IndustryWeek's Best Plants winners, the top 10 factories for 2004 and those going back 15 years to 1990, all share a common scouting report. Beginning on the plant floor -- where customer value is most visibly created -- these operations achieve results that rout the best efforts of their competitors. Benchmark operational performance supports sales and market share growth, which drives quarterly and annual financial results, and superior industry earnings.
The Tijuana-based operation of dj Orthopedics is a shining example. Growth of the Mexican facility, where they manufacture knee braces, arm braces and other orthopedic devices, has supported an operational transformation within the company. Following a leveraged buyout in 1999, the company went public in November 2001. Sales grew 8.4% in 2003 to $198 million at year end. Gross profit increased 29%, and net earnings improved to $12 million from a $15 million loss the previous year. With a one-year share price appreciation of over 600%, dj Orthopedics was the No. 2 performing stock (NYSE: DJO) on the New York Stock Exchange in 2003.
Where do such championship journeys begin? Is it better ideas? Superior tactics and strategies? Luck?
|The 2004 Winners:
Batesville Casket Co.
The Boeing Co.
Collins & Aikman Plastics
Guidant Puerto Rico
Northrop Grumman Corp.
This year's Best Plants use a variety of techniques to continually improve their new product development, purchasing, manufacturing, assembly and logistics processes. They all employ various methods to eliminate wasteful activity (or lack of activity), fully leverage resources and streamline the flow of material and information. Not limiting their initiatives to production processes, the top 10 also push performance excellence within engineering, order entry, customer service and various administrative functions.
When asked to explain how they have been able to achieve such spectacular results, leaders from the winning facilities will mention unique technologies that they have developed; they will talk about how information systems have tightened the loop between production and customer demand; but ultimately, they always credit their people.
But most business organizations have skilled and talented people. They look the same, dress the same, have the same qualifications and talk the same game as the folks who work for industry's top-performing operations. The difference between winning and second place often comes down to how well these talented people work together.
This manifests itself on the factory floor of the Best Plants winners, where the production teams take responsibility for hitting production goals. Such teamwork is equally critical among the leadership team. When a company assembles a group of first-string managers, where the chemistry is apparent in how openly they share ideas, discuss and debate alternatives, then rally together around a common goal, incredible results can be achieved. Such conditions attract other talented people.
"When you can create a work environment that is team oriented, collaborative, and communicative, you have a competitive advantage in attracting top performers, which ultimately gives you a competitive advantage in the marketplace," says Keith Syberg, a Columbus-based management recruiter with a preponderance of manufacturing clients. "It's like a flywheel. It gets cranked and cranked and cranked, and pretty soon it flies on its own."
Syberg says assembling such a team remains as much of an art as a science. It often begins with a strong leader who isn't worried about hiring people who may be smarter than he or she is, who creates a culture of openness and respect, and who doesn't hesitate to turn decision-making over to others. It also helps to have an organization that nurtures employee education and leadership development.
Among the Best Plants winners, such an emphasis shows up in the amount of classroom and on-the-job training all employees receive (more than 80 hours per employee per year is typical among this year's top 10). It is also evident in the formal arrangements these organizations have with local colleges and universities to help employees fill in any gaps in their capabilities. Tuition-reimbursement plans encourage lifelong learning and company loyalty.
A recent program at Northrop Grumman in Rolling Meadows, Ill., brought together a cross-section of the business unit from 5 states and all levels and functions to develop their leadership skills over an 8-month span of classroom sessions, workshops and team projects. The objective was not only to make people better managers, but to energize them with a deeper understanding of the company and the direction in which it is heading.
The result, in the words of V.P and General Manager, Jim Cameron, "You have a whole bunch of people diving for balls in the outfield now. It's not just your highly paid first-line guys. You've got people everywhere who are motivated and trying to do things better, and who affect the people around them."
To identify team players who will respond to such training and power championship performance within any manufacturing operation, management recruiter Syberg says past behavior is the best indicator of future behavior. If that is true, we expect IndustryWeek's 2004 Best Plants winners will keep doing everything they possibly can to stay at the top of their game.
IndustryWeek began accepting nominations for the 2004 Best Plants awards in October of last year. Over 400 plants were nominated as leaders in their industries. A panel of IW editors reviewed the applications, which reported management practices and plant performance in such areas as quality, customer and supplier relations, employee involvement, application of new technologies, productivity, cost reductions, manufacturing flexibility and responsiveness, inventory management, environmental and safety performance, new-product development, and overall market results.
Selection of the final winners from the list of 25 finalists was aided by a team of outside experts: Sherrie Ford, principal, Change Partners LLC; Robert Hall of the Association for Manufacturing Excellence; Peter Ward, associate professor, Fisher College of Business at Ohio State University; John Puckett of Visions of Excellence; and Ken McGuire of the Management Excellence Action Coalition. Their evaluations, along with additional information provided by the finalists, were considered in the final stage of judging. The selections did not become final until site visits by IW editors to validate the performance data and management practices reported in the applications.
The best source of knowledge for any journey is a personal guide. IndustryWeek, in partnership with the Association for Manufacturing Excellence, is pleased to announce that representatives of the 2004 winners will be presenting their stories in person at our annual Best Plants conference, scheduled for May 16-18, 2005, at the Marriott Airport hotel in Nashville. For more information see the Best Plants conference Web site.
Nominations For 2005
IndustryWeek is now accepting nominations for the 2005 North American Best Plants competition. Manufacturing facilities in the United States, Canada, and Mexico are eligible. To nominate a facility, use the Best Plants nomination form.