The Ideal Factory: When (some) Principles Are Applied


Please check out Neil Irwin’s excellent article entitled, “And in This Aisle, Higher Pay” in the Sunday, October 16, 2016, Business Section of the New York Times. (the obvious source and inspiration for this post)

 What happens when (at least some) Ideal Factory Principles are in place at one of the largest companies in the world? We need to look no further than Wal-Mart.

In last Sunday’s (October, 16, 2016) New Your Times’ Business section, Neil Irwin wrote an illuminating article about what happened when Wal-Mart used some of the principles

espoused by The Ideal Factory. Now to be completely honest, these principles were not conceived by my partners and me at 5i, the home of The Ideal Factory. Certainly others have adopted their use long before we did. Nor do we have any copyrights, patents, trademarks, or other claims to their origin. Neither does Mr. Irwin or the NYT identify The Ideal Factory in any way imagined or unimagined in the article. Hopefully, these statements will keep us clear of any litigation.


These are core principles we have for The Ideal Factory…and so we want to toot their horn whenever possible. Especially if doing so will help advance those who work in manufacturing and raise customer value around the world.

So what are these revolutionary principles that transformed the world’s largest retail company and increased their customer’s happiness?

Are you ready?

They increased their worker’s pay and trained better.

 In early 2015, Wal-Mart was being crucified by its customer’s response to those invitations to express your thoughts that appear on the back of their receipts. Customers complained loudly about the dirty restrooms, inability to find someone to help them with questions, chronic inventory shortages, and of course, those infinitely long lines at the two open check-out lanes, while the other twenty-one remain aggravating closed.

In addition, apparently investors weren’t too pleased with the powers that be at Wal-Mart either. Amazon was pressuring and customers were starting to shop at their rivals. Also, for the first time in the 45 years since Wal-Mart went public, revenue fell. Money speaks, and since at Wal-Mart it appears to speak very loud, something needed to be done…and done quickly.

Wal-Mart CEO Doug McMillion (what a great last name) spoke to 1.2 million employees by uttering what I think is probably the best, most truthful, three sentences I’ve heard in business for a long time. “Sometimes we don’t get it all right. Sometimes we make policy changes or other decisions and they don’t result in what we thought they were going to. And when we don’t get it right, we adjust.”

 Now here is where Wal-Mart put their money where their mouth is. They built 200 training centers. Hourly pay was increased to $10 for associates who finished the training course Pay for department managers went from $12 to $15 an hour. According to Mr. Irwin’s article, “…average pay for a full-time, non-managerial position is now $13.69 an hour, up 16 percent since early 2014.” Now lest anyone believe this came cheaply, the price tag was $2.7 billion.

But what about those customer surveys? Did more money in the pocket of the associates and better training have any effect? Were the restrooms cleaner? Could you get your questions answered in a timely manner? And maybe most important of all, (at least to me), did those rows and rows of cash registers get opened?

Well according to Wal-Mart yes they did. Positive comments from surveys have been “rising for 90 consecutive weeks.” And, sales seemed to be positively impacted as well. Mr. Irwin’s writes, “…stores open at least a year, sales were up 1.6 percent over a year earlier in the most recent quarter…Overall sales at general merchandise retailers are down 0.4 percent this year compared with last, according to census data.”

Now to be honest, profit for Wal-Mart has not done so well. Mr. Irwin states, “Operating income for Wal-Mart’s United States stores was down 6 percent in the most recent quarter, reflecting higher labor costs and other new investments.

Mr. Irwin’s article closes by saying, “In the short-term, the Wal-Mart experiment shows pretty clearly that paying people better improves both the work force and the shopper’s

experience, but not profitability, at least not yet.”

Again, I ask everyone to read Mr. Irwin’s well balanced report on Wal-Mart’s experiment with higher pay for its hourly employees entitled “And in This Aisle, Higher Pay” as it appeared in the Business section of the New York Times last Sunday, October 16, 2016. It offers a look at what can happen when employees receive better pay and better training.


The Ideal Factory: The Hidden Factory Must Go


Not too long ago I had posted a question on LinkedIn: “What is your idea of The Ideal Factory?” I asked the recipients to keep it rather short, two or three sentences at most. This is what I received from Brad;

“The ideal factory is that in which the “hidden factory” does not exist. In meaning the activities that take place to produce an end product are visible to the customer (internal or external).”

I think Brad is brilliant.

How many times have we experienced this? Our employer says one thing, but actually does exactly the opposite. One factory I worked for was an adamant proponent of the Toyota Production System. They said all the right words. Yet the day before the owner’s scheduled visit associates worked late into the evening to hide excess inventory. Of course, once the owner’s departed, workers came in early to return it to the floor.

This resulted in an erosion of trust between the rank in file and management. Clearly management was seeking to deceive the owners from what was the truth. So when questions were asked of management, their answers were met with thinly veiled skepticism. The same was true when management implemented new ideas, again those on the factory floor were unwilling to make much more than a token effort to ensure success.

At the same company, department leaders were less than truthful while fulfilling the kaizen requirement. Each associate was required to submit three kaizens per month. Total associates on the factory floor exceeded eight hundred. This meant more than twenty-four hundred kaizens were being turned in each month. Far more than the Kaizen Department’s five associates could ever hope to complete. Leaders quickly realized, since each department was required to keep a copy of the kaizens for three years, they could pull an old kaizen, copy the information over to the new form, sign off, and resubmit. Every month management would stand before the associates at an all-hands meeting and announce that, once again, the company had attained 100% kaizen compliance.

During our 70+ collective years in manufacturing my partners and I have experienced hundreds, if not thousands, of such incidents.

The Ideal Factory will eliminate the ‘hidden factory” by not allowing these types of situations. Inventory control is crucial. Without it in the first example excess inventory developed and rather than the resolve the cause, management decided to hide it. In the second scenario, unrealistic goals were set for the associates. The letter of the law was enforced, while the spirit departed a long time ago. In both cases respect in leadership suffered.

The Ideal Factory returns commonsense and practicality to the workplace. We know what is right and now is the time to do it.

The Ideal Factory: What, Why & How

In giving advice, seek to help…-Solon

So what is the Ideal Factory? If you go online we find Ideal defined as “perfect, or best possible” and Factory as “a building where people use machines to manufacture a product.” This seems straightforward, but within those words we’ve found a lot of disparity in how they are applied in manufacturing.
I know for many of us the Ideal Factory would resemble a coffee shop…some place where we could meet up with our friends, access free WiFi, and work at our own pace…while enjoying significantly less stress.


Yet the Real Factory, the place where we actually work, probably feels more like the above photo. A bumper-to-bumper, stress laden, grind where you hope and pray you don’t cause a massive pile-up. I know my own days in manufacturing were more like eight lanes of traffic that was either traveling at break neck speed or inching along at a snail’s pace…both conditions produced incredible stress.
Fifty plus years ago Bob Dylan wrote an anthem for a generation entitled “The Times They Are a Changin’.” And those words are no less as relevant today. The times are definitely changing. Silicon Valley has created an entirely new kind of work. Although computers and robots have changed the manufacturing world forever, the factory worker remains an essential part of how everything gets produced. Factories must move forward. We can’t compete for the brightest minds if we continue as we have. Every year we experience less and less young people looking at manufacturing as a career choice…and who can blame them? Where would you rather work…in a poorly lit, cobweb encrusted, questionable air quality, incredibly loud factory or at a desk decorated with photos of your loved ones and a kitchen with refrigerator, microwave and coffee close by?
The pathway forward will not be a straight line upward, starting with our current situation and finally topping out at an area marked SUCCESS…although that would be nice. The reality will resemble a ball of twine thrown on the floor and played with by three cats. The way forward will twist and turn, fold back on itself, move up and down with all kinds of mistakes made along the way, but ultimately it will be progress. Each factory’s road to the Ideal Factory will definitely be unique to their situation, but there are guidelines. These guidelines are not set in stone, nor are they completely comprehensive. However, they are applicable to every manufacturing environment. If allowed to be guiding lights they can and will produce environments where people want to come to work, raise productivity, increase profitability, and yes, even creates peace of mind.
Sound like I’ve been listening to the Grateful Dead far too long? Or worse yet, one of those emails in your inbox screaming you can make one million dollars within eighteen days by simply purchasing this internet package all for the low, low price $349.00. Well I invite to read on.
Steve Jobs once said, “Think different.” I believe that is the point we are at today in manufacturing. So how do we start to think different about factories?
I have what I call the 4P’s…not terribly original I know, but stay with me. The 4P’s are:
  •  Paint
  •  Process
  •  Planning
  •  People
We start with Paint, but not just paint. Think of paint in a broader sense. When I refer to paint I’m thinking of the overall appearance of the facility, from the sign out front, to the parking lot, to th entrance, to the factory floor, to the lights, to the types of sounds used to denote breaks and lunches, to the restrooms, to the break rooms, to the color of the machines, to how the floor is marked for foot and POV traffic. In other words, I am talking about the entire factory environment.
Painting the inside of a factory entirely white, yes including the machines, has several advantages. Obviously it makes the interior brighter, making lighting more effective. It creates a sense of openness even in the tight confines. It promotes a sense of cleanliness, encouraging workers to keep their area clean. It also speeds confirmation of any leaks or damages on a machine…this promotes quicker countermeasures preventing further damage and/or extensive downtime.
I visited a factory once that was quite dingy. The lighting was poor, the walls had accumulated so much grime it was difficult to know what the original color was, and all the machines were painted a ghastly dark green color. As an experiment they painted a small portion of the ceiling white. That was all they did. They didn’t clean the walls or paint the machines a brighter color, or install better lighting. They simply made a small portion of the ceiling bright white. The results were incredible. It was all the employees working in that area could talk about it. They loved it. They felt it helped them do their job better. They commented on how easier it was to read the kanbans and do their paperwork. Arguably the most important change was the remarkable attitude change of the associates towards upper management. They felt as though they were being valued. Now the downside…the owners refused to paint other areas. All the goodwill generated was lost. Lesson to be learned…starting and stopping is not a good idea.
Next stop is Process. The focus of efforts like Lean, Toyota Production System Total Quality Management, and others is continuous improvement…always make the process better. But remember at the start when I defined Ideal as “the best possible?I believe we may be looking at the “wrong end of the stick” (as my Mother use to say). Instead of continuous improvement we should be making the process “the best possible”…the Ideal it can be at that time.
One of the most common errors we encounter in manufacturing is the establishment of a cutting edge process, but no investments in the upgrades. Within a year or two (if not sooner) the factory begins to lag behind and the machine becomes less efficient. At this point they determine the need for improvement activities, but then will not commit the proper resources whether they be financial or people in order to catch up. This results in a never ending cycle of striving for, and at times reaching better…but they never reach Ideal.
This brings us to Planning…which often seems to be a great stumbling block for many companies. All business schools teach the necessity of short and long term plans. It is well known those plans must be tweaked from time to time. However, what we experience, especially with plants who have been in existence for several years, is the planning gets vague and the focus becomes getting the maximum output from the least investment in both equipment and personnel.
Often too many companies “gain” capacity by working overtime, rather than developing the correct plan. There is a tendency to neglect or delay upgrading or replacing older equipment as time passes. I favor a four day, ten hours per shift schedule. This allows four hours of zero production per day for maintenance to be done. If overtime is required, for whatever reason (weather, parts delay, power outages) then Friday can absorb the OT.
Planning must also include continuous education and motivation for all associates. Please do not allow lip-service to work its way into this element. Far too many times we’ve seen this simply become one more “hoop” that a company will jump through, then check off its list, so they can lay claim to being a progressive company who “cares” about their employees.
Which brings us to the most important portion of the Ideal Factory…the people. The people are the bedrock foundation of everything done in a factory. A company can build an architectural perfect building with well maintained grounds, inviting environment, well designed processes, immaculate planning, and yet lose it all, because they don’t take care of their people.
It all starts at the interview process. I know a company who between January 4th and March the 31st of the same year hired 203 employees…during the same period they lost 148. The back door is controlled by the front door. A company cannot allow it’s hiring process to succumb to the Warm Body Syndrome. Each applicant must be carefully evaluated to determine if they are a good fit for the open position…a process which goes far beyond just getting them past the criminal background check and drug screening.
As mentioned above, continual education and motivation is essential to the Ideal Factory. Remember, “the times they are a changin'” to stay competitive and capture the best and brightest, we must ensure they stay up on the latest trends and technologies.
The final piece is all associates must be kept in the loop on plant operations and company goals. A recent study shows only 16% of the manufacturing workforce can accurately articulate their company’s goals. The bottom line is everyone is important to the manufacturing process…and they should be treated that way!
Seth Godin made the statement, “…tribes, not money or factories will change the world.” While I have no desire to enter into spitting match with Mr. Godin, but in this instance I believe he is dead wrong. Factories contribute to the global and local economies in a variety of ways. They can empower individuals socially and financially. And I believe if the Ideal Factory is part of it…factories can change the world and make a better place for all of us.
Steve Jobs (again) had an incredible knack for finding the right words…“Every once in a while, a product comes along that changes everything.” I believe there are times when that “product” is an idea…and I believe the Ideal Factory is that kind of idea.
I’ve only barely scratched the surface with this post. My partners and I are writing a book about the Ideal Factory due out in the Spring of 2017. So I’ll have updates, ideas, and additional aspects of the Ideal Factory in the future, but in the meantime I want to hear from you. I know there are horror stories about factories and the people who work there (I actually collect them) and if you want share them, please feel free. But what I’m most interested in is your ideas and thoughts. What does the Ideal Factory mean to you? What do think when you think of the Ideal Factory? What else can we due to create the Ideal Factory?
To answer you can leave comments here…or you can write me at my private email …or you can text me on private phone at 812-322-3080
I look forward to hearing your thoughts.