I recently had yet another opportunity to observe the corporate decision-making process and the experience left me unimpressed. This example is typical of the logic that seems to be growing in dominance in todays business culture. Extremely high reject rates, rework and other product quality issues are costing this plant the equivalent of $8 for each unit it produces. In addition, production capacity is decreasing and cant keep pace with consumer demand.
When I questioned management in an attempt to isolate the reasons for this condition, the absolute, unanimous answer was Our equipment is old and doesnt have the state-of-the-art technology needed to control product quality. When I asked what they planned to do to correct the problem, the unanimous answer was, Our only options are to sell or close the plant.
During the past 10 years, Ive observed this same decision process -- and resulting decision -- in a number of plants and corporations. Is technology limitation the real reason for poor plant performance? In the example company, a through evaluation of plant performance clearly showed that the real problem is a failure in the manufacturing process. Data that the company compiles, but never uses, universally illustrates that theres no consistency -- production volume, product quality and cost of goods sold vary radically from shift-to-shift, crew-to-crew and day-to-day.
While the plants standard operating procedures are valid, no one follows them. In addition, the commonly-accepted technology limitation in one of the primary manufacturing processes was perpetuated throughout the plant. Inspection of rejected products in subsequent manufacturing processes kept pointing to the primary operation, even though the evidence clearly showed that the real reason for the reject had nothing to do with the upstream process. For example, inspection of 50 rejects in the machining operation indicated that the units had been improperly indexed in the machining centers, but the reason listed for rejection was poor primary process quality.
Our analysis concluded that simply enforcing universal adherence to standard operating procedures could eliminate the $10 million-plus loss in this plant. While there was some truth in the technology argument, the technology limitations were only a minor contributor to the plants decreasing capacity and profitability problems.
The best way to ensure universal adherence to standard operating procedures and best practices is obvious, simple and doesnt cost anything. Management must establish effective procedures and enforce adherence to them. We seem to have lost sight of a simple concept: People do what you inspect -- not what you expect. Senior management must establish a work environment that makes it difficult to do the wrong thing and encourages the workforce to do the right thing consistently.
Effective line supervision is the first, essential level of management in any organization and is the key to consistency. The supervisors role is to encourage and, if necessary, force members of a work unit to contribute positively toward accomplishing the organizations goals and objectives. Although the definition is simple, supervision is quite a complex job. The supervisor must learn to make good decisions, communicate well with people, make proper work assignments, delegate, plan, train, motivate, appraise performance and deal with various specialists in other departments. The supervisors varied workload is extremely difficult to master. Yet, mastery of supervision skills is vital to plant success.
The bottom line in the plant mentioned above is that it will most likely be sold or closed. The data we gathered would invalidate that decision, but admitting that a failure is controllable and that the root cause of the problem is management failure isnt a politically correct stand to take. It would be career limiting for anyone involved.
Could the plant be saved? Absolutely. With effective management and enforcement of best practices, this plant could be profitable within a year and could build on this fundamental principle for long-term survivability. Maybe, some day, corporate management will pull its collective head from the sand and fix the real problem instead of looking for excuses that protect their jobs while punishing the workforce.
Contributing Editor R. Keith Mobley, CMRP, is principal consultant at Life Cycle Engineering in Charleston, S.C. E-mail him at kmobley@LCE.com.