operations excellence

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.

 

The Politics of Performance: The Relationship Between Results & Rhetoric in Business

Manuficient - Chess Piece

There is an interesting mix of performance and politics present in any group of people who share resources and work together. Performance can be viewed as any activity needed to help the organization to achieve its goals. If it’s a basketball team, performance can be viewed as either scoring points or stopping the other team from doing so. I like sports analogies when discussing performance because it’s one of the most objective ways to measure results. In sports, it’s difficult to deny that Michael Jordan scored a ton of points, which greatly contributed to his team winning a lot of games.

In most other businesses, performance can be viewed as activity that contributes to productivity or sales, a safer work environment, better quality product or service, or any other of the organization’s performance goals. Since these things are rarely, if ever, achieved in a vacuum, it’s not so evident who deserves credit for what aspect of success or failure. This is especially true in the absence of high-fidelity data down to the blocking and tackling level, which is often not practical for most businesses – outside of professional sports of course. Usually, everyone involved played a role in either creating success or causing failure. Who’s to say that what one person did was so much more significant that what the next person did to improve performance? Sure, this guy is in here 16 hours per day but who can say that he is productive for even one minute per day? Likewise, this other lady comes late and leaves early every day but who’s to say that her contribution didn’t accounted for 99% of the outstanding results?

In the absence of granular data and a thorough / objective evaluation of people’s actions and the impact thereof, their contributions are typically measured by one thing – other people’s perception of their performance. And perceptions are shaped by…you guessed it – politics.

Politics often have little to do with actual performance. It determines who gets access to resources, promotions, bonuses, fired, blamed, their way in a disagreement, and sometimes even life and death. Politics is about jockeying for power or control over resources; and exists as a result of scarcity. Scarcity can come in many forms such as financial, credit / credibility, titles, authority, privileges, promotions, etc. One of the rules of politics is – what gets repeated becomes reality; if not immediately, then eventually if it’s repeated enough and by enough people. This is why professional politicians develop “talking points” so that the same themes get repeated and ultimately accepted as truth. Unfortunately, politics can enable people with terrible performance to win and people with outstanding performance to lose. When this happens (as it does more often than you would think) the entire organization loses. The reality is that the poorest performers tend to get really good at politics for the sake of their own survival. Superstar performers are rarely good at politics since they believe the world is generally fair and their results will speak for themselves. However, whenever good results are produced, there are always a few over-ambitious and under-performing sharks waiting for the opportunity to take more than their share of the credit. Likewise, whenever teams do fail, these same people have toolbox full of techniques to deflect blame to someone else.

It can be annoying that we have to play the politics game; especially if you’re no good at it. However, it’s one of those things that will either propel your business to success or accelerate it’s failure. As business leaders, we tend to talk about performance as if politics doesn’t exist. But oh it does – and it has everything to do with how the business performs. But what is the right mix of politics and performance?

Internal politics is never value added but may be necessary. The ultimate goal of politics is to influence people’s decisions in one way or another and to shift / sustain power. There is a certain amount of value-added work that must be done in order for the business to achieve it’s objectives. Leadership should always look to minimize the amount of political behavior and maximize the amount of value-added activity. To do this, there must be a fair way to measure progress against equally challenging targets. Then grant power to those making the strongest strides toward achieving those targets. Thus, adverse political behavior should not be rewarded as it only begets more political behavior. However, when actual high-performance is adequately rewarded, it encourages stronger performances across the board.

The following leadership characteristics encourage adverse political behavior:

  • Favoritism
  • Gossip
  • Being aloof; unaware of people’s actual contributions
  • Incompetence; not understanding the value of people’s work
  • Granting unequal access to face-time, coaching, and mentorship
  • Creating or failing to eliminate scarcity of resources or recognition
  • Failing to acknowledge strong contributions or distribute recognition fairly
  • Punishing productive or progressive behaviors (even if they fail)
  • Accepting gossip as fact without sufficient investigation
  • Promoting based on political prowess as opposed to verified performance
  • Failing to recognize people’s (or your own) prejudice when considering a point of view
  • Failing to hold people accountable adverse political behavior

On the other hand, the inverse of these behaviors promote strong performance and help keep adverse political behavior to a minimum.

Political behavior can also be beneficial. The truth is that we are all the same; breathe the same air and bleed the same blood. We can accomplish a lot as individuals but a lot more by working together. The process of determining who will lead the group is done through politics. The better job we do of gathering and assessing people’s quality and quantity of contributions, the better results we get when we assign power to someone. We also need to assess our leaders’ capacity for respect for others and ability to get results through people. Unfortunately, by not having adequate systems in place, it’s difficult to truly size up someone’s contributions; and often use other people’s perceptions to make these pivotal decisions instead. What’s the solution? Be systematic. Continuous Improvement assumes you have a system in place to improve. Without a system (or standard) for assigning power to people, you have nothing to perfect. Once you have something, you can effectively assess each success or failure on its own merit and use that information to engineer a more perfect system over time.

One example of a great system for assessing true performance is the Factory Operating System (fOS). It helps to evaluate the members within the manufacturing operations chain of command based on the same metric. The metric is based on the principle of OEE (Overall Equipment Effectiveness) but improved so that it can measure the performance of people, assets, and entire systems. OEE is regarded as the benchmark for measuring performance against perfection and assessing the gap to World-Class execution, or 85% OEE. The fOS calculates the performance of shop floor operators, managers, and executives alike. It considers the performance of the leader to be an aggregate of their direct reports’ performance, which ties everyone in the chain of command up to the CEO to the execution on the shop floor, which is where value is created for the customer.

Continuous Improvement in HR Part 1 – Training; the Key to Sustainment

Manuficient - Knowledge Key

Training and People Development – The linchpin that holds any Continuous Improvement initiative together. People development is at the heart of factory performance. In fact, survey after survey has shown that a lack of workforce development is one of the greatest impediments to driving a CI culture. You can get a pretty clear picture of an organization’s agility by taking a close look at their training and knowledge management systems. When a company decides to undergo a transformation such as implementing Lean or other form of CI, they are committing to a period of substantial change in the way business is being done. This impacts individuals on all levels in the organization. Many companies believe that implementing CI is as simple as hiring a Lean expert or doing a few improvement events per year. What they don’t realize is that a CI implementation demands that everyone adopt a new set of behaviors – meaning letting go of old habits and picking up some new ones. Sometimes KPI’s, performance reviews, and coaching alone aren’t enough to get people to relinquish deeply entrenched habits. Those old habits are what kill sustainment of any initiative. If you probe deep enough, you’ll find that one of the biggest reasons for resistance to change is that people don’t believe that they, their peers, or their managers have the discipline to change. The role of the training and people development function is to close this gap, especially during a CI implementation.

In many organizations, training is simply having someone sit through a presentation and sign-off that they’ve been trained. Some go as far as to give a test or quiz at the end of the presentation to validate that learning actually did take place. Modern adult learning techniques encourage incorporating activities to engage learners, mainly to keep them from completely tuning out. But a vast majority of training programs stop there. What happens when the employee goes out on the plant floor and gets back to work? What happens when that employee gets stressed or is under pressure to hit production numbers for the day? How much of the material learned in the classroom is retained after 6 months or a year. Training, and even further, workforce development goes far beyond a classroom activity. If an employee is not performing the new / desired behavior on the job as if it is second nature, they have not been trained. Similar to a boxer or basketball player who trains for months on end before the big fight or game. The training includes learning the sport but also conditioning the mind and body to execute the desired behaviors unconsciously. Best in class training programs do provide classroom time but include auditing,continuous coaching, and corrective action until the desired behavior is ingrained. Only when the employee executes the desired behavior on a consistent basis without deviation have they been trained.

The speed at which an organization can truly “train” their human assets, the more agile the organization is. Agility is a measure of how efficiently an organization can change from one state to another. Agility is critical for a transformation at the magnitude of CI implementation. An effective training program needs to incorporate 1) Standards Development, 2) Knowledge Transfer, 3) Validation of Learning, and 4) Change Management. Items 1 – 3 are fairly common but the 4th is actually pretty rare. Change Management is the piece that requires ensuring that employees have incorporated the new behavior after they’ve returned to their work area. In many organizations, the first question people ask when someone makes a mistake is – “have they been trained?” And even though the sign-off sheet confirms that they sat through the class, they were often never really trained. In other words, the desired behaviors were never fully ingrained into their work patterns. As a change agent, you owe it to the workforce to ensure that they are actually trained, which can be verified by sampling work patterns from time to time and verifying that they match the documented standard procedure. This should be a shared responsibility with the immediate supervisor. Even better if you can foster an environment where all employees provide coaching or other corrective action to all other employees whenever deviations occur. This is trademark of how a high performance team truly works. This creates a foundation for true leaders to emerge – being those who can not only help to engineer a more perfect production system, but also lead the way on developing a more agile workforce. A manufacturing efficiency expert such as those at Manuficient can help develop a training program tailored to your specific needs that drives agility and workforce development.

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

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.

The Detrimental Impact of Cutting Costs at All Costs: A Case of the Goose and the Golden Eggs

Manuficient - Golden Eggs

A factory and all its glory is a business asset. Within a factory, you have many things at play: people, processes, technology, culture, waste, organizations and sub-organizations, hierarchy, opportunities, dreams, breakthroughs, failures, successes, entitlements, disenfranchisement, rewards, consequences – this list can go on forever. Its possible (and no doubt has happened) for a person to live a majority of their life inside the four walls of a factory. The job of a factory is to make stuff at the highest possible quality and lowest possible cost. From a purely economic viewpoint, you pump money into a factory and it pumps valuable product out. The intent is to pump out more value that you are pumping in because this is what generates wealth. This creates a dynamic where wealth can be maximized in two ways: one is to maximize the value being pumped out; the other is to minimize the money being pumped in. Let’s look at the merits of each approach separately:

Maximum Value Creation: Most manufacturing businesses are built on this principle. This is what gets sold and what customers come to know and love about the company. When you see the product on the shelf at Walmart, it says “look at all these fantastic features” and “new and improved”. Entire companies are built on the value that they bring to their customers’ lives. The factory is an asset that creates value for both the company and it’s customers. When a manufacturing company creates a valuable product, it can grow until the market becomes saturated. Up until that point, the company is presumably profitable, products are selling faster than you can make them – let the good times roll. Many people don’t realize that Lean Manufacturing was created as an approach to maximize value creation and strengthen the company’s viability. At some point, the market does become saturated and the company’s growth becomes flat – or even worse, starts trending the other way as many companies saw between 2008 and 2011. People come to miss those good ol’ times when the financial statements always had great news to share. With increasing pressures from all angles to turn those numbers from red back to black, many companies start looking at alternative ways to grow wealth.

Minimum Cost Operations: Cutting costs is another way for a company to grow wealth. A company should not carry costs that are not needed. In fact every company has an obligation to its stakeholders, especially its shareholders and customers to remove unnecessary costs from its business processes. The challenge is removing costs without compromising the value that it has brought to its customers’ lives. Cost cutting should be a careful, continuous, and deliberate process as to continue nurturing and protecting the asset that is the factory. Factories thrive on happy employees, innovation, and streamlined processes. When cost cutting impedes on any one of these critical factors, the factory as an asset becomes malnourished and productivity suffers. When the manufacturing base becomes malnourished, the company overall may soon find itself in trouble. Many companies have gone as far as divesting completely in their in-house manufacturing base and instead opted for outsourcing to China and other countries to take advantage of lower labor costs. This is done at many expenses, including destroying the innovation pipeline, losing core capabilities, shipping jobs abroad, and funneling American dollars to other countries. Unfortunately, its difficult to capture these costs in a financial statement. This approach essentially delegates the company’s most important job, to maximize value creation – in other words, compromising their core capability to create value for their customers.

Growth for a manufacturing business is achieved by maximizing the amount of value being created in its processes. As such, value creation should never be de-prioritized to cutting costs. However, every company has the obligation to continuously reduce operating costs while maximizing value. This is the true and original intent of Lean, Six Sigma, Agile Manufacturing and other continuous improvement initiatives. As the definition of value changes for customers, so should the manufacturing processes. This requires agility and continuous innovation, which every healthy factory needs. A manufacturing efficiency expert such as those at Manuficient can help you assess your manufacturing business’ value proposition and identify areas to reduce costs effectively.

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

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.

To Make or Not To Make – That is the Question

Manuficient - Kid Costume

Manuficient – Kid Costume

What do you want to be when you grow up? I remember being asked this question as a kid once or twice. I may have even asked my own small children what they wanted to be; not expecting a well thought-out answer…just want to get them to think about it. Most of us had at least some idea of what we aspired to become at some distant point in the future. It was fairly easy to just pick something – after all, since we planned to live forever, we had plenty of time to work on it.

Then over time, life happens and you look up and realize that you’ve become many things. An employee, a student, a parent, a church member, a husband or wife, a moonlighting entrepreneur, etc, etc…  In the end, we seek to be as good as possible in all these things and that’s fine. That’s life. Strangely, the exact same dynamic exists in the world of manufacturing. Many manufacturers start out with the modest ambition to make something great to serve a given market. Over time, more and more operations are brought in-house for one reason or another: rather it be to cut costs, improve service levels, hire more people, or something else. I’ve seen manufacturers start out with one production line and then take on all its own outbound logistics, kit packaging, and anything else it could fit within it’s four walls. This approach has its advantages but it can also make you lose sight of why you exist in the first place. You end up spending so much time and effort dealing with these supplementary processes that they start to feel like your core business. This is called vertical and horizontal integration. I’m not suggesting that integration is always bad; I am suggesting that any process that can be done better by someone else, you should strongly consider letting them have it. Then you can focus on achieving excellence at what you should be making.  Although its perfectly fine to be good at everything in life, you need to be great at something in business.

At some point, you have to take a step back and ask what is uniquely valuable about what is done at the factory. What is the Core Value Proposition? Ask yourself: “What process or set of processes are critical to our business that we can do better than anyone else?” Then you can start asking what can be outsourced. This is an approach to leverage economies of scale. As long as the factory or company is able to focus on becoming great at what it should be great at, it can partner with other great companies to take care of the rest. In the end, you end up with a truly great business system where each component continuously strives toward operating excellence.

Visit the Manuficient website for more information on this topic.

Visit my Excelville Profile for tools to help drive your continuous improvement efforts.

Regards,

Calvin

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© 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.

fOS Part IV – Management Systems: Exactly How Good Are you? And What Are You Going to Do About It?

Manuficient Consulting fOS Part IV - Management Systems

Manuficient Consulting
fOS Part IV – Management Systems

You may not be at all surprised by this, but I’d like to begin this post with my top five quotes about management:

5) “The secret to winning is constant, consistent management.” – Tom Landry

4) “The show doesn’t go on because it’s ready; it goes on because it’s 11:30.” – Lorne Michaels

3) “Unfortunately it’s also true to say that good management is a bit like oxygen – it’s invisible and you don’t notice its presence until it’s gone, and then you’re sorry.” – Charles Stross

2) “What’s measured improves.” – Peter Drucker

1) “All organizations are perfectly designed to get the results they are now getting. If we want different results, we must change the way we do things.”  ― Tom Northup

To throw in a bonus, I’ll include a quote that I’ve heard often, especially in the later years of undergrad and graduate school: “Managers do things right: leaders do the right thing.” – Unknown. From that I’ve always put more energy into developing leadership skills. However, in the decade or so since college, I’ve come to appreciate the value and importance of effective management. Lets face it, the most brilliant ideas and strategies are just that – ideas, until you can manage them into fruition.

I’ve been very fortunate to work for and with some of the most talented managers and most successful companies in the world. I’ve also worked for and with some managers who I would definitely not classify as great. As a disclaimer, the common thread among great managers is the same with great leaders…its their ability to get people to work hard and like it. Unfortunately, that is a skill that is extremely difficult if not impossible to teach. However there are some teachable skills that can help a manufacturing manager achieve World Class Execution, which is the goal of the fOS Methodology.

There are three main components of fOS Management Systems:

1) Performance Analysis & Reporting

fOS - Management Systems - Performance Communication

In the Planning quadrant of the fOS Methodology, we talked about the importance of setting goals, which are transcribed into performance standards. In this quadrant, we look at measuring actual performance against those standards and establishing a systematic communication structure to make sure that performance information is effectively communicated. This could be a combination of electronically, one-on-one, one-to-many, focus groups, 10-minute touch points, or whatever mix works best within the structure of your specific operation. The communication structure needs to ensure that the performance information is communicated in an actionable manner. This means that not only the right metrics should be used, but the timing of delivery should give the information recipient sufficient time to take the action necessary, ideally to prevent an issue from becoming a problem.

2) Corrective Management

fOS - Management Systems - Corrective Management

Not many things erode a culture of performance like insufficient response to issues. I look at two categories of issues: one is chronic issues, which can be worked around but still nag people and process performance; and the other is imminent issues that pose a immediate threat to schedule adherence. Both of these types of issues need to have a systematic escalation process which involves all levels in the factory at the appropriate interval. Operators are your first line of defense and should be equipped with the training and skills to permanently resolve every issue if possible. Support and management should be capable of providing deeper levels of analysis and resources needed to completely and permanently resolve issues as well. Notice the word choice…the goal is to resolve the issue permanently, even if not immediately. This is always a tough call for a manager who is dealing with immense pressure to hit schedule for the day or control costs for the current cycle. This is where someone has to stick their neck out to do the “right thing”, even if it means making higher-ups or a customer feel a little uncomfortable. As a manager, you may feel you’re getting ahead in the short run by putting a band-aid on an issue..but that issue plus tomorrows issue plus the next day’s issue create a snowball effect that eventually sets you into crisis mode and life quickly becomes quite miserable. Better to fix issues permanently as they arise and make that not only the expectation, but part of the culture.

3) Predictive Management

fOS - Management Systems - Predictive Management

A vast majority of “future issues” come as no surprise to the managers of a manufacturing organization. Most often, these future issues, or changes are known long in advance but mostly ignored because managers become overwhelmed with the crisis of the day or some other distraction. One of the most common reasons this occurs is that a surprisingly high percentage of managers work at one or two levels lower than their job title. One example would be a Supervisor spending a good deal of each day performing tasks that should be done by a Lead or Machine Operator. In these cases, that Supervisor is taking his “eye off the ball”. This happens for many reasons, ie. the manager was really good at his previous role and hasn’t grown out of it, the manager doesn’t trust that her team will perform their work effectively, the manager just doesn’t have the skills needed to be a manager and needs to score points in other ways, etc… Either way, effective management requires not getting too deep into the weeds of manufacturing and applying resources to address changes coming down the road in a way that sustains or improves current performance levels. This also helps to develop your people to build skills and take on more responsibility.

In summary, the objective of the Management Systems quadrant is to outline and assess the role of management in World Class Manufacturing Execution. Effective management not only quickly identifies current issues and takes the appropriate corrective action, but also takes appropriate preventative action for known future events that may impact performance. This is the step that not only helps the manufacturing process to achieve World Class Execution, but ensure that excellent performance is sustained.

Visit the Manuficient site for more details on this topic.

Also, visit my Excelville.com Profile for tools to help you along the way in your continuous improvement journey.

Best Regards,

Calvin L. Williams, MBA, BSIE, LSS

Engage with us:

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

Network with us:

Facebook | Twitter | Linkedin | Google+

© 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.

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