Thanks to the recession and the current recovery-that-doesn't-feel-like-a-recovery, some manufacturers are discovering that their future success will hinge on reinventing themselves as a lowest-cost producer. That transformation will have to be made, though, without compromising quality or utility.
According to Mark Sutcliffe, president of CDC Software's CDC Factory product line, manufacturers need to let go of old assumptions and take a different approach to their performance improvement initiatives, particularly when it comes to technology. One of the keys is to focus on taking action that will impact real costs every day. He offers 10 tips to achieving more immediate results.
1: Don't Lose Sight of the End Goal
"The goal is to become the lowest-cost producer in the sector," Sutcliffe notes. "It is not to capture all data from the plant." He points to studies suggesting that in as many as eight out of 10 initiatives, managers are focusing too much on the new tool or technology instead of on the goal.
At the risk of sounding too much like Rahm Emanuel, President Obama's former chief of staff ("You never want a serious crisis to go to waste"), Sutcliffe urges manufacturing leaders to craft a decisive action plan for specific cost improvements, given that 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," he points out.
3: Don't Assume All Answers Come from the Executive Suite
As much as it might pain them to admit it, senior-level managers are not the be-all and end-all of manufacturing performance gains. As Sutcliffe observes, "the real daily performance dials in today's plants are moved by the workers, not by upper management. Manufacturers that focus attention and technology on factory-floor workers to improve their individual performance will see transformational results."
4: Don't Take Current Factory Metrics at Face Value
Most plant managers exaggerate their efficiency, often by as much as 10%, Sutcliffe notes. Their metric calculations are often flawed or too focused on the plant rather than on the operational causes of performance loss or waste. "Yet management continues to set the bar for improvement against a spurious starting position," he says, which obscures the potential for true improvements.
5: Don't Assume Data Leads to Improvement
In some cases, Sutcliffe states, data-collection software tools can lead to a state of "analysis paralysis" as managers seek to get complete data for the entire plant. What's needed is a framework that empowers the workforce to resolve problems in real time.
6: Don't Assume that Improvement Centers Only on Plant and Equipment
Rather than focusing on equipment, manufacturers should focus their continuous-improvement initiatives on people and processes. Sutcliffe recommends implementing disciplined day-to-day review points, adhering to procedures and offer basic skills coaching, reinforcement and real-time feedback on the factory floor.
7: Don't Avoid People Issues Because of Perceived Difficulty
Real, sustainable change can only happen, Sutcliffe says, in a manufacturing environment where operators and supervisors have real-time visibility into production performance, reduced administrative burden and a structure that allows them to contribute their own ideas and turn them into actions.
8: Don't Do a Trial; Do the Project (or Don't Bother)
"With any performance improvement initiative, momentum is key, and quick wins provide the fuel needed to gain that momentum early on," he says. "Early successes ensure that the organization's focus remains fixed on the true objectives -- to lower operating costs." Once you start, he adds, there should be no going back. "Your confidence will be felt by all the stakeholders and the project is already on its way to success."
9: Don't Build Your Own Technology
Considering that Sutcliffe's company is a vendor of packaged solutions, not surprisingly he recommends that manufacturers look for packaged solutions specifically designed for their industry verticals, rather than attempting to design and build their own systems.
10: Don't Assume That Major Improvements Take Years. Think 90 Days.
"Don't assume that transformational improvements can't be achieved in the short run," he notes. Results can occur in a relatively short time if you focus on technology that supports continuous improvement practices.