Building an infrastructure for productivity

April 14, 2005
Two infrastructures influence, if not control, plant performance. The first is the way you do business and run your plant. The second is the methods and tools you use for managing the operation.

It always bothered me that continuous improvement programs ignore the infrastructure’s effect on productivity. Perhaps one reason most programs ignore completely or address infrastructure indirectly is that few of us like to be told that we are the reason the plant is ineffective. Think about it. If you were the CEO of your company, would you hire a consultant or adopt a continuous improvement program that pointed the finger of blame directly at corporate management?

Two infrastructures influence, if not control, plant performance. The first is the way you do business and run your plant. The second is the methods and tools you use for managing the operation.

Corporate culture
The corporate and plant culture that starts in the boardroom should establish and enforce an operating environment that is conducive to effective operation. It starts with the corporation’s mission or vision that explains why the company is in business and what are its goals and objectives. In addition, the philosophy and policies the boardroom establishes govern the day-to-day operation of every job function. These policies establish the benchmarks that measure success: individual performance, rewards and other criteria that determine how each employee performs.

Unfortunately, many corporate cultures are counterproductive. In most cases, the mission statement, policies and benchmarks preclude effective resource utilization and limit performance severely. In too many cases, these criteria are driven solely by short-term ROI and stockholder dividends, not optimum plant performance.

How many of you have worked in a plant that closed the receiving department near the end of the month to limit expenditures? Or, kept the books open for an extra week to improve monthly revenues? These are classic symptoms of corporate cultures that limit our ability to achieve optimum performance levels.

Methods and tools
The methods and tools for managing day-to-day operation is the second form of infrastructure that affects performance. Until recently, most corporations have ignored this factor. They continue to use outdated information-management systems and standard procedures that can’t serve as effective management tools.

Information management systems are designed for one purpose: to make the corporation look good. In our consulting practice, we rarely find an information-management system that provides accurate, timely data for managing the day-to-day and long-term operation. In most cases, reporting is too late to have any meaningful value.

During the past two years, many corporations have recognized the limitations their outdated information management systems impose. There’s a growing trend to upgrade to a new generation of enterprise systems that provide a common, integrated database for managing the corporation. The enterprise approach has many benefits, but it isn’t a panacea. My concern is management hasn’t recognized the need to upgrade the standard procedures and practices that these systems demand. It’ll do little good to invest $100 million in a new enterprise system and continue to do business as usual. These systems are merely software shells that acquire, store, manage and report the data needed to evaluate and manage a corporation. Unless the shells are implemented properly, loaded with viable data and used universally, they offer little value.

Please don’t misunderstand. I believe that an enterprise-type system is an essential management tool. Consolidating the data needed to evaluate and manage a plant effectively is a positive, necessary step toward optimum performance. However, to gain real benefits, software must be used properly. Lacking a change in corporate culture, it won’t happen.

Infrastructure for productivity
The first and most critical step in developing an infrastructure that is conducive to optimum performance is to change the way we do business. Instead of short-term benefits, focus on the real measures of effectiveness. This implies a radical change in the way we evaluate and measure performance. Establish new benchmarks that define the physical limits of performance and establish indices that measure day-to-day and long-term effectiveness.

Management philosophy must support effective resource utilization and be applied universally. Until effective procedures and practices become the only acceptable means of performance, we can’t hope to achieve optimum performance.

An effective information-management system must be implemented fully and used universally. It must be conducive to effective performance of each job function. The bottom line is that developing the right infrastructure will require a total, absolute cultural change in many of our plants.

Contributing Editor R. Keith Mobley, CMRP, is principal consultant at Life Cycle Engineering in Charleston, S.C. E-mail him at [email protected].

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