Manufacturing executives tend to know what’s expected of them. They face financial statements, customers, and stakeholders, on an ongoing basis. In their performance metrics, there’s no denying the “what” but truly world-class leaders continually search for the best “how?” Faced with an ever-present trade-off between short-term and long-term results, even the best companies can struggle to present high-quality answers at the velocity needed.
The most common “how” in delivering improved performance is to usher in new initiatives. We find that a majority of manufacturing leaders can point to many successful improvement projects or initiatives within their operations – waste removed from a process, improved change-over speed for a piece of equipment, or higher output from a specific line or work cell. These advancements are always welcome but when project-based improvements are enacted in isolation there are far greater opportunities missed.
To maximize productivity and profitability, manufacturing leaders should avoid:
- Silo-based Improvements: A manager accountable for his or her own department and its performance will do whatever demonstrates success— regardless of how those efforts might affect other departments or overall resource availability. Even though silo-focused initiatives often yield short-term, localized results, they rarely align with other corporate actions. Oftentimes, they don’t take advantage of cross-functional synergies and are usually abandoned when the responsible manager leaves or more resources are required to sustain or grow localized gains.
- Broad, Shallow or Tool-Based Improvements: Popular improvement methods such as lean-manufacturing have spurred adoption of individual tool-associated improvements; 5S, Six Sigma statistical analysis, or Kaizen events are just a few examples. Broad, plant-wide implementation of a tool without alignment to a strategic objective seldom delivers bottom-line results and often overwhelms managers and employees with make-up work and meetings to keep disconnected initiatives alive.
- Short-Term Focus: Manufacturers — especially public companies — too often emphasize short-term results over long-term planning and investments for improvement. A case in point: it took Milliken & Co. nine years to implement the Milliken Performance System across our global operations. Milliken benefitted from its private ownership and long-term focus but most public companies cannot bear that type of implementation timeframe. Instead of investing in the short-term, those years paid out handsomely for Milliken who has exhibited average manufacturing productivity gains of 5-6% and earnings gains of 16% annually for over a decade since implementation. While Lean manufacturing methods, Six Sigma, and other solutions are beneficial, there is always room to enhance current performance and continue to excel. We advocate the pursuit of improvement in a systematic way— one that closely links every improvement action to corporate objectives through a well-defined system.
Here are some initial steps:
- Define your improvement system: Without a corporate architecture of system-wide strategy, planning, support, and implementation— along with systems to monitor and respond to conditions on a daily basis — improvement initiatives are doomed to plateau or fail.
- Prioritize the leading indicators of success: Companies have the tendency to apply pressure on the lagging indicators. Think TRIR, OEE, Cost, etc. They’re prioritizing the outputs above the inputs in their process, which is not productive. One of our clients explained this well, “We’re trying to get our plants thinking about OEE as an output mechanism. How well we run the equipment, how well we train our associates, how well we take care of our equipment, how well we prepare our inventory — all of that leads to the result. And the result is a high OEE number, which is what we want.”
- Initiate Zero Based Thinking: Zero-based thinking forces companies out of “budget thinking.” When an organization looks at the maximum loss landscape in their operations it unmasks all of those fire-fighting activities that we call “daily operations.” The concept of losses on an activities basis [i.e. identifying detailed costs associated with underperforming activities] has supported hundreds of companies as it helps guide an organization directionally in where to work and the appropriate tool to use. While targeting zero losses may seem difficult and/or impossible to achieve, we have found no better way to prioritize and focus on the things that matter most.
Establishing a systematic improvement approach doesn’t just happen. It can be a difficult process and each manufacturer must methodically embed a system and approach that is unique to its own culture. It is hard work but sustainable results are worth it. Contact us today to get started.