Full Transcript for Lean Manufacturing for Florida Manufacturers, with Paul Smith

really writing the thesis in Japanese was not going to be much use to me. moving forward in a world that uses English as the main language. So I did write it in English, but the defense and all of the time spent at university was pretty much in Japanese. So I actually had a bit of an advantage in that my fellow students, most of whom were Japanese, they were doing their research in English, being the language that most international journals are published in and I could consume that information a lot quicker than them. So I didn't realize it but it did give me bit of an advantage in that I could just read a lot quicker than them. But on the flip side, I had to be prepared to present whenever I gave a presentation in Japanese which developed over time and by the end of what ended up being seven years living in Japan, it got to a point where it was suitable. Pavel: Yep, makes sense. Wow, so what do feel now? Which language, I mean, I guess you're really fluent in both of them or? Paul Smith: look, ⁓ is my native language. If I ⁓ to start even just, you know, five or six years earlier, you know, you get something in your head before the age of seven and ⁓ be ⁓ fluent. ⁓ am ⁓ fluent user of Japanese, but ⁓ there is a gap between, say, my Japanese colleagues at Shinko Management and myself in terms of the ability to ⁓ myself in Japanese. But I use it, I do the interpreting on programs over in Japan and I'm quite happy going in and meeting with the companies that we have relationships with over in Japan and feel very comfortable in the language. But you know what it's like, I believe you speak at least three languages, so there will be languages that you feel slightly better than Pavel: But, I mean, for me it's, I guess it's a different, a little different story. For me now English is, really, it's predominant, a hundred percent. I've been speaking English all the time for the last, I don't know, ten years. So for me it was changing, right? So from the three languages, Hebrew, Russian, and obviously English, it was changing the predominant language. But now English just took over since I was 17, 18 when I started the university in Canada. Since then, it's all English, right? So eventually English took over. Paul Smith: Yeah. No, I I shift between them very fluidly. So you probably have the same experience Pavel: experience when there's certain things you want to express and you can only do it. Paul Smith: when there are certain, certain things you want to express and you can only do it in one language or the other. And, know, some things I want to say that, you know, I can explain it in Japanese, but when I come to think about what would the, what would the words be in English, it, you know, sometimes trips me up. Pavel: Yeah, that's true. That's true. There is some of those specific kind of expressions or more more like a slang, right? How can you explain it in one language as opposed to the next? It's you cannot, like it wouldn't have the same punch,

I guess, the same punch line. Paul Smith: Yeah. Yeah. Yeah. Well, there's, and there's expressions that really they come from a cultural context that is very different. you know, the expression such as Otsukare Samadeshita, which is if you literally translated it, it would mean, you know, something along the lines of you poor, tired person, you, but it's just a way of someone doing a greeting at the end of the workday to say, you know, great job, see you tomorrow. But if you, if you take these things literally, it sounds a little bit strange. Pavel: Exactly Exactly it's gonna be very different Paul Smith: And, you know, yeah. Pavel: Great. So back to Shinka management. So you did some work in Japan in the manufacturing, I would assume, in the industry? ⁓ Paul Smith: Yeah, so look across our team, we've got various different backgrounds. We've got the majority of our team. I'm not talking about myself personally, but the majority of our team have worked either in Japanese industry or for Japanese manufacturers abroad. So whether that be Toyota or Denso in the US, in Europe and so forth. for me, personally, my experience in engineering, I came very close to accepting a job in Tokyo. was an interesting interview process and they offered me the salary package and said, ⁓ that looks good. And they said, well, we've already factored in that you'll be doing at least two hours of overtime every day. And I of looked at the work-life balance and also the opportunity for career advancement and balance that with the idea that, if I didn't leave Japan when I chose to, I would probably have ended up living there permanently. So in my case, I chose not to work in a Japanese company. But there certainly has been over last 30 plus years, a lot of back and forth to Japan and working or partnering with Japanese companies and... And now it's more the case that we have a number of Japanese clients as well that we support. So that's where my experience of working with Japanese companies come from. I spent six years running the local chamber of commerce focused on Japan, South Australia trade as well. So a little bit like the role that you have with Florida I guess, ⁓ but just with a ⁓ different focus, not a productivity focus, but more a trade focus. Pavel: Yeah, I was just about to say it's kind of we are. Yeah. Yeah, so all the Chamber of Commerce are like around the Florida are good partners of depending which association is in the area. So I represent two associations. One is Southwest Florida one is South South Omanati area. But obviously we work very closely with the Chamber of Commerce. Paul Smith: Yeah. Pavel: in the different colonies. So yes, that's exciting. Paul Smith: Yeah. Actually, I should mention you asked about the origins of Shinka, and it's probably worth just mentioning what the word means. So when Ben and I got together and decided to do this, we wanted to firstly create a brand that had some reflection of the Japanese origins of what we were doing. And we didn't want to use the word kaizen or something that was just very commonly used. a word that really resonated with us was shinka, which is, it has a number of different meanings, but the word that I guess closely, you know, we felt strong about was the meaning evolution or to evolve, which is, know, what, what we're trying to help companies do through Japanese management practices. So just to sort of throw that, throw that out there. That's, that's where the name shinka came from. Yeah. Yeah, yeah. More, more evolved. it's, it's really is a word that you, when you're in Japan and you're just listening to your environment, you hear it used a lot in the same way that you hear the word Kaizen used a lot. And when Japanese use the word Kaizen, they're not always necessarily referring to the, the, the manufacturing sort of continuous improvement application of Kaizen, but just improvement in general. Yeah, that's right. So yeah, that's right. Yeah. Yeah. Yeah. I mean, the Japanese expression that's equivalent to, know, ⁓ there's for improvement. You know, the word kaizen features in that, for example. Pavel: So that's like I always want to ask this but I don't know who I should ask this question and now I think I have a perfect person in front of me and I'm so it's just you know it just the thought came to my head it wasn't like I didn't think about it before but now it came at a perfect time so Paul Smith: Sure. Pavel: You know, obviously World War II, rebuilding the country. And how much Edward Deming, Dr. Deming had influence on all this way of life of continuous improvement? Is it strictly the Japanese culture or Edward Deming had some influence? Paul Smith: Well, I mean, the influence, if you look at historical records, was huge. And as the story goes, Deming didn't really find an audience that was willing to take up his lessons, you know, to the extent possible in the US and other locations. And then he found an audience that was looking for this type of thing, ready to take it on board and probably had the need more than others. You know, if you look at If you look at the situation that Japan finds itself in, really they're an island nation that has very little in the way of resources and there's this still very strong competition from their neighbors, whether it be China, South Korea, Southeast Asia, and other challenges around natural disasters and whatnot. And so they had to be very good at this value add part of things. Import raw materials. do something to them, get them out and make their margin on it. what Deming had to offer, I think, really fit with that need. there are, there's a lot of respect for him in the country. When you go to conferences in Japan, the usually, you know, in the opening remarks, often someone will talk about the history of what led us to this, whether it's quality management or or whatever, along with others, his name will often come up. it was a big influence and the Japan Management Association

would also point to his role as well. Pavel: the usually in the opening remarks, often someone will talk about the history of what led us to this. Yep. Along with others, his name will often come up. So it was big influence and the Japan Management Association goes to his role as well. So I guess it was just the. the culture, the way the Japanese are, it was just they were absorbing the knowledge rather than just, ⁓ it's not for us, we know better, like, you know, like, or we don't have time for this, we are too busy, but the Japanese thinking, okay, that's actually going to help them. And especially Paul Smith: Yeah. Hmm. Well, you mentioned World Pavel: ⁓ Paul Smith: War II and one of the things that the Japanese did very well, ⁓ even after what's called Meiji Restoration, know, there's quite a famous period that was close to 200 years where Japan was completely shut, well, nearly completely shut to ⁓ trade and ⁓ influence the rest the world. There was, I think, maybe one port that There was some trading with the Dutch maybe at the time, but when they emerged from that and looked around, they saw that they were behind in quite a number of things, whether it be technology, whether it be the way that warfare is waged and so forth. something the Japanese have been very, very good at from that period onwards is sending their people out, their very bright people out to the different countries. to identify what a different country is good at and what can we learn from them. they sometimes get a bad rap for it and have in the past of, ⁓ the Japanese have always been very good at copying things. And there probably was a time when they had to do that. There's also a time when they were leading the world in many industries, including technology. And boy, during World War II, Did they have a few surprises up their sleeve? There was a lot of dismissal of the capability of the Japanese up to the point of, the Pearl Harbor attack, to the point where they may be able to do some damage, but we're not really at risk. things like the Zero, the aircraft that was probably equivalent to... or superior, I don't know, to I think what the US have at the time, Spitfires. So the Japanese have been really good at taking those lessons, learning, adopting, and then what we're talking about today, improving on it. So yeah, there's Pavel: So the Japanese have been really good at taking those lessons, learning, adopting, and then what we're talking about today, improving on it. there's Paul Smith: a bit of history there. Pavel: a good history there. Absolutely. Actually, theory of constraints, Dr. Eli Goldratt. Paul Smith: Mmm. Pavel: he for a long time he said I'm not ready to introduce theory of constraints to Japan because he was afraid because Japan was already at the time so much further ahead than the United States manufacturing wise so he said if I introduce it to Japan too early they'll just like there'll be no chance to catch them ever so he only introduced it later

I think in the early 2000s Paul Smith: Mmm. That's a humble approach. It's interesting, ⁓ given that, that something actually reading the moment, ⁓ obviously the goal is very famous. And I know you've been speaking with, I think both his son and his daughter recently. ⁓ Yeah. So, but what reading at the moment is actually the Japanese manga or comic book version. It's a three-part series of the goal. So Pavel: So the Japanese... There is one here too in the States. It's Paul Smith: the Japanese have ⁓ it into a comic. Yeah. And ⁓ it's a of fun, ⁓ know, the way they've it. ⁓ The lessons are It's ⁓ an easier way for people in Japan maybe to some of the lessons there. ⁓ And, you know, of course the goal became very popular because of the way it was written ⁓ as a ⁓ fictional story with lessons embedded Pavel: approach some of the lessons there. of course the goals became very popular partly because of the way it was written. A fictional story with lessons Paul Smith: in it. Pavel: embedded in it. Yeah, when you relate, right? You can relate to the main, to the protagonist in the book, you can definitely relate. ⁓ Paul Smith: And yeah, yeah. Well, yeah, that's right. The manufacturing manager that's under a lot of stress. Pavel: Yeah, only a lot of stress spending 12-16 hours on his slips on the plant. Paul Smith: Yeah, yeah, so, yeah. So, no, they're happy to take these ideas on board over in Japan and it's really impressive to see that. In fact, something that has often surprised me in the last, probably, especially the last 15 years of being involved in, specifically in sort of improvement methodologies is The vast majority of the Japanese that I come across that are involved in this don't actually realize how much value the rest of the world puts on the capability and know-how that exists in Japan in this area. They're aware, ⁓ yeah, we've got this thing called the Toyota production system. It's kind of good and it suits our needs, but as you know, and you've got a background... possibly longer than mine in deploying lean. think distribution and warehousing, you spent quite a of time. Pavel: and distribution, yeah. Supply chain. ⁓ Paul Smith: Yeah. And, ⁓ and, so, know, about this, ⁓ admiration globally for what Toyota and a lot of Japanese companies have been able to achieve. The Japanese just don't realize it. They, you know, it's, yeah, it's, Pavel: ⁓ absolutely, Really? For them it's another like it's normal, right? And they probably think they're not doing good enough. Paul Smith: Yeah, yeah, well, we had. Yeah, we had two of your ⁓ ⁓ us ⁓ Japan a couple of weeks ago on one of our, ⁓ we call the Lean Japan Tour. ⁓ that group, so we take up to 20 people and amongst that group we had a number from the US, ⁓ Brazil, ⁓ and so forth. ⁓ we had eight people in the group from Amazon. ⁓ one of the two... One of the Toyota suppliers we went to, he's a fantastic gentleman and he has some great stories to tell about how he came to be involved in the Toyota production system. And frankly, frankly, it saved his life. I won't go into that unless we want to, but at the end of the visit, we took a group photo and one of the members from Amazon came forward and offered his business card and he looked at it and he nearly fell over. He's like, What has Amazon got to learn from us? And like, that's the sort of humility. then, you know, but on the other side, the Amazon guys, as with the rest of the group, were just amazed by this factory. And if you go into this factory without really understanding what it's about and just look at it, it's sort of a bit dark. There's a lot of real analog sort of manual approaches and, know, to look at it, you might not get it. But once you have this gentleman explain to you, how they manage their operations, how they manage to do manufacturing in a sort of small lot high mix type environment without going out of business. And you see the application of Toyota production system there, people are just amazed. But they don't realize the secret sauce that I've got over there. So that's one of the pleasures of doing what we do is being able to not just show the rest of the world what's going on in Japan, but also In a way, this sounds arrogant, but it's sort of giving a pat on the back to the Japanese to let them realize they're being recognized. certainly the operators and the sort middle level managers really like seeing that when we come through their factories and they just see that sort of admiration the groups that through. Pavel: Yeah, so you mentioned that of our members, ⁓ mean, both of them are ⁓ for the same manufacturing company. But yes, they are members of our ⁓ our Southwest Florida Manufacturing Association. ⁓ ⁓ spoke to the president who attended and he was blown away. ⁓ enjoyed the tour. He said he learned a lot. He already deploying ⁓ methodologies. ⁓ ⁓ he has a whole list of things he needs to do now and he's in his facility. He's even mentioning the jacket. You know, the jacket that they wear in the Japanese companies, like the managers wear the jacket. Like something like that, something like you are wearing. Paul Smith: ⁓ it's similar to this. It's called a Sakyogi. Yeah, they're super handy. Apart from keeping, I mean, ⁓ you know better than most, Pavel, but Japanese management all about being at the gemba ⁓ and getting your hands dirty. ⁓ But you don't to get your shirt dirty your clothes dirty. So these are really useful. You've got somebody to put the pens and ⁓ yeah. ⁓ So we ⁓ all wear them. ⁓ Pavel: Yep. Paul Smith: super not so necessary when you're having a chat like this but when we then go out and visit our clients it's just convenient and on the flip side wearing a suit jacket makes no sense in these environments yeah. Pavel: Exactly. Yeah, so even thing little things like that, but he said visual management is a big thing that he learned. So that's what he's trying to implement in his facility. So tell me about visual management or any

other things that if we were to send or to tell our members here in Southwest Florida, what are the benefits of the Lean Japan tool? What is it going to learn? Paul Smith: It's huge. Yeah. Pavel: ⁓ Paul Smith: Well, visual management is sort of one topic amongst many. Just to sort of take a step back, the whole focus of the tour is on operations management and from a lean manufacturing Kaizen perspective. And visual management falls into that. Now, one of the great things about visual management is it creates awareness among people. The Japanese factory managers, but Also, of middle level managers, their ideal for a manufacturing environment is that they are able to step one foot into that environment, basically into the factory, and immediately understand what the state of the operations are. Is it abnormal? Is it normal? If there is a problem, where is it? And a lot of lean is sort of setting yourself up to understand where the problems are, whether you want to call it waste or... other issues because until you've identified where these issues are, you can't do something about it. And that's sort of where Kaizen and improvement comes in. But, you know, the first step is to actually be able to see what's happening, whether that's in a live environment or whether that's problems that occur over a period of time. And visual management is part of it. Now, that could be something as simple but powerful as a management board that is used a number of times a day for team huddles. Often the team manager or leader will go back to it and mark it up over the, you know, maybe even on an hourly basis. Toyota is famous for having their team leaders go back and sort of mark up, you know, how many items and what be a vehicle should we have manufactured in this hour? How many did we? What's the difference? Why? What are we going to do about it? And, you know, it's no good thinking about that at the end of the shift because you're behind and you haven't been able to do anything about it. But just by doing that, it keeps them aware of what's going on. If you go into a manufacturing environment in a lot of other countries, and this has been my experience, it's the experience certainly of a lot of those senior Japanese that we work alongside, they'll go in and they'll pull a team leader over or a supervisor and they'll say, well, what is the current state? of production and they might ask a specific question. And they'll say, ⁓ hold on a minute. I will find out. And I'll open a laptop and they'll search around for a couple of minutes and then they'll say, I'll be able to tell you tomorrow or something like that. know, it's just, it's not up here. Whereas visual management is keeping it up here. Now it works for the operators as well, because often this information about, you know, let's say again, productivity or production management, production status. is displayed on digital boards overhead. And you can see how many should we have done, how many have we done, what's our operational availability or sort of a percentage as to how close to what we should have done have we done, know, you're 100 % being the ideal. And they're constantly aware of what's important. And, the typical important things are productivity, quality and safety. You probably flip it in terms of importance, safety, quality, productivity. so there are things related to visual management that keep people constantly aware of those. And there have been many studies, ⁓ outside of industrial engineering, that have demonstrated the ability to improve things, metrics, KPIs, whatever it might be, just through raising awareness. ⁓ of the famous ones from a ⁓ ⁓ read a few years ago, actually. was, it's kind of an interesting one that came out of the UK and it was one related to electricity usage. And you might recall this one, but they actually found that homeowners that had their electricity meter in the hallway on the ground floor compared to those that had the electricity meter in the basement were using far more electricity. So just the natural fact of walking past your electricity meter, it was like a 15 or 20 % difference. I can't remember the exact number. Just by being aware, by seeing it, thinking about it, putting it in your head, they were more energy, you know, they were more conservative with their use of energy. And that happens in manufacturing environments as well. It's huge in terms of safety. You know, Japanese, when they go to work, working for any sort of decent company in manufacturing, will go through a green gate. It's called the safety gate. You've probably been through many of these yourself. you know, the gate has no magical properties. But what it does do is it reminds you, ⁓ yes, I want to come out of here. I want my colleagues to come out of here, you know, in the same state. And often alongside these, there'll be a mirror and you walk in, you look at yourself and, know, what's the color of your, you know, your What's your complexion like today? And was I drinking too much last night? Am I dressed appropriately? ⁓ did I remember my safety gloves or whatever it might be? And there are these things there. There are times that I've explained these things and a sort of tear has come to my eye, which makes it very hard to interpret when you're sort of crying out. But I remember one poster that we went past and someone sort of said, what's this poster about? And it was, I'm to do it again. It's partly because I've got a young daughter and the poster is of this young Japanese girl waving and she's using expression. It's another expression that's hard to translate into English. It's hitarashai, which means, you know, go and come back. It's a way of her saying goodbye daddy. And, you know, it's just her way of saying, daddy, I want to see you at the end of the shift. And, you know, I think about going to work and not coming back to see my daughter, you know. These things around the environment help. Visual management is a lot

deeper than this. It relates to topics like 5S, how you set things up so you can always get access to the tools in the state that you need them. You can tell if something's missing and so forth. But I'm just giving a few examples here. Pavel: that, you know. These things around the environment help. So, know, visual management is a lot deeper than this. It relates to topics like 5S, how you set things up so that you can always get access to the tools in the state that you need them, you can tell if something's missing and so forth. But just giving a couple of pure examples here. Exactly. mean, if visual management is critical and especially You want to know if, like you said, the situation is abnormal, normal, abnormal, but what you also want to see easily is the flow, right? The flow, the product flow. And if you come into a show, a production floor, whatever the industry is, and you see working process everywhere, and there is mountains of inventory, How can we really see flow? So when you create stability in your production and you use visual management to be able to see the flow, right? So even if a person is not from this company, but they're just visiting, if you have good visual management in place, you can see the flow of production. And you can tell, is it normal or abnormal? Are we green or red? that's... Paul Smith: Absolutely. An example would be our clients can see problems when they go into Japanese manufacturing plants, not because the Japanese have more problems than we do, but they've just set it up to be obvious. And what you're talking about is, you you might, ⁓ the ⁓ standard amount inventory maybe, or WIP, that may be allowable next to Lineside might be just enough to fit in this little box that's labeled on the floor. If it spills out into the corridor and we find ourselves tripping over it. clearly there's a problem. And we don't encounter that very frequently, but it's set up in a way that it's so obvious, whereas in so many other places, things are set up so that people can't see the problems because it would be embarrassing. Let's hide the problems, but then you don't have a chance of fixing them. Sorry, I cut you off. Pavel: little bit. No, absolutely no problem. So tell me more about the Lean Japan Tour. So what else, what is it about? I know we spoke a lot about things around it, Japan, but specifically the Lean Japan Tour. I mean, obviously, if you're going to go and visit companies, but what else is around it? Like one thing I heard is the connections you can make, but I want to hear from you. Paul Smith: Sure. the origins of the tour came very much from, we're consulting and training company. And our main goal is to be able to go in and help our clients implement a sustainable, lean culture that comes back to productivity quality and in the end, profitability. So. In working with our clients in Australia and New Zealand, this is going back to the origins, just given that we had that connection with Japan, we wanted

to create an opportunity for them to go over and see it for themselves, to understand it properly and to believe it. And that's where that came from. And the way we structure the week and now. We've had participants from over 70 countries now join us. So it's extended beyond Australia and New Zealand. Pavel: Hold on, did you say 70? Paul Smith: 7-0, yeah, we've just updated the numbers on our website. The most recent countries were Tunisia, so we have a manufacturer from Tunisia that joined us, and Myanmar, a retail group, one of the largest retail groups from Myanmar, where we went over and we've done some consulting and training with them. Pavel: Did you have anyone from Florida before? Paul Smith: that ticked us over 70. We have, in fact, we have one of our former regional managers who worked with us for a number of years in Chile, is actually based in Florida as well now. yeah, I won't name names of companies. yeah, Sorry. anyway, the way we structure it, what is it? It's one week. It's very intensive. tell people to make sure that they, tell their colleagues that they're not to be sort of bothered during the week with the meetings and other things because we don't have time for that. And we usually have everyone flying to Tokyo. We have some briefings, but the way we structure it is we have a mix of sort of classroom based training. So we get everyone up to speed on the Japanese approach to the Toyota production system and lean. understanding some of the fundamental concepts that many people are familiar with. The idea of what waste is, how to identify it, how to eliminate it. The 5S, visual management standard work. And then we go into some topics that people have heard about but maybe couldn't really explain to you how to implement or what the role is. Things like Kanban, Katakuri, the idea of how to efficiently use labor. how to track productivity and efficiency. It's simple but very powerful stuff that we're teaching. And normally that teaching comes from one of our Japanese colleagues. So we have a number of very senior Japanese gentlemen, former factory managers from Toyota that do the teaching from their perspective and their 30, 40 years experience in Toyota. And they teach that. Yeah, these are the senseis. So we do that. So that's the hearing about it. But then we go and see. So we typically would visit, normally about five different factories, maybe a final assembly plant, maybe one or two Toyota suppliers, maybe one or two factories outside of Toyota. Occasionally we go to hospitals. Sometimes we go to government. Sometimes we look at more service-orientated. areas and you we mix it up a little bit too depending on the mix of people that are that have registered when we can you know we ran one last year that was entirely for the housing industry so we went and saw a lot of prefabricated housing and actually we included a housing a housing industry related factory in this month's program that No, it wasn't actually if you you mentioned I don't know if you want to mention the name of the company that joined us but they are from you know, they make shutters and we actually went into a factory that makes shutters and Yeah windows and other other components that go into houses. So they don't Last year we did it a lot of prefabricated but this one was more Suppliers to the housing industry including to prefabricated housing manufacturers, but sorry, I've digressed. So we go and see these factories, we meet with the management. So it's not just some sort of marketing tour that, you know, there are a lot of public tours like that available in Japan, but we, you know, honestly, we pay these companies so we can have the time with them. We can go and see what we want to see and then make it very specific to operations management. And then we also have hands-on training. go... We've got a training dojo where we test the guys that come. the ladies and gentlemen that have been part of the program, we put them through some simulations. We give them a production line that they have to improve. And they have to go through the Kaizen steps as we've taught them. actually, I'll mention his name. It goes by name of Junior. This is the president that you mentioned. that joined us, him and one of his colleagues who's the director of operations. They went through this particular exercise with us and Jamie's comment at the end of it, he mentioned in the feedback survey, said, that particular exercise at the time, I thought was, it struck me as being quite simple and I wasn't quite sure about it, but when I looked back on the whole week, It was probably the most profound experience that I had, was his words. In terms of what it teaches you, the need to understand the current state of operations, to actually follow the steps. His background, he worked many years for NASA. He's a very, very intelligent guy, very humble at this time. And he's a bit like the rest of us engineers. He's got that tendency to look at something and think, I reckon I can solve that, and to jump to the solution. And in many cases, in some cases that can work, but in Lean and in Kaizen, you'll often find yourself getting to a far superior outcome if you are very clear at going through the current state analysis, identifying the individual issues. And sometimes you can use the seven wastes as a guide for that. And if you're very clear on this, there's this many seconds of walking, there's this many seconds of waiting. Clearly there are items that are being transported in this environment that transport doesn't necessarily need to happen and that contributes to this much waste. And when you build up a picture, Pavel: Don't give away too Paul Smith: of all of the issues that you've got and you specify them, it leads you in a different direction. And it also helps you, know, it's a common occurrence. And I don't mean to spoil this for those that, you those of your members that might join us in the future, but it's a common

occurrence for people to get to a point where they make an They pat themselves Pavel: much ⁓ Paul Smith: the back. They high five each other and ⁓ then, you know, they're not even close to where they could be. And so it's when get to the end and they go. wow, we didn't look at it from that perspective. There's a number of ahas and they do really find that profound experience that they go through. So it ties everything together. So in summary, you're here, you go and see, you do, and that's our approach to helping people develop their capability with Pavel: Well, S3 is the best way of learning. mean, you can't just, you know, just lots of theory, but no practice. You got to do some actual hands-on practice exercises. it's great to hear that you're doing that. Paul Smith: Yeah, it's a doing thing. Pavel: ⁓ Paul Smith: Yeah. And frankly, we have a lot of fun when it comes to the doing. People really, really light up. It's, great. I get my hands on it now. And it also hits home though that, you know, when they heard it for the first time, it all sounded simple and easy. And we try to make it as simple as possible. It's probably the word that features most, most, you know, when we, when we look at the feedback we get from people, it's like, wow, you, you took something that for us had been very, very complicated. and you simplified it in a very nice way. sometimes, simple is one thing, there's that old quote, how does it go? I wrote you a long letter because I didn't have time to write you a short one. Doing simple is not always easy, and that's something that hits them. It's like, ⁓ Pavel: Exactly. Paul Smith: We thought we understood it when we heard it, but now that we've actually done it. Pavel: you really think about it, ⁓ the solution to ⁓ big, big problem, when you get to the solution, you will be like, how I didn't think about it before, it's so simple. But the thing is to get to the solution, that's the journey. But then the solution is actually, wait, it's common sense. ⁓ Paul Smith: Yeah. Yeah, well, I suppose a bit more common, but Pavel: Until you get there. Paul Smith: yeah, that actually, that is a lesson that I learned in the early part of my engineering career. ⁓ I started my career, ⁓ I started in construction, then moved to ⁓ of engineering design, ⁓ but in a sort niche where ⁓ technologies we would call roughly fit in the the realm of artificial intelligence, things like genetic algorithm optimization and artificial neural networks were being used to solve engineering problems. And I love that kind of thing. But, and that was very much the selling point for our company, the company that I worked for, but the real beauty I felt in what we did, and this is something I learned over a few, few years was we were very good at clarifying what the problem was. And if we got that bit right, the technology really didn't matter. You could almost solve the problem manually. And frankly, I found myself doing that many times. But if you got the

problem specification right, and this is something so many people just don't bother to do, but we had to be able to do it to sort of plug it into an optimization model, if you got that right, gee, it made things so much better. And that's similar to what we're talking in Lean. If you ⁓ understand the you do the current state analysis thoroughly, this simple solution presents itself. Pavel: It's it's it's up like say I you just hit the nail on the head and you think you could have said it's More correct than you did Companies like what I see they tend to jump into brainstorming, problem solving, but without really identifying the problem yet. The problem statement. Paul Smith: Yeah, even Pavel and I'm sure you've seen this. ⁓ We this problem a lot because ⁓ we with ⁓ a of different regions and there are some regions, ⁓ full for ⁓ the that we work for in the Middle East, but ⁓ a of inquiries that come out of the Middle East, for example, India as well, ⁓ are... that they almost start out with the technology or the tool that they want to use. It's like, want to implement industry 4.7 or more recently, we want to apply AI to our operations management. it's like, okay, well, let's back up. What is the issue and what is the problem? Pavel: We need a different ERP system. Paul Smith: Let's be clear on that. And then we'll work out if we need some sort of tool. ⁓ often, often we a pencil and ⁓ It's ⁓ you know, mean, you've seen it very rarely does what sits in the ERP system and what sits in Reality Match. ⁓ mean, they have their place and they're very, very useful ⁓ some sense, but ⁓ are not an ERP ⁓ our thinking is not really a Pavel: You've seen it. Very rarely does what sits in the ERP system, what's in reality match. And I think they have their place and they're very useful in some sense, they are not an ERP in our thinking. It's not really... Paul Smith: ⁓ system. Pavel: Software is an enabler. It's not the solution. Paul Smith: Yeah. Pavel: First you need to do it with the basic tools, use what you have, optimize, and then you can start thinking, okay, do I need to elevate? Do I need to increase my, how can I increase my capacity if I tried everything? And everything is, there is visual management in place, everything is working. Now it's time to elevate. Okay, maybe a software is, maybe now I need something to make myself even better, but it's not the first thing. Paul Smith: Exactly. Yeah. Yeah. And we have the ⁓ or the privilege, I guess, ⁓ we're going into factories over in Japan and, you know, there's some that we've been into dozens and dozens of times over the past 15 years or so. ⁓ we get to see how these environments are evolving. But, yeah, it's not to say Toyota and others don't use technology where it makes sense. ⁓ know, we have to make the distinction between technology for things like automation. and technology for management, sort of two different topics, but, they will use technology for management as well. But what we see is almost always there's a year or two or three where they are using the, the analog methods first or the manual method first. They perfect would be the wrong word, but they get it very, very good. And then they say, okay, now we might bring in the IT team and, now we might digitize this a little bit, but. We understand it, it works. And in many cases they decide actually analog is fine, it's better. Pencil and paper you can fix it, it breaks down pretty easily. You're not calling for the IT team, you're not waiting 50 days. It's usually a sharpener. So they know how to fix it. Pavel: So now I'm going to ask you about technology, AI, automation. You know in Florida and I'm sure everywhere else in the world, big big thing is industry 4.0 automation AI so it's actually a huge topic here if you believe it or not I mean probably it's not a surprise but huge topic for manufacturers is AI automation we don't so what's your take on it where do you think AI takes us what do you think about adapting automation Paul Smith: Mm. Pavel: There is such slogans going here, if you don't automate, you're going to run out of business and things like that. So there is a big push. We've got to automate. We've got to increase productivity. it's almost like, you know, it's OK. If I want to increase productivity, maybe I need to automate. So what's your take on that? I mean, I know we touched a little bit, but I still want to hear Paul Smith: Hmm. Yeah. Yeah. Sure. No, it's, it's a great question. And certainly we're, we're not against this movement. ⁓ Again, just to you know, where we fit in, in my thinking, ⁓ is on the side of things. So, you know, there's AI and there's industry 4.0. mean, industry 4.0 sort of lends itself more to management. Automation is quite broad. And that could be, you know, as simple as a welding robot. You know, that's sort of automation because it is safer, it is quicker, it is more accurate. And in the end, will cost us less and so forth. And these things, you know, going back decades have made a lot of sense. in fact, you know, there's a lot of that around. But then there's the... attaching sensors to everything. There's collecting data from everything. And then there's analyzing it using whether it's AI or other technologies. we've started to ask ourselves these questions and probably nine or 10 years ago, I started looking at that. My first attempt at that was to go and visit one of Hitachi's flagship plants in Japan. Hitachi actually make systems for industry 4.0. So they have this factory of the future where they have implemented it all. it was quite impressive. But what you need to remember, not you, Pavel, because you know this painfully well, I'm sure, is that you can't jump to that step without getting the foundation right. And that is what we find ourselves working with our clients. doing 95 % of the time is really getting that foundation in place. A little bit like the idea of get it right with pencil and paper and then three years

from now you can sort of digitize it. Things like you cannot skip the basic steps of setting up your environment through 5S and visual management, developing your people. That's a huge one, getting problem solving skills into the workforce. So many of the factories that we go to in Japan and this sometimes shocks participants, you know, are very, very analog. There was one that we took the group into on this tour this month. And it was sort of, you know, showcasing a little bit of this idea of, how do we mix digitization with traditional approaches to manufacturing management? And the factory manager that met with us was very clear. He spent quite a bit of time on this idea of, first, we have to be very clear on what it is we want to achieve. And then maybe one or two of these ideas come about. And for them, the big thing they needed, just given that they use a lot of molding machines and CNC machines, these can be quite expensive pieces of equipment, equipment utilization was big for them. so digitalization to help them track the real-time status and make decisions relating to how they were working with their equipment was a big thing. But then, you know, they could have done a lot more in terms of digitization, but they, the way he described it was, we don't do Kaizen for the fun of it. We don't use these technologies for play. And so often we are going into, and again, I mentioned a couple of regions where, where this is quite common, where people see something fancy, some awesome technology, maybe they have some experience with it themselves and they see that as a shortcut. But all they're doing is automating or automating crap, chaos. Pavel: I like how you said... Paul Smith: it doesn't work. ⁓ Pavel: I like how you said, don't do Kaizen for the of it. ⁓ Because ⁓ I heard of where one of the ⁓ metrics of the management is need to do Kaizans a quarter or something like that. ⁓ Or three Kaizans a quarter. So it's almost like just doing Kaizen for the fun of it. So ⁓ is it the real Kaizen? ⁓ Paul Smith: that's your KPI, will drive you towards that. Now, ⁓ are companies that might do it well, and there might be companies that have a long list of issues that they've identified over time. ⁓ know, there's, then it's, okay, freeing up some time to work on these in a manner that makes sense. But if you're, if you're coming to work and you just saying, okay, my KPI tells me I'm going to do some Kaizen, what am I going to do? It's the wrong way to go about it. Yeah. ⁓ we're very clear to our our clients that come over to Japan because one of the risks is they come and we do a kanban simulation, for example, for those watching that haven't heard of kanban. It's a very simple paper-based tool that helps you manage the flow of information and material throughout your environment and within your supply chain. Little cards that get attached to containers or the items that move within your facility and when they're released from these containers, when something is used, they become a production instruction, like an order form and a really simple way to manage things. one particular facility we go into, we go into great depth about how to implement, how it's used, how wonderful it is. And then we come out of that and then we tell everyone, don't do it. And because the risk is people are coming and they're seeing all these great ideas and tools and they, they, they, you know, if they're to write down in their notebook, we need a combine system. They're missing the point is like, what is going to improve in your facility by implementing combine? Well, we hadn't really considered it. Maybe inventory would be better. What's wrong with your inventory? Well, you know, they haven't clarified how much they've got, what the problem is, you know, what the cost of that is. If we were to implement this, we could bring inventory down by this. We would remove the need for this number of managers. We wouldn't have to have people constantly going into a database to work out what they're doing. If they can be very clear about that and they've got all the other prerequisites in place, which more often than not, they don't. And if they're dealing with repetitive manufacturing of very similar or the same item on a daily basis, made it as a need for it. most of the 20,000 plus manufacturers that I think you represent in Florida are not in that situation. So it's like, that is really interesting to understand from the Toyota production system perspective. There are things in this that will be hints for things that you can do. Things something like the signal combine can be very, very useful if you understand the purpose of it. But if you just come in and try and copy Toyota, it's going to be a mess. Don't do it. yeah. Pavel: At tool, you got to know what is the right situation to use a tool. So it's funny you mentioned, don't do it because when I was doing workshop, so we played a dice game in theory of constraints. Basically, it's a simulation and you actually roll dice. And the number of dice, shows how many pieces each workstation produces. So if you rolled snake eyes, then you're only moving two pieces. And it's like chips, like poker chips, so you're moving it. And basically, we simulate different environments, different production environments. And one of them is where we have a constraint and the whole system is subordinate to the constraint. But then the funny thing is everybody's starting to write notes okay, well, I'm gonna change my production. So I'm gonna change my environment in my company. And then what we're saying is, you know, PDCA, Plan Do Check Act. So we're saying PDCA, please don't change anything. Paul Smith: I like it. Pavel: Because like you said, you need to know what you're doing and why you're doing that. ⁓ Paul Smith: Yeah. And look, that, you you yourself, you have experiences as a consultant in the lean space and TLC and so forth. And, obviously that's our role supporting companies.

But, you know, one of the things we need to be very diligent about, although we could probably see several steps ahead, our job is to get them to the next step. And, ⁓ what, what, what is that next step? What is going to be appropriate? What will people come along for the ride? you know, what would help remove some frustrations of the people actually working on the shop floor, you know, and coming in and implementing some fancy tool that we've found in Japan, it's not the solution. So, yeah, you got to be a bit disciplined and, you know. Pavel: discipline is a big word and focus ⁓ another one ⁓ know Eddie Goldratt said if in one word you're gonna ⁓ about theory of constraint it's focus ⁓ to explain to you see in one word Paul Smith: Yeah, haven't read. So she put a new book out recently, I believe on flow, right? ⁓ sorry. Did you say Elliot? ⁓ Not his daughter. Pavel: Ely? Ely, oh, yeah, Fratt, she released The Rules of Flow. It's a very easy read and it's a great book, so I would highly recommend to go through it and read it. Paul Smith: Yeah. Okay, yeah, no, haven't had a chance to look at it yet, so yeah. Pavel: Yep. And if you haven't read the article by Eilidh Goldrath, Standing on the Shoulders of Good Giants, by giants he means giants of the industry. So one of them is Taichi Ono, second of them is Edward Deming. And he said he created TOC, Standing on their Shoulders. And he wrote an article, I think it was about Hitachi Tools. It's just two or three pages article, and how's implemented TOC in Hitachi Paul Smith: No, I haven't. ⁓ there you go. Yeah. Pavel: Tools. ⁓ Paul Smith: All right. That's good. know there has been some uptake of that, but we tend to focus on things that have sort of evolved from the Toyota production system and total quality management. So TOC and Six Sigma, frankly, are areas that we do not put ourselves forward as experts, but of course we need to be familiar with them. Hmm. Yeah. Pavel: It's really looking forward for the next steps for our partnership. Now you have global presence We are just solely focused on Florida. We are even smaller Southwest we focusing on Southwest Florida. However, I think the impact can be really significant for our clients over here and Looking forward for what's next our partnership. I'm very happy that we were able to send the first company member of SRMA to to the tour and Paul Smith: Hmm. Pavel: What do we think what do you think is the next steps for us? Paul Smith: Yeah. Well, firstly, thank you. It's a big privilege for us as well. you know, if we, what's the population of Florida? It'd be in the sort of 20, 25 million or something. I'm guessing. Yeah. But the population of Australia as a country is it's like 26 or 27 million. So from our perspective, you know, we're sort of equals here in terms of size. Pavel: Yeah, so we are about the same. say another thing, Florida's economy, think it's... It's close to top 10 in the world, our economy. Maybe 15, but we want to get to the top 10. That's one of our goals. We also want to be number three manufacturing state in the country right now. We actually just surpassed New York as a manufacturing state, Florida. So we jumped from 15 10 years ago and now we are number 10. Paul Smith: That's right. Well, you got Well, that, but for us to have a relationship with a manufacturing state like that is huge. It's what we, you know, it's what we set out to do. And, we're all about helping companies around the world to adopt. in our case, know, it's Japanese management practices to help them improve their productivity and quality. you know, Florida makes SRMA and the other manufacturers associations a big theme. And I suspect part of the mission is, you know, productivity is there. So for us to have that sort of relationship, that that's wonderful for us. So where would like to go from here? Well, you we've had a couple of your members join us. Of course, we'd like to be able to extend that to others. We do run the Lean Japan Tour program several times a year. It's an open registration program. So you can send one person from your company, you can send several, just hop on our website and have a look at the dates. But as this evolves, I would hope that we go beyond, say, having a discussion through the internet and... we come over and do some things live in Florida as well. I Pavel: as well. Yeah, that would be great. We'll get one. But to be part of that would be a real honor. Paul Smith: don't know if you have annual gatherings, to be part of that would be a real honour. So let's see where we take it. Pavel: Let's see where we take it. Yeah, so the next one we'll do in person, either in Australia or more likely Japan or even more likely Florida, right? That would be nice. I see all of them are really good options. Well, thank you, Paul, and looking forward for our partnership to continue to grow and evolve. Paul Smith: Fantastic, we've got options. No, thank you and appreciate it. And if I may just close with a compliment, Pavel, ⁓ I can see through ⁓ ⁓ and ⁓ other sort of ⁓ channels how much you have been putting these of with ⁓ industry thought leaders. ⁓ the manufacturers themselves. I'm very fortunate to sort of have a chance to talk to you as well. you reached out to me three or four days ago actually and just said, ⁓ let's do this and bang, bang, bang, you got it done. A lot of others would spend two or three months thinking about it. So if you don't mind me saying, I'm very impressed with that. with your level of efficiency and productivity in terms of what you're doing for Florida makes amongst the many different hats that you roll, many different roles that you have or hats that you wear. It's awesome. So thank you. Pavel: thank you Paul as well for being able to schedule it so quickly. It really worked out really well, especially with their time difference. I how many hours we said? 12? Something about that. Paul Smith: Yeah, I imagine you're getting ready for bed, Pavel: Yeah, it's getting 9pm, it was a long day. Okay, thank you, Paul. Paul Smith: Yeah.