Looking great from one angle anyway


    Comedian Tim Allen once said that the reason women take so much longer than men to get ready to go out is because women will take the time to look at themselves in the mirror from every possible angle and make sure things are right, while men are content if they can find just one angle from which they look good. Humorous … but probably not too far from the truth. If that distinction between men and women applies to life in general it alone is a solid argument for the need for more women in positions of leadership. How else can we explain Nike’s strategic “commitment to lean”?

    There are no big secrets or confusing nuances concerning the seven wastes of lean: Transportation, Inventory, Motion, Waiting, Over-production, Over-processing and Defects. So what can possibly be the deal with this: “Two lean manufacturing pilot studies carried out in Indonesia last year are said to have shown ‘significant improvements’ in productivity, cost and worker engagement, and Nike plans to roll out the findings from these programmes throughout the supply chain”?

    Certainly it looks good from the standpoint of minimizing the wastes of defects and motion, but how on earth can they miss just how ugly they look from the angles of inventory, transportation, waiting and over-production? Indonesia? Really? Indonesia is seven thousand freakin’ miles from Nike corporate headquarters. Gotta be close to ten thousand miles from where most of the folks who actually buy Nike shoes lace them up. I can only assume they looked at their process from seven different angles and rather than work at it until they looked good from all of them, they found one and said ‘good enough’.

    Of course what really happened was that they looked at things through the only window their limited accountants can quantify – the one that shines a bright light on the 16¢ an hour the folks in Indonesia get for their efforts. That is easy to count, so lean is seen as a vehicle to turn that into 15¢, and little else. And of course Nike is hardly alone. They are just the ones who demonstrate their ignorance out on the public square. The correlation between destructive accounting and the seven wastes is clear and pervasive.

    Traditional accounting is all over direct labor, and it does OK with defects. So lots of folks use lean tools, tricks and techniques to optimize the wastes of motion and defects. The wastes of transportation, inventory and over-production all gobble up real cash, but that cash is on the balance sheet so accountants think it doesn’t count. And to quantify over-processing one has to understand costs as they relate to value adding and non-value adding, and the accounting profession is far too concerned with developing ever more sophisticated regression analysis techniques to hone in one the meaningless distinctions between fixed and variable costs to look into value adding effects of spending. So it should come as little surprise that most companies do a whole lot more with lean to attack direct labor and defects than they do reduce the wastes accounting so poorly addresses.

    As trivial as direct labor is when it comes to the total cost structure, if it is the only thing you know how to measure, it tends to be the only thing that seems worthwhile improving. No wonder so many execs don’t go into lean whole hog with such poor information at hand.

    The non-value adding waste in a pair of Nike shoes is staggering, but the women taking home a dollar a day to make them will be “fully engaged”, so the men in Beaverton are ready to step out for the evening and roll that out across the entire supply chain.

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