Tag Archive: performance management

Manufacturing Management Success: Managing in 2014’s Complex World

March 6th, 2014
complexity in manufacturing

Complexity abounds in manufacturing management; can you rise to the challenge?

Complexity abounds!  Supply chains are extended. Risks must be mitigated. Rules and regulations are increasing. Talent is in short supply.  95% of business is outside the U.S. yet expanding internationally brings challenges and complexity. Customers are demanding more for less – with quicker turnaround times than ever before. We live in an information overloaded society and must be able to pull together the “right” information at the “right” time to make informed decisions. Thus, manufacturing management must rise to the challenge.

In manufacturing, I’ve found few “quick fixes”. Success almost always boils down to a day-to-day approach of combining continuous improvement with a touch of radical change from time to time. Unlike sales managers who might grab the elephant deal and be the “hero”, manufacturing managers must keep many balls in the air to navigate the daily grind while continually pushing for operational excellence and customer loyalty with exceptional customer service, just to remain in the game.  Thus, when you find the select few leaders who can successfully manage in today’s complex world, recruit them, retain them, and develop them.  A few of the keys to success to simplifying the complex to accelerate results include: 1) Lead by example.  2) Focus.  3) Metrics rule!

1. Lead by example: People are your #1 asset.  Look for folks who lead by example.  Begin with the company’s principles, vision and goals. Tie manufacturing’s goals to these. Communicate, communicate, and communicate. It is critical that people understand why the company’s vision is important (how the product or service helps humanity, customers, etc.) and how they fit into that big picture and add value to it.

Principles are not a “touchy feely” topic.  Only the best organizations communicate and live by core principles. Have you noticed that they become the successful ones? Culture is key. For example, is the company passionate about customer service? Integrity? Teamwork? Manufacturing management must lead by example. Do what you say you’ll do.  That alone can make you stand out in the crowd. In my experience, I’ve found that 80% of success begins with people.  Lead by example.

2. Focus: Focus alone can achieve wonders. Vast results follow. It sounds quite simple yet is rarely done. The day in the life of manufacturing management includes many conflicting priorities and fires to fight. Instead of jumping into the fray, it is essential to remain focused. Give me focus any day over expensive capital improvements. Undoubtedly, new levels of performance will be achieved.

For example, at one mid-market manufacturer, a team of operational experts succeeded in increasing production efficiencies by 20% through focus alone.At first, it seemed an impossible feat requiring many equipment upgrades, additional resources and complex analyses; however, after stepping back and creating a focused team, the results occurred within a three month timeframe with a focus on the basics – people and process.

3. Metrics Rule: The only way to win the race is if you know where you’re going and whether you are on track to get there. Again, simplify the complex. What 2 or 3 key metrics will tell you whether you are making progress? Ignore the rest.

Think about the key cost drivers for the facility. Is the majority of your product cost based on materials? Labor? Freight? How important is cash flow? Why would you spend countless hours measuring production efficiency to get an idea of your labor utilization if your #1 cost driver is freight?  You might think, “Who would do that?”. If smart people such as Board of Directors who have successfully run many companies can make this mistake so can you. It’s easy to get sidetracked with what is popular, talked about in the news, what was important at a similar company.

Instead do a deep dive on the key metrics which will have the largest impact on your business success. Discuss during a daily meeting. Make progress visible.  Identify roadblocks to improvement. Identify internal best practices. Set goals, track progress & celebrate small wins.

Manufacturing has become complex. Those who simplify and focus will thrive amidst the chaos.  As manufacturing continues to gain momentum, those who are ready for success will grow their business and will attract top talent. Will it be you?

 

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Lisa Anderson - The Manufacturing Connector



Metrics Rule

March 4th, 2014
LMA Consulting Group - Metrics Rule

You can’t give attention to work priorities to grow a more profitable business if you aren’t collecting data, measuring variables and tracking trends.

I refer to one of my core service lines as “Eagle Eye” since I’ve found that selecting the right priorities to work on is half the battle (if not more) to succeeding in business.  After all, what’s the point of working long, tireless hours on the wrong priorities?  Formulating strategy is rarely the problem; instead, 80% of the time, the problem is one of the following: 1) You don’t have time to work on the critical priorities.  Perhaps you are not selecting well and/or you have too many priorities….  2) You don’t know how you’re doing on those critical few priorities.

How can you have an eagle eye to pick out priorities and actions required to thrive if you don’t know how you are performing?  You can’t.  Thus, metrics are vital to success.  A few keys to leveraging metrics to drive bottom line business results include:  1) Track only the essential metrics.  2) Understand trends.  3) Focus on corrective action.  

1.  Track only the essential metrics:  Just tracking metrics is useless; however, tracking and using the “right” metrics is a secret to success.  How many of us have metrics and spreadsheets being tracked that we do not use or do not understand?  I venture to guess ALL of us.  Why?  It is someone’s job to track the metrics.

It might seem radical to consider stopping all of your metrics for a day or a week.  Give it a try.  Find out which are missed.  Are they missed because they are important to success?  Put only the critical metrics back in place.  Can you see whether you are on track with key objectives by the metrics you have in place?  If not, you might need to add a few.  Once you’re finished with this exercise, you will undoubtedly have fewer metrics but you’ll be on top of how your business is performing.

2.  Understand trends: Even the “right” metrics are useless if you don’t understand how you are performing over time.  A single point in time could be a huge success, a horrible failure or average performance yet you’d have no idea which without a plan and trend data.  I’ve recently become aware of the term “bowling chart” which is the lean terminology for tracking performance on policy deployment objectives.  To me, it is a trend of key metrics.

When I think back to the clients where we’ve achieved significant business performance improvement, metrics have always been an essential piece of the puzzle.  What is the plan?  How did we perform?  (And let’s NOT wait too long to know!)  How do we know whether especially good or bad performance was an outlier?  Where should we focus resources?  Which action plans should we follow?  Impossible to know until you track performance trends.

3.  Focus on corrective action:  Let’s say you have the “right” metrics and have trending information; unfortunately, they can still be useless if you don’t DO anything with the information.  It might seem obvious that corrective action must follow; however, I find it is rarely done.

For example, one of my clients had to reduce past due and was able to trace the bottleneck to one of their operations.  The next step would be to devise a corrective action to resolve the bottleneck and bring past due down towards 0 to rapidly to resolve customer concerns.  So, why didn’t that happen quickly?  Corrective action requires the hard work of blocking and tackling and often is unpopular to boot.  In my experience, figuring out the appropriate corrective action isn’t rocket science; however, implementation can seem like rocket science.  It requires confronting reality, addressing issues upfront, and excellence in execution – a rarity in my view.

My clients who take metrics to heart and ensure they are integrated into the culture succeed.  My client who don’t flounder!  Which will you be?

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The Resurgence of Manufacturing – it’s up to you!

February 20th, 2014
Resurgence of manufacturing is occurring if we choose to take hold of it!

Resurgence of manufacturing is occurring if we choose to take hold of it!

As I recently attended the Manufacturing Summit in the Inland Empire and have been preparing for my Association of Operations Management Inland Empire Chapter’s 2nd Annual Executive Panel & Networking Symposium entitled “The Resurgence of Manufacturing & Logistics in Southern CA”, it’s become readily apparent that resurgence is occurring if we choose to take hold of it!

As most manufacturers suffered during the recession and haven’t seen robust growth since, it seemed appropriate to discuss what my best clients and contacts are doing to jump on board the resurgence. There are a few key strategies they have in common: 1) Focusing on the export market. 2) Investing smartly. 3) Leveraging relationships.

1. Focusing on the export market: Undoubtedly, the manufacturers and distributors growing most rapidly have export business. It’s not required to grow yet it certainly jump-starts dramatic growth. For example, according to one manufacturer with export business, the last two months have been 30% higher than last year. Not too shabby!

While listening to an export panel at the Manufacturing Summit, I learned that significant growth is not uncommon especially with Made in the U.S.A. products. This is especially true in industries regulated by the government such as by FDA. International consumers are quite interested in these types of products as they can “count” on the quality.

As the vast majority of the world’s population resides outside of the United States, it only makes sense to expand internationally. There are programs designed to support companies interested in exporting; thus, the opportunity exists if we are interested in taking advantage of it. Sure, there are additional complexities; however, you can avoid issues with a bit of common sense and research.

2. Investing smartly: Certainly during the recession, I had trouble finding companies interested in investing – in anything. No ERP system upgrades. No capital equipment. And in several cases no cash outlays even with huge returns (like 10:1 or 15:1 returns on investment). However, I’ve found studies from ALL past recessions inclusive of the Great Depression that has proven the opposite – in essence, those companies that invest during these times of crisis leapfrog their competition.

Of course, if you took advantage of the recession to make smart investments when your competition didn’t, you’re likely growing rapidly in comparison. However, if you haven’t, all is not lost. I find that although my typical clients have more cash, they are still a bit reluctant to spend it in today’s environment of volatility. In general, they are starting to put their toe in the water; thus, if you’d like to join the resurgence, jump into the water for solid opportunities!

3. Leverage relationships: It might be hard to understand how relationships can be a key to success yet it has proven time and again to be so! In today’s new normal business environment, it is not nearly as simple to grow sales and increase profitability as it was during the boom years and when supply chains were less complex.

In my experience, those companies that partner with suppliers and customers to elevate the entire supply chain not only perform far better than the rest but they also generate additional revenues by virtue of a relationship-orientation. People purchase from those they respect, like and trust. How can they do that if they don’t know you? Or if their only interaction is when you try to negotiate with a win-lose approach? Additionally, as supply chains are increasingly complex with elevated levels of risk, who will you likely support when issues arise?

It is an opportune time to join the manufacturing resurgence. The good news is that it requires working smarter; not harder. Why not put a plan in place, rally your team around it and give it 120 days? You’ll be glad you did.

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Turning Data into Dollars

February 18th, 2014
Turning data into dollars.

Extract the right data at the right time in a meaningful format for decision-making.

Almost every company I work with seems to get caught up in the bells and whistles of their new or upgraded software; however, when push comes to shove, the bells and whistles mean nothing if they cannot perform the basics. One of those basics is to be able to extract the right data at the right time from their system in a meaningful format for decision-making.

Who is able to extract meaningful data to make an informed decisions with minimal time investment – without hiring a data ninja?  By the way, I love that name one of my clients gave to a data guru at their company!  I venture to guess it would be a low percentage.  On the other hand, who needs to be able to make informed decisions rapidly in today’s face-paced environment?  100%!  Thus, I thought a few keys to success were in order:

1. Data integrity  – before we move on, it’s best to make sure any data used in critical decision-making isn’t “garbage in-garbage out”.  I’ve yet to come across a company that didn’t need to focus some efforts in this area.

2. Data extraction tools – query tools, report writers, business intelligence tools, etc.  Worst case, you’re likely to have Sequel or something like that which requires a stronger programming background to utilize.  Simpler is better; however, a simple front end usually requires a more complex back-end.  Invest time to find the “right” one(s).

3. File tables – It shouldn’t be an Easter egg hunt to find the right files.  Put together a map/ cross-reference of your files.

4. A business sense – You can hire a data ninja, extra the perfect data and yet still have lousy decision-making abilities if you don’t add a business element into the mix.  Does the data make sense?  You’d be surprised how often I’ve received reports which were millions of dollars off.  No one gave it a logic check.

5. Less is more – This entire process is far from a no-brainer to set up successfully.  Why waste time on developing 25 reports when 5 metrics tell you everything you need to run the business.  And focus your high-skilled IT / business combination resources as they are hard to find.

 

 

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Gain an Edge with S&OP

February 13th, 2014

Sales & Operations Planning (S&OP) can give your business an edge over the competition – minimal investment in resources to yield substantial results! Although S&OP which balances demand with supply has been around for a long time, I’ve seen interest in this concept increase as businesses are looking for ways to leapfrog the competition in today’s new normal business environment.

In the new normal, we must be better than we’ve been in the last several decades just to maintain our market position. Customers are demanding more for less with significant improved service levels and quicker lead times. How can we achieve this? Lean? Six Sigma? Sure, all of these types of initiatives are important; however, they have become an assumption – necessary for survival. Instead, we must find new ways to stand out in the crowd. Why not renew an old concept that will give us an edge? A few keys to success with S&OP include: 1) Executive commitment. 2) Collaborate. 3) Simplify.

1. Executive commitment – There is no point in wasting even a dollar or a minute in S&OP without executive commitment as it is cornerstone to success. In the process of balancing demand with supply and syncing up all the areas of your business around one set of objectives, many conflicts and strategic decisions arise. Thus, without executive commitment, you’re bound to dead head right into a wall. And, as I’ve seen multiple times, if you start a major initiative like S&OP, start to gain momentum and then hit a wall, it is worse than not starting at all.

SIOP S&OPFor example, in one mid-sized manufacturer, we implemented a simplified S&OP to better align all business functions. Soon, a key conflict arose between Engineering and Production in terms of which area would have priority in the production schedule. Because we had executive commitment, we were able to get the CEO in the loop and resolve the conflict so that we could achieve significant results – decreased inventory levels and improved efficiencies while supporting the new product launch trials.

2. Collaborate – In balancing demand with supply, the key to success is in collaboration and teamwork. Undoubtedly, there will be several roadblocks to work through in aligning all the functional areas of the business.

For example, typically, production prefers longer runs of the same product. The sales function prefers lots of inventory and variety to choose from. Finance prefers low levels of inventory to free up cash flow. R&D prefers to trial whatever they need whenever they need it. And the list goes on. Thus, it is important to bring all functional areas into the loop upfront and rally everyone around the long term objective to balance demand and supply in such a way to maximize the value of the business.

3. Simplify – In my experience in working with all types and sizes of organizations across multiple industries and globally, the most common roadblock to success is to add too much complexity. Of course, it is tempting to add this feature and that bell and whistle; however, it can lead to a web of complexity that you get lost in. Soon, you’ll see your competition passing you by with a no-frills S&OP process.

For example, in one S&OP implementation, the team got caught up in developing a complex process and system to support the ultimate S&OP theory yet lost sight of the end goal. In the end, we threw out theory and complexity in favor of a pencil and paper and common sense – and achieved vast results! In the new normal, cash flow and customer service are vital to success. There is little else that can achieve as significant a result as implementing S&OP, and it costs nothing. Why not give it a try?

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SIOP WEBINAR – FEBRUARY 25 @ 11AM PST

Lisa Anderson presents Sales, Inventory & Operations Planning (SIOP): How to Drive Revenue, Profitability and Cash Flow to give your business an edge over the competition with minimal investment in resources to yield substantial results! Learn how Lisa uses SIOP to balance demand with supply and leapfrog the competition in today’s new normal business environment.

REGISTER NOW.

Lisa Anderson - The Manufacturing Connector

 

 

 

 

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