Isegoria

A volcano erupts in Iceland, the European air freight system slams to a halt, stores run out of products, and manufacturers run out of parts — and it’s lean manufacturing’s fault. That inane mantra has been repeated over and over again ad nauseum in the past weeks. The same nonsense is spewed any time something happens that having a mountain of inventory sitting somewhere would have solved.

It’s about time, not inventory, Bill Waddell says:

The objective of lean is to cut cycle times. The fact that inventory dollars go down as a result is all well and good, but that is only because inventory is the manifestation of cycle times. Reducing inventory value is not, in and of itself, a lean objective. Reducing inventories without fixing the underlying problems that cause the need for the inventories is not only ‘not lean’ — it is just plain stupid.

Inventory turns is not a measure of ‘leanness’. All lean companies have high inventory turns, but all companies with high inventory turns are not necessarily lean. Inventory turnver is a financial measure — meaning that almost by definition it is (1) inaccurate and (2) grossly over-rated.

For instance:

There are two parts — a $100 part and a $5 part. They both turn at a snail-like twice a year. In scenario #1 you reduce the inventory of the expensive part by 67%, but make no improvement in the cheap part. In scenario #2 you reduce the inventories of both parts by 50%.

In the first scenario you made greater improvement to inventory turns, but you still have an overall cycle time of 6 months because that is how long it takes you to get the longest cycle time part needed to produce. In the second scenario your overall cycle time went down from six months to four months. Dismal even after you have finished, but the point is made. Even though the first scenario resulted in better financial inventory turns, the length of time it takes to execute the supply chain is no better. You are just as dependent on forecasting as you were before.

The problem with financial inventory turns is that it assumes that reducing the inventory of the $100 part is 20 times more valuable to the company than reducing the inventory of the $5 part. In fact, the cost of the part has no bearing whatsoever with the amount of waste the part is driving through the system. Part #2 may well be bigger and bulkier, driving more wasted floor space and more material handling and storage cost.

Obviously the ideal scenario would be to reduce the cycle times of both parts — improving execution, reducing waste and improving financial inventory turns all at the same time. The point, however, is that it is not only possible but fairly easy to reduce inventory dollars and show an improvement to financial inventory turns without really making any meaningful improvements to the supply chain or factory execution.

Lean doesn’t care about inventory dollars. It cares about waste. There are reasons for having all of that inventory — long supplier lead times, long set-up times resulting in batch production, geographic and logistics issues forcing purchasing by truck and container loads, and exposure to risk in the supply chain. All of these things (and more) drive waste into the total cost — floor space, handling, exposure to quality problems, transactions and cycle counting to keep on top of it all, and on and on. The objective of lean is to get rid of these costs. That means rooting out the underlying problems and resolving them, then shortening the cycle times, and the inevitable result of that effort is the reduction of inventory and better turns — but that is just a side benefit.

The masthead from my web site is a Henry Ford quote, “Profit is the inevitable conclusion of work well done” that I believe encapsulates the driving principle of lean. I think a corollary might be “inventory reduction is the inevitable conclusion of work well done”. But it is just that — an inevitable result but not the goal.

The little teeny farm fantasy pops up again and again, Nathan Lewis says, but, while little teeny farms make for wonderful hobbies, they make for terrible farms and terrible cities:

Some people have been pushing the notion that a family of four can be sustained with a 3000 square foot garden.

Oh really? That’s about 50×60 feet. Which is actually a pretty large garden, by hobby garden standards.

Let’s think about this.

A square mile has 27.878 million square feet. There are 640 acres in a square mile. Each acre has 43,560 square feet. Thus, 3,000 square feet is 0.0689 acres. This is about the size of a typical “suburban backyard garden,” if you use most of the available space.

The highest calories per acre are probably attained with grains, such as wheat or rice. You aren’t going to get there with lettuce and asparagus.

One of the highest naturally-obtained grain yields per acre that I know of is Masanobu Fukuoka’s farm in Japan. Using all natural techniques, he averaged 1,300 pounds of rice per quarter-acre, which is probably the highest natural rice yield in the world. That’s 5,200 pounds per ace. Rice farms in California can do up to 9,000 lbs per acre of rice, with chemical fertilizers, irrigation, GMO seeds, optimal climate and so forth.

For 2007-2008, the average U.S. wheat yield per acre was 41 bushels per acre. A bushel of wheat has 60 pounds. So, that’s 2,460 pounds of wheat per acre. That is with every sort of chemical fertilizer, genetically-modified seed, pesticide and so forth. (Single farms using corn can do much better. The record for a single farm in 2002 was 442 bushels of corn per acre.)

The average wheat yield per acre in the U.S. in 1899 was 12.5 bushels, or 750 pounds. This represents professional farmers with refined traditional technique but without chemical fertilizers, GMO seeds and so forth. Clumsy amateur farmers would do well under this.

Since I will assume that the prospective gardener will not be using chemical fertilizers or GMO seeds, let’s take the 1899 average. Thus, at 750 pounds/acre and 0.0689 acres, we get 52 pounds of wheat.

There is some loss as the wheat is processed into flour. However, let’s just use that figure. At 1,700 calories/pound, that’s about 88,400 calories of food energy. With four people in the family, that’s 22,100 calories per person. At 2,500 calories per day for an adult (could be higher especially if outdoor labor is involved), that’s 8.84 days’ worth of food per person. I suppose kids will eat a little less.

So, we can see that your little 3000sf garden certainly will not feed a family for a year. It might feed a family for a week, and that’s only if they like plain bread a lot.

Let’s say you are an ultimate natural farming master, like Fukuoka. Then, your 3000sf garden would produce about 358 pounds of rice in a year. I’ll spare you the math, but it works out to 61 days of food per person per year.
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What could be possible, and what most of the “little teeny farm” advocates are really talking about, is producing fresh fruits and vegetables. They aren’t really talking about producing grains, beans, meats (usually), dairy or oils, which can amount to 80% or more of the typical diet. Can you produce enough lettuce, tomatoes and zucchini in your 3000sf hobby garden to give/sell some of it to your friends and neighbors during the summer and harvest season? With a bit of basil and thyme? Sure, and why not? If you already have a suburban backyard, you might as well grow zucchini or blueberries instead of grass. This is fun. That’s what makes backyard gardening a fun hobby. But, there’s a difference between having some fresh zucchini in August, and feeding a family for an entire year.

One reason I call this a “hobby” is that it doesn’t make a good business. Let’s say you want to grow lettuce in your suburban backyard hobby garden, and sell it to your neighbors. Great! Who wouldn’t love local, fresh-grown lettuce instead of something from 3000 miles away? Let’s say you sell lettuce for $2 a head. If you sold a thousand heads of lettuce, you would have gross revenue of $2000. Think about the labor and expense involved in growing and harvesting and selling (don’t forget the selling) a thousand heads of lettuce, from your suburban backyard garden. You better love lettuce. For this, you get $2000 of revenue, per year, before covering your expenses. It probably works out to less than minimum wage. You would only do it “for fun.” That’s why I call it a hobby.