, currently with The Coca-Cola Company, recalled that when previously working for another Fortune 500 company one energetic young engineer came from MIT with enthusiasm that infected the whole office. Unfortunately, he didn't stay long because certain people who were part of the management team felt threatened by his talent and zeal. Transient executives are another major impediment to achieving lean manufacturing and natural capitalism. Spear said he worries that, if natural capitalism is adopted by corporations, the concept won't be sustained because of the frequent changes in management that plague many companies. "My fear," he said, "is that leaders will bring in natcap and then leave, and someone else will take over with some other idea."

Small Steps First

Although no corporate revolutions were fomented during the day-and-a-half meeting, Colosky said some small-but-important steps towards getting sustainability into industry were accomplished. First, the members of this young group satisfied themselves that they're all seeking the same goal. Second, the members had the opportunity to talk about and compare their individual experiences in bringing a fundamentally different idea like natural capitalism into the marketplace. All could compare experiences and begin looking for shareable, cross-sector solutions. New connections were made, too, and existing relationships were cemented as a result of the meeting, bringing new confidence and camaraderie to the members. The fourth accomplishment of the meeting was developing new ways to move forward in the field of industrial efficiency and environmental consciousness.

In a Saturday morning session, group members agreed there is a future for the organization, bringing the message of efficiency and environmental consciousness into industry. Doc Hall might have summed up the discussions best when he said, "David is still looking at Goliath. These people have been beaten up enough times that they know that change doesn't come easily." Who can say what the future might hold for the small EMD Group? David was a small guy, but he certainly put Goliath in his place.

This article, which was first published in September 2002, was reprinted courtesy of Rocky Mountain Institute.