How to Get Undeniable Buy-in for Driving Change in Manufacturing

Manuficient - Thumbs Up / Change Management

Have you ever had the feeling that someone was telling you they were on-board with a change but they didn’t even fully understand or think through the change you were proposing? Or maybe they were just saying yes because they like you but not taking your idea very seriously? Or perhaps you’ve done all the groundwork for a change and one or two people are just dead set against it for no rational reason. And then you go ahead and make the change as promised and two things happen: 1) those same people who said they were all for it are now visibly uncomfortable with what you’ve done and 2) those who were against it before have now declared you public enemy number 1.

If you’re already in this situation, this blog post won’t be very helpful for you. Good luck and stay tuned for the post on How to Dig Yourself Out of Whatever it is That You’ve Stepped in. Fortunately, this post may help keep you from stepping in it again in the future. I’m going to share with you a process for garnering stakeholder support for the changes needed to drive manufacturing efficiency in your organization.

There are many reasons people hold out from making the changes that are needed for progress. The change could pose a legitimate threat to safety, quality, productivity, morale, or some other important aspect of the business. It could also be that the change threatens someone’s personal position of authority. However, no matter the reason, the bottom line is that people are going to be uncomfortable with change. And the bigger the change, the more resistance you will face. The key is to take the burden of change upon yourself to make sure all risks are identified and satisfactorily mitigated to address and minimize the discomfort of your stakeholders. The way to do this is as follows:

1) Organize a risk-assessment. Invite all relevant stakeholders to participate in identifying the risks involved in making the proposed change. If the stakeholders themselves cannot be present, have them substitute a representative that they can trust to effectively express their interests. Make sure everyone understands that the proposed change is just for discussion at this point and you want help understanding some of the risks involved. Try to keep this session to under an hour because that’s about as long as you can reasonably hold people’s attention; especially in a manufacturing environment. Make sure to capture all identifiable risks. This means giving your participants free-reign to add risks to the list at will. The last thing you want is for someone to come out in the 11th hour before implementation with the objection that you did not capture during the risk-assessment. Also ensure the group’s leader is present  to keep some of the risks grounded within the realm of reality. Even better, get the boss’ general buy-in before going into the risk-assessment.

2) For each risk identified, work with the stakeholders to develop a course of action that would satisfactorily mitigate the risk. Its important that the person who raised the risk agrees that if the mitigating action was completed satisfactorily, they would have no further objections. Here is where artful facilitation is needed. If you’re not a skilled facilitator, you will need help to get good ideas out and keep the meeting on coarse. Ideally you can get the concerned party to propose the solution themselves; second best, you or another attendee propose something that they can publicly agree to. This may mean slightly changing the scope of your initiative, completing more testing to verify the cost / benefit, including additional training or documentation, or expediting planet’s revolution around the sun by 6 or 7 days. Whatever it is, you as the change agent need to build consensus around what specific actions are needed before you can earn the stakeholders’ buy-in. In a group setting, people’s personal intentions are a little more difficult to hide and they tend to engage with the idea that their concerns can potentially be addressed, especially if everyone else is playing along.

3) Take your mitigating action items list and get to work. Complete every single item to the best of your ability. It doesn’t matter if you complete these items yourself or delegate. In this case, you cannot afford to deny or delay any of the items. Gather proof that demonstrate the completion and quality of workmanship of each item. Use pictures, standard work documents, data or test results, sign-off sheets, or whatever else it takes to provide a paper trail of thoroughly completed action items. Neatly package the artifacts and preparation to get sign-offs. Then create or use a sign-off sheet and have all the key stakeholders sign the sheet saying they are satisfied with the mitigating actions taken and that they are ready to proceed with the change. Then you are clear to proceed in changing the world – your world at least however small it may be.

Going through this level of rigor to get people’s buy-in has a psychological effect that the change is worth it and it shows that you value the authority and professional integrity of the key stakeholders. I’ve seen cases where people have forgotten that they ever were opposed to the change by the time the mitigating actions are taken and its time to sign-off. In this case, they just sign-off so they can hurry up and jump back into rescuing the plant from today’s crisis. Either way, this process covers your bases and lays out a path for continuous improvement both in the manufacturing and leadership buy-in process. Keep a record of the sign-off sheet, risk-assessment, and proof of completion artifacts in case you need them for future reference.

Copyright © Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

Manufacturing Execution Strategy: Technique vs Speed

Manuficient - Swimmer

In manufacturing, there is an optimal point where you have achieved the ideal balance between technique and speed for a process. The trick is knowing when you have struck that balance; and the answer may not be what you think.

I have a son and a daughter who are just shy of two years apart in age. They have a completely different approach to learning a new thing. Swimming, for example, is one of the things they are learning to do at the same time. My son’s approach is to go as fast as possible. He doesn’t care how much energy gets wasted in the process or if he has nailed down the proper stroke or anything like that. He just wants to go fast. In the manufacturing setting, he would be like the supervisor who speeds up the production line to the point where it begins to take a toll on quality, morale, and even machine lifespan; all for the sake of getting the most units produced for that day. For my son, the budding swimmer, the consequences are not so severe. His agility and strength will quickly improve, especially while he is young. He will achieve a pretty good speed early but potentially peak out before he reaches his potential, especially if he remains in the same sport. He will then either need to unlearn all his bad habits and improve his technique in order to get better or he’ll pick up something else where he can win. In the manufacturing environment, speed can be a little more dangerous. For one, running the line faster than it is capable of running reduces machine uptime, quality, and morale. These things cause the production crew to create work-arounds to sustain the increased speed that over time turn into bad habits. You may be able to get some pretty strong results early on but cannot be sustained over the long run due to the amount of wear that it places on the system. Also the higher-ups get “drunk” off of the increased rates (even if they are short lived) and that supervisor finds himself in a position where he is expected to produce ever-increasing throughputs with a declining production system. This approach is best suited for an environment where sheer strength and agility are the predominant requirements such as places with frequent changeovers, constantly evolving product offering, and shorter production runs. However a much higher investment in production system maintenance, and training is required.

I have a daughter who is also learning to swim. She makes little to no effort to go fast, but her inclination is to master the technique of swimming. She will swim laps across the same stretch of pool for the entire time. If you give her a tip to improve her technique, she will incorporate immediately and continue her laps. As such, she is constantly evolving her method and developing good habits. She is also gradually increasing speed as she becomes physically stronger. In the manufacturing environment, her approach would be akin to the craftsman or master artisan, patiently working to perfect the craft. This approach is perfect for environments that experience infrequent change and mastery of delivery is the predominant requirement. Fewer changeovers, longer production runs, and longer SKU lifespan would be the ideal state characteristics. This approach is great for long-term growth but less than ideal for short order production runs.

In manufacturing, you will find both approaches winning the day depending on the needs of the business. However there is a fundamental approach that applies across all types of manufacturing environments. The key is to analyse the perimeters of the specific manufacturing environment and identify those elements of the business that will probably not change for a long time and those elements that change frequently. For those elements that are long-lived, the slow and steady approach to management should be applied. For those elements that are constantly changing, techniques of speed and agility should be mastered. There are four core elements to every business: people, processes, products (or services), and technology. All of these elements evolve at different rates within the company, therefore the management strategy should be selected to fit the rate of evolution for the given element.

© Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

Plant Profits: The Whole that is Greater than the Sum of Its Parts

Manuficient - Man Drawing Bar Chart

In a healthy product-driven business environment, value is created in the manufacturing process. In fact, the entire value chain lives within the manufacturing (and supply chain) process. Case in point, if you take the of raw materials, conversion (labor utilities, maintenance, etc.), and overhead and total that all up for one unit; then compare that value to the market price for one unit, the difference is the amount of value created. Now some of that value is real and some of it is perceived which is created by dynamics in the market such as scarcity and other factors. For the focus of this post, lets focus on the concept of real value.

For many people (depending on the product), its just more practical to go purchase something than it is to try to produce it themselves. Lets look at a car for example. If everyone had to build their own car from scratch, the road would be a much scarier place. Not everyone has the time, talent, resources, or desire to build their own car – and there’s nothing wrong with that. By having auto-makers that we can trust to deliver a quality vehicle at an affordable price gives us all the freedom to focus on the things that we are great at or love to do. In other words, having skilled mechanics / technicians, robust quality assurance, and reliable and scalable manufacturing processes to build our cars for us, they are creating value for our lives. And because of this, we are happily willing to pay them more than the combined cost of raw materials, conversion, and overhead for our car. This is the real value that is created by the manufacturing process.

By creating real value for the end user, the manufacturing process is also creating wealth for the company. One of the most important roles of marketing and sales and some of the other demand-side business functions are to transform the value created in manufacturing into cash.

In the previous post titled: Measuring Plant Performance by the Common Denominator in Business, we discussed the importance of measuring plant performance in terms of cash and then having the tools in place to communicate performance as frequently as possible, if not in real-time, down to the value creators themselves, the shop floor operator. In order to do this, you have to understand the value of finished working capital on a unit by unit basis (or series of value-added steps). This allows you to identify the amount of value created in real time, which can be measured against conversion costs in real time. The difference can be viewed as manufacturing profits. This creates the possibility of allowing the manufacturing executors to understand and share in the success of playing their role in driving wealth into the company. This also lays some of the ground work for a culture of continuous improvement since it enables greater financial incentives for increasing plant profitability, which we’ll dive into for our next post.

© Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

Measuring Plant Performance by the Common Denominator in Business

Manuficient - Money on Mind

For the sake of its own survival, a business must make money. And it must make more money than it spends. A business that spends more money than it makes is cannibalizing itself – and if not corrected will eventually fail. This is not controversial; it is a fact of reality for all commercial entities. Because of this fact, the default “language” of any business is cash. Sure there are many aspects that all make up the DNA of a business such as company culture, employee safety, product quality, and so forth. However, you can look at cash flow as the end-all-be-all indicator of the company’s health. Granted every company experiences periods of heavy investment where cash out may be greater than cash in. This is not necessarily a bad thing, especially when you can draw a logical and justifiable link to how the cash being invested will result in greater cash flow in the future. On the other hand, if cash out is greater than cash in but there is no clear link between investment and greater future returns, some serious questions need to be asked about what is happening and what needs to be done about it.

With that said, people know cash. Everyone on earth has some relationship with and some degree of understanding of it. Good or bad, its a fixed part of the human existence and has been since the beginning of documented human life. Cash is also the life blood of any manufacturing process. At the highest levels in just about all manufacturing organizations, cash out is managed to varying degrees of granularity. At the lowest levels in the org chart, the focus of the manufacturing operation is simply to hit schedule for the day. It doesn’t matter if hitting schedule means producing way more or less than anyone will buy; it just matters that we hit schedule. The point is that there is a disconnect between what happens in the boardroom (where the priority is increasing cash flow) and the shop floor (where hitting schedule among a host of other things is the priority). Somewhere along the chain of command, the focus on cash gets lost in the mix as you progress to the shop floor level. At some point, performance is no longer measured in gains and losses in cash and it gets measured by all these other things that just create room for misalignment to breed. At the end of the day, the shop floor operator or mechanic has the power. On a day to day operational level, they make the decisions that will greatly influence rather the factory will gain or lose cash (or equivalent value) for that day. Unfortunately, since the typical manufacturer doesn’t measure the performance of the shop floor operator in terms of cash (or value), it becomes very difficult if not impossible for that operator to understand how their minute by minute actions are helping or hurting the company.

In an ideal arrangement, a line operator would know in real time how much value they are bringing to the business in terms of cash. This might mean quantifying the value of one finished unit (or set of value added actions) and subtracting material, conversion, and overhead cost, and presenting the result in real time. It would be made clear what specific area of the overall cost that operator has complete control over so they can quickly and easily test the financial result of one action versus another. The overall cash impact of quality failures would also be factored in to keep the system honest. This puts the shop floor operator in a position of true ownership for their process and lays the foundation for continuous improvement at a daily / micro level.

Such a system might require a respectable investment and may not be feasible for many manufacturers. However, all manufacturers should seek to increasingly improve the frequency at which value could be quantified and reported at the shop floor operator level. Monthly financial reports just aren’t sufficient for leveraging the financial function as a driver of a continuous improvement culture. At least once or twice a day, an operator or mechanic needs to be able to quantify exactly how much value they have brought to the business given the amount of time they have been on the clock. This also lets the operator know if they have more or less contributed their fair share for the day. This makes the job of the operator, their managers, on up to the CEO that much easier.

© Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.

When Its Smarter to Hire Consultants in Manufacturing

Manuficient - Man Thinking

Its time to change, either because you need to, or you just want to. You need to reduce operating costs to free up working capital to invest in marketing. Your leading competitor just went out of business and you need to increase throughput levels to meet a rapidly expanding customer base. You’re starting up a new product line and need to know the optimal manufacturing model. Your raw material costs are inflating and you need to get costs back in control to increase your profit margin. You need to know what something “should-cost” to make or buy…the list of possibilities are endless. In business, there are always problems that need to be solved. These problems come in all degrees of scale and complexity. Some of them can be handled by your internal team and some not so much. There are mainly three situations when its smarter to hire consultants to help you get something done:

1) You don’t have time to do it yourself. Your internal team is stretched thin with their current responsibilities. Business systems like to operate in a steady and predictable environment. Unfortunately, the world outside of the 4-walls (and sometimes inside) of a manufacturing facility is very unpredictable. When problems arise, management level work demands surge. As a manufacturing leader, you need to determine how you’re going to deal with the surge in demand. You can tax your current team, which works to an extent but can disrupt your business system, especially if you’re already running with a lean organization. You can just ignore the problems and hope they go away. Or you can bring in consultants to help capture the opportunities at hand.  You can expect a consultant to work at least twice the speed of your employees, and be happy to do it. Aside from a few meetings and data requests, you can also expect the consultant to work fairly autonomously to get a full understanding of the problem, potential solutions, and sometimes not-so-obvious opportunities abound. Additionally, hiring consultants for some services alleviates you from the management burden of hiring and maintaining an employee.

2) You don’t have the expertise in-house. Its just not realistic to expect to have 100% of the expertise needed to effectively run a manufacturing operation. Some knowledge or skill sets will only be needed less than 3% of the time; and sometimes just once ever. Other times, your internal team may have a good grasp on the subject but not to the extent needed to produce the quality of results you need at that time. For instance, if you want to implement a world-class continuous improvement process, chances are that your internal team has not seen very many world-class operations (if any) in practice. Consultants are in the unique position to have served many clients and often have an array of best-in-class techniques and methods for you to incorporate.

3) You need an objective perspective. Within any organization, there exists varying degrees of internal politics. Underneath the surface, everyone is competing for a larger share of the company’s spoils. This comes in the form of bonuses, pay raises, stock, promotions, or just having more say over what gets served at the company picnic. Because of this, everyone operating within the confines of the organization has a personal agenda. As such, all employees look at the situation from their own perspective, which is influenced by alliances, past hurts, and personal ambition. All of these things cloud your employees’ judgement and blind them to opportunities that would otherwise be very obvious. A consultant who has seen many manufacturing operations and who is not embedded in to the internal politics can help develop unbiased solutions and see opportunities that everyone else is conditioned not to see.

Combining the objective perspective with a high degree of expertise and a high workload capacity, a consultant can often provide you with very high quality solutions in a much shorter time-frame placing minimal strain on the existing business system.

© Calvin L Williams blog at calvinlwilliams.com [2015]. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Calvin L Williams with appropriate and specific direction to the original content.