Why most manufacturing and engineering businesses are missing the point

The Lean movement was started by manufacturing companies in Japan as a way to improve efficiency, flexibility, quality, and cost. Total Productive Maintenance (TPM), Six Sigma, Total Quality Management, 5S, and other lean methodologies have taken the manufacturing world over by storm.

But what about engineering processes? Design, costing, product development, vendor management, technical sales, quality management?

“You can’t manage what you can’t measure”

– Misattributed to both Paul Drucker and W. Edwards Deming. It’s also not entirely true, but it nevertheless serves as a useful placeholder the remainder of this blog post :-)

Out of the 61 companies from 6 countries that we met during the first phases of customer development phase at Unifize, the majority had optimised their manufacturing processes down to hours, minutes and, in some cases, seconds.

However, we only found only one that had made an attempt to implement lean in their engineering processes: Caterpillar.

How could this be happening? Lean was invented and pioneered by mechanical engineering companies. Why weren’t the same companies able to measure and reduce their engineering cycle times like they measure every other process?

When we dug a little deeper, we were surprised to learn why….

Now we measure, now we don’t

“Why is only half the space being used?” I asked the operations head of an equipment manufacturer that supplies to companies like GE, ABB and Siemens.

We were standing in the middle of a 10,000 sq ft section of their shop floor, with clashing and humming CNC lasers and machining centers on one side, and a large empty space on the other.

The ops head smiled and pointed to a notice board behind us.

“Many years ago, we did a Lean implementation and increased our productivity by 30%. We keep this board here to show the effectiveness of Lean to new employees and trainees,” he said.

We peered at the yellowing, frayed floor plans and other documents that were pinned all over a blue velvet backing.

In the bottom right corner, one number was given special prominence: 13.6 hours – the reduction in manufacturing time they had achieved for a product to pass through that section of the line.

Later that afternoon, we met with the CEO of the company in his office and asked him about his growth plans.

“We need to develop more products, faster,” he said abruptly, “Product development always takes too long.”

“How long, on average?” I asked.

“About 9-12 months for each product, but in some cases this can even go up to 2 years,” he said, sounding slightly pained, “If we can increase the rate at which we develop new products, we can increase sales immediately. And obviously cut our development costs.”

“And how are you measuring your engineering process times?” Lakshman asked.

“We have a plan and we cross check that against how long it actually takes. If anything goes on too long, we investigate.”

“And what if the plan is wrong?”

“Well, we have all the historical times for product development. That’s as good as it gets.”

It’s hard to get the cadence of these interviews right without influencing the outcome. However, I decided to persist.

“If I asked you specifically what the breakdown of all the activities actually was for each day of the nine months of your product development time, would you be able to give it to me?”

“Well, unless someone is going to trawl through every email, drawing, and other documents, probably not!” he admitted honestly, chuckling to himself at the absurdity of it all.

The Pain…

This is a breakdown of a sales rep’s activities at a manufacturer of wind, turbine and gas steam turbine generators:

200 enquiries a year with a 30% conversion.

75 emails between the customer, engineering, production, purchasing, finance and other teams to convert 1 order.

An average of 50 customer emails and 150 internal emails to coordinate, follow up and manage received orders until dispatch and installation of the product.

250 engineering clarifications for each order, resulting in an average of 5 revisions.

At least 2 hours a day spent on quoting, and 4 hours on order management.

This means the sales rep has approximately 2 hours every day to meet customers, generate more inquiries and book more orders, which is what 60% of her variable compensation is linked to.

Engineering is a series of communication processes

“…we have paid tremendous attention to the flow of materials through factories or the entire supply chain. But all too seldom do we sit down to analyze the process by which we plan for the information flow. These processes are stuck in the 1950s, and are based upon the organizational hierarchies we inherited even earlier than that.”

Let’s be clear: Digitization is not the same as Digital Transformation – Trevor Miles, Kinaxis

Unless engineering teams are able to measure their communication processes consistently, they’ll never be able to identify and reduce the time and errors in their engineering processes systematically.  

Furthermore, the sheer volume and variability of engineering communication means that this cannot be done manually.  

The result is that functions such as engineering and product development will continue to take longer and cost more than they need to, depriving these companies of quicker product validation and sales.

Our Team

Phase 1 complete – 6 devs + 2 non devs! 

Jeff Bezos clearly hasn’t built a product team in India, where the largest pizza is only 12″. 

So, this is our five-pizza team, and it’s everyone we need to get to the end of Phase 2, which reminds me of my favourite South Park quote:

Gnome 1: Hey, what’s phase two?!

Gnome 2: Phase one: we collect underpants.

Gnome 1: Ya, ya, ya. But what about phase two?

[Silence]

Gnome 2: Well, phase three is profit. Get it?

—South Park, episode 30 (1998)

About Unifize

Sales teams at manufacturing and engineering companies spend up to 60% of their time communicating to manage their customers' expectations, risks and problems.

We help these teams measure and reduce time and errors in their communication processes, so they can focus on selling better products to happier customers.

For more information, please visit our website here.

About the Author

I am American-born Englishman who lives in India with his wife, son, and a pug called Piggles. I'm the Co-Founder of Unifize, a technology company that builds a communication platform for manufacturing and engineering teams, and I'm also a contributor for various publications on business, technology and entrepreneurship, including the Wall Street Journal, the Financial Times and Business Standard.

Follow me on Twitter here.

? Ben Merton 2018