A Publication of WTVP

Let go of the old assumptions and focus on the right things.

While the economy is attempting a comeback from one of the worst recessions in the country’s history, manufacturers are again challenged with reinventing themselves as a means to survival. Not much different than in the past, as most of the effort seems to be trying to become the low-cost producer. The transformation, however, will have to be made without compromising quality or utility.

Recently, in one of the courses we conduct on quality management, the class was discussing the current journey that many companies are on toward recovery. One of the students commented that Mark Sutcliffe, senior vice president and division president of CDC Software’s CDC Factory product line, said, “Manufacturers need to let go of old assumptions and take a different approach to their performance improvement initiatives, particularly when it comes to technology.” Sutcliffe’s comment generated quite a discussion on what companies need to do in order to be successful. The following are 10 tips that all organizations should cultivate to bring about results.

  1. Keep the end goal in focus. Maybe the goal is to become the low-cost producer in your industry sector or core competency area. Studies suggest that in as many as eight out of 10 initiatives, managers focus too much on other, less important things rather than the goal. The organization needs to focus on the important issues that will allow them to achieve the goal. Find ways to deal with the “day-to-day” issues, but don’t let these things alter the primary focus. A good tool to help might be Hoshin Planning, a methodology developed in the 1950s by Dr. Kaoru Ishikawa. The basic premise is that the best way to achieve the desired result is to ensure that everyone in the organization is focused on a shared goal. And that might be a topic for a future column…
  2. Make crisis an ally. At the risk of sounding too much like Rahm Emanuel, President Obama’s former chief of staff and Chicago’s new mayor, “You never want a serious crisis to go to waste.” If not already done, it is a good time to craft action plans for specific cost improvements and initiatives. The current climate of economic uncertainty offers an ideal opportunity to drive change. Organizational resistance is low, and the workforce is more willing to change daily work practices. This is a great time to “rally the troops” to be synergistic and work toward common, shared goals.
  3. Answers come from all levels. As much as they may not want to admit it, senior-level managers don’t always have the solutions to all problems. Certainly, they hold the keys to the success engine. However, the engine is propelled by the energy generated at the plant/factory level and supplied by the workers. Manufacturers that focus attention and technology on factory-floor workers to improve their individual performance will see sustained transformational results.
  4. Metrics should not be taken at face value. It is not unusual for middle managers to exaggerate or misrepresent their efficiency. Metric calculations are often skewed, flawed or too focused on the plant rather than on the operational causes of performance loss or waste. Because of the “blurred” results, management routinely sets the bar for improvement against incorrect baselines, which obscures the potential for true improvements. 
  5. Numerous metrics hinder real improvement. Most companies have far too many metrics, which confuse their organizations and hinders improvement. With so many metrics, only a few people know what drives the metrics or how they are even calculated. Too much staff time is spent collecting and reporting data which drives little or no improvement. In many cases, this leads to something called “analysis paralysis.” Data is often compiled at a plant level, and we fail to provide a framework of meaningful metrics to empower the workforce to properly identify issues and resolve problems in real time. This is stifling most organizations and is prohibiting real and sustained improvement.
  6. Cost of poor quality must be known and managed. Most organizations have no real idea of their total cost of poor quality. The cost of poor quality (COPQ) is defined as the costs that would disappear if systems, processes and products were perfect. There are few things that are perfect, so every organization has a COPQ, but most spend little time in trying to truly identify theirs. In many organizations, total COPQ can be as much as 25 to 30 percent of the cost of sales. Staggering! A couple years ago, I spent time with a company that focused their entire continuous improvement efforts at a team level. Their primary tool was a COPQ analysis worksheet. Everyone was trained, involved and worked toward reducing their COPQ. 
  7. Real improvement doesn’t center on plants and equipment. Rather than focusing on equipment, manufacturers would do well to focus their continuous improvement initiatives on people and processes. Companies should implement disciplined day-to-day areas of review, adhering to procedures and offering basic skills coaching, reinforcement and real-time feedback on and from the factory-floor level. 
  8. Don’t avoid people issues because of perceived difficulty. Real, sustainable change can only happen in an environment where workers, supervisors and managers have real-time visibility into performance, reduced administrative burden and a structure that allows them to contribute their own ideas and turn them into actions. 
  9. Focus on action. Don’t procrastinate! Decide the path that will achieve the improvement and focus on the implementation plan. With any performance improvement initiative, momentum is key, and “quick wins” provide the fuel needed to gain that momentum early on. Early successes ensure that the organization’s focus remains fixed on the true objectives. (Lower operating cost with higher quality is the target, but don’t confuse the two, as they are not always complementary.)
  10. Major improvements shouldn’t take years. Many companies take too long to implement major improvements, and their efforts stall. Don’t assume that transformational improvements can’t be achieved in the short run. Results can occur in a relatively short time if you enlist the help of the entire workforce, properly deploy effective resources, create meaningful metrics and focus on technology that will support the improvement effort. Think 90 days, not years. iBi