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The North American Manufacturing Sector Roller Coaster

A Rapidly Changing Business Environment

The COVID pandemic triggered a resurgence of manufacturing in North America over the last two years. This has been a welcome boost to domestic production and the North American manufacturing sector.

However, with the opening of the global economy, companies will again soon face competitive head winds. Domestic producers will have a difficult time outperforming their global counterparts as we face a very challenging manufacturing cost structure in North America. A skilled labor shortage, increasingly stringent environmental laws, escalating energy prices and rising interest rates will make manufacturing more difficult.

Now is the time to position your company to weather the change. Do you need to upgrade your facilities? Is it time to update processes and technologies? Will adjusting work-force skills lead to better performance? Does it make sense to deploy a knowledge-based management system?

Management Response

Managers quickly run into roadblocks when it comes to addressing these complex, industry-wide issues. They lack sufficient skills and tools for measuring factory-level performance or comparing overall performance from one location to the next. Of course, they can rely on traditional cost-accounting figures, but these figures frequently fail to provide the information they require at a process level. The productivity tool discussed in the last blog can be used to compare the performance of locations or plants or product lines. However, a much more systematic and deeper dive into business processes is required to understand the significant benefits that managers can realize by making data and information flow for better and faster decision-making on the factory floor.

What Senior Management Needs

Senior managers need a reliable approach to determine why some facilities or areas are more productive than others before they can target what they need to do to improve overall manufacturing performance. They require a reliable metric for finding and measuring disparities, as well as a framework for thinking about how to improve and sustain improved performance.

They also need tools for managing the large amounts of change that implementation of technology entails. They need to empower their employees to make better decisions faster, while finding ways to retain them in the face of a heavily disillusioned workforce. They need to improve quality, decrease costs and tame their supply chains. All while keeping an eye on their book of business and keeping a lid on costs. Its enough to drive anyone crazy.

Manager's Options

Managers don't have very many options when it comes to toolkits for managing change. Doing a Master of Business Administration is too costly and takes too long to generate a return on investment. It certainly is not a whole-of-business option; companies cannot afford to train everyone with an MBA.

Digital transformation consultants are readily available. However, they are expensive and once they leave, the organization is back in the same place for their next project. It's not a sustainable approach. Especially in a world that will require many transformation projects over the next several decades.

The lean six sigma toolkit is also no longer sufficient in today's digital and virtual environment. Organizational processes are no longer limited to the confines of the business. They have to reach into suppliers' factories as well as consumers' organizations or houses. Although lean six sigma has always been customer-centric and its success is based on listening to the Voice of the Customer (VoC), the biggest advances in customer-centricity have arisen through the application of digital and data methods to the marketing and sales function.

The Internet’s arrival enabled marketers to reach out to millions of customers directly and enabled customers to interact with and influence business in unprecedented ways. Think of Amazon and the many ways it interacts with customers by sharing process and outcomes data with them. Think also of the ways millions of customers interact with Amazon, without ever having to call the help desk.

Digital Transformation Failures

Consultants and academics have rushed to fill the void by offering frameworks that allow businesses to integrate digital technologies into their operations. Despite these frameworks, digital transformation initiatives continue to fail. They fail in large part because they have the effect of speeding up and scaling up existing processes, amplifying whatever inefficiencies and defects that may be present. Processes that are inefficient are not streamlined by digitizing them. On the contrary, digitization only accelerates the pandemonium.

Innovation is the Key

Business evolves because of innovations that boost worker productivity, freeing up personnel to perform more value-added work and thereby raising real wages. This offers a win-win situation for both employers and employees. Workers make up the bulk of consumers, so when they benefit, so does society. Productivity gains benefit not just the production of goods and services, but also the creation of new products and services that boost our productivity at home, allowing us to spend more time on leisure and pleasure.

Although many call data the new oil, the reality is that artificial intelligence and machine learning are the new electricity. They are the technologies that are powering organizations to improve productivity dramatically.

For nearly four decades, lean six sigma has been a proven approach and tool for businesses to enhance process efficiencies and product quality. Most corporate giants could not function without them. When lean six sigma was used as a company strategy and management practice rather than merely as a quality improvement program, it had a significant impact. Most large companies, such as Walmart, GE and even Amazon would not have survived without use of the lean six sigma toolkit. Lean six sigma emphasizes the use of key performance indicators (KPIs) and data for management and production decision-making. When used as a corporate strategy, lean six sigma was instrumental in breaking down the silos that generally form between departments inside a company.

Products aren't just consumed; consumers also get very attached to them. They are increasingly encountered in a virtual or hybrid (augmented reality) world, rather than solely in the physical one. Increasingly, products are getting smarter through sensors and effectors. Tesla is an excellent example of a corporation that mixes physical and digital elements: they continuously improve the customer experience by updating software in their cars, resulting in thrilled and devoted consumers who brag about their vehicle. Amazon web services is another company that has excelled at developing cloud services that can be used by individuals with fewer qualifications.

Digital Lean Sigma for Digital Age

The digital age has arrived and has changed the world of business forever. Clearly, a unified framework is required that encompasses the finest process and quality improvement knowledge as well as the best knowledge of how to digitally integrate and transform businesses. We have upgraded and advanced the lean six sigma toolkit by integrating digital transformation tools and digital technology skills into the program. Digital Lean Sigma is the result of performance optimization methodology combined with years of experience in digital transformations and process improvements.

The Goals of Digital Lean Sigma

We have designed Digital Lean Sigma to achieve the following:

  • Help management better see the connections between cyber and physical systems and how to create new products and services with digital components built in.

  • Improve the likelihood of success of digital transformation and automation.

  • Provide better understanding of why projects succeed, why they fail and how to rescue failing projects.

  • Help management empower employees to make more customer-centric decisions, faster and better on the factory floor.

  • Prepare organizations to use machine learning (ML) and artificial intelligence (AI) more effectively.

  • Reduce waste, inefficiencies and costs while automating processes and improving the quality of products and services.

  • Enable organizations to better understand the customer journey and use digital technologies to improve customer intimacy and customer delight; and

  • Create a more predictable and easy to implement connection between investments in people, process and technology and the top and bottom line.

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