It Doesn’t Work If You Don’t Do It

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Recently I was working a project for a client and I checked several references I’ve used over the years for manufacturing and distribution improvements. Four of the books I often refer to are:

These books guided many of the World Class transformations I worked on in the mid-1990s and beyond. They’re 25 years old (or more)!

The interesting thing is that many companies still aren’t doing what these books (and others) suggest. The ideas in them are extremely effective and produce extraordinary results, so why aren’t more companies using them?

  1. You can’t learn things by simply reading a book – you need guides to help you along the way and experience from trying things with the resulting mistakes/learning and successes. Would you want to read a book on how to ski and then go hit the black diamond slopes?
  2. It takes intentionality – you have to have a strategy and then execute.
  3. It takes leadership – What all of my successful clients have in common is an upper-middle level manager/champion who is driven to accomplish extraordinary things.

The foundational ideas of process and productivity improvement are immutable, but they only work if you use them.

© 2019 – Rick Pay – All Rights Reserved

Ask Your Customer

One of the keystones of Lean (back when it was called World Class Manufacturing) was The Customer Defines Quality. Simply put, if you want to know how a product or service should perform, ask your customer what their requirements are.

You don’t need to be a manufacturer to ask your customers what they want. Recently in my consulting communities, there’s been a discussion about the best way to structure blogs and newsletters, and how frequently to issue them. After much debate, one of my associates decided to ask his readers. They said they don’t have time to read long newsletters and prefer short pithy blogs once or twice per week to challenge their thinking and bring new ideas to light.

It seems the old ideas still apply. If you want to define the customer’s need, ask them.

© 2015 – Rick Pay – All Rights Reserved

Sometimes It’s the Emotion

Consultants, Lean experts, managers and executives often get wrapped up in the process. They focus on improvements, introducing controls, reducing expenses, increasing revenues and improving the business overall. But despite the intense focus, the improvement processes don’t last and can even hit a brick wall. Why?

Back in the 1980s and early 1990s – before Lean entered the popular lexicon – World Class Manufacturing was the buzzword of the day. It was a three-legged stool – Total Quality Management, Just In Time and Total Employee Involvement. The Total Employee Involvement, in my opinion, was the magic elixir that yielded extraordinary and sustainable results.

When mid-market company improvement efforts stall, the root cause can often be traced to fears on the part of executives, managers or employees. They’re asking themselves, “What does this mean for me? What do I do when my job changes? Will I be left behind? Are the results too big for me to handle?”

Fear of the unknown and fear of change can be powerful impediments to process improvement, leadership development, succession planning, strategy, etc. If you don’t address the fears, you’ll likely find that change is not sustainable, if it begins at all.

Have your addressed the fears in your organization? Have you bridged the emotional gaps that might be present? And don’t forget about your own.

© 2015 – Rick Pay All Rights Reserved

Minimum Wage or Employee Partnerships?

There’s a political debate going on over whether an increase in the minimum wage will improve the incomes of lower wage families. Politicos want to raise the wages of lower level workers, while business is always trying to reduce the cost of labor. It seems they’re at loggerheads, but isn’t there a way to accomplish both things at the same time? Employee partnerships can help make the compromise.

If companies can work with employees to raise productivity, they can then afford to pay them more, perhaps much more, while keeping their labor costs per unit of output low. In my prior life as VP, Operations of a rapidly growing manufacturer, we accomplished just that. We started at $13 million in annual sales with 61 people on the shop floor. About five years later, we were at over $55 million in sales with 62 people on the shop floor, making essentially the same products. At the same time, people in the community were clamoring to work for us.

How did we do it? We trained our people and implemented World Class Manufacturing concepts. Then, as our productivity skyrocketed, we shared the benefit with the employees through dramatically increased wages and benefits. Our labor cost went from over 13% of sales to around 3%. It is possible to create win/win relationships with your employees. Partnerships work, even inside the company.

© 2014 – Rick Pay – All Rights Reserved

What Does World Class Performance Really Mean?

Many companies call themselves “world class.” It can mean that they perform in a global market, or that they have implemented World Class Manufacturing. So, what is world class? Does it really mean the best in the world? Not necessarily, and it depends on how you measure your performance.

I often use benchmark data in evaluating operations and supply chain performance for my clients. That data normally shows industry averages, which are clearly not world class. I have found data that shows the top quartile of performance, which is geometrically better than average. Occasionally I find top 10% performance levels, which are way above average.

For example, I recently benchmarked a company’s inventory turns. Industry average was 6 turns per year. Top quartile was 18 turns and top 10% was 26 turns. In another case, industry average was 8 turns and top 10% was 101 turns.

World class is definitely top tier performance. If you are average, 50% of the companies are better than you are. If you are in the top 10%, you have something to shout about. Strive for world-class performance. It puts you way ahead of the competition.

© 2013 – Rick Pay – All Rights Reserved.

Empowering Workers to Enact Change

One of the concerns I’ve always had about Lean is the strong focus on process and the somewhat weak focus on people. World Class Manufacturing predated Lean, and it was comprised of three basic elements, one of which is involving people:

1) Total Quality Management

2) JIT

3) Total Employee Involvement

While the House of Lean has a pillar named Respect for People, in practice most organizations focus on process improvement and workplace organization and overlook worker involvement. Particularly in Six Sigma the worker is often pushed aside while the experts determine the improvements.

 

Peter Drucker

Peter Drucker considered his most important contribution to be the concept of the responsible worker and the self-governing plant community. He formulated much of his thinking on this topic during his project with General Motors in the early 1940s, well before the Toyota Production System came on the scene. One of Drucker’s biggest disappointments was his apparent failure to convince US automakers to use these concepts, while Japanese companies seemed to pick them up and run.

Part of the critical change component – strong leadership – involves empowering people at the point of work. Be sure any improvement opportunities include that consideration.

© 2013 – Rick Pay – All Rights Reserved.

Reinforcing an Action Imperative: Evaluation

In order to create and maintain an action imperative, the desired culture needs to be reinforced, and one way of doing that is through the evaluation process. It begins with the vision…

  1. Review and revise (or create, if one doesn’t already exist) the vision for the company or department
  2. Distill and record the basic values embodied in the vision
  3. For each value define specific behaviors that will make the vision a reality
  4. Include those behaviors in personnel evaluations.

In my prior life at a manufacturing company, we implemented what was then known as World Class Manufacturing. One of the first things we did was to overhaul the entire employee evaluation process to include things like team participation, communication and quality. Essentially we built the things we wanted to improve in to the evaluation process, and we paid people based on the results they achieved in those areas. That got commitment.

© 2011 – Rick Pay – All Rights Reserved