management effectiveness

Systematization: The Teeth in the Gears of Continuous Improvement

Manuficient - People & Gears

Systematization is standardizing a sequence of events through automation or verifiable reaction protocols designed to produce consistent outcomes. It’s also where the rubber hits the road for the Percent Perfect Methodology® (PPM), which is designed to achieve rapid and sustained results in operating efficiency and manufacturing profitability. We see systematization everywhere we look, especially in manufacturing. For example, every factory has a system for tracking and managing when and how much an employee should get paid based on the hours they worked each payment cycle. If an employee wants to take a day off or works an extra shift, there are usually well defined protocols in place to make sure that employee is compensated accordingly. The reason just about every company has gotten this particular process down to such a science is because failing to fairly compensate employees could land them in some serious hot water. In this case, the motivation is fear of a lawsuit or disenfranchising workers; it’s also just outright unprofessional when people aren’t getting paid on time and in full.

Manuficient Methodology1.1 SystematizeSystematize is the fourth and final phase of the PPM. In Phase 1, we defined perfection for your manufacturing operation. Phase 2 assessed where exactly you are in your journey to Operational Perfection (OP). In Phase 3, we prioritized 3 – 5 critical initiatives needed to make substantial progress toward your potential. In Phase 4, Systematize, we look closely at how to fully integrate the 3 – 5 critical initiatives identified in Phase 3 into your operating model, or the way you do business, to close the gap between your current state and OP. This produces rapid results and ensures that improvements are sustained.

There are a several key elements required for an initiative to be systematized:

  1. An event or trigger to indicate that waste has occurred.
  2. A method or technique for making the waste or inefficiency visible and/or highly detectable.
  3. A reaction protocol – This could be an automatic or manual series of steps to be taken to remediate and eliminate the opportunity of re-occurrence of waste.
  4. A method or technique to track, quantify, and report waste events and their impact on operating cost and service levels. There also needs to be a way to evaluate the quality of response from element 3.
  5. A method or technique for allocating the appropriate resources to minimize or eliminate chronic process waste – This is to continuously improve processes where the greatest ongoing opportunities exist.

An overwhelming majority of Continuous Improvement initiatives fail to sustain because the organization gradually (and sometimes instantly) rejects the changes needed to make progress. For example, I’ve seen organizations do kaizen events to reduce changeover times (called SMED events) but fail to systematize the initiative to see and effectively respond when there is a deviation from the new procedure – and thus waste is allowed to creep back into the process. In other words, the organization rejects the initiative. If this backsliding were to happen with the payroll system and people were not being paid on time and in full, the reaction would be swift and possibly quite extreme. For this SMED event to sustain, there should have been techniques installed to ensure that the new process was being executed as specified and detailed reaction protocols to address any deviation from standard. One tool for achieving this would be something like a changeover clock that alarms or sends an alert if the allotted timeframe is exceeded, indicating that waste is occurring. Then the alarm or alert triggers waste elimination protocols. Generally speaking, lights and sounds are great tools for highlighting that waste is occurring. These are called andon systems.

Tools of Systematization

Automated Response tools:

  1. Poka Yoke – If waste could be eliminated automatically then it should. The tool for this is called poka yoke, or error-proofing. This is a technique for preventing or limiting any activity that produces waste. It is also the most effective tool to Systematize improvement. Examples are guides that ensure perfect assembly on the first attempt or an outlet designed to prevent the wrong device from being plugged in.
  2. Autonomation – The close cousin of poka yoke is autonomation, which automatically detects and rejects bad parts or waste in order to minimize the impact to production. An example would include an opening on the production line that removes parts that do not fit through it. In this case, the defective unit would be swept aside as not to interrupt production.Non-automated Response tools
  3. 5S – Finally, 5S which stands for Sort, Set in order, Shine, Standardize, and Sustain can be used as a tool for making waste highly visible. 5S is a technique to organize a workstation to increase efficiency and make so that wasteful activity becomes visualized. For example, if cleaning tools are to be staged near the production line, an area should be designated for those cleaning tools. If the tools are not in use or in their designated space, waste is likely occurring because the line operator will end up needing to wait or walk to another workstation to get the supplies they need.
  4. Performance Reports – The purpose of performance reports is to highlight the amount of and other details about the waste that has occurred. The more real-time and actionable these reports are, the more waste can be eliminated from the process. This is ranked last on the list of Response tools because it’s the least reactive method of eliminating waste. The interval between reports indicates the window that inefficiency is allowed to fester before it can be identified and addressed. For example, up to a week may go by before you become aware of an issue if you’re using a weekly report. The rule of thumb for Performance Report effectiveness is visibility. The objective is to make waste very obvious and public, which has to do with how the report is formatted. It also has to do with how the report is presented. For example, huge boards or screens that highlight opportunities positioned in the main entrance where everyone can easily see are going to be a lot more effective than a report that gets saved on a hard drive and left there. The fOS at http://factoryoperatingsystem.com is a great tool for reporting performance since it automates the data synthesis and disseminates performance reports along with success stories to appropriate personnel within the operations chain of command.

There are many other great tools to systemize improvement but these are the Big 4. For any of these tools to work, they need to be coupled with reaction or escalation protocols. There are two types of escalation protocols:

  1. Immanent Issue Escalation – This is the sequence of steps to be taken when waste occurs that threatens the ability to meet the immediate objectives, such as attaining schedule for the day. An example of an Imminent Escalation protocol might be:
    T=0 mins – Begin 5 Why / Troubleshooting Analysis
    T=5 mins – Notify production lead or mechanic to continue 5 Why / Troubleshooting Analysis
    T=10 mins – Notify production and maintenance supervisor to continue troubleshooting and deploy additional resources if needed; also to coordinate production to minimize waste in other areas
    T=15 mins – Notify Operations Manager to support coordination of other production activities to minimize impact of waste; also to deploy additional methods of analysis or technical resources
    T=20 mins – Notify Plant Manager to engage necessary resources including but not limited to reaching out to other facilities for ideas and supportThis protocol would be executed until the issue is resolved. For example, if the issue is resolved after 10 minutes, the Operations and Plant Manager would never be engaged. However, the issue would still be presented in Performance Reports and followed up on to ensure absolute resolution.
  2. Chronic Issue Escalation – This process is used for issues that impact performance but not to the extent of threatening schedule attainment. For example, a date coder system that kicks out one unit out of hundreds every 20 minutes would probably be a chronic issue. A Chronic Escalation protocol might be structured as follows:
    Day 0 – 1 = Line operators are given an opportunity to resolve the issue through Root Cause Analysis (RCA) or other CI tools.
    Day 2 – 7 = A mechanic or other administrative personnel is assigned to the issue to continue the RCA process and deploy additional resources
    Day 8 – 30 = A Staff member or Manager is assigned the issue to drive it to resolution by deploying tools and resources as needed
    >Day 30 – The Plant Manager takes the necessary measures to completely resolve the issue including but not limited to engaging outside resources

The Plant Manager is the last point of accountability for ensuring that the escalation protocols are being used and are working as expected. He or she should apply downward pressure to resolve issues before they reach the Plant Manager level. Again, this only applies to issues that do not use Automated Response tools; and thus is why the Automated Response tools are superior. At each phase in escalation, a specific person and due date needs to be assigned. There also needs to be a set of rewards / consequences for resolving or allowing issues to escalate. This set of rewards and consequences will vary by organization and company culture. Lastly, before items can be removed from the escalation process, there needs to be a method to ensure that the issue has been resolved effectively.

MIC_Lean - Systematic

In the Systematize phase of the Percent Perfect Methodology®, the 3 – 5 initiatives identified in the Prioritize phase are “systematized” into your operations model. Automated waste identification / prevention and correction tools are deployed to reduce or eliminate inefficiency. Escalation protocols are also implemented to make sure that systemic process failures are effectively managed and eventually eliminated for key initiatives. This also includes training internal resources to see the waste and to develop proficiency in the tools that are best fit to eliminate it. The fOS gives you a good indication of where you are in your journey to Operational Perfection by team, product, production line and other factors. A Plant Manager should also be mindful of how many issues are being escalated to their level because this indicates how competent the management team is. A highly competent team would resolve more issues at lower levels and prevent escalation. Frequent escalations indicate that additional training is needed to increase operational discipline.

A manufacturing efficiency expert such as those at Manuficient can help to systematize improvement initiatives and ensure sustainment of improvement efforts.

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The Compounding Benefits of Prioritizing in Continuous Improvement

Manuficient - Compounding

Albert Einstein once said that the most powerful force in the universe is compounding. Just as in finance, this is true for managing a manufacturing operation. New problems, big and small, arise everyday. When a problem goes unresolved, it behaves like a disease on your productivity. Additionally, new problems are added to old ones, which creates a snowball effect, and thus the compounding dynamic takes effect. At some point in the life cycle of a manufacturing operating, it takes what Grant Cardone calls “massive action” to reverse this momentum and get into a position where compounding is working in your favor. To do this, you must develop a thorough understanding of what specific wastes are driving inefficiency and pick them apart with well orchestrated and massive action. The 85/15 rule (a variation of the 80/20 rule) definitely applies here. In other words, 85% of your inefficiency is probably being driven by 15% of the issues. The key is to systematically identify the 15% of issues and prioritize the fewest number of initiatives needed to eliminate 85% of inefficiency, which will result in substantial profitability increases.

Manuficient Methodology1.1 PrioritizePrioritizing is the act of deliberately ranking needed activities, then allocating time and other resources in the order of greatest to least significance. Prioritize is the 3rd Phase in the Percent Perfect Methodology® (PPM), which identifies the 3 – 5 tools and initiatives needed to capture the greatest gains toward achieving your operating potential. In Phase 1 of the PPM, we looked at how to define perfection for a manufacturing operation. In Phase 2, we reviewed how to Assess where you are in your journey to Operational Perfection (OP). In this phase, we look at how to determine which specific initiatives will have the greatest impact on closing the gap between current state and perfection.

There are hundreds and perhaps thousands of Lean Six Sigma and other Continuous Improvement tools out there to be applied depending on the specific application. In fact, any repeatable activity that makes a process more efficient can be classified as a tool, which makes the list virtually limitless. The challenge is knowing a) which tool(s) should be applied and b) how to most effectively apply the tool(s) selected. Just like a mechanic needs to have the right tools for a given job and know how to use them without completely mucking up the project, so do manufacturing leaders. This takes resourcefulness, knowledge, and skills – which are all a function of having the right quantity and quality of experiences.

You can identify the appropriate tool to apply based on the type of waste that is occurring. The 8 lean wastes are: defects; overproduction; waiting; non-utilized talent & ideas; transporting; inventory; motion; and excessive processing.

There is a 6 Step Process for determining which tools will have the greatest impact on closing the gap to OP for your manufacturing operation:

Step 1: Determine what perfection would be for your manufacturing operation. Use the Factory Operating System (fOS) to achieve this. It’s a free tool and provides the best way to set and establish your theoretical maximum productivity levels.

Step 2: Analyze where you are in your journey to Operational Perfection. The fOS will also help you complete this step. It provides a user-friendly interface to track, aggregate, and report production performance. It also helps to cultivate employee motivation around CI by disseminating success stories such as personal records and breakthrough performances across your manufacturing network.

Step 3: For each of the three significant types of loss (availability, throughput, and yield), further categorize each type into the 8 wastes.

Step 4: Quantify the total losses being driven by each type of the 8 wastes and perform a Pareto Analysis grouped by type of waste and total annualized losses (in dollars or other currency).

Step 5: Select the set of tools or processes that are best fit for eliminating or reducing the types of wastes that are resulting in the greatest losses. The objective here is to identify the fewest number of tools that will cut waste to within 15% of Operational Perfection, which is widely considered to be World-Class execution. For example, motion waste is best address through time and motion studies; and transporting waste is minimized through process layout re-design and a technique called Point of Use Supply (POUS) among others.

Step 6: Develop the specific initiatives needed to best leverage the selected tools for maximum effect. This may mean customizing or combining tools to refine an ideal set for your specific needs.

Once you’ve gotten this far, you’ve won more than half of the battle. Abraham Lincoln once said that “If you give me 6 hours to cut down a tree, I’ll spend the first 4 sharpening my ax.” After Phase 3 of the PPM, the axe is razor sharp and you’re just about ready to deliver a swift blow to your manufacturing operation’s inefficiency. Unfortunately, many companies skip this phase and consequently, this is where they go wrong with their CI program implementations. Instead, they often mistakenly approach it as either a beautification or fire-fighting program. They start with something like 5S because it’s very visual and friendly or they go with problem-solving / kaizen events just so they can pull their CI resources into the weeds of daily operations with them. This isn’t necessarily a bad thing, it’s just not the most effective use of time and resources. They rarely take the time (and it usually doesn’t take much time) to assess exactly where the greatest gains can be achieved, then prioritize effort and resources. As a result of this and other factors, 70% of improvement programs fail in their first couple of years according to a study completed by the McKinsey & Company consulting firm. Furthermore, having the prioritized list of initiatives on hand helps to recruit / promote the ideal talent for manufacturing leadership roles. For example, if your greatest opportunity for improvement is to reduce changeover times, the optimal talent for a director or plant manager role would have a tremendous track record for implementing the SMED tool (Single-Minute Exchange of a Die) for minimizing changeover times. You can see how having a rock solid CI playbook changes your entire approach to how you play the game. Can you imagine how many major decisions are made everyday without taking any of these factors into account?

MIC_World Class Mfg

I can assure you that the powerful dynamics of compounding are either working for or against you. If you’re not taking deliberate action to leverage this phenomena to your advantage, then it’s most likely working against you. The key to changing the trajectory of your manufacturing operation’s performance is to prioritize the small set of CI initiatives that will produce the greatest impact on closing the gap to Operational Perfection. Defining perfection provides the North Star for manufacturing leaders to navigate the complex maze of day to day manufacturing operations. Assessing the current state helps you to gauge exactly where you are in your journey. The fOS tool at http://factoryoperatingsystem.com is the best tool available to define and assess where you are against operational perfection on an ongoing basis. Finally, prioritizing provides a clear and executable roadmap to World-Class execution. From here, you have laid the groundwork to capture rapid gains in productivity and profitability.

A manufacturing efficiency expert such as those at Manuficient can help you to prioritize your CI initiatives and gain immediate results in performance.

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Copyright © Calvin L Williams blog at calvinlwilliams.com [2016]. 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.

 

How to Define Perfection for Manufacturing Performance

Manuficient - 100%

Perfection for a manufacturing operation is the absence of inefficiency, or process waste. It is seamless execution. It is spending every minute of every day in a state of operational bliss where everything and everyone is in the zone of impenetrable harmony. Product quality is flawless; machines run like an impeccable script; manufacturing teams perform like a masterfully orchestrated symphony; and the supply chain delivers like clockwork.  The first step in the Percent Perfect Methodology® (PPM) is to paint a clear picture of a manufacturer’s operating parameters in a state of absolute zero losses such as profitability, operating costs, lead time, capacity, material costs, and others. The PPM is a methodology designed to determine and systematize the few critical operational disciplines needed make dramatic progress toward perfection. There is a powerful psychological and motivating effect to beginning the PPM methodology with defining perfection. This approach quickly shows the difference between ‘how good you could be’ and ‘how good you currently are’. This creates an intense motivation to get better because defending the status quo becomes completely unacceptable by anyone’s standards, especially for an organization with great opportunity for improvement. It also provides some insight to how much more efficient your competitors might be by presenting your performance on a spectrum of 0 – 100% using OEE, which is the global benchmark for managing manufacturing efficiency.

Manuficient Methodology1.1 Define

Operational Perfection (OP) is achieved when the following types of process waste are completely eliminated:

 

In this state, your operating costs are reduced to the minimum needed for creating the necessary value while retaining the capability to meet the changing demands of daily operations. This has a profound effect on profitability and just about every other key measure of execution. Here are a few of the capabilities needed to achieve OP:

  • Exclusively value-added activity (no downtime, changeover time, or start-up time; maximum run rates only; and no quality / yield losses)
  • Zero raw, finished, or work in progress (WIP) inventory
  • Perfectly balanced capacity between workstations (no waiting time in or between stations)
  • Lead time equal to the duration of sequential value-added steps (no transporting, motion, or other losses)

Additionally, the customer receives their 6 Rights – 100% of the time. This means the right product, at the right time, at the right place, in the right quantity, in the right quality, and at the right price.

Continuous Improvement, in its purest essence, means closing the gap between your current state of execution and OP. It’s a fantasy to think this can happen overnight. In fact, getting within 15% of perfection is considered World-Class execution, which can take years and most will never even come close. The point here is to define the true north for factory performance; and set the objective of your Continuous Improvement initiative, which is to eventually achieve OP, or to reach the North Star. Whether you are doing Lean, Six Sigma, Re-engineering, ISO 9000, Agile Operations, TPM, TQM, or any other Continuous Improvement program, it’s important to know and understand your OP just like a navigator and the North Star. It’s also important to know that perfection is theoretically unachievable. Hence, Continuous Improvement is just that…improvement that continues into perpetuity. In other words, everyday, your manufacturing operation should be inching (or sprinting – why not?) toward perfection, or OP.

Manuficient - Perfection

So here are a few steps to define perfection for your manufacturing organization:

Step 1: Determine your maximum theoretical run rates. These are the greatest rates that your production equipment or teams can achieve before reaching the point of diminishing returns, which is when increasing speeds result in declining quality or system damage.

Step 2: Determine the total runtime needed to execute your product mix at theoretical maximum run rates. All startup, changeover, shutdown, unplanned downtime, rate losses, and yield losses should be excluded.

This gets you to your optimal runtime for a given product mix and provides the basis for defining perfection for your manufacturing system. It also positions you to determine operating parameters in a state of zero-losses including:

  • Profitability (Total Revenue – Total Cost in a state of zero losses)
  • Operating Cost (Operating Costs required in state of zero losses)
  • Throughput Capacity (Max Time Available x Weighted Avg Theoretical Run Rate)
  • Order Lead Time (Processing time for the sequence of value-added activities)
  • Working Capital (Total product in-process [value-added stages only])
  • Labor Requirements (Labor required in state of zero losses)
  • Energy Requirements (Energy required in state of zero losses)
  • Material Requirements (Minimal material required to produce demanded goods)
  • Others

Determining Theoretical Maximum Run Rates

Theoretical Maximum Run Rates can be determined in a few different ways. Its imporatant to determine your theoretical max at the bottleneck process step. Wikipedia defines the bottleneck as “a phenomenon where the performance or capacity of an entire system is limited by a single or small number of components or resources.” For all practical purposes, it’s the step in the process that constrains the throughput of the manufacturing system. If the bottleneck is a mechanical process, you need to calculate the machine’s cycle times from step 0 to step 0. It’s important to capture the full cycle. Then you can estimate how many units can be produced in a given timeframe such as seconds, minutes, hours, or even longer. If it’s a labor process, time and motion studies will need to be completed to determine the throughput rate per person and subsequently, the entire process step if multiple workstations are involved. A rule of thumb to include for time and motion studies is a fatigue factor which varies based on the intensity and duration of work being done. The other key factor is to assess throughput based on a speed that 50% of all well-trained people can achieve on a sustained basis. It is advised that an experienced Industrial Engineer be employed or contracted to help establish these rates as professional judgement needs to be applied. You get this wrong and you will be dealing with more employee grievances than you are with prospective customers if you catch my drift.

The alternative to establishing maximum run rates is by using empirically demonstrated rates. This process involves determining the rate from every production run and considering the max rate achieved as the benchmark (or standard) against which all subsequent runs are measured. The advantage to using this method is that it doesn’t require an Industrial Engineer to determine the Theoretical Max Rates. The other benefit to this method is that “standard” rates are based on demonstrated performance, which removes all debate about rather or not the rate is attainable. This is the method applied by the Factory Operating System (fOS) so that Theoretical Max Rates can be defined organically. As run data is captured in the fOS, the system keeps track of the maximum rate achieved for each product and production line.  With this method, the fOS learns the ‘definition of perfection’ for your manufacturing system using a form of artificial intelligence. As production records are broken, the standard is updated accordingly and best-practices are shared across the network.

Continuous Improvement should be baked into the way any manufacturer does business. In any truly competitive landscape, the best performers win – eventually. Therefore, it’s imperative to strive to get better everyday in order to increase competitiveness and stay healthy as a business. As Toyota has cleverly made into it’s slogan, we should all be “in pursuit of perfection”. The Percent Perfect Methodology® defines perfection for all manufacturers in the same way; putting all manufacturers on the same playing field regardless of industry, product, location, or other attributes so that everyone has an equal shot at World-Class execution. The fOS helps manufacturers to determine perfection for their specific operating parameters and then measure actual execution against OP on an ongoing basis.

The fOS automatically performs the first phase of the Percent Perfect Methodology®. It helps you to define and maintain a current definition of perfection for your manufacturing operation. The optimal approach for implementing the fOS would be to assess where you have WIP buffers in your manufacturing process. Then use the fOS to track efficiencies in between WIP buffers. You’ll quickly realize that WIP builds up because process throughputs are imbalanced. The fOS will help you see where efficiency losses are occurring so that stations can be balanced and WIP can be eliminated; creating more of a continuous flow operation over time.

A manufacturing efficiency expert such as those at Manuficient can help you to Define Perfection for your operation and initiate your journey to OP.

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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.

 

How to Increase Manufacturing Agility in Consumer Packaged Goods

Manuficient Consulting - CPG Agility

Agility is paramount in the CPG industry. This is driven by rapidly changing consumer tastes and preferences, competition – which drives the need for greater differentiation, varying degrees of automation and manual labor forces, constantly changing packaging technology and platforms, and several other factors. Agility is simply defined as the efficiency of change. In other words, how efficiently can you go from your current state to your desired future state? In the CPG industry especially, the future state is a constantly moving target. If your supply chain can’t keep up with the rate of change, then it has no alternative than to become obsolete. This explains the significance of increasing Manufacturing or Operational Agility.

There are several benefits to increasing Manufacturing Agility (this list is not completely exhaustive):

  1. Satisfy a more diverse SKU portfolio with fewer production lines, requiring a smaller manufacturing footprint
  2. Drastically reduce the product development cycle from ideation to commercialization
  3. Scale production capacity to fit fluctuating demand without inflating costs
  4. Significantly reduce the time frame from improvement idea to gainful implementation
  5. Create opportunities to increase asset utilization by picking up orders from competitors and store-branded products

In the CPG industry, the more agile factories or operations win in the long run. Agility helps to keep costs low while making the changes needed to stay competitive. It also brings down the risk of changes significantly since they are less cost prohibitive. There are three main areas where CPG companies need to focus on increasing Agility; people, processes, technology. And there are several approaches to increasing Agility in each of these areas.

PEOPLE

People Agility is referred to as scaling the labor force up or down to meet immediate production needs without inflating costs. This can only effectively be done without compromising critical process knowledge and skill sets. Many CPG companies experience significant peaks and valleys in demand throughout the year. In many cases, manufacturers build inventory or find some way to avoid needing to scale man-power, maintaining a flat workforce with “normal” work hours for each employee. What ends up happening is that they eat labor costs during valleys because productivity slows and people are idle; then they eat labor costs during peaks due to excessive overtime. When you maintain a full workforce when productivity slows, the workforce loses its operational discipline, which is needed for when production demand is high. This creates frustration for both management and the labor force. Its also an expensive way to manage a factory. Below are a few ways to increase the scale-ability of the labor force:

  • Use a fixed crew and fixed production rates but vary production hours based on demand. This would make for inconsistent work hours for employees but help maintain the operational discipline needed for peak volume times. During valleys in demand, production could be scheduled at standard rates; when the crew finishes the work, they could be deployed to other productive work or process improvement projects.
  • Have a fixed full-time crew (based on business case analysis) and use temps to support surges in volume
  • Run with a fixed crew (again, based on business case analysis) and outsource surge volumes to contract manufacturers

PROCESSES

Process Agility refers to the efficiency of changing processes and procedures to meet business needs. In CPG, as well as many other industries, processes need to change constantly to increase competitiveness, reduce costs, increase quality, improve safety, increase moral, improve service levels ,and many other important reasons. Processes in this sense include the specific steps taken by people or technology to get something done. The more Agile a factory or operation, the easier it is to change processes to suit the needs of the business. For a factory that lacks Process Agility, it requires at least 5 years to implement a Continuous Improvement program such as Lean Manufacturing. Contrarily for a factory with great Process Agility, Lean could be implemented and self-sustaining in as few as 2 years. Below are some techniques to be employed to increase Process Agility:

  • Implement systematic management systems that drive operational discipline such as the fOS (factory Operating System). The fOS sets standards for the management function and is designed to drive the discipline needed for Continuous Improvement. Click this link for more information on the fOS.
  • Develop and execute a world-class training program. This helps to significantly reduce the learning curve for on-boarding new employees and implementing process changes with current employees. Click this link for more details how a world-class training function works.
  • Employ Lean practices such as Standard Work to develop efficient processes and reduce learning curves. Also use tools such as Kaizen and Root Cause Analysis to drive rapid process improvement.

TECHNOLOGY

Technological Agility refers to the ease of changing the technological capabilities used for the efficient making of a product. This could mean changing packaging ability from a canning to a pouch filling; or from vacuum sealing to over-wrap; or from a carton to a sleeve…I think you get the idea. In the CPG industry, formats change frequently. By now, every marketer in CPG has identified the impact that an attractive new packaging format has on product sales. Those same marketers can tell you how frustrating it is when they get push-back from the manufacturing folks that “there’s no way we can do that”. Well the truth is that it can be done – it can always be done. The only factor is what it’s going to cost, which is a function of Technological Agility. A factory with high Tech Agility can run multiple packaging formats on the same production line. On the other hand, a factory with low Tech Agility needs a separate line per format at best; and at worst, simply doesn’t have the capability to efficiently process different formats. Below are a few ways to improve Tech Agility:

  • Use of sensors and servo motors to automatically adjust for changes in package sizes. This also helps for automating product changeovers.
  • Design line layouts that allow processing equipment to be swapped in and out based on production needs. This creates modularity and makes better use of the factory footprint.
  • Outsource smaller runs to contract manufacturers to test market results instead of investing in new equipment
  • Employ 3D printing for late-stage-customization to increase SKU variety without making significant changes in other production areas
  • Engage plant technology and process experts in the product development and design processes. This reduces the time wasted on designs that are not feasible and cannot be manufactured.
  • Leverage data sharing systems so that information from across the supply chain can be used in the product development process. This allows people to understand performance data, capabilities, capacities, costs and other key information across the supply chain.

As new generations usher in new ways of experiencing life, manufacturers in the CPG industry need to have the Agility to keep up with changes without inflating costs. Agility not only enables market leadership, it also removes a significant amount of risk from experimentation – bringing the fun back into the factory. An Agile factory or supply chain creates business opportunities for itself and its customers, who may also need contracted work for store-branded products in new and exciting formats. A manufacturing efficiency expert such as those at Manuficient can help you increase the Agility of your supply chain and match your production capabilities to current and emerging market trends.

Download Your FREE Whitepaper Today!:  Why Most American Continuous Improvement Initiatives Fail

Regards,

Calvin

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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 Change Management: Leveraging Forces of Change to Grow

Manufivient - Threat - Opportunity

In manufacturing, change happens – rather you’re ready for it or not. Sometimes these changes are expected and sometimes not so much. There are many forces acting on the manufacturing system (or any business system for that matter). These forces create pockets of pressure and vacuums that ultimately result in disruptions to the manufacturing system if not handled effectively. There are many sources that these forces can emerge such as: corporate mandates, governmental mandates, personnel changes, competition activity, technological advancement, customer taste changes, new market pursuits, improvement events, etc. This list barely chips the iceburg. When the forces of change becomes strong enough in any direction, the manufacturing system has to have the agility to quickly adapt and sustain acceptable productivity levels. Change is risky but absolutely necessary; it is also unavoidable. With that said, how can a manufacturing system be in pursuit of perfection, when the system is in a constant state a flux? While I’m a huge proponent of Lean Manufacturing, the reality that the manufacturing system is in a constant state of flux highlights a limitation of Lean, which sometimes assumes that processes remain generally the same. It also exposes the urgency of Agile Manufacturing.

An effective Change Management System is essential in our pursuit of the perfect manufacturing system. This is based on the definition of a perfect manufacturing system being one that can sustain above 85% OEE, even under changes of any frequency and magnitude. This being a manufacturing system that is both Lean and Agile – or Leagile as some are now calling it. A Change Management System can help prime the organization for upcoming changes as to minimize disruption and avoid compromising any element of manufacturing execution. There are several critical components of any effective Change Management System:

1 – Change Tracking Log – This provides a database of past and future changes and allows effective prioritization. The log allows for changes to be spread out on the factory’s calendar so that non-critical changes can be scheduled around critical ones. The Tracking Log also helps to predict how upcoming changes will affect one another. Finally, the Tracking Log helps to identify which key stakeholders have signed-off on the change and which buy-offs are still pending.

2 – Change Management Communication – CM Communication provides the critical change information to the right people on a regular basis so that all stakeholders remain aware of what changes are coming down the pipeline. This helps leaders to predict how upcoming changes will impact their areas of accountability and allows them time to take steps to prepare. The CM Communication could occur in the format of a weekly meeting, emails, publishing printed documents or whatever works best within the context of your manufacturing environment.

3 – Risk Assessment – This is a process that provides a safe format for all key stakeholders to assess risks and voice their concerns about an upcoming change. The Risk Assessment also provides a platform to collaborate on any mitigating actions needed to sustain acceptable business performance.

4 – Key Stakeholder Buy-offs – Stakeholder Buy-offs allow key stakeholders the opportunity to approve or dis-approve on the quality of execution of the agreed-upon mitigating actions from the Risk Assessment. Depending on how your CM System is designed, the owner of the change will likely have the obligation to provide as much evidence as needed to validate effective execution of mitigation actions. This could include test results, photos, training sign-off sheets, or any other form of proof.

5 – Change Management Review Process – The CM Review Process is a step to ensure the integrity and Continuous Improvement of the CM process itself. Its possible to develop CM metrics to measure the team on the effective execution of the CM process. For example, one metric could measure if the change owner obtained 100% of required sign-offs before the change actually took place. Another could measure the delta in OEE% for a process following the implementation of a change.

Implementing an effective Change Management System is an initiative in itself. Just like any initiative, its success or failure depends primarily on the discipline of its leaders to see it through even when others have not bought in. An effective Change Management System can be a tremendous asset for people on all levels in the factory and the company at large. It provides a systematic way to drive the changes that need to be made. So if you’re an operator on the plant floor, you can use the CM System to initiate a change for much-needed improvements in your production area. Likewise, the Plant Manager can use the CM System to ensure team engagement and support before engagement. Additionally, in the most Agile organizations, CM Systems are used company-wide to affect changes initiated across different business units such as Marketing, Sales, Distribution, Finance, or other.

A manufacturing efficiency expert such as those at Manuficient can help create a Change Management System tailored to the nuances of your organization that helps sustain and drive Continuous Improvement.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

fOS Lead Capture2PPM Lead Capture2

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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.

Hiring, Promoting, and Firing for Transformation in Manufacturing

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What is the mix of attitudes toward change within your organization? Is your factory’s mix of attitudes optimized for transformation?

One of the most critical factors of a successful Continuous Improvement implementation is having the right people on the bus. When undergoing this type of change, the organization is going from a steady state to a transformative state of operation. To optimize the speed and strength of an implementation, it helps to have the right mix of personalities, talents, competencies, and attitudes in place. For instance, the greater manufacturing competency (such as experience with Lean, Six Sigma, or other), the easier the implementation. In regard to personalities, it helps to have a diverse team that can bring a variety of perspectives to the table. Also, talent brings magnitude to the direction that is set for the change. However, the predominant factor in the organization’s Agility is people’s attitudes toward change at the onset of the initiative. Organizational Agility is the speed at which it can effectively change and return to steady state. Granted, people can change and judgement needs to be applied as to how much a person can change and by when, the amount of time required for people to change adds time to the implementation. As you may have gathered at this point, a CI implementation needs to happen in the attitudes and behaviors of people, just as much as it happens with other manufacturing assets on the production floor. Depending on the specific current and future needs of your business, your approach to getting the right people on the bus will vary.

One of the most profound publications on people’s attitudes toward change is “Who Moved My Cheese” by Spencer Johnson, MD. According to Spencer, there are four types of attitudes towards change which I’ll summarize below:

Sniff (or the Change Agent) identified change early. He kept things simple and adopted the change. He would represent those in the organization who advocate change for the others.

Scurry (The Supporting Agent) was eager and quick. He was flexible, aware and accepted the change that was taking place.

Haw (the Adapter) dealt with change in a different way. He was able to relinquish old behaviors and learn from past mistakes.

Hem (the Stabilizer) preferred to stay in his comfort zone and ignore the reality of the situation. He felt entitled and just trusted his needs would be met if he took the easiest path.

One of the keys to optimizing a CI implementation is finding or cultivating the right mix of attitudes. Based on personal experience, the typical organization at steady state might contain the following mix:

Change Agents (2%) | Supporting Agents (15%) | Adapters (50%) | Stabilizers (33%)

For a more effective Continuous Improvement implementation, a more appropriate model might look as follows (depending on the organization’s goals):

Change Agents (10%) | Supporting Agents (35%) | Adapters (40%) | Stabilizers (15%)

The point is to show a significant shift from people on the Stabilizer end of the spectrum toward the Change Agent end. This is especially true within the Leadership group of the organization. This may also require either helping people to change their attitudes or hiring/promoting/firing people to optimize the mix required to strengthen a transformation. Notice that even in a state of transformation, some population of Stabilizers is still required to support implementation. This is because Stabilizers are best suited for driving adherence to standards, which is critical for continuous improvement.

To effectively apply this model, an inventory of attitudes toward change should be taken to get a snapshot of the organization’s current state. An expert can help you determine the attitude mix required to achieve the desired future state. After the implementation has reached maturity, there should be a shift in attitudes away from Change Agents and toward Stabilizers in efforts to sustain desired changes. At any state of operation, there is an optimal mix which should be evaluated and decided upon based on the current and future needs of the business.

A manufacturing efficiency expert such as those at Manuficient can help to assess your organization’s current state and help develop the optimal mix based on business needs.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

fOS Lead Capture2PPM Lead Capture2

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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.

Continuous Improvement in HR Part 3 – The Value-Creator Ownership Model

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Have you ever heard of an economic model where everyone makes about the same amount of money regardless of what actual value they contribute to society? Of coarse you have…just pick an American factory at random and that’s pretty much what you’ll find. The norm for US factories is to have minimal or marginal income diversity, especially among blue collar workers. Let’s look at this model in a slightly different context. Take entrepreneurship for example. Entrepreneurship usually takes a substantial degree of risk but can be tremendously rewarding if it works. Just about every entrepreneur would tell you flat out that the potential for rewards out-weighs the risk, and that’s why so many people go for it. This is one of the most powerful engines in business and for any economy. In fact, some brave soul(s) made this calculation prior to the birth of every company in existence. If you told an aspiring entrepreneur that no matter how much risk they take on with their dream venture, they would never make much more than $18/hr, do you think they would still go for it? Do you think they would bother with all the brainstorm sessions, raising capital, breakthroughs in innovation and all the exciting and sometimes dreadful aspects of entrepreneurship? Probably not so much.

This model of marginal income diversity contradicts some of the values that America is founded on. Some of those being freedom, prosperity, equality, competition, individualism, progress and change, etc. The compensation system currently used by most American companies is designed to make life easy and predictable for the accounting function. It was designed and deployed before we had computers to do the vast majority of our bean counting. The downside of the current low-income diversity model is that it gradually disengages employees and is counter-productive to the most predominant American values. In other words, it shuts the growth engine off at the shop floor level. This leaves managers scrambling to find the next motivation and performance management tactic to deploy in efforts to maintain or increase productivity levels.

So the question becomes – How can we leverage the values that have made America the most powerful economy in the world to make your company more successful? The answer lies in providing those who create value for your customer with the freedom to create wealth for themselves. Not by working slower and racking up overtime hours; but by working smarter with the time they have available. Not by asking them to claw their way up the corporate ladder in hopes for a higher salary; but by tying their value contribution to their income on a daily basis. The answer lies in converting employees into business owners that operate within the framework of the larger company.

The Value Creator Ownership Model

This is an example of a model where employees are given a tremendous degree of ownership of their work. Every employee has internal suppliers and customers, just like every business has. In this model (in the manufacturing environment), there are those who make stuff and those who provide services. Anyone not a part of the immediate value chain is a Service Provider. The compensation of those on the value chain is linked to the value they contribute on a daily basis. Those on the value chain (aka Value Creators) would be allocated a production budget. Internally (or externally) contracted services would be paid for out of that Value Creator’s budget. The Value Creator is allowed to take home whatever portion of their budget that they don’t use. Value Creators who want to increase their take-home pay might invest more in training and continuous improvement to reduce their operating costs. See my post on Value-Based Compensation for more details on how this works.

Service Providers are compensated based on being “hired” by Value Creators internally to provide a service at rates that they control. In this model, a service provider, such as a maintenance technician or trainer, could potentially price themselves out of the internal market. This provides an incentive for service providers to strive for quality and perfect their craft to keep steady business. Since Value Creators have a choice in who provides their services, Service Providers who are poor performers will struggle to find work in the factory. A Service Provider who wants to increase their pay might invest more in training so they can charge higher rates or they can foster strong relationships with Value Creators to maximize billable time.

The major benefit to this model is that the production floor becomes virtually self-managed. Poor performance anywhere results in lower pay everywhere on the value chain. If a supplier struggles to get parts made, it reduces the value that can be created downstream – resulting in reduced pay for all those affected. This makes the pain of poor performance hit home across the board and puts tremendous pressure on everyone to work together to achieve more.

This model self-corrects many of the issues that plague American manufacturers today such as resistance to change or improvement, managing individual performance, eliminating waste in activities both on and off of the value stream, and others. One of the potential drawbacks to this model is that some people may end up making less than minimum wage. Minimum wages can be instituted as well since manufacturing typically pays well over the legal minimum wage. This works out because those who don’t perform well and end up making just the minimum wage can (and probably will) easily find manufacturing work elsewhere for substantially more money. This automatically free’s up opportunities to on-board higher performers. In the end, your factory becomes a sub-economy that is driven by people’s own desires for freedom and prosperity instead of top-down command and controlling. A manufacturing efficiency expert such as those at Manuficient can help you develop an employee compensation model that leverages American values to create an internal growth engine.

Visit my Excelville Profile for tools and resources for your operations excellence initiative.

Regards,

Calvin

fOS Lead Capture2PPM Lead Capture2

Engage with us:

Subscribe | Request Material | Schedule a Call | Request a Proposal

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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.