Shook offered whats he has learned about cultural change, the rise and fall and resurrection of various production facilities – and about what’s working soundly at GE’s appliance manufacturing facility in Kentucky.

1. Manufacturing’s Next Chapter:
The Story of GE Appliances
and the Future of Manufacturing in
North America
John Shook
Lean Enterprise Institute
October 2013

2. How we got here…
•
•
AME Conference Planning Meeting - July 6-7, 2012
Topic: AME Toronto 2013 program
“I see every value-creating organization as a collection of primary
processes, involving many steps that must be performed properly in
- James Womack
the proper sequence at the proper time”
So, here we are, 15 months later: October 22, 2013

3. The State of “Lean”
• We’re out to change the world
• Making things better through Lean
Thinking & Practice
– 25 - 30 years in North America
• We’ve won some battles, maybe even
some wars
– Auto industry
– Healthcare
– New frontiers

4. The State of “Lean”
• We’re out to change the world
• Making things better through Lean
Thinking & Practice
– 25 - 30 years in North America
• We’ve won some battles, maybe even
some wars
– Auto industry
– Healthcare
– New frontiers
•
 But, there is much yet to be done!

5. Reshoring?
•
•
•
•
Outsourcing
Offshoring
Reshoring
Rightshoring




Insourcing
Reshoring
Rightshoring
Leanshoring

6. The Outsourcing Lie
The economic lie:
• CEO: “I am taking money OUT of my wallet and
giving it to someone else…”
• Typical company piece-price models show illdefined savings. Total cost analysis reveals a
very different picture:
– Take a look at Harry Moser’s total cost
calculator at www.reshorenow.com
– Or the story of “Mathew Lovejoy” and “Acme
Alliance” at www.lean.org

7. Total Lean Value Streams
• From analyzing the value chain as a series of
discrete transactions
• To seeing the value stream as series of tight
connections, each representing a relationship
that holds potential for deep learning
• Exploiting value streams with this understanding
enables quick flexibility and deep adaptability
• From optimizing discrete transaction points to
creating value streams as adaptive learning
systems

8. Lean Value Stream Design Goes Mainstream
in Ontario…and Underground
“Police said the ring
used the “just-in-time”
supply model”

9. Manufacturing’s Next Chapter
The story of GE Appliances is the
concluding chapter of the story of
North American manufacturing of
the past 50 years. It could be the
story of the future of North
American manufacturing.

10. Manufacturing’s Next Chapter
• What happens when we decide to reshore
offshored operations?
• When operations go far away, capabilities go
with them.
• How does an organization identify and go about
reacquiring needed skills?
• When manufacturing operations go
away…

11. A Very Important Factory:
Ford Highland Park 100 Years Ago

12. A Supply Chain as One Giant Conveyor
Running Through the Country

13. Ford Highland Park

14. Another
Important
Factory…
Ford’s
River Rouge
Plant

15. River Rouge
Giant Conveyors for
“Ore to Assembly”

16. 15 million sq. ft.
100,000 workers
100 miles of railroad track
15 miles of roads
And, of course, conveyors. 120 miles worth.
And 6000 suppliers

17. A Supply Chain as One
Giant Conveyor
Running Through
…the World

18. The Rouge 1932 - Choked by Complexity?

19. Another Important Factory…
New United Motor Manufacturing, Inc. –
NUMMI – built its first car in December 1984
and its last on April 1, 2010. NUMMI kickstarted a revolution that continues.

20. Lean Success
in North America
Agreement between Toyota and GM:
Toyota manages the plant via
the Toyota Production System
GM’s “worst” (certified worst) plant:
Quality
Workforce
Former GM workers offered jobs:
Including the old “troublemakers”

21. 21
john shook

22. Employee development:
Some Classroom
Mostly OJT or OJD
TPS established:
Technical - Physicals, “hard” technology
- Product, plant layout, etc.
Social
- “Soft” technologies
- Management/people systems
(Note: “soft” doesn’t mean “easy”!)

23. Results
In about one year…
Quality
Productivity
Best ever in GM
Equal to Takaoka Japan
Best in GM
Close to Takaoka Japan

24. • NUMMI as example of
Successful Culture
Change
• Sloan Management
Review
(Limited # of copies available
at the LEI booth)
• National Public Radio
“This American Life”
http://www.thisamericanlife.org/
play_full.php?play=403

25. Ford Milpitas CA Plant

26. Ford Milpitas CA Plant Today

27. Model T Plaza
Highland
Park
Today

28. The Rouge Today
Rebirth

29. GE Appliance Park – Louisville Kentucky
From Reshoring to
Rightshoring to Leanshoring

30. GE Appliances
$5 billion global business headquartered in Louisville, KY
• Appliance Park production began in 1953
• Annual production volume ~3MM units
• Park houses global staff, R&D, customer
training facilities, manufacturing facilities
• $1 billion investment 2010-2014, over 1,300 new
U.S. jobs
• Largest U.S. appliances production
operation
• 10,000 employees, @3k represented (IUE,
IBEW)
• 3,600 employees … 900-acre campus
• Six U.S. manufacturing operations located in KY,
IN, AL, GA, TN, IL

31. It Started with a Model Line
“Can we do this for all of our products?”
– CFO GE Appliances
Process
Inventory reduced 60%
Labor efficiency improved 30%
Time to produce reduced 68%
Space required for line reduced 80%
People
First hourly kaizen positions (KPO)
Cross Functional Team
Missing org structure to improve
Spring 2009 – First Model Line

32. “Big Room” Process
Cross
Functional Team
Teardowns
Mockups
Production
Visual Schedule
7 Ways
Production Prep

33. The Story of the
Disappearing Screws
• Original design: visible screws 
• Marketing: “Want a sleek look with no
visible screws.”
• Production: “Shooting screws is a lot of
work.”
• Designers elegant solution…
one hidden screw and a rod!

34. The Story of the
Disappearing Screws
• “If the people who design dishwashers sit at
their desks in one building, and the people who
sell them sit in another building, and the
people who make them are in another country
and speak a different language – you never
realize that the screws should disappear, let
alone come up with a way they can.”
- Charles Fishman, The Atlantic

35. Manufacturing’s Next Chapter
• “An assembly line is a way of putting parts
together.
• Lean Production is a way of putting the
assembly line itself together. So the work
is as easy and efficient as possible.”
The Atlantic - Charles Fishman

36. GM Fremont  What Production and
People Systems?

37. Manufacturing’s Next Chapter
• “An assembly line is a way of putting parts together.
• Lean Production is a way of putting the assembly line
itself together. So the work is a easy and efficient as
possible.”
The production system as science,
as something to improve, just like an
individual job.

38. Manufacturing’s Next Chapter
 The production system as science, as something to improve, just
like an individual job.
Macro enterprise system level
Value stream level
Factory level
Level of each individual job

39. GE Appliances Design of Lean
Production and People Systems
Rich Calvaruso – Operations
Bill McDonough – Human Resources

40. Physical Plant Transformation
Completely gutted
and refurbished

41. Social Plant Transformation…
Which way?
Study and Design by
Cross Functional Team
?
Autoliv
Herman Miller
NUMMI
Winter 2011 – Little Big Room Begins

42. Social Plant Transformation
Team
Leader
Team
Leader
Team
Leader
New Leadership Practices
•
•
•
•
•
•
•
•
•
Coach
Support
Motivate
Build trust
Problem Solvers
Communicate Business Objectives & Results
Collaborate across functions
Sets improvement targets for team
Involve and challenge employees
AME
EHS
Design
Quality
KPO
PMQE
Area
Business Leader
Business
Leader
Maintenance
Production Eng.
Stewards
HR
Materials
CI Team

43. Improved Jobs,
Designed for Improvement

44. Learning and Teaching Jobs
via Training Within Industry

45. Doing and Improving Jobs via TWI

46. Great
care for
the
design
of each
job
Simple
Easy to
do right
Hard to
do wrong
Easy to
spot
problems

47. Easy to do right, hard to do wrong
Easy to spot problems
Easy to do pdca
Then…
Support to solve problems
Skill building for continuous improvement
Structured support for pdca

48. Errors Happen

49. Problems Happen…
what do we do with them?

50. Problems Happen…
How do we learn from them?
Reactive Trouble-Shooting and Firefighting
Reflexive Root Cause Problem-Solving
Proactive Target Condition Experimenting
Open Innovation Exploring

51. Plan-Do-Check-Act Cycle

52. Foster the Art & Craft of Science
from “scientific management”
to “management by science”
Always asking
•What is the real problem?
 “What?”  “Why?” 
 “What if?”  “Why not?”
•PDCA, DMAIC, Kaizen, Continuous
Improvement – call it what you will, as
long as it is an approach to scientific
thinking: the art & craft of science.
52
john shook

53. LEAN – and Six Sigma and
“Process Improvement”
Whether or not it’s all a waste of time is a
question of “purpose”…

54. Manufacturing’s Next Chapter
 The production system as science, as something to improve, just
like an individual job.
Macro enterprise system level
Value stream level
Factory level
Level of each individual job

55. GM Fremont  What aligned
business purpose?

56. Lean Transformation Model
SITUATIONAL APPROACH
- Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?”
PROCESS
IMPROVEMENT
Clear Roles and
Responsibilities
CAPABILITY
DEVELOPMENT
Sustainable
improvement
capability
in all people
at all levels
Continuous,
real, practical
changes to
improve the way
the work is done
LEADERSHIP
MANAGEMENT
Basic Thinking, Mindset, Assumptions
That underlies the transformation

57. Transformation Model Questions
1. What is the purpose or what problem are we
trying to solve?
2. How are we improving the actual work?
3. How are we building capability?
4. What role should leadership take and how does
the management system support the new way
of working??
5. What basic philosophy or thinking underlies or
is driving this transformation?
SITUATIONAL APPROACH
- Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?”
Clear Roles and
Responsibilities
PROCESS
IMPROVEMENT
Continuous,
real, practical
changes to
improve the way
the work is done
CAPABILITY
DEVELOPMENT
LEADERSHIP
MANAGEMENT
Sustainable
improvement
capability
in all people
at all levels
Basic Thinking, Mindset, Assumptions
That drive this transformation

58. “GEMBA” is not just a
Japanese concept…
“If you want to know about
something you ask the
people who know; the
collier, the countryman,
you ask the fellows who cut
the hay.”
- George Ewart Evans

59. How we got here…
So, here we are, October 22, 2013
Four Lean Books

60. And Four More…

62. What is the
Lean Enterprise Institute?
• Non-profit education and research institute, based
in Cambridge, MA, with 16 global affiliates
• CEO John Shook, 15 full time employees,
extensive list of faculty and associates
• Founded in 1997 by Dr. James Womack, principle
scientist of the MIT IMVP study that resulted in
“The Machine That Changed the World”
• Over 250,000 members from all industries
• Mission: Advance Lean thinking and practice in all
things, everywhere
62

63. LEI Mission and Vision
Mission: “Make Things Better Through
Lean Thinking & Practice”
Vision: A mission-driven institute that
bridges academic knowledge with
practical, real-world application to help
society improve through lean thinking &
practice

64. High-Level Transformation Model
• Basic Approach: PDCA – The art and craft of science
• TWO Pillars: Process Improvement and Capability Development
– Process Improvement
• Start with the work
– Individual level, system level
– Capability Development
• At all levels
• Problem-solving, improvement capability
• Specific Approach in each case: Situational, determined by asking
– “What problem are we trying to solve?”
SITUATIONAL APPROACH
- Value-Driven Purpose “WHAT PROBLEM ARE WE TRYING TO SOLVE?”
Clear Roles and
Responsibilities
PROCESS
IMPROVEMENT
Continuous,
real, practical
changes to
improve the way
the work is done
CAPABILITY
DEVELOPMENT
LEADERSHIP
MANAGEMENT
Sustainable
improvement
capability
in all people
at all levels
Basic Thinking, Mindset, Assumptions
That drive this transformation

65. Lean Enterprise Institute
Industry Networking
and events
Publications
Coaching and
Co-Learning
Education: public and inhouse workshops
Digital books,
courses, social
networking
www.lean.org
community with
over 230,000
members

66. LEI Partnerships
• LEI establishes a limited number of
collaborative learning partnerships
with organizations committed lean
transformation.

67. LEI Co-Learning Partnerships
• LEI establishes a limited number of collaborative
learning partnerships with organizations
committed to lean transformation.
• We want to see the creation of at least one
exemplary “reference model” in each sector, each
level and each type of work.
• Co-learning projects are defined by determining
(together with the partner) the questions to be
addressed and the means of addressing them.
• For each specific project, define current, ideal and
target conditions. Then LEI will provide support:
As little as possible
As much as necessary

68. Lean Global Network

69. Lean Transformation
Technical
69

70. Lean Transformation
Social
70

71. People & Process – aligned by
leaders to achieve purpose