My friend Jeff Bust had recently taken over the Energy Products Group (EPG) of Dover Corp., a multi-billion dollar global manufacturer of industrial products. Oil prices were pushing an all-time high and demand for the company's primary product -- sucker rods -- was through the roof. Dover owned two companies that produced sucker rods -- Norris from Tulsa, Okla. and Alberta Oil and Tool (AOT) from Edmonton, Alberta, Canada. Jeff sensed that if the two companies worked closer together they could produce more rods for Dover.
Unfortunately, the two firms had been pitted against one another for years, and although they were part of the same conglomerate, there was not adequate incentive for them to play nice together. Our mission from Jeff was to eliminate the constraints between the two companies, making them more cooperative, top-producing teams, and increasing the overall output of sucker rods.
In process improvement initiatives, processes are only as good as the people who implement them, and if John doesn't like Bill and Bill thinks John is an idiot, no change initiatives can succeed. Systems are held together by purpose, relationships and information. The purpose of Jeff's system was clear cut -- make more money by producing more sucker rods.
First, a word about sucker rods. Imagine an oil well that has something that looks like a giant horse head pumping up and down. Attached to the "horse head" is a rod that goes down into a casing thousands of feet into the ground to the oil patch. This rod is known as a "sucker rod" and is in 22-foot sections.
The first step in our analysis was to define the system, its purpose and how to measure it. Defining the system was going to be different because we looked at AOT and Norris as one plant under the same roof. This was a different perspective from the past and yielded different solutions.
The second step was to identify the system's constraint; it was heat treat. The most sucker rods that Dover could produce would be the combined output of the AOT and Norris heat treat operations. Now, it was clear that they would have to work as a team, not against each other.
Maximizing the Output of Heat Treat
The sequence of product through heat treat had an enormous impact on "run out" or "dead" time. This meant that forging needed to run with a "lean" mentality with respect to changeovers, quality and precision.
AOT had maximized their productivity by practicing Lean concepts for nearly a decade. Norris, on the other hand was two decades behind with respect to progressive manufacturing procedures, and had been plagued by hostile union/management relationships for at least that long. This was no more apparent than in the forging area. So, essentially the constraint is the mindset of those closest to forging in Tulsa, Oklahoma. That one department and their attitude would determine the success of the two combined companies.
Anticipating and Pre-empting Worker Resistance.
What would happen if we got a group of disgruntled workers and "told" them they needed to operate more like Canada or in a Lean way? How effective would education on set-up reduction, Theory of Constraints and Lean concepts be? We knew the answer. We needed to open the minds and hearts of those closest to the issue and we didn't have time to start at the top with some sort of new initiative. We needed improvement and better results immediately, and in order for that to happen there needed to be a sense of discovery and ownership by those involved.
We put union factory workers, maintenance personnel, front-line supervisors, engineers and scheduling people through three programs: on-line assessments, a two-day relationship development workshop and individual half-hour sessions with an executive coach. The purpose of this education was:
- To show each individual their behavioral style and how their style affects communications with people throughout the organization.
- How best to communicate with people of different behavioral styles and values.
- To learn that many communication problems can be solved by adapting our style to better learn what the other person is trying to say.
- Improve everyone's listening ability and thus the ability to learn new ways of doing things.
By the end of the two days arms were unfolded, and there was laughter and collaboration.
We then put the group through several workshops on synchronous flow and Lean concepts.
We then took the group to Alberta, Canada to work with their peers at AOT. Some of the team had probably never left Oklahoma, much less the U.S. so there were passport issues and extensive preparation. A team of 15 people from Norris and with their AOT counterparts participated in tours, hands-on-training and actual kaizen projects.
The joint team then brainstormed ideas and developed short-term doable projects to increase the flow of sucker rods for the combined operations.
- A new view of both companies working together as one system under one roof.
- An increased focus on heat treat as the strategic constraint for both companies.
- Norris profits increased by over 6% despite taking 33% of constraint capacity out of service for repair.
- AOT profits increased even more and both of these profit improvements were achieved in spite of increased steel prices.
- Set up time at Norris forging went from 4 hours to 30 minutes.
- Went from 50% rework to 10% (thus gaining constraint capacity).
Systems are indeed held together by purpose and relationships, and the marriage of people and process. The yield of purpose, relationship and information is culture, which was now one, not two.
- If there is a question about the effectiveness of relationships surrounding an issue, work on that prior to the issue itself.
- Folks are folks. Some wear ties and hang around in the executive suites and some wear hard hats and work in a non air-conditioned forging operations. What works in relationship building in the executive suite also works on the shop floor.
- The huge amount of money gained from this project would not have happened without engaging the people in a different more proactive manner, before pushing them into a new process.
John Covington is President of Chesapeake Consulting. Chesapeake Consulting blends manufacturing experience with proven principles of TOC and Lean Manufacturing to provide process and operations improvement consulting to manufacturing firms across a broad spectrum of industrial, government and non-profit organizations. Chesapeake also links these programs with best practices in leadership and staff development to align processes with people. http://www.chesapeak.com/