Category: Transition (page 1 of 2)

Managing Culture Change

Managing culture changes up and down the organization can be challenging and tedious in a profit conscious environment. As we attempt to change the entire organization and methodologies in production, we encounter many different perspectives and paradigms on the path. Making a change to a leaner more productive environment will incur some costs, interrupt production in small segments, require training of employees throughout the organization, and demand patience from all aspects of the population. As we grow the mindset of the hourly and middle management associates, we must remember the true mission of business is profitability. Upper management and executives must remain patient as any quick changes are usually not sustainable and any long term changes to the business model will take time. The management of change will require a balancing of production’s current needs and the implementation future changes that will enhance growth and efficiency.

A sound plan for implementing lean and improved productivity needs to have a detailed approach. You will need to rely on your most experienced personnel and use them as a sounding board for the changes your want to make to the current model. However, those same employees may resist change as they believe they are operating as effectively as possible. You must share the vision and strategic plan with all levels of the organization and you must brainstorm the shortcomings and roadblocks the company will encounter. Employees at all levels must agree with the need for change and embrace the vision to be the “Best of the Best”. Middle management must allow employees to make decisions and empower them to design their own work areas. While all aspects of the plan may not be totally popular with the workforce, you must gain consensus. As an agent of change, you will need to prevent protectionism from the different internal business sectors. Individuals may resist anything that increases responsibility or work load. You can prevent this by guaranteeing employees that you will be keenly aware of the pain factors in the new organization and any undue workloads will be addressed and compensated with efficiency, teamwork, flexible work schedules and manpower changes.

A major challenge for any transitional change is the ability to manage the “knee jerk” reactions of executives. When profits appear to be affected in a negative manner, many will try to delay, augment, and change the path you have strategically created. You must realize their position and their responsibility to continually turn higher profits. When business markets may slow, cost cutting moves may be necessary. You need to assure that labor and costs associated with the implementation of improvements are not significantly hampered. You must assure them of necessity for improvement and continually communicate your plan, the risks, and the timeline for recovery. No executive will force you to make improper decisions that will stymie long term improvements if they understand what is causing impacts and the duration of them. A change agent cannot be inflexible to executive’s demands and they may have to comprise the length and/or effects of plan. However, a well constructive plan will have those contingencies built into them and therefore the move to a more effective and productive environment will continue. Executives must beware of the miracle promising consultants and those that do not have a plan that fully explains the time elements, support and cost associated with their program. There are many books on the subject and how to implement but most are naïve, unproven, and without the strategy of managing the implementation. There are too many textbooks on the subject and few success stories from following them.

In conclusion, the greatest asset that you can contribute as a change agent is the understanding of the paradigms, the communication of vision and strategic plan, creation of a contingency plan for setbacks and creating open communication to all elements of the business environment. Be patient and do not expect everyone to accommodate your needs. As a leader of change, you must be the most flexible and adjust your plan to accommodate everyone else in the organization. However, do not let your plan be so manipulated that it is not effective. Compromise, embrace your organization, understand their perspectives and meet the needs of the entire company. If a culture change was an simple endeavor, it would have evolved naturally over time.

THE NEW GENERATION OF WORKERS NEED NEW LEADERSHIP STYLES

As we continue to actualize our production or service, we tend to make every attempt to hit our commitments and goals. What makes us unique as leaders is the ability to manage success. There is always a pattern of accomplishing our goals during our careers but we need to reflect on just what we are doing to accomplish those goals. There are several ways of meeting our deliverables and unfortunately we grew up in a society where leadership was recognized for “block and tackle” techniques. This methodology worked in years past and still can yield results on a short term basis today, but there are several elements that limits the success of this management technique in our present culture.

If you haven’t noticed, the world has changed. The mentality of the worker, the philosophy or labor, and the expectations of human resources are different than in the baby boomer days. Today’s workers have evolved, especially with Generation Z . The baby boomers strong work ethic was rewarded by companies by giving lucrative pensions and benefits . Companies revered loyalty and long term employment with one company. As global competition evolved, companies have been forced to pull back on benefits and have learned that employees that switch jobs and companies bring forth new diversity into a workforce. Generation Z functions different as they are social creatures that are flexible in nature and expect flexibility from institutions and companies. They are so flexible that employers are challenged to retain them if demands are too high. They expect instantaneous rewards and recognition for performance. They cannot be intimidated and sometimes can feel entitled to their job. Therefore we cannot intimidate them or insist they work long hours to please the company or their boss. They are now flooding the job market and leaders need to change their style from micro management and a demand persona.

The philosophy of labor has changed. The labor market will soon have more jobs than people as the prior boom generation retires. Labor’s paradigm is changing to one where employees desire constant increases in salaries and benefits and they do not react to an environment where people are expected to be patient for recognition. This requires that management spend a significant amount of time on the recognition aspect of employee management. Leaders must also determine how they can bridge the gap between expectations and business restrictions. There is always a way of managing a company to meet the business’s needs and employee’s expectations. This does require creativity and good communication with the workforce to determine methods that satisfy both criterion. Most studies show that monetary recognition is not the only avenue to engaging and delighting your workforce. Honest description of the business conditions will help employees understand what restrictions exist and the performance necessary to embrace monetary improvements.

Finally, the next generation of workers have different expectations of human resources. In prior work generations, the worker did not engage human resources as deeply as they do today. Human resources was the element that defended them against unreasonable management demands and was a defender of worker’s rights. Seldom did people involve human resources in anything but these matters. Today, human resources is viewed as the element that helps workers remain in a safe, politically correct, and respected workplace. Workers expect that human resources will assure they are continually trained thereby allowing employees to grow in the organization. They are looked upon as the employee’s ally and employees use human resources as a sounding board for both work and personal issues. Human resources’ tasks have grown immensely in the last ten years as they have expectations from the workforce that assimilates both a counselor and personal carrier growth advisor.

In conclusion, our success as leaders is dependent on an engaged, self empowered workforce that is allowed to be creative and involved in determining the business’s future. This workforce is more highly educated and has characteristics that will not respond to older management styles. It is the leaders responsibility to change their tactics and embrace the new workforce’s personality. It is an enriching workforce that will guide us into a better workplace and one that self actualizes itself to a more productive society if we embrace them. Do not rely on the “Block and Tackle” micromanagement tactics as they will eventually fail. Leaders will be more successful if they accept this new generation’s philosophy and work with it to aspire the business to new heights of performance.

Five S Implementation

The 5S initiative is one of the most difficult to accomplish in your lean journey. The efforts to sort, simplify, sweep, standardize and sustain are the backbone of lean. Many companies roll safety as the 6th S, but in reality that is a mistake. 5S is about the lean manufacturing of business. For businesses to treat the safety of employees on the same plane as lean is a critical mistake. In the hierarchy of business and employee needs, employee safety is the most critical and far more important than efficiency and is the baseline of the hierarchy. The emphasis on the 5S is overlooked and considered by many to have aspects that are optional and not necessary for productivity improvements. Nothing could be farther from the truth.

Sorting is necessary for several reasons. First a sorted facility reduces inventory waste, eliminate the use of un-standardized tools or parts, and eliminates confusion to employees who are at different training levels. It also increases usable space by the elimination of storage for unnecessary items, obsolete tooling, and duplicate materials. Having the correct tools visually noticeable in each workplace allows both the operators and supervisors to realize any shortages that may exist. If you look at effective assembly operations, tools are placed in the proper places before, after, and during production. Have you ever had the home project and did not return the hammer to the proper place at the end of a project? Then in a couple of months when the next project is started you floundered to find where you left that hammer. The same is said for the wrench on an assembly line. After the daily production is complete, if an operator leaves the wrench in an undesignated location, they will have trouble starting the next day’s production on time. Therefore, efficiencies are dwindled from their optimum. Communication between shifts and workers becomes more effective in a well sorted environment and much of the extraneous discussions and frustrations disappear as everything is where it should be located. Finally, a poorly sorted operation effects the quality of product. Tool substitutions are minimized as all the proper tools are always available to everyone. The application of any incorrect parts or subassemblies are eliminated.

Simplifying the operations are key to the lean process. This effort also reduces inventory as designers attempt to use common hardware that is readily on hand. This prevents special orders for unnecessary products. This also eliminates waste due to difficulty in using unique items and improves quality as options for misapplication become more limited. But the simplification goes further than design. It includes the arrangement of the workspace and encompasses shadow boxing tools and standardizing the best tools for the job. The development of simple jigs and fixtures improves the quality of product as a standard method of locating features is in place. Jigs can be designed with the same basics and mere detail changeovers accommodate mixed model production. As a manager, we should also drive the organization to the simplest functionality by reviewing each step of the operations with engineering, operations and quality concurrently. Do not merely accept the design from research and development as seldom is efficiency and productivity taken into account.

Sweep or shine is essential for several reasons. First and foremast is ensures a safer workplace. The cluttered workplace is one that is doomed for trips and falls. Clean and bright workplaces have a psychological effect on workers that is positive and is one where we are proud to employ ourselves. The lack of lighting can lead to poor morale and inefficient work. Shine can also assure that tools are in the proper condition for usage at all times. The lack of lighting also allows undetected visual defects and therefore the bright and shiny workplace is less apt to produce and ship nonconforming hardware. I painted all my machines white in a company. Initially, the thought of white machines that remove metal was frowned upon because it was not sustainable. As each machine showed a leak, the leak was fixed to prevent the need to repaint. That triggered an improved TPM program which reduced downtime by 21%.

The most difficult is the standardization of work. This effort integrates the sort, weep and shine and simplifying efforts. It ensures conditions do not deteriorate to the former state and facilitates the implementation of the aforementioned. The standardization of work ensures that work is performed the same way time after time and integrates an improved quality and predicable delivery plan. It is difficult to create the standardization of work and it is very time consuming. You must segment your workplace into sub-sections so that smaller successes can be declared and celebrated. It is essential that the format for the standardization is easy to implement and that any software you use is ready to use for its purpose. Do not use ad hoc programs as the documentation and implementation is difficult and strangling the organization with complicated programs will exhaust personnel. Eventually, your standard work will allow you to predict how many people are needed to attain takt time for work cells and will assist in allocation of resources necessary to attain customer commitments.

Making a habit of properly maintaining correct procedures and installing the discipline to regress requires that all personnel including management pay attention to detail. The consequences of not allowing employees to correct standard work when needed, to clean, sort, straighten the workplace, and allowing an environment of sustainment will deter any advancement of the lean systems your put in place. It will evolve a culture where employees will consider your journey as another program that went to the wayside and will make any revitalization of the effort more difficult.

Leaning Out a Mix Model Assembly Line

One of the more challenging industries to get lean is the mixed model, made to order, assembly production lines. We all have read the success in high volume production lines with options but what if you are producing several distinctly different products on the same line. It becomes a challenge as each station needs to be level loaded for the processing time so the overall cycle time remains consistent. There are several pieces of ground work that must be accomplished prior to any indoctrination of lean processing. While this may seem like a huge task that will take significant time to complete, the manager must remember the basic elements of success – a vision and a strategic plan that states which product line is approached first. Your vision should state what the perfect production line would resemble and the plan will state the cadence of products and the sub-steps to completion. You must remember that cellular or assembly processing must call for the same processes to be followed each time a product is produced. Repetition makes it easier to control quality and also allows you to track whether improvements have a positive or negative effect.
1. Value stream map each assembly
2. Create sub assembly operations and co-locate them to the line in a balanced process and cycle time
3. Break out and balance the tasks
4. Layout inventory, tools, workbenches so that tasks can be eventually and linearly be produced
5. Create inventory feeder line strategies and kits for common sub-assembly operations
6. Define and set in place Standard WIP
7. Create standard work
8. Determine the proper spacing in the flow. Make every a incorporate a “U” shaped cell (Rabbit Chase)
9. Cross train operators
10. Create standard work for the “load versus operators” necessary to meet Takt time
11. Determine the vortex operations and assure that all operators are trained in these operations
12. Assure that there is contingency planning for excess load and equipment failures

While these are not the only elements that must be addressed they are the basics for your journey’s inception. Do yourself a favor and benchmark other and similar industries. Most manufacturing facilities are eager to share their successes and you will not be re-inventing your entire operation as you can use the “Best in Class” practices. You must remember that this is not easy and you will never be complete in your leaning of the lines. After each iteration, you will discover new avenues for improvement.

Getting Your Business Visual

One of the most difficult phases of improving business efficiency is implementing a visual workplace. We have all seen the isolated examples that consultants and academia recite but getting the correct systems in place for your business environment is essential. Do not adapt huge expense in getting the methods in places in their infancy of the conversion, but place simple methods that may require more administrative effort during development. Visual systems tend to evolve as the workforce becomes familiar with them and offer suggestions.
The most important visual systems are ones that show what is expected for outputs. You may want to simply invoke a white board that is updated daily with an indication of what is expected daily. As your system develops, you will include meaningful metrics of performance. This can be, but not limited to, a weekly output, monthly output, year to date outputs, efficiencies, productivity etc. The workforce will tell you what is meaningful to them and that which allows them to know how they are performing. Most industries show do not go beyond monthly information at this stage and save the year to date performance for all-hands meetings. If is essential that the posted information is meaningful. The system should evolve to a visual display of takt time versus performance. There are several digital displays that allow people to hit a toggle a button or switch every time a deliver is made. Either the lead or supervisor in the area can administrate the takt time. This allows a real time display of performance that is accurate to the minute.

Another vital part of the visual system is an Andon light. This is an indicator of two elements. The first is the performance obstacles in the cell. A red, yellow, green light display is easy to understand. A green light may indicate the work cell is on target and all assets are running correctly. A yellow light indicates that takt time cannot be met but all assets are running correctly. A red light that indicates there is an asset problem or material shortage that is slowing of shutting the cell down. The yellow light indicates that manufacturing or industrial engineering needs to speak with the cell for changes and/or resolution. The red should require that management, your maintenance group, or engineering needs to expedite resolution. It is essential that we react to those lights expeditiously because the lack of response will evolve a culture suggesting that the light is not valuable and executing the visual signal is therefore useless. The second type of Andon light is usually used in an assembly environment. This light would be a digital readout of any parts holding up the production of a cell creating delays and wait time. This light requires that communications be made to the cell and timelines associated with resolution be developed. None of these lights should get turned off or returned to green unless the issue is totally resolved or parts are now on hand. These lights should be periodically reviewed by dedicated personnel and certainly reviewed during a daily Gemba walks.

The next part of a visual workplace is a visual workflow. A hospital may put different stripes on the floor so that everyone understands where to go. It also can be signage that shows the steps or stations in a process. This allows everyone to identify workflow and observe any bottlenecks. This is easy to accomplish in a standardized high volume tasking but can be more contrived in a mixed model or tasking flow. However, they are all attainable and easy to implement.

Finally, we need to create Kanbans, Heijunka box or wheels, or other visual signals to accommodate lean pull and overproduction elimination. As we progress through lean, we will continue to reduce inventory and waste through more efficient methods of lean tool usage. There are many other tools and methodologies that can be implemented. Educate your workforce and empower them to implement what is the most effective communication methods for good productive flow and waste elimination. They know the processes and know what will indicate to them their performance. Enjoy the process and admire your workforce’s knowledge of lean implementation. They will make your system successful if you engage and empower them.

The Journey Begins

The challenge of starting systemic productivity improvements in a facility and knowing where to start is not academically taught and is usually based on experience. Consultants my give you a program that it so large to implement that success is limited. When you decide that your company has used all the conventional methods to improve efficiency and productivity and they have “block and tackled” every avenue to increase outputs, what do you do? The answers are not simple but they all follow the same theme.

The first step is stop and look. Let the processes flow normally and look for two types of changes, systemic and points of production. The first type of change is systemic and you must form a three to five year plan and an initial plan. First observe the flow and identify evident systemic gaps. It could be a process, an element of production (i.e. safety, quality), a product flow, the placement of an order, or procurement. The second type of change is individual points of production changes. You must find three to four small areas of change that will be the example for the changes in the future. You must remember that you probably have not changed the culture of the facility and have not communicated well with your workforce. You need to pull ideas out of employee’s heads for understanding their efficiency roadblocks. These small areas of change are critical for changing the culture to one where employees will be your consultants. The quickness and sincerity of your responses to ideas they give you is critical. If you want to improve, you have a wealth of information in your workforce that will provide you success and them with a sense of accomplishment.

Form a plan that employs the overall systemic changes you want in the long term. Take that overall plan and divide it into smaller sequential system changes that will align your vision and your overall systemic change plan. These systemic changes must be ones that are smaller in nature when you begin your journey to change a company. They must be ones that will improve the processes but also ones that have minimal negative side effects within the workforce. You may want to relocate a department to increase flow. You may want to separate processes and remove production delays by segregating workflows to their proper elements.

The first changes you make must be reviewed with your leadership team to attain both consensus and comradely. After that has been accomplished, you must present your long-term systemic change plan and the initial changes to your entire population to explain how your vision and strategic plan align themselves. Remember to speak with anyone that may perceive your changes as affecting them negatively. The worst tactic is to present material to all your people at a group meeting and someone that is affected being advised at the same time. You need to assure that people are not being surprised and not feeling that you did not speak to them to get their inputs. They may not always agree but they will at least understand you motives and expectations. You can never over communicate. Once you have presented the material to all, act on it. Failure to do what you say will create a perception that management does not do what they say they are going to do.

Creating the correct change path is vital. You need to create a few small changes that will support the overall long-term plan. Remember that any huge change usually takes a long time and your employees are watching to see if things are really going to ascend to a better The challenge of starting systemic productivity improvements in a facility and knowing where to start is not academically taught and is usually based on experience. Consultants my give you a program that it so large to implement that success is limited. When you decide that your company has used all the conventional methods to improve efficiency and productivity and they have “block and tackled” every avenue to increase outputs, what do you do? The answers are not simple but they are all follow the same theme.

The first step is stop and look. Let the processes flow normally and look for two types of changes, systemic and points of production. The first type of change is systemic and you must form a three to five year plan and an initial plan. First observe the flow and identify evident systemic gaps. It could be a process, an element of production (i.e. safety, quality), a product flow, the placement of an order, or procurement. The second type of change is individual points of production changes. You must find three to four small areas of change that will be the example for the changes in the future. You must remember that you probably have not changed the culture of the facility and have not communicated well with your workforce. You need to pull ideas out of employee’s heads for understanding their efficiency roadblocks. These small areas of change are critical for changing the culture to one where employees will be your consultants. The quickness and sincerity of your responses to ideas they give you is critical. If you want to improve, you have a wealth of information in your workforce that will provide you success and them with a sense of accomplishment.

Form a plan that employs the overall systemic changes you want in the long term. Take that overall plan and divide it into smaller sequential system changes that will align your vision and your overall systemic change plan. These systemic changes must be ones that are smaller in nature when you begin your journey to change a company. They must be ones that will improve the processes but also ones that have minimal negative side effects within the workforce. You may want to relocate a department to increase flow. You may want to separate processes and remove production delays by segregating workflows to their proper elements.

The first changes you make must be reviewed with your leadership team to attain both consensus and comradely. After that has been accomplished, you must present your long-term systemic change plan and the initial changes to your entire population to explain how your vision and strategic plan align themselves. Remember to speak with anyone that may perceive your changes as affecting them negatively. The worst tactic is to present material to all your people at a group meeting and someone that is affected being advised at the same time. You need to assure that people are not being surprised and not feeling that you did not speak to them to get their inputs. They may not always agree but they will at least understand you motives and expectations. You can never over communicate. Once you have presented the material to all, act on it. Failure to do what you say will create a perception that management does not do what they say they are going to do.

Creating the correct change path is vital. You need to create a few small changes that will support the overall long-term plan. Remember that any huge change usually takes a long time and your employees are watching to see if things are really going to ascend to a better organization. Several small changes will involve more people and therefore can be more effective to promoting a culture change.

In the points of production changes, you must address a process improvement project for each major sector of your business. These should be the result of interviewing the people and finding out parts of their job that are troublesome and hindering productivity. They may not be what you think is of the utmost importance but they are the issues that concern your workforce. Accomplishing these is vital to your changing the overall business and a significant step in changing the culture of your organization.

You must remember that you have probably forced as much change through the organization that is possible by your powering the organization forward. You now must take a different tact. Embrace the workforce for ideas and act on them. Regard safety as not only a benefit to the people and company, but realize an unsafe environment will create inefficiencies. As you work down this strategic path you will enact your vision to actualization and display the correct atmosphere and culture.

Finally it is critical not to make this a one-time event. Continue this philosophy and continue to take small strides that will change the overall effectivity of the business. Embrace your workforce, communicate with them continually, and improve the business one step at a time. The time for larger strategic changes will come with time and may result in reorganization of the business. You will weave in all the elements of a lean environment such as value stream maps, kaizens, standard work and 5S in the ongoing change plans. The overall goal is to create a culture that self-actualizes itself to the best in the business sector.
organization. Several small changes will involve more people and therefore can be more effective to promoting a culture change.

In the points of production changes, you must address a process improvement project for each major sector of your business. These should be the result of interviewing the people and finding out parts of their job that are troublesome and hindering productivity. They may not be what you think is of the utmost importance but they are the issues that concern your workforce. Accomplishing these is vital to your changing the overall business and a significant step in changing the culture of your organization.

You must remember that you have probably forced as much change through the organization that is possible by your powering the organization forward. You now must take a different tact. Embrace the workforce for ideas and act on them. Regard safety as not only a benefit to the people and company, but realize an unsafe environment will create inefficiencies. As you work down this strategic path you will enact your vision to actualization and display the correct atmosphere and culture.

Finally it is critical not to make this a one-time event. Continue this philosophy and continue to take small strides that will change the overall effectivity of the business. Embrace your workforce, communicate with them continually, and improve the business one step at a time. The time for larger strategic changes will come with time and may result in reorganization of the business. You will weave in all the elements of a lean environment such as value stream maps, kaizens, standard work and 5S in the ongoing change plans. The overall goal is to create a culture that self-actualizes itself to the best in the business sector.

Organizational Structures and their Impact on Performance

In business, there are numerous organizational structures that exist. They can be classified as “traditional” or “flat”, or even “mechanistic” or “organic”. It is commonly debated which structure reigns supreme, but what it comes down to is what structure best suits the needs of the company. The structure and design of an organization is the basic framework that dictates things such as roles and responsibilities or the reporting structure and compensation. In deciding which design is most beneficial to the company, many factors need to be taken into account. Some examples of these factors are the changing culture, future opportunities, and what the financial and business goals of the company are. The structure should clearly define the reporting relationships of employees and the basic hierarchy of positions. The design of the company in essence gives power and responsibility to employees and solidifies it with a formal chart. It is important to keep in mind that the organizational structure is not only seen on paper
but can also be seen in the everyday relationships of employees.

The strictest and most formal type of organizational structure in business would be considered a “mechanistic” design. The mechanistic organizational structure has fine divisions of labor which results in a high output of specialized jobs. They have a very strict chain of command and rely on high level management to make the brunt of the decisions. A textbook example of this type of design would be the United States Military. There is a clearly defined hierarchy with a tight chain of command. The decisions are typically made from the top down and the contrary would need special and individual approval. The compensation and power of each position is also clearly defined by its place in the order. The mechanistic structure was established in the early twentieth century when mass production was the trend and the industrial age was in full swing. Leaders looked for something that promoted efficiency as well as productivity through bureaucracy and found that this structure fit the mold. Unlike some structures that flow horizontal or even vertical, the mechanistic model is strictly vertically oriented. This means that the chain of command goes literally from the top down and typically in a triangular shape. The employees are grouped into different specialties with each grouping having a clearly defined leader. As you climb the structural tree, the control starts to tighten to a point where managers are managing other managers rather than employees. The top of the structure is the individual with the most power and control which is most usually the “CEO” or Chief Executive Officer. As with anything, this type of design does come with its negative attributes. The biggest downfall to this structure would be the ability to quickly and efficiently adapt to changes in the market and outside variables. With such a strict chain of command, employees are not free to problem solve through creative means and are held up waiting for approval of leadership. This could cost the company productivity which directly equates to profits. Another issue with this model is the difficulty in collaborating with other departments in achieving a common goal. This structure groups employees into specialties which creates a sense of isolation among departments. For creativity to thrive and efficiency to flourish, people need to leverage the abilities of the entire company and all departments and not just rely on their single goal oriented coworkers. Even with opponents across the industry, this model still continues to hold strong to this day. In a stable industry that requires extreme efficiency as well the ability to decentralize, the mechanistic design structure will earn its keep.

In the 1950’s, a man by the name of Tom Burns as well as G.M. Stalker created the term “Organic Organization”. Rather than a design that is rigid and well defined, organic organizations are flexible and can adapt to changing cultural environments. Unlike the mechanistic approach, ideas and decisions tend to flow horizontally rather than vertically. Employees are given the ability to make on the spot decisions that eliminate the need to wait for higher approval. What we see with this design type is the authority is given to the group of employees rather than the manager overseeing the group. What this does is greatly increase the quality of work and products as the employees are encouraged to problem solve and display creativity on their own rather than with approval. Two examples of organic designs are the team and network organizational structure. The team structure utilizes the idea of a team that is made up of different specializations. When a unique problem does arise, most likely one or more of the team members will be capable of resolving the issue. Unlike the mechanistic approach, this organic team structure is led by a single manager overseeing multiple teams. This fosters the idea of adaptability and problem solving as the employees collaborate and leverage self-worth to achieve goals. The network approach does not use teams but rather employs outside vendors to accomplish major work functions. The major advantage or an organic design is the ability for companies to adapt and change with the fluctuating markets. When employees are not held up by bureaucracy, they tend to accomplish the task with minimal oversight and with extreme efficiency. This design also enhances communication among the work force as they use each other to problem solve and collaborate with other departments. This type of structure best suits those companies that deal with extremely volatile markets and unpredictable environments.
Worker productivity can greatly be affected if the organization is employing the incorrect
type of design structure. There is many variables that go into the creating of structure such as the type of work environment, the amount of control needed and what type of production method you are relying on. Something to keep in mind is that if you want to change performance within an organization you must change the design. If the design is not changed to meet the demands of a changing market, then the performance will be severely impacted.

It is essential that the company utilizes the type of design structure that best fits its goals. The structure needs to change as the goals and environments change as well. If you shift ideas and want to create change, you must first look at the foundation or the very basic level and that is the structure of the company.

Standard Work Assures Consistency and Opportunities for Ever Evolving Improvement

The misconceptions of standard work throughout the consulting sector is staggering. Standard work is not merely written work instructions. Standard work is the application of the proper resources to the appropriate workload. It is the standard by which we can measure productivity and also allocate the proper resources to assure efficiency.

The simple portion of standard work is the visual written work instructions to all elements of the business. The instructions should assure that all personnel could complete the tasks with little or no training. While that is simplistic in nature and assumes there are no skill levels required for tasks, it is a goal that if not attainable can be closely assimilated. When we think of standard work instructions, we think of the operational ends of the business as it is a simple interpretation. For these work instructions, we should have step by step instructions stating the tools required, quality requirements necessary, critical features identified and visuals to assure interpretation is correct. However, the implementation goes greater than the operational end of the business. The application should include all interests including, procurement and the appropriate decision trees for a make /buy decision, financial reporting to assure consistency during attrition, management practices for capital ROI decisions and headcount allocations, sales with standards for meaningful profit margins, maintenance for continuous allocation of resources, quality for standardization of inspection standards, and many other elements that are necessary for the business. If these instructions rely on IT functions, screen shots should be part of the standard work.

As we assimilate the standards, we then need to look at our value stream maps to assure that the standard times for operations are level loaded through the production cycle. Once we have a level loaded value stream, we then can calculate the resources necessary for the volume increases and decreases. Our value stream should engulf more than a statement of operations and work tasks and should include the min/max of personnel and shift allocations, resources necessary to support those functions, and standards for operational efficiency. Finally, the value stream maps should then include a standard work contingency for each operational failure that can occur. Once those failure points are established, a risk level needs to be assigned to them. We can then prioritize the contingency plan development needs.

Standard work is ever evolving and is the backbone for predicable production and financial success. Implementation of standard work must grow with the evolving culture change to a leaner environment. The culture must understand that standardization does not threaten their job security as they define tasks, but allows them to spend their resources on creativity and strategic development. We must be patient with the evolution of standard work. If the workforce embraces the conceptual, we will actualize the benefits in a shorter time span.

Where Do You Begin?

You have taken on a new position or decided that a step change needs to be made to improve your business’s efficiency. Where do you begin and how do you make the transfer effective without slowing down the business to an unprofitable margin, alarming customers with late deliveries, or creating a total disarray of the business? We have witnessed many businesses over the years go through a restructuring plan that has severely effected the business in a negative financials and has forced the owners to recoil initiatives. These businesses then pull back to a ’year over year’ small percentage change and never make the step changes necessary to evolve the business thereby capturing new markets. There are steps that can be taken and a strategic plan that can be developed whereby all owners know what is expected and the pace of which improvements will occur. The following points must be considered to be successful on your journey.
1. You need a Vision that states where you want the company to evolve to in one, three, five and ten years. That vision must be accepted by the CEO, COO and the Board of Directors.
2. There must be a yearly strategic plan. This plan must be clear and must state details, expectations and risks.
3. Know your risks and the impacts of them. Divulge them at your strategic plan discussions. Too many plans are overly optimistic and do not inform the owners of the inherent failures that can happen to even the best strategy.
4. Contingency plan every avenue of defined risk. It is acceptable to have different levels of risk in your plan. Categorize them and all high and medium risks must have contingencies constructed ahead of time to ensure that the effects are minimized.
5. Do not change the plan to hit financials quarter points. You can adjust your strategy to accomplish the tasks necessary but you must not chase a metric for a quarter point and change your strategy in a haphazard manner.
6. Assure you understand how changes affect costs, workers and managers. Minimize wastes of people waiting, overproduction, procurement or idle equipment, and excessive stagnation and transportation of product.
7. Process change one piece at time. When you process change in too many areas, you cannot understand the data and the attributes. Therefore, you cannot construe a cause and effect relationship as the changes and their effects are muddled together.
8. Use Kaizen bursts to implement small changes to a larger value stream improvement.
9. Realize that new capital is a financial drag. The more the expense that capital incurs, the more cost structure you must absorb immediately. Think small and less expensive. Anyone can engineer a process with the most elaborate equipment. A good plan is one that uses current resources and equipment with some intermediate investments.
10. Realize that this is not easy. Never become discouraged. A failure or setback is merely an opportunity for improvement. You can accomplish the tasks if you plan out your process improvements. We tend to apply these improvements to the manufacturing world. In reality, the service industry needs the same overhaul and drive for efficiency.

Sourcing Decisions – Do You Re-Shore, Near Shore, or Remain Outsourced

The decision of re-shoring work to domestic suppliers and internal to your own operations can be a contrived and convoluted strategy. Many corporations have historically arrived at the conclusion that the short term savings from global outsourcing would benefit the company to extremes that were not realized for extended timespans. In addition, the quality from developing nations and low cost initiatives require a larger infrastructure to support in both the quality and logistic factions. The incurred costs for excessive quality checking and support infrastructure can undermine any potential financial savings and often substantially increase overall costs. Attrition is intensifying offshore, leading to inconsistent and unsettled operations. Combined with a rise in global salary demands, improper offshoring has driven overall costs to an uncompetitive state. This does not translate to a total de-globalization of supplies but has created a multifaceted solution for sourcing strategy. Approximately twenty to twenty-five percent of products that were outsourced globally over the last decade are projected to return to the United States in the next five years. Therefore, there is credence in re-shoring but logic must direct the operation.
There are several steps in the decision process. They include financial modeling, footprint optimization, site selection, production planning, supply chain selection, manpower needs (support and direct labor) and most importantly the implementation of lean. The process is one that will take substantial effort but developing your strategy is the most important faction of your justifications. The process needs to start with an efficiency and cost analysis of products procured and produced. You need to construct a model that takes the cost of the product, the cash conversion cycle costs, the cost of cash velocity, the cost of poor quality and its effects on customers and the required inventory costs that are required to offset longer delivery distance and delays. After that comparison is completed, you need to analyze the impacts of delivery delays and poor quality on customer retentions. While a subjective conversation will occur, there can be a valuable cost associated with outsourced product’s impacts on customers that can be quantified. The analysis will lead you to a pareto analysis of high cost and high pain products that are currently outsourced.

The next step is analyzing the top ten to twenty percent of these products and determining if you have internal capabilities or will need to near source the products. Near sourcing may be more profitable if you do not have the capacity and capability to insource them to your facility. After the pareto is completed, your procurement department must then quote sources for external suppliers and the operations management within your company must analyze the internal production costs. This will allow a full comparison of price. There may be decisions that sway internal or near sourcing that have quality performance indicators in them. You may need to review supplier quality performance and customer satisfaction with peer companies. You will find that companies that are involved in the re-shoring of manufacturing are eager to share the data they have collected. Your internal operations may not be the best answer as your quality performance may be lacking in certain areas. Factor your quality into the equation and determine if you are indeed the best option for production. When all your data is collected you will have a list of products to possibly go forward with for insourcing efforts.

The next stage is the estimation of the strengths, weaknesses, opportunities and threats to your plan. This is the risk assessment that accommodates the financial conclusions. Weigh each element and create a numeric score for each category of risk and opportunity. Of course, risk to the customer carries the highest weight and discretion. The cumulative score then can create a cost factor to apply to the financial data. An example of this is a product that is significantly higher cost in the domestic market because of environmental, technical expertise, health and safety risks to employees and regulations, capital re-investment necessity, and supplier developed nuances that you have no knowledge regarding processes. This would carry a higher percentage factor that would be applied to insourced costs.

Finally, create a contingency plan for each part number. Do not assume that the current supplier will provide products expeditiously if you fail in your re-shoring efforts. You must create a sound contingency plan as this effort is not an easy one. You may also want to review your business strategy for a “Made in America” product line and a “Global Product” line. Many initiatives are in place to promote re-shoring efforts and customers may be willing to pay a premium for the “Made in America “line. There is so many intricacies in these decisions that they should be low risk, well analyzed, and be part of an overall vision and plan for your company.