"The Gold Mine is the first book to comprehensively introduce all the lean tools by means of a vivid personal story showing how hearts and minds are won over. “The Gold Mine is the first book to comprehensively introduce all the lean tools by means of a vivid personal story showing how hearts and. The Gold Mine: a Novel of Lean Turnaround deftly weaves together the technical and human pieces of implementing lean manufacturing in an engaging story that readers will find both compelling and instructive. Really an excellent read in terms of the experience of Lean.

The Gold Mine Book

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Freddy and Michael Balls book, The Gold Mine, serves to remove these doubts. Readers of this story will find in the alltoo-human details of one lean turnaround. The Gold Mine: 1 1 by Michael Balle, , available at Book Depository with free delivery worldwide. At this point, I also want to acknowledge you, dear reader, and those of you who wrote noting that reviewing a book did not equate to writing.

The book also reveals lean as a system—using a realistic story to show how the principles are interrelated and how they lead to useful tools such as kanban or 5S. Managers and executives just beginning a lean transformation will learn valuable insights about how to sidestep the technical and people problems that lay ahead.

And experienced lean thinkers will discover fresh insights about overcoming resistance to change. For instance, we would argue that lean is fundamentally about rigorous problem solving and involving operators in kaizen. But in most working environments, if you start there, as most TQM or six sigma programs do, you will end up with disappointing results.

People will get confused about which problems to solve, how to go about change, and what kind of attitude to adopt when dealing with resistance or recurring problems. From the Back Cover Tools are not enough. This engaging novel — The Gold Mine — shares the human side of implementing lean principles. While offering the technical knowhow to get lean done, it also shows the messy human dynamics that occur when the workplace, people, and practices clash.

The Gold Mine is a gold mine for those who really want to create lean enterprise. It does what no other book — fiction or nonfiction — has done, by comprehensively tackling both the human and the technical dimension of a lean transformation progresses. James P.

Womack President and Founder Lean Enterprise Institute This gripping companion to your lean journey comes from a unique team. Freddy Balle is one of the very first gaijen to figure out the Toyota system. It all depends on your customers and your markets.

In that area over there, we have all the cabinet-making equipment sheet-metal cutting, punching, bending, and assembly, Phil continued, pointing at a confusing area of machines, boxes, and people. This is where we make the metal parts for the cabinets. And, yeah, he added, giving Dad a sidewise glance, this is the inventory. We walked by a large room lined with racks of wire-mesh crates filled with all sorts of metal plates.

We know about this, he went on. We call it the wall, but we havent found a way to reduce it without penalizing production. Dad said nothing, just shook his head. Now, over there, Phil continued, is our big innovation. We have three parallel lines specialized by products. The first line assembles the STR mechanism, incorporating the capsule. The second, deals with both variants of QST, and the third is a DG line, but it doesnt run full time. Two shifts or one? We work from 8 a.

And, of course, a short midmorning and midday break. Were looking into moving to two shifts, but we dont have enough people as it is, and it would be a serious investment to hire some more qualified operators. But would you have the business to sustain two shifts? Matt claims so, Phil answered dubiously.

We currently have quite a backlog, so I guess we could. On STR I think we could. But given our current cash situation, its not even in the cards. We just couldnt pay a second working shift. On each production line, operators were working bent over their tables, assembling a variety of rigs, which, I guessed, somehow would transform themselves into completed products in the end.

At the end of the lines, we send the assembled mechanism and capsule over to that electrical testing area over there, showed Phil, pointing toward a partitioned cubicle with a number of racks filled with mechanisms waiting in front of it. Testing is actually quite sophisticated, and we use high voltages in there, so it has to be kept clear of the rest for security purposes. It needs special equipment that we couldnt include in the lines.

Dad turned away and exclaimed, What the heck is this monster? Im sorry? This conveyor. Just look at that! A row of cabinets was hanging by hooks from a massive superstructure, fixed to the ceiling, like carcasses in a butcher shop.

Operators worked at different assembly stations, fitting mechanisms into the cabinets, and then pushing the cabinets to the next station to add cabling or the circuit board or the instrument panel, while a number of cabinets waited patiently between the stations.

Ah, thats where the major components are assembled into the cabinet to make the finished circuit breaker, as you can see. The cabinets are supported from the ceiling by the conveyor to allow the operators to walk all the way around the cabinet as they work. The wiring in particular is a bit of a pain and requires assembler access from many points, including the bottom.

At the end, they fit the control panel, wire it up, and lock the breaker. Doesnt it move? Well, not automatically, Phil continued. Its not a conveyer in the usual sense, just a way to keep the cabinets at working height and to allow access. It has no built-in pace. When the operator is finished, he pushes the cabinet ahead to the queue before the next station. And all of your products end up going down this same line? Yes, Phil acknowledged, which is why we often get pile-ups upstream as the different fabrication operations feed the one line.

But in any case, we are now finished with assembly. You can see where the fully stuffed cabinets are lowered to the ground and onto pallets, then picked up by forklifts and taken to the final testing area. When they pass the test, which may require more changing of parts, they are taken by forklift to the packing area for crating and then to shipping. He guided us around the packing area and up a long aisle running the length of the plant, past endless floor-to-ceiling racks of boxes with components, until we finally reached the shipping dock.

A few men were stretch-wrapping the finished circuit breakers in their crates while, further off, other employees were unloading a truck on the dock, moving piles of cardboard boxes through what looked like an airplane crash site. Yeah, I know, said Phil, rubbing a hand on his face. It still looks a mess, but it used to be much worse. Anyhow, thats about it. If you come back over here, he said, walking us back toward the door to the offices, we have an actual map of the plants layout.

Okay, Mr. Woods, what do you think of it? Well, son, said my father looking at the plants hustle and bustle, I can see your inventory. But where is your factory? Ouch, said Philip, downcast.

Look at it like this, Dad pressed. Youve got three big piles of inventory with a little manufacturing in between. Youve got a heap of vacuum cores over there by your glass box, mountains of metal parts across the aisle, racks of assembled mechanisms right after testing, and I dont know how many of your cabinets queuing on the conveyor. What do you expect? This place is storing and moving around a lot of stuff, with very little useful action.

What makes you say that? I asked Dad. All I could see was a beehive of activity. It was just what I expected of a plant and, even though I had never set foot in a factory before, there didnt seemed to be much wrong with it. After I got used to the din, it was a far cry from the dark satanic mill Phil and my father had led me to expect.

Well, let me put it this way, started Dad, which was a sure sign Phil was in for a serious put down. I dont know much about your industry, so I try to look at your operations as if I was a potential customer. Eye of the customer, yeah, weve done that with the consultants, interrupted Phil, attracting the glint of Dads stare.

Consultants, hah. Well, here it is. Lets assume I dont understand anything about your process itself. Ill worry about two things: Our qualitys not too bad, Phil ventured. Weve had only five customer complaints over the past month from about 1, units sold: Thats outrageously high!

Never mind now, thats not what Im looking for at this stage. I want to see how quality is built into your product. Phil looked at him, puzzled, reaching instinctively for his notebook. Well, look at your process. Im sure that mistakes and defects must happen here and there.

But I havent seen any. Which means that there is no system to identify nonconforming parts. In other words, whenever a defective part appears, I have no guarantee that it will not find its way back into the product somehow. But our people are trained to spot and isolate defects! Hey, you asked me, son. And if I were a potential customer, Id be worried. You guys can tell me whatever you want, but I dont see any system in place making sure that defects are systematically identified at each step of the process, and separated from good parts.

Nor am I sure that anyone is asking why these defects show up when they do. That tells me you dont control your quality. But what about our testing? Youve seen our testing procedures, and theyre very rigorous! Dad seemed to weigh Phil for a moment and replied, All well and good, but testing doesnt tell me how quality is built into the product, or, more to the point, how nonquality is built into the product. See, any defect that turns up on one of your products has in fact been put there.

It is the result of work, albeit bad work. You need to understand this. Do you track how many defective parts are found at each testing phase? I dont know, Phil mumbled, but Im sure that Dave would. Let me go and find out. Forget it. I told you I dont want to talk to anybody, Dad said crossly. Anyhow, thats not the point. The point is that I am troubled about quality in your production process. Five defects per 1, in the customers products are terribly high in my book. Thats about how often airlines lose your luggage.

You happy with that? What about inefficiency? I asked, to get Phil off the hook. Well, look at it this way. Anything that does not directly add value to the product is inefficient, correct? So when I walk through operations I always look at people first and foremost.

I count: The ratio of operators who are actually adding value to the product to total operators gives me a good feel for how efficient the process is. Phil just stared at Dad and then started looking around, counting silently. Im not good at numbers, but I could see that for every operator we saw actually doing some work, there were two or three people just doing something else.

Thats not entirely fair, Dad, I ventured. Its not because they arent working on the product that theyre not working! I never said that, Dad replied flatly.

Im sure all these folks are doing their job. Thats precisely my point. Look at this lady over there searching through a pile of parts for the one item that she needs next. Clearly shes working but her efforts arent adding any value to the product. What Im saying is that you need to figure out a better system. In particular, you need to distinguish motion from work. Work is adding value to the product, and motion is everything else, is that right?

At the end of the day, improving operations means transforming motion into work. Phil opened his mouth, but then said nothing again. He stood there, taking in the shop floor, pushed his glasses back on his nose, and looked distraught.

Now, the second thing to look at is inventory, continued Dad, relentless. Same principle applies.

See a Problem?

Every part out there that is not being worked on is a sign of inefficiency. Weve paid for that stuff, and its not being transformed into value. Its just sitting around gathering dust.

Thats inefficiency. Okay, okay, Mr. Woods, Phil conceded, I get your point, but you dont understand. What you see is I dont have to understand, son. All I know is that all these inefficiencies somehow translate into cost. And if Im a customer, I know that if you plan to stay in business all these inefficiencies will eventually be reflected in your price and mine.

But weve come so far. Dad just shrugged and started walking away. Come on, Dad, dont be like that. I, for one, would at least like to know what Phils been doing with this plant. My father gave me his irritated stare, but relented with a sigh.

All right, lets hear it. It might not look like much to you, started Phil, but you should have seen it when we took over. There were piles of inventory surrounding every workstation. I mean heaps! I can imagine, mumbled Dad, nodding wearily.

When we took over the plant, it was organized in five shops: Each shop dealt with all the products. The first shop would do mechanical assembly for all mechanisms.

Then they would move to the mechanical fitting shop to get the motor fitted, then to electrical wiring, then back to fitting for the capsule, then to wiring again, then to testing, and finally to the final assembly line. Inventories were sky high in each shop! We had some consultants come in, and they got us to separate our products into families, which came down to the four Ive mentioned. Because of all the customization we do, it wasnt clear to us that product lines existed at all!

Then they broke the shops and created the lines we saw. It was a revolution, let me tell you! We initially halved the inventory! Halved it, I tell you, Phil repeated excitedly. And the same for lead time. It was amazing, you should have seen the stuff lying around before. Not that were particularly good now, but back then, it was just horrendous.

What I dont understand, I asked, is why final assembly was not split into lines as well? We had endless arguments about that. The end of the matter is that we cant afford another two lines. I can see, I continued, that with the old layout you would have had parts being moved around a lot. Yeah, talk about motion!

So, if youve already solved the problem, whats the panic? Phils face fell as if hed doused with cold water. Its not enough! Thats the problem!

You said it yourself, theres still too much inventory around this place. Too much inefficiency, and we dont know where to go from here. Well, answered my father after an awkward silence, the usual: I asked.

To be efficient, the trick is to maximize value the work that the customer really thinks is worth paying for. In any operation, youve got a value-creating element, like tightening a bolt, a necessary element, like getting the bolt to the operator, and then a whole load of waste.

Most people dont even see it. You can basically split waste into seven types, as Toyota does: So get your consultants to work and systematically reduce the waste! No offense, sir, but we know all that, Phil said carefully. The trouble is that weve reached the limits of our consultants. They dont seem to get any more results than what youve seen, and they tell us that its because of too much resistance to change, and anyhow thats no longer the issue.

How do you mean, not the issue? Were running out of time, Phil answered with a hint of desperation in his voice. Whatever we do in continuous improvement is going to take ages and it wont solve the business problem were against the wall! My father sighed and shook his head in this exasperating, seen-it-all-before manner he has, and said in a quieter tone, Come on, nothings ever that desperate.

But maybe we should continue this discussion out of earshot rather than right in the middle of the shop floor. Lets get a cup of coffee. I looked around and, indeed, many people were looking at us with a mixture of curiosity and defiance.

The company had already changed hands and been reorganized, so God knows what they were thinking of their strange visitors. Another sale perhaps? With Dad dressed like a house painter, stains and all, not likely, I thought with a chuckle.

Phil took us back to the engineering area, past an acre of cubicles and ushered us into a large pleasant office with bay windows overlooking the parking lot.

The Gold Mine_ A Novel of Lean - Michael Balle.pdf

He sat us at a round conference table, and went back out to ask someone for coffee. Can you help? I asked Dad, but he just shrugged, mulling over his thoughts and looking grim. Okay, Philip. Whats the problem then? As Ive told you earlier, were out of cash! I understand that, Dad said with exaggerated patience. But whats the business problem? Why are you out of cash when your products seem to be selling? Well, we have two issues, Phil said.

First, we still carry far too much inventory, which eats at our cash flow. Second, were not covering our fixed costs, no matter how much weve already cut overhead.

We just cant find a way to get more output from the money weve invested in this factory, given the capabilities and customers that we have. So you have a market for this? Yeah, plenty, especially the new stuff.

Matt thinks that if we get the price down just a bit, we could easily double our sales volume. But at this stage, we would never find financing for additional capacity. It would require more factory space, more people, and more equipment. We just dont have the cash. Suppose you could magically produce your backlog overnight, would that help? Well, sure. These customers pay promptly, so if we could catch up on late deliveries without increasing our parts inventories, wed be improving our cash position.

Well, theres your solution, son. Reduce the waste to produce more with the same facilities, since the market demand is there. Phil looked back, mystified.

Oh, heck, it isnt that hard to make money in industry, said Dad animatedly. Your company thinks in terms of fixed costs and variable costs, right? Variable costs are the costs which can be attributed directly to the product, like materials and direct labor, arent they? I asked, vaguely remembering a business course back in college. And fixed costs are all the other costs related to running the plant itself.

Correct, Philip is a fixed cost, Dad answered with a wink. The trick to running a profitable operation is to find ways of increasing production without increasing fixed costs if the demand is there; and reducing fixed costs if you have to reduce production because demand falls.

But wouldnt that be treating fixed costs as variable? Not quite. It just means that you have to be ready to close down entire parts of the plant, or product lines, if theyre not profitable. Like Harry told you this morning. Fixed costs are not fixed by an act of the Almighty. Theyre called fixed costs because they cant be related to each single product. It doesnt mean they cant be reduced. You could still close down half your shop and relocate to a cheaper building or something like that.

But thats not the issue anyhow since the demand is there. Your problem is to find a way to increase production without increasing your fixed costs, right?

Yes, absolutely. But how can that be done? By reducing waste in the product flow, of course! Im sorry Im being so slow, sir, but I dont get it, complained Phil as Dad made a show of looking at his watch. He would be missing lunch with his cronies soon, I figured. Let me put it another way.

Suppose that you could move from one shift to two shifts. You follow? Youd be doubling your output without increasing any of your fixed costs, right? Assuming people would agree to it, wed need more people to staff the second shift, Phil reasoned. Direct labor is a variable cost. Well, not quite in this process. Each of these operators is both trained and skilled. We couldnt find people on the street just like that. And anyhow, we can barely pay those we have on the payroll now, theres no way we could hire any more, said Phil.

Well, youve figured it out yourself. Your challenge, said Dad, is to staff a second shift without hiring any more people. This is assuming, of course, that you could sell everything that second shift would produce. But wed have to double our productivity! And wed run the risk of further increasing our inventory!

Thats what I meant. Get rid of the waste in the process! Phil looked at my Dad thoughtfully, digesting this. Can it be done? Double productivity? Phil pulled off his glasses and started polishing them on his shirt, shaking his head in a mixture of dismay and irritation.

Not that I blamed him. My Dad has the same effect on me. As far as I understand, you wouldnt want to double your lines anyway. Its only the STR product that is a potential high runner. Youre saying that if we improve productivity on the three lines we could pull enough people out to staff one second shift for just the STR line?

Well, said Dad, all you need is five or six operators. Surely if you improve productivity in the entire area, you should be able to liberate enough people. It doesnt solve your problem because you still have to move all the additional STR mechanisms through the final assembly conveyor to get paid. But if you can do that, then youve got something. We might be able to do that, Phil said, thoughtfully. Right now the conveyor is not operating at full capacity, weve got an.

As a result were not utilizing our people fully, and we keep hearing from the veterans about how the conveyor used to produce far more output when they were only doing the DGs, muttered Phil, the cogs in his mind spinning wildly. Listen, son, said Dad, when the Toyota people first showed us their continuous improvement system, all they talked about was waste reduction. I didnt understand it anymore than you, so I asked them what the strategy was.

Simple, they said. First we thought that: Its the same thing! I blurted out. Dad corrected me patiently: Hmm, it took me three years to get it. When the market turned around on us, we found that we had to sell at market price, and adjust our margins to what was left once the cost was taken out.

So if we wanted to keep selling and make a profit, we had to find ways to pull costs down without affecting quality. This meant reducing the waste in existing operations. Thats your current situation. Phil looked uncertainly at both of us in turn. Can you help us? I just did, was the grumpy reply. No, yes, I mean, help us really. Help us to do it. Help us to get the waste out of the system! Sorry, son, I dont do that anymore. He stood up abruptly and gave me a nod toward the door.

Well, its been nice talking to you boys, but Im expected at the Yacht Club for lunch, and the day isnt getting any younger.

Mickey, youre driving me back. In the end, we all drove back together. Phil had enough tact to sit in the back of the car in gloomy misery and keep quiet, so we drove in silence, my Dad and I having, as usual, nothing much to say to each other once the lot of daily news had been chewed through. We dropped Dad at the Yacht Club, and Phil persuaded me bullied me, really to drive him home to Charlene and the kids and stay for lunch.

I knew he wanted to talk, and I guessed he probably wanted to discuss my father, which made me uneasy. Dont get me wrong. Phil is a good friend. Only a few months ago, when my girlfriend Sarah ditched me, Charlene and Phil had proved a staunch support as I moped through the usual sad palaver of denial, anger, and despair.

Now I felt one good turn deserved another. Of course, the cure seemed to promise at least a small dose of pain all around. My Dad probably had answers for Phil; after all, he had been turning companies around all his life. Yet he had also been embittered by the endless political battles, particularly at the end, and had largely closed that chapter of his life.

Phil had yet to show that my fathers direct approach was helping him see the situation in a fresh light. It struck me that bringing them together was my doing, and that there was much more at stake to lose than the possible benefits of this arrangement. At the end of the day, my relationship with my father had never been an easy one, and we had learned to keep our distance. I was not sure I wanted to get involved in this.

As it turned out, Charlene forced my hand. Phils mood had lifted considerably. He raved about Dad during lunch, adding to my unease, and I could see he was already making plans in his mind. Yet, instead of running back to the office, he had the good sense to stay home and enjoy the sunshine. As he was playing with the kids in the garden, Charlene cornered me in the kitchen. She is a forceful woman with a cultivated Southern drawl. Quite pretty, in an all-American blond way, and hard as nails.

Shes always been very friendly, but Ive never felt entirely comfortable around her. Phil, by contrast, had a good head for physics, and an instinct for the effects of heat on exotic materials, but not much else. He was a large, friendly, happy-go-lucky character and had struggled to get interested in making products as opposed to research. From a humble background himself, he couldnt resist the lure of the success that being a self-made man would.

His bias for showy sports cars, for instance, I found in rather poor taste. Philip and Charlene seemed at times a study of contrasts, yet their marriage had held together through 13 years and three children.

As I was rummaging through the fridge for a soda, she got straight to the point: Can you help him? I hesitated, but she just stood there, her arms crossed, her face set. I dont know. Personally, I dont have a clue about whats going on in the factory.

But your dad does. I think so. The trouble is that he has walked away from all this and doesnt want to get drawn back in.

The Gold Mine: 1 1 : A Novel of Lean Turnaround

We faced each other as she stood defiantly in front of me, hugging her sweater to herself. I shifted my weight uncomfortably from foot to foot. How long have you two been friends? Like, forever. Charly, you know that. Well, in all this time, Phils always been there for you, no? Cover for your stupid pranks, get you out trouble, cope with your moods and break-ups and what not! Yes, I agreed curtly. Whats your point? Its payback time, Mike.

Youve got to help him on this one. This is serious. Weve always been there when youve fretted through papers and politics, right? Well this is it for us. Make or break. And Phils breaking, and I dont want to be there and watch it happen and do nothing. So youd better help him make this work. It felt as if she had slapped me. I needed time to digest this, but she was on a roll. Listen, I know its not easy with your father, Im aware of the baggage and all.

But hes your father. If you ask him, hell do it. You dont know what youre asking. I think I do, Mike. More to the point, I think you do too. I drove home but then continued on to my parents, as they were getting ready for dinner. Dinner in a very loose sense.

Since it was just the two of them living in that big house on the hill, theyd dropped any attempt at sitting down at the dining-room table.

They mostly drifted toward the kitchen roughly at the same time to make themselves a snack before going back to the sitting room and their home cinema. My mother had always been a movie buff and for some time now shed become a DVD film critic for a number of clubs and even a magazine. So every night was movie night. They had bought one of those largescreen TVs and she watched every film, whether a childrens story or a horror sci-fi extravaganza, taking notes with the same thorough concentration.

Dad usually fell asleep halfway through. Before I could speak, my father said, The answer is No. Dad, its Phil were talking about. This is not a business deal, this is about helping out my best friend! He looked at me quizzically, and then sat his martini glass on the kitchen bar. He poured one for me, refilled his own, took a sip, and then held his hands behind his head, leaning against the kitchen cupboards. Cmon, Dad. You wont have to do much. Just talk to him, thats all.

Do you remember I always say its not about the process, its about the people? I nodded. I had heard it enough times. Thats one thing wed always agreed upon Im a psychologist, after all! Well, I dont know how to say it nicely, son, but Philips not up to it. Hes cracking under the pressure. He was a physics student, a lab rat, before he got into all this entrepreneurial nonsense. But hes bright, right?

Hell get it. Weve got to help him. We, is it? All right, heres what I propose. I dont want to deal with the drama. I dont want to argue and explain and cajole and do all the people stuff. Im done with having to convince every man, woman, and dog of the most obvious common-sense moves. And make no mistake, whatever I say out there, theyll fight it.

Its human nature. People need to disagree to understand. But Ive had my fill of it, so no more. Ill talk to him, but you come along and hold his hand. If and when he goes to pieces you deal with it, and well finally see if all your psychobabble is any use in real life. I balked a bit, I guess. I was on a sabbatical, so I was pretty free with my time, but that didnt mean a vacation.

I was in the midst of writing a book and not doing too well. I just couldnt see myself spending my time baby-sitting Phil or driving Dad to the factory for kick-ass sessions. Still, Phil was my friend, and it was my idea.

Deal, Dad. I thought, and then suddenly realized what I might be getting into. Could we help Phil out? I hadnt the faintest idea. Hey, Mike, long time no see! I never did take to Matthew. He had a cheesy smile and slick trappings: Phil tells me you can double our STR production without further investment?

That would really save our butts! Hold your horses, son. Im not going to double anything. Youre going to do the work here. No pain, no gain. Anyhow, can you really sell more of that stuff if it comes off the line?

A flicker of uncertainty broke over Matts plastic smile, and I remembered that my Dads style had an occasional benefit.

For sure, Matt said, snapping back to sales mode. Our current contract calls for us to be shipping about twice the number of STR that we are now, so were paying late-delivery penalties. We argued about stopping everything else and producing only those to catch up on the backlog, but we dont want to screw up the deals with our other customers either.

Right now the market is booming. All sorts of global industrial players are pitching for energy markets. He flashed his smile on Phil, adding, You build them, Ill sell them. Phil just shrugged, and we looked at each other uncertainly.

Wed bumped into Matt in the plants lobby earlier as he was dashing to yet another important meeting. Id met Matt on and off over the past couple of years, and always wondered how Phil ever ended up going into partnership with the guy. He looked too much like a con man to me. To give credit where its due, he had always been fair to Phil. Sure hed exploited Phils patents, but hed also made them both rich in the process.

In any case, Phil never understood why I didnt take to Matt, whom he considered a real friend, so he probably deserved more credit than I gave him. But I couldnt stand his manner any more than Phils taste in cars. Ill let you guys get on with the important work, said Matt with an unctuous grin. Im off to race a customer check to the bank and keep us open one more week! See ya. Was he serious?

I asked Phil as he walked us past reception and toward his office. Yeah, its been like that for the past month or so. But I dont worry too much; hes really good at getting money out of people.

Hes had plenty of experience since we started this racket. He keeps the business afloat day-to-day, and Im more of a long-term worrier. Here, come on in.

He ushered us into the room and, as we went in, a young Hispanic woman in an expensive suit stood up from the conference table and walked to my Dad, hand outstretched. Hi, Im Amaranta Cruz, she announced with a toothy, engaging smile and a firm handshake. I know you dont want an audience, Mr. Also it will give me the opportunity to learn more about what the company actually does for a living, she added with an impish smile. Phil and I shared a glance, expecting my Dad to bite her head off, but to our mutual surprise the old man smiled politely as he shook her hand.

Call me Bob. Pleasure to have you on board, Ms. Call me Amy, she answered. She was a petite woman with roundish features and a surprisingly deep, smooth voice, like a radio announcer. She gave the impression of being filled to the brim with the kind of cheerful energy I am repeatedly told we should all radiate, but in her case it came across as a naturally sunny disposition rather than neurotic positive thinking, and it did lift some of the gloom Phil seemed to lug around with him these days.

Good, Phil said. Ive asked Amy to prepare a more formal presentation of the company to give you to have a better idea of what we Cant stand presentations, son, just bring along your notebook, and we can hit the shop floor. Fine, said Phil, taken aback. Lets go. Ive asked Dave, the production manager, to join us too, but he can catch up when One last thing to get clear before we go anywhere, Philip, said my father with his best scowl.

Down there its my way or no way. I dont particularly want to do this, and I certainly dont want to deal with any politics, resistance, or plain stupid questions. Is that clear? Yes, sir, answered Phil uneasily. I could swear Amy was biting her lip to hide an amused grin.

All right then.

The Gold Mine: 1 1 : A Novel of Lean Turnaround

Lets go! Okay, Philip, said Dad as we entered the plant.

What you have to tell yourself is that this is a gold mine. Theres gold in these peoples hands. Our job is to find it. Gold, repeated Phil uncertainly. The problem, continued my father, is that so much happens in a factory that it becomes very difficult to see where value is actually created. As we saw yesterday, most of what people do out here may be necessary, but it does not add value to the.

So where will we find the gold? Where they build the products? I guessed. Thats where value is created.

Products are built up part by part, so, in fact, value flows through the factory. The first thing to get clear is to identify the various streams value flows through. Product lines, right? In your case, youve split the flow into three streams, but thats not all.

Think of all the tiny rivulets that move parts into these main streams. Sooner or later we will need to map these value streams in order to see where we are creating value and where we arent. But we need to take other steps first. Where should we begin our walk? At the start, I guess, muttered Phil, with frame assembly. Wrong, countered Dad. Is that where the gold is?

I dont think so. We stood there looking at each other like guilty kids. Of course, exclaimed Amy unexpectedly. Finished products. Thats the gold, right? I mean when weve panned it out of the river and all, right?

Theres hope for you yet, said Dad with a brief smile. Youre right. Finished products tell us exactly what comes out of this place in both quantities and variety. So lets move it, to shipping.

So we trundled through the factory with Amy looking like the cat thats got the cream, and Phil obviously trying to make sense of all this gold-mine talk as we dodged forklifts and passed racks of inventories. What have we got here? Dad asked when we arrived at the loading dock, where crates were packed haphazardly around the place.

A bit of everything, admitted Phil ruefully. Not much of a gold miner who doesnt keep different kinds of nuggets separate! Im sure the guys in charge of shipping know what is where, though, Phil said, looking around.In the end we were even contemplating building a manufacturing capability from scratch, but then this opportunity came up.

Everything we own is mortgaged. Youve got to download materials upfront, and then youve got to pay for labor, and finally you get a check back from a customer after a sale. Your email address will not be published.

The hard thing is staying motivated enough to persevere through the ensuing challenges. Managers and executives just beginning a lean transformation will learn valuable insights about how to sidestep the technical and people problems that lay ahead.

SHAWNNA from Wichita
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