The Transformative Power of Operations Discipline

Recently I was talking with a manufacturing CEO about a production assessment to improve productivity and customer service. I said that I look closely at Operations Discipline, and he immediately responded, “That’s our problem!” Operations Discipline encompasses everything required to efficiently and effectively develop and deliver an organization’s products and services. It applies not only to manufacturers and distributors, but to banks, insurance companies, service organizations and just about any company that has an operational component.

Operations Discipline is a strategic issue that directly impacts the organization’s ability to carry out its mission. Fundamentally, it is the willingness of the organization to create and follow process and rules, and holding people accountable for performing them. The elements of Operations Discipline are:

1) Systems and processes

2) Constructs and rules

3) Behavior and accountability

These elements exist within a framework of continuous improvement.

A strong culture of Operations Discipline results in highly profitable operations, strong customer service, and effective use of assets such as inventory and capital equipment. Weak Operations Discipline crates the opposite, and also lowers morale.

Systems and Processes

An operational environment is comprised of a series of processes that, taken together, create the system that delivers what the customer wants, when they want it, at the lowest possible cost. Systems and processes are the building blocks for how the company does what it does to fulfill its mission, and they serve as the foundation for continuous improvement. In Lean, there is a concept called “standard work,” in which each process is defined and performed the same way every time. This removes randomness and improves quality and service while reducing cost. The result is a consistent outcome that achieves the organization’s objectives.

The first step in improving any process is to understand it clearly. Then you define how it should work and what the expected outcomes are, and finally, you assess how the process is working. Many companies start with the last step without knowing what the expected outcome should be, which usually produces a less than useful product. In order to define the gaps in performance, you need to know what ideal performance looks like.

Constructs and Rules

Constructs are the basic elements of the design, and rules are the guidelines for execution. Operations Discipline cannot exist without them.

Think about product numbers and descriptions – in a store like Home Depot, there could be tens of thousands. Without constructs and rules, employees wouldn’t be able to find an item’s product number to look it up, order it, sell it, or report it. Columbia Sportswear stores have terminals where you can find out if items are available or even order them for delivery. Constructs and rules make this possible, boosting customer satisfaction and sales.

One of my past clients had almost five times the part numbers they needed in their database, because every time someone couldn’t find a part number, they created a new one. The result was excess inventory and frustrated employees. Constructs and rules are vital.

Behavior and Accountability

Have you ever gone to a seminar, only to return to work and not apply anything you learned? Have you known of a company that has been on a Lean journey for a few years with low (or no) results? Operations Discipline requires you to hold people (including yourself) accountable for results, not just activities.

Repeating actions over time and measuring results instills accountability that helps turn actions into habits, and habits into culture, yielding sustainable results. Part of setting the foundation for behavior and accountability is to have consistent values in the company, then determine the behaviors that will support those values. Include the behaviors in the hiring process to be sure you’re building a team that aligns with company’s culture.

When we implemented world-class manufacturing at Supra Products, one of the first things we did was to overhaul the entire employee evaluation system and the hiring process. We focused as much on team participation as we did on the technical skills for the job. We found we could train skills, but it was helpful to start with a strong foundation of values and behavior.

When organizations lack Operations Discipline, they slowly die from increased costs, increased use of working capital, employee frustration and weak customer service. Recently I have seen a number of companies whose culture does not hold people accountable. Things as simple as having standard part number structures or consistent receiving processes are either non-existent or aren’t enforced. The result is excess inventory, increased costs, and poor customer service.

If you’re curious how Operations Discipline could transform your company, give me a call.

 

© 2019 – Rick Pay – All Rights Reserved