achieving growth and healthy profits has not been effectively defined and communicated.
During my 30-year manufacturing career as a supervisor, manager, director and chief executive, I participated in four successful "financial turnarounds". Throughout these experiences, I continuously researched and tested business ideas, practices, processes and systems relative to their growth and profit margin contribution. As the years passed, it became clear to me that there were a number of tools, techniques and processes that were crucial to establishing a solid foundation for growth and profits. Because of their importance, I now write, teach and counsel on the development and implementation of the 8-Basics of Kaizen Based Lean Manufacturing™.
Over the past 30 years, we were led to believe that computerized systems would provide the solution to all of our growth and profit problems. In manufacturing and distribution, systems sophistication was to provide the tools for getting the right material in the right quantity to the right place at the right time. In engineering, Computer Aided Design (CAD) systems were to be the high-tech innovation for improving engineering design and speeding the time-to-market process. In sales/service, Microsoft Office was to provide the missing link in effective business communications while the Internet was to improve order sales capture rates and order processing speed.
In their efforts to draw closer to customers, many business management teams have lost focus on what should be a company's primary success factor - profitable growth. They have pursued Total Quality Management (TQM), Enterprise Resource Planning (MRP/ERP), Business Process Reengineering (BPR), ISO-9001, and Six Sigma with each respective guru reassuring them that if they followed their program the bottom-line would take care of itself. Well it hasn't happened! Like most perceived panaceas, each of these programs received a lot of hype, produced a few success stories but in general, contributed little towards helping companies identify and achieve their full potential.
For a measure of their shortcomings, one needs only to spend some time in a manufacturing facility - especially during the last weeks of the final financial quarter. In a typical company, you'll find that converting the quarterly financial forecast into reality still requires overtime, internal/external expediting, last minute "on-the-run" product changes and even a little "smoke and mirrors". Results are scrap, rework and warrantee costs that negatively impact profitability and quality and shipment problems that deliver less than acceptable customer satisfaction. Companies have spent many thousands of dollars in pursuing MRP/ERP and ISO-9001 certification, only to see their business decline due to uncontrolled operating costs that produced non-competitive pricing. Other companies have won the Malcolm Baldrige Award for Quality and Business Excellence and subsequently fell far short of achieving growth and earnings expectations.
So, after introducing all these computer systems and more, why is it that most businesses are still struggling to sustain profitable growth and are no where close to achieving their full growth and profit potentials? The first reason is simple - the results achieved by any computer system are only as good as the people at the controls and the integrity of the data they provide. The second is complex - most manufacturing managers facing major day-to-day problems and constraints adopt a totally reactive management style. Consequently, their time is consumed with "band-aiding" and/or finding ways to work around system and process problems - leaving them little or no time to analyze and eliminate the root causes of ineffective systems and processes. How does one turn around such a classic "cart before the horse" syndrome? What's required is first a company-wide, in-depth understanding of the fundamental importance of manufacturing basics and then a total commitment to the consistent and tenacious execution of the 8-Basics of Kaizen Based Lean Manufacturing™.
Like Vince Lombardi, who achieved success by having his team focus on the mastery of football basics - we need to have our manufacturing teams focus on the mastery of the manufacturing basics. Each of the eight basics requires proactive planning and tenacious execution that demands leadership above and beyond just satisfying "day-to-day" accountabilities. Some managers can't envision the benefits of mastering manufacturing basics, other simply can't find the time. Like practicing blocking and tackling in football, it's not exciting, and like most football heroes, managers prefer to run with the ball. But without the tenacious and flawless execution of manufacturing basics, companies will seldom achieve their full growth and profit potentials. Delineated below are the 8-Basics of Kaizen Based Lean Manufacturing™.
Information Integrity: It is not uncommon for front office management to become disenchanted with computerized systems results when time schedules and promised paybacks are not achieved. Truism: acceptable systems results cannot be achieved when systems are driven by inaccurate data and untimely, uncontrolled documentation.
Performance Management: Measurement systems can be motivational or de-motivational. The individual goal setting of the 80's is a good example of de-motivational measurement - it tested one individual or group against the other and while satisfying some individual egos, it provided little contribution to overall company growth and profit. Today, the balanced scorecard is the choice of manufacturing winners.
Sequential Production: It takes more than systems sophistication for manufacturing companies to gain control of factory operations. To achieve on-time shipments at healthy profit margins, companies need to replace obsolete MRPII/ERP "order launch and expedite" methodology with the simplicity of sequential production. The assertion that sequential production only works in high production, widget-manufacturing environments is a myth.
Point-Of-Use-Logistics: Material handling and storage are two of manufacturing's high cost, non-value added activities. The elimination of the stock room, as it is known today, should be a strategic objective of all manufacturers. It's time to realize that there is much more to increasing supplier contribution to a company's growth and profitability than simply placing purchase orders with the lowest price bidder.
Cycle Time Management: Long cycle times are symptoms of poor manufacturing performance and high non-value added costs. Manufacturers need to focus on the continuous reduction of all cycle times. Achieving success requires a specific management style that focuses on "root cause" proactive problem solving, rather than "fire-fighting."
Production Linearity: Companies will never achieve their full profit potential if they produce more than 25% of their monthly shipment plan in the last week of the month or more than 33% of their quarterly shipment plan in the last month of the quarter. As companies struggle to remain competitive, one of the strategies by which gains in speed, quality and costs can be achieved is to form teams of employees to pursue and achieve linear production.
Resource Planning: One of the major challenges in industry today is the timely right sizing of operations. Profit margins can be eroded by not taking timely downsizing actions and market windows can be missed and customers lost by not upsizing the direct labor force in a timely manner. These actions demand timely, tough decisions that require accurate, well-timed and reliable resource information.
Customer Satisfaction: Customer satisfaction is in the eyes of the beholder - the customer. Perceptions are what we need to address when it comes to improving customer satisfaction. It does us no good to believe our products and services are best if a customer's perception of our "as received" quality and service is contrary. We need to plan and implement proactive projects that breakdown the communication barriers that create invalid perceptions.
While many business gurus have identified one or more of these manufacturing basics as important to the successful pursuit of business excellence, the fundamental importance of these the 8-Basics of Kaizen Based Lean Manufacturing™ has been lost in the proliferation of buzz words and the mania of systems sophistication. We say it is time for companies to put a hold on sophisticated systems development that cause self-inflicted, day-to-day chaos. In its place, they should immediately initiate an action learning program for gaining a company-wide understanding and acceptance of the importance of the 8-Basics of Kaizen Based Lean Manufacturing™. Once buy-in and commitment have been achieved, aggressive planning and tenacious implementation must follow. In short, let's put the "horse before the cart" - such a program will build a solid foundation for redefining and revitalizing a company's pursuit of growth and profits.
ABOUT THE AUTHOR
Mr. Gaw is president of Business Basics, LLC, the publisher of five lean manufacturing change initiative e-tutorials. He is a seasoned manufacturing executive with four successful business turnarounds to his credit.
Using these experiences as a learning lab, he methodically researched and tested business ideas, practices, processes and systems relative to how they contributed to increasing speed, improving quality and reducing costs. His efforts culminated in the development and publishing of five change initiative e-tutorials that provide e-learning for anyone ... anywhere ... anytime. Visit the Business Basics, LLC website at http://www.bbasicsllc.com/kblm.htm.