I’m always amazed by companies, even those operating at a deep loss, that are convinced their major problems can be solved without professional help. Recently, we’ve been involved in numerous discussions with management teams who are absolutely convinced that their understanding of what limits their profitability and market position is valid and their approach to resolution will turn around the company’s fortunes quickly. In each of these encounters, the company’s management team was fixated on obvious issues, such as equipment failures, and the actions were quick fixes or tactical solutions.
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One client was convinced that technology limitations in one of its primary manufacturing areas were the reason the company was losing more than $11 for every unit it produced. Their solution is to invest millions of dollars in new technology. A professional evaluation of the plant confirmed the technology limitations in the one manufacturing area, but most of the quality-related losses were caused by production and maintenance workers failing to adhere to standard procedures. The lack of consistency in manufacturing and maintenance processes was directly responsible for scrap rates in excess of 20%, or more than 500,000 units per year. Eliminating these quality loses could catapult the company from being a multimillion dollar loser to respectable profitability.
In another case, a small manufacturing company was losing about $2 per unit produced. A new management team recognized that this problem must be resolved quickly and so mobilized the plant team to resolve problems as they occurred. They used a small group approach and a derivation of root cause failure analysis to evaluate each problem systematically as it occurred, then implemented corrective actions they hoped would eliminate a recurrence.
While this tactical approach eventually will resolve many problems that result in high cost and scrap rates, it can’t eliminate the losses soon enough.
The question of tactical versus strategic solutions to eliminating the factors that limit plant performance is not new nor is there an absolute answer. Obviously, the best practices approach must include a tactical component, but it can’t be the only one. Tactical activities, such as root cause analysis, 5S, Kaizen and the like provide only short-term improvements for obvious problems. The benefits are hard, if not impossible, to sustain.
A client recently recapped a Kaizen event in which the plant assigned 10% of its production and maintenance workforce to one manufacturing area to resolve reliability and cost issues. While the short-duration effort was successful in that it generated almost immediate improvement in both reliability and quality in the target area, performance in other areas of the plant declined and the overall effect on plant performance was negative. In addition, the improvements achieved in the target area degraded quickly and, within a few months, the gains had vaporized.
Tactical activities are an absolute requirement in continuous improvement, but they’re rarely sustainable. In almost every case, they don’t address the culture change -- the way work is accomplished and enforcement of universal adherence to the best practices that eliminate most of the problems.
These tactical activities must be used in conjunction with long-term, strategic activities that take a holistic view of the myriad of limitations or failures that directly or indirectly result in less than optimum plant performance. Key among these strategic activities is promulgating standard procedures and processes for each and every plant or company function.
These processes define how work is identified, planned, managed and executed. These standards must include a clear, concise methodology for measuring performance as well as means of enforcement. In addition, the strategic activities must include proven change management processes that, over time, will engender a work environment, work ethic and coordination that are essential to sustainable world-class performance.
These strategic activities too often are invisible to in-house management and, as a result, are rarely addressed. Instead, management teams continue to concentrate on tactical, quick fixes. Experience shows that few of these “we can do it ourselves” attempts are successful. There’s absolutely nothing wrong with seeking help when you need it. Why are we so reluctant to ask?
Contributing Editor R. Keith Mobley, CMRP, is principal consultant at Life Cycle Engineering in Charleston, S.C. E-mail him at kmobley@LCE.com.