Operational excellence is vital to a manufacturer's financial health -- and not only because of cost and quality improvements. Operational excellence creates the space for innovation and creativity to blossom. By tackling operations improvements with a systematic regimen of identifying and solving organizational problems, day-to-day incremental innovation emerges and resources are freed up to pursue breakthrough innovations. In the 1990s, Milliken & Co., a multinational group of textile and chemical companies, envisioned operational excellence, institutionalized within the organization, as the delivery system for improved performance and innovative products and services.
Since the 1980s, Milliken leaders have questioned the conventional wisdom that climbing is the hardest part of any journey, deciding instead that climbing is the most valuable experience of the journey. As a result, Milliken prepared to climb, step by step, and launched 125 separate corporate initiatives focused on people, process and business excellence. The company measured anything that could make it stronger -- safety, customer satisfaction, on-time delivery, quality and product development.
"Reviewing leading or lagging indicators was always done with one part patience and two parts determination," says Vice President Craig Long. "We had the tolerance to explore how to improve and the excitement to do it."
Milliken customized the Toyota Production System to its own culture and operations (the Milliken Performance System) and applied the scientific method to new initiatives, examining and experimenting with ways to improve even the smallest aspects of its business. Where new techniques worked, they were shared; where results lagged, experiments began again -- plan, do, check, adjust (PDCA). Soon, the company saw aggregate positive trends, the first steps on a journey that would result in a host of innovations and improvements.
Milliken, a thriving organization with more than 100 years of manufacturing expertise, now operates with the energy, urgency and clarity of purpose found in start-up companies. Company leaders believe Milliken's blend of disciplined design, purposeful creativity, innovative spirit and experience allows it to win in the face of four brutal truths that often derail organization improvements, preventing innovation and sustainable excellence.
Brutal Truth No. 1:The majority of performance-improvement programs fail.
Successful improvement requires a strong organizational commitment and culture around learning. There is tremendous value in organizations adopting the healthy self-image of a perennial student -- inoculating them against what David Garvin of the Harvard Business School calls the "not-invented-here syndrome."
Although Milliken was a market leader, metrics gathered during the 1980s and early 1990s indicated the need for a daily management system. The company looked for outside expertise -- specifically, to Japan -- to map the way forward, seeking to adopt process controls outlined by W. Edwards Deming. At the time, Japan was a world leader in sustainable business modeling. Milliken was privileged to learn from companies that had been in business 100 years or more, and that had begun to set the pace for industrial excellence. More than 100 management employees made four exploratory trips to visit leaders of Japan' s best companies -- Ricoh, NEC, Nissan, Toshiba, Dynic and others -- to learn and adopt performance systems. Those trips started an organizational journey that would last a decade and cost millions of dollars.
Milliken had built a system, a foundation, for improvement that could be sustained.
Brutal Truth No. 2:Organizations will founder unless they cultivate the trusting environment needed to perform honest self-analysis.
A learning organization both applauds success and learns from failures. For Milliken, learning from mistakes is an integral part of the discovery process. Milliken rejects traditional, pessimistic manufacturing beliefs: e.g., There will always be yield loss; accidents are to be expected; and not every customer can be fully satisfied. Instead, quality leaders adopted zero-based thinking as a countermeasure against these paradigms. In each case, the Milliken objective is zero -- period. To get there, Milliken relies upon a holistic systematic approach -- the Milliken Performance System (MPS). As part of MPS, a 10-step focused improvement (FI) process locks into place actions that prevent recurrences. FI processes help to replicate improvements wherever they are transferable.
"In 2001 we were working on one type of machine to reduce its minor stops to zero," says Steve Meyer, Milliken's director of client engagement. "This machine was suffering 13 breakdowns a month, so we organized a breakdown elimination team. A log was kept on the model machine to record the reasons for each stop, right down to the zone where the stop occurred." The team realized a 90% reduction on breakdowns when it identified and implemented five countermeasures, added the countermeasures to the process-management process, and developed one-point lessons (highly focused training documents that address a specific learning) to prevent recurrence. "Conducting five-why analysis keeps our eyes open to creatively handling problems like this one," Meyer adds. Five-why analysis broke through the superficial explanations for breakdowns and drove down to root causes.
Long cites the importance of value-stream mapping, which helps companies identify eight forms of manufacturing waste. "Much of our manufacturing involves material going through multiple plants and processes," Long says. "Our first value-stream map involved three plants where we applied seven scheduling points." Milliken applied lean principles and value-stream mapping to improve management of changeovers, level schedules and implement standard work. "We realized a 42% reduction in cycle time and went from seven scheduling points down to two. Applying this company-wide over the past 12 months, our lean pillar work has improved cycle times 48% and working capital has improved more than 20%."
Keeping everyone's eyes open for opportunities to improve is a constant at Milliken. As a reminder, Milliken MPS leaders received Daruma dolls as gifts from their Japanese manufacturing hosts; by custom, the recipient of a Daruma doll draws or paints one eye of the doll when setting a goal, and the other eye only after the goal has been reached. "We learned to sharpen our eyes during our trips to Japan," Long adds. " We've applied this throughout our global operations for several years now, and the results are gratifying."
Milliken embraced the saying that "no problem is a problem" and encouraged its workers to expose problems and search for root causes.
Brutal Truth No. 3: Organizations often count the wrong things.
In his Harvard Business Review article, "You Are What You Measure," Duke University professor Dan Ariely advocates changing how companies measure CEOs, which has traditionally been done using shareholder value as the primary barometer of performance. Rather than focusing solely on bottom-line numbers, organizations should consider a more holistic approach in measuring corporate success. Milliken positions safety as the foundation of its performance system -- and starts every meeting with a safety review. Employees who know that the company has their interests at the top of their agenda can trust their managers and be open to coaching and support opportunities. Then, too, employees who aren't worried about injury can invest more effort into developing new skills, mastering new tools and applying new methods (i.e., process innovation can occur).
Milliken holds a total injury and illness rate (TIIR) of just 0.50. EHS Today rated Milliken one of the safest companies in America in 2010 -- the only organization to have repeated the honor. Yet the impact of this focus on safety goes well beyond employee health: When visitors tour a Milliken plant, they notice a unique level of associate (Milliken's term for "employee") engagement. In most Milliken plants, at least one shift runs entirely without a management presence. Hourly associates own and are responsible for 90% of the plant's safety processes and safety education: Everyone's head counts who adds to the headcount.
Associates not only take on leadership roles at work but also assume myriad leadership roles in their communities. For example, Treva Rice has been a Milliken associate for nine years. She chairs the Relay for Life, volunteers for the Red Cross and acts as youth director at her local church. In addition to chairing Milliken's Magnolia site Process Hazard subcommittee, Rice conducts lean audits as part of a Milliken scorecard developed through years of benchmarking. "The work I do counts," she says. "We are our brothers' and sisters' keepers."
Milliken focused first and foremost on safety, which enabled it to engage and empower its workers. In the process, it transformed each associate into a renewable source of improvement and innovation.
Brutal Truth No. 4: Facts don't lie -- but they don't drive change either.
While measurement is the first step in any improvement process, strong companies have a clear bias for action based on data. For example, if a company discovers 33% waste in its production processes but fails to conduct root-cause analysis and implement corrective action, the firm will continue to lose the entire value of an entire production shift for each 24 hours it operates. Data without analysis and deployment is worse than meaningless; it adds another layer of wasted effort.
Scorecards are a vital component of the drive for organizational excellence, but successful firms implement them with a bias for action. Underperformance promotes investigation and experimentation, not blame. Effective scorecards identify problems, leading to explorations of "what" and "why," but never "who."
Tom Peters, author of "In Search of Excellence," notes that Milliken benefits from a long-standing penchant to cut the malarkey and get on with it." In 1986, Wayne Punch, corporate emeritus director of safety and health, was summoned by then-CEO Roger Milliken and other executives to explain why Punch had stopped production to hold an impromptu meeting. "We had been asking for ideas from associates," Punch says. "They were giving ideas at first, but recently we had zero ideas coming in." Punch says the shutdown changed the way forward.
"Ideas had stopped because management wasn't implementing good ideas from the shop floor. "After the meeting (Punch's experiment/corrective action), associates began to see evidence that their ideas were being implemented. Creative problem-solving increased. The difference was action."
Milliken views problems as opportunities to explore new ideas and innovation -- not disasters that end in finger-pointing and blame.
The Most Important Toolbox Is the One You Carry in Your Head
For Milliken, breaking through the brutal truths and barriers that prevent improvement meant implementing a performance system owned by passionate associates who carry their most important toolboxes in their heads. Avoiding "flavor of the month" projects, Milliken's performance initiatives dovetail seamlessly into MPS "pillar work." These pillars rise from a foundation of safety and employee engagement and include daily team maintenance, focused improvement and lean management. Each pillar strengthens what MPS calls "The House."
Allowing associates to own quality and safety and tackle day-to-day issues reduces "firefighting" activities and frees Milliken productionmanagers to explore breakthrough improvements and innovations.
Laurie Haughey is Milliken & Co.'s director, education services and marketing. Formerly she was continuing education director at Clemson University, where she created and marketed training offerings on Six Sigma, lean manufacturing, supply chain management, design and analysis of experiments, project management and executive leadership.