This particular business, the local site of a sub-assembly manufacturer, was a bit of hustle and bustle in a sleepy village. The gravel roads fooled most, but if you looked past them, then you uncovered an impressive four-building manufacturing facility. Many of their manufacturing assemblies required clean rooms with reverse air pressure to reach the required quality-level of their final products. There is not a person alive who does not depend on the quality and consistency of these parts.
Quiet frustration had set in at nearly every level of the management team and within the hands-on workforce. Some had resigned themselves to it and others held tight to their belief that it was just a passing phase. All they knew for certain was that it was impacting everything. The business they had built that once filled them with joy and anticipation as they walked in the door and enjoyed their coffee, was now shrouded in bitterness. The coffee hadn’t changed in the last 12 years, but something had, and they were tired of it.
Upon arrival, there were several challenges standing in the way of overall productivity:
- Additional 30% in sales was not translating into improved performance in throughput and profit: The sales team worked hard to secure more larger than normal accounts. These expected profits were celebrated when they won the contracts, but the profit never seemed to turn up when they looked for it at the end of the year.
- Recent change in leadership: There was a new GM and production manager that they promoted from within to ensure that they had the business knowledge to be successful in their new roles. They hadn’t changed much since they stepped into their new roles, but they were noticing several issues pop up.
- 40% scrap rate: One problem that wasn’t new was their scrap rate. It has been steadily inclining over the past 6 years. They were able to buy raw materials at a discount to make try and make it up, but scrap was still climbing.
- Warehouse full of undesired finished product: The warehouse was piled up with old stuff that would never be sold. No one was really in charge of it, and it was starting to spill into the travel areas and slowing things down.
- Support functions not aligned with production goals: There were pieces of the production process shared by different departments like the large ovens, sand blaster, or anodizer. These elements each had individual managers who gave priority based on personal relationship rather than production requirements.
- Leadership managing too low: The management team cared deeply about their departments but allowed those feelings to chain themselves too closely to their former roles. They micromanaged the operators and neglectedthe key measurable trends in their areas. The management team did not embrace their roles & responsibilities to manage their processes and positively confront when needed.
- Program management and planning departments’ schedules not meeting customer requirement: The scheduler was laying out plans based upon past run rates and procurement schedules. They did not make the customer delivery date their priority. They presumed that they had been operating as efficiently as possible and scheduling to pass throughput.
In order to overcome these challenges, it was crucial to consider different areas in which the company required improvement, such as management and oversight, analysis, and performance review. The following solutions were implemented to address these issues:
- Create a Culture of Short Interval Follow-Up: Condensed the amount of time mangers took to follow-up on assignments. Instilling follow-up at regular times gave the workforce confidence that their leaders were there to support them.
- Management Workshops: Conducted enriching training sessions with the management team on critical management concepts. The subjects were tailored to their specific need to include Positive Confrontation, Managing by the Numbers, and Roles & Responsibilities. These concepts were then put into action in their day to day operation and reinforced by upper management.
- Root Cause Analysis: Taught root cause analysis techniques to the management team as part of their enrichment. The team then applied theses new skills to their rising scrap issues, identifying errors in the build plans & lack of oven procedure as the two sources of the problem.
- Build Control System: Most areas of the facility would assign their team to build parts without orders for them if there was no clear plan for the day or materials for the daily plan were missing. Constantly building, in contrast to the orders on hand, led to them drowning in unsalable goods. A front to back Build Control System was created and deployed to ensure all areas worked on the correct product. This included the staging of materials from the previous day as well as a new procedure for work stoppages. Instead of building the wrong assemblies, a crew now could shift back to the area that is holding them up to help them move material along the process.
- Support Unification: As there were three managers each overseeing their support function, there was no one in the business with the perspective required to ensure the maximization of the support areas to meet their build/shipping schedules. We consolidated the support areas under a Shared Services Manager. One position owning all three support areas created a vantage point that provided strategic insight on how to schedule the area for increased output and improved quality.
- Twice Daily Management Tours: The management team who previously spent nearly all of their time locked away in their offices, now walked the production floor twice a day. They stopped at each ‘Visual Communication Board’ where the area managers gave a brief account on the progress and challenges of the day. This was instrumental in addressing issues before the end of the day to salvage time and efforts that would have been lost. These bi-daily walks were a conduit for cross-department collaboration. The promoted positive confrontation helped usher in a culture of meaningful collaboration within the management team.
- Visual Communication Boards: Every day the managers and team-leads of each production area would review their performance for the previous day as well as ensure they had everything required to execute the plan of the day. The managers would display their performance from the previous week/day graphically on a board in their production area. They would use this board as a visual aid while they spoke to their teams each morning, investigating what went right to positively influence their performance as well as what impeded them. They developed corrective action plans and intentionally spread best practices to improve productivity and quality.
Ultimately, when you consider the impact of the implemented solutions, such as the importance of aligning individual programs from front to back around true customer need, reducing scrap or excess inventory, and achieving 121% of savings goal, then you start to observe dramatic improvement in overall performance and satisfaction.
There was a diverse management team unified around the mutual goal of improving the health of the business and developing a joyful work environment. With guidance, they put in the work and their efforts bore fruit in abundance.
Some positive results came quickly in the first two weeks. Their quality scores increased from 60% to 78% through short interval follow-up and critical analysis for root causes. This scrap reduction saved them $216K annually and it was only the beginning. It was a real turning point for management team as they all accepted the 40% scrap was inherent in their business. Once they broke through that paradigm, they searched for others to overcome reducing the impact, or eliminating completely, problems they once viewed as insurmountable.
It was the 5-week mark where they realized the gains from their next operational enhancement. Utilization among the newly combined Shared Services was up 21% as compared to previous run rates. With the long run times and poor scheduling in the individually managed support areas, the equipment often stood idle. Now under one unified authority they were able to make better use of them. This significant increase in utilization, paired with the Build Control System ensuring all areas produced the correct products against the schedule, had a substantial impact on their on-time delivery.
Where they at one time were making weekly calls apologizing to their customers for missed shipments or asking for extensions, they were now calling customers to ask to ship their orders early and ask for more business! Their productivity improvement was modest at 6%, but that is all they needed with a proper build schedule and operating procedures to improve their on-time delivery from 56% to 87% over 13 weeks.
Each of the managers were in-tune with the successes and challenges of not only their area, but all the key areas through the tours and the communication boards. They knew the metrics and the plans of action to improve. They knew the newly identified best practices and the benefits of adopting the updated method. But do you know what they would lead with when you asked them about the experience? They’d tell you they were happy again.
The improvements in culture throughout the facility was what each manager mentions first when they talk about the 13-week project. There is a restored sense of pride in their work from the hands-on employees on up to the business owner. They all marvel at the joy they feel, some for the first time, pouring that morning cup of coffee in the office. Their jobs are still challenging, but they are now equipped with the tools to successfully meet those challenges head on.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: