I’ll admit it: After five decades watching U.S. companies turning to simplistic accounting tricks to remain profitable, I’m discouraged.

I was a kid when I first discovered the Toyota Production System (TPS). My eyes were opened to the immense amount of waste in our production and business processes. I was so excited at the potential it unleashed in my company that I anticipated a renaissance in U.S. manufacturing. U.S. manufacturing was struggling during the 1980s to remain competitive in an increasingly global marketplace, so the prospect of radically reducing costs and improving service by engaging the workforce to reduce process waste seemed like a no-brainer.

Naïve me.

Based on the damnable formula C = L + M + O, cost decisions were being made in boardrooms across the U.S. to:
a) Reduce labor and material costs by sourcing offshore
b) Purchase large quantities of material (say, a shipload) of material to reduce the piece price.

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