Frank Rzeznikiewicz

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Tag: management

December 5, 2022

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.

June 15, 2016

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.