Preparation for Lean Manufacturing

It seems that every manufacturing company is now trying to adapt the Lean Philosophy, invented and mastered by Toyota Corporation. Lean manufacturing has also spilled over into non manufacturing industries. Unfortunately, many companies don’t completely understand the true meaning of Lean Manufacturing. Lean Manufacturing, simply put, is “continuously improving your processes to eliminate waste”. This sounds simple, but many companies will fail to become truly Lean because they don’t have an environment to implement and maintain Lean.

Most people believe Lean is just a set of tools (One Piece Flow, JIT, Kan-Ban, 5S, Six-Sigma, Kaizen Teams, Push / Pull Systems, etc.) that can be used to cut waste. However, Lean is not only a set of tools, it is a culture. If a company has severe issues with employee turnover, employee morale, product quality, product delivery, equipment uptime, plant housekeeping, etc., it will be extremely difficult to shift the employees to a new way of thinking and conducting business. In other words, if your employees are in constant fire fighting mode, they will not be able to properly implement Lean.


<b>Fix the obvious problems first</b>

To prepare for Lean, you must “fix the obvious problems first”. Many times employers will know exactly what the problems and solutions are. They just don’t have the time, resources, or incentive to fix them. If you have an automobile that is constantly breaking down because of a bad transmission, then fix it! Repair or replace the transmission. Do not implement a Lean Strategy to fix the car. Just fix it. Lean is not used to fix broken processes. Lean is used to continuously improve working processes to eliminate waste. When all the obvious problems are fixed on that vehicle, it’s then time to fine tune it to become more efficient. It’s time to look at ways to cut waste (cost) to ultimately save money!

<b>A Word about Six-Sigma</b>

Some companies now mandate that Six-Sigma be used to fix problems. Unfortunately, Six-Sigma isn’t always used correctly. Six-Sigma is intended to solve complex problems that have numerous variables that cause variation in a process, which ultimately cause defects. Six-Sigma uses statistics to systematically identify what the different variables are doing in the process and points to potential solutions. It eliminates guessing as to what’s causing the variations. Again, fix the obvious problems first. Many problems don’t have to be analyzed to detect solutions. In many instances, the solutions are obvious: i.e., If the light bulb is blown, then, change the light bulb.

<b>Value Your People</b>

Society generally refers to companies as entities. We speak of IBM, GM, and Microsoft as entities; however, they are really groups of people. GM doesn’t build cars, the employees of GM build cars.

To develop that culture as successfully as Toyota Corporation has, companies must first realize that they have to develop, nurture and value their employees. In order to build a culture of people wanting to continuously improve, people have to be engaged in their jobs. They have to feel valued by the company. They have to feel they are noticed and rewarded for their contributions. Ultimately, the company has to value having low employee turnover to create consistency. A company with high employee turnover cannot maintain a successful Lean environment.

To foster this type of environment in today’s business world isn’t easy. There is low loyalty between U.S. companies and their employees for a variety of reasons. Some companies look at employees as an expense rather that an asset that can be easily cut. If employees of a company do not feel the company values them, they will find other jobs. With today’s business world, it’s difficult to implement a long term Lean strategy. Yes, a company can dictate to it’s employees to use Lean tools to cut waste, however, to sustain that ideology long term require an engaged, loyal, consistent, work force.

<b>Develop and Retain Strong Leaders</b>

Good managers are coaches, poor managers are dictators. A good manager will believe in the team concept where every member of the team is important and his/her opinions are valued. A good manager will value his/her employees and realize that for him/her to be successful, the team has to be successful. A poor manger will dictate to his/her employees, which creates havoc! A good, efficient, business unit with high employee morale will fall apart within weeks if a poor manager has taken over. Poor managers fail because they don’t have strong leadership skills. They lack people skills, communication skills, decision making skills, and delegation skills necessary to develop and maintain effective teams. A strong leader must sell the Lean Strategy and realize that ultimately the employees as a team are the ones to make it happen.

<b>Think and act World Class (even if not there yet!)</b>

To become Lean is to become World Class. When walking into a facility that has an unclean, unorganized work environment, one knows he/she haven’t walked into a World Class facility. There is no need to look at the productivity numbers to determine whether or not the facility is World Class. If a plant is World Class, it looks World Class as soon as you walk into the door.

A Lean facility is thoroughly organized. Every process is clearly defined via standards. Production is operated via very clear Visual Management. A true World Class facility has the discipline to sustain organization. Outside auditors, potential customers and employees will be turned off if the work environment isn’t clean and organized. Keeping a work area clean and organized is simple; however, many companies overlook this simple task.

<b>Make Decisions Based on Logic and Not Politics</b>

Most of the time decisions made senior management are implemented without questioning regardless if the decisions make sense or not. Too many times, decisions are made by senior management without them fully understanding the process and issues. Lower-level managers ultimately implement ideas and strategies that are not based on logic but politics. They will implement ideas even if they themselves do not believe in them. This can create numerous problems which makes implementing Lean Strategies difficult.

Decisions should be made throughout the organization through effective communication. Senior management should not just mandate, but sell their ideas and be open to questioning and suggestions from lower-level managers. Senior management should fully understand the issues and processes by effectively communicating with the managers at the different levels. Major decisions whenever possible should be made as a team vs. an individual.

Prepping For Business Partnerships: A Bird's Eye View

Successful business development executives increasingly are doing battle in the arena of strategic alliances and marketing partnerships. Nowadays getting the jump on your competition is not half as important as mapping out and deploying a targeted and unique value proposition with particular appeal to potentially compatible allies.

Successful business development executives increasingly are doing battle in the arena of strategic alliances and marketing partnerships. Nowadays getting the jump on your competition is not half as important as mapping out and deploying a targeted and unique value proposition with particular appeal to potentially compatible allies.

Take the old aphorism: "The early bird catches the worm?" It just doesn't apply anymore. Even in the wild, naturists have discovered that 'early on the job' does not necessarily equate with success.

Consider this analogy:

Worms are slow, but they are expert at hiding. To catch one, birds must do more than just show up early. In the highly competitive world of birds, all the birds are up early. So, in practice, what distinguishes the successful bird from the hungry one is observation and preparation. Smart birds have figured out that worms are most vulnerable when they are in the act of eating.

The clever ones take care to study when, where, and what worms eat. The successful bird takes that data into account when making preparation! For example, one rather successful bird has learned that a certain type of worm finds a particular kind of leaf to be especially appealing. The wise bird has been observed using its beak to place the targeted worm's preferred leaves in the worm's vicinity.

The analogy of the clever bird applies not only in nature, but suggests a powerful strategic option available to you in business.

Knowing your target partner's needs and decision structure gives you the edge over all other early birds. Whether you're a CEO or a field executive with front line responsibility, you know that your prospects are capable of sophisticated camouflage. They are expert at hiding behind gatekeepers, red tape, misdirection, and layers of bureaucracy. So be it! Getting in front of potential partners takes more than showing up early. Executives responsible for cultivating business relationships must be able to increase their penetration effectiveness. They do so by providing prospects with "food" -- in this case, a compelling level of data, analysis and capabilities presented in an extraordinary manner. The results of such highly creative, custom prepared initiatives are dramatic.

Your commitment to a content-based partnership initiative is a win-win strategy:

* Partnership options, sales opportunities and receptivity improve dramatically when prospects are prepped via well-designed initiative tools front-loaded with offers of relevant information.

* Superbly orchestrated interface meetings, powerful creative presentations and mouth-watering proposals (worthy of the partnership's revenue potential) help prospective partners cut back on resistance and institutional firewalls.

* Most partnership executives are more inclined to bite into knowledge that treats them like a stakeholder. This approach improves their ability to evaluate, decide and be open to profiting from a prospective alliance.

Empowering your target with information is significantly more likely to get the deal done at the end of the day.

Increasingly, the Web is proving to be an ideal content delivery venue for initiative purposes. Content configured, digitally distributed partner initiatives are growing, but when it comes to relationship building face-to-face meetings are still essential.

Increased partnering productivity has a significant bearing on:
- finding good opportunities
- executive dialogue
- positive brand perceptions
- reducing the cost of partnership development
- buy-in from gatekeepers and influencers
- negotiating agreements.

It is never too early to start developing and implementing a targeted and effective Strategic Partnership Plan & Program. Feel free to contact the clever birds at Partner | M for assistance in this matter.

PRESENTEEISM: Another Dimension

In the past few years the terms &#8220;employee engagement&#8221; and &#8220;employee disengagement&#8221; have emerged to more fully describe the employee&#8217;s level of motivation and commitment to their job. An engaged employee is considered to be passionate about their work and emotional connected to their work and to their company.

Disengaged employees are those employees that are at work but their minds are not necessarily on their jobs. The term presenteeism has also been used to describe disengaged employees. There minds are somewhere else. They could be thinking about their children, their upcoming date, a party, last&#8217;s night basketball game or be engrossed thinking about their own personal problems. From a productivity perspective this may not be that serious for a person working manually on repetitive tasks. However, in the advanced economies of the world such as those found in North America, Europe, Japan and elsewhere, where the contribution of knowledge workers to the GDP is greater than that associated with production workers in the manufacturing sector. Mental performance is the key determinant of productivity and profitability. In this setting if an employee&#8217;s mind is not on their jobs they become a significant liability to their organization. The mind today is the ultimate productivity weapon.

This new paradigm has brought awareness to the serious increase in the rise of mental disabilities. For example, it is estimated that the cost of depression to the US economy is approximately $150 billion a year. Forty to 50% of the cost of absenteeism is on account of mental disabilities in medium to large North American organizations. Prescriptions such as Prozac, Welbutrin, Zoloft, Paxil and others used to treat mood disorders and other types of mental disabilities are among the fastest rising category of drugs. To respond to this situation, managers are increasingly challenged to create workplaces that will support a mentally healthy environment.

We also know that there are anywhere from 10%-15% of employees who suffer from depression and who are not absent but who are in fact are at work. This group of employees is incapable of working at peak performance. They are at work and they fall squarely into the disengaged or presenteeism category of employees. To add to this new research in the October 2004 issue of the Harvard Business Review showed that there was an additional dimension to presenteeism.     There is another threat to productivity that can be added to the presenteeism group: physically sick workers who show up at work but are not fully functioning. In a research study commissioned by Lockheed Martin in 2002, the single largest group of employees who were at work and were suffering from allergies and sinus problems had a prevalence rate of 60% and were costing the company close to $2 million in lost productivity, followed by chronic lower back pain at 21% and $859,000 in lost productivity, arthritis at 20% and $860,000, depression at 14% and $787,000, dermatitis or other skin conditions at 16% and $610,000, and flu at 18% and $607,000 in lost productivity. This research estimates that presenteeism costs the American economy about $150 million in lost productivity.

What Can We Do?

1. Human Resource Departments need to begin to collect and use the absenteeism and other health statistics in a strategic way. This means being proactive in their organizations to begin to educate their own managers.
2. Train managers to manage for performance as well as managing for health. If they see a performance change in an employee who is considered a good performer, managers need to be given the language to enter into the appropriate conversation with their employee to discern the problem. The manger is not being asked to be a doctor or psychiatrist. She is being asked to point the employee in the right direction, i.e. going to EAP or whatever is the most appropriate course of action to restore the employee to fully productivity.    
3. Educate your employees. This can be done using lunch and learns. Use your own internal health statistics to determine the priority for the programs.
4. Ensure that your absenteeism policies are not encouraging sick employees to come to work.
5. View employee productivity from a systems perspective. Employee health is inexorably linked to productivity. Therefore all managers should be held accountable for both their own business performance measures as well as for their unit&#8217;s absenteeism. In other words the health of their employees is now their responsibility and not the responsibility of their health department. We worked with a client where this was instituted. The health of the employees in their department was discussed along with business issues at the weekly departmental meetings. Absenteeism decreased and productivity increased.
6. Assess your company drug plan. Does it support a healthy workplace or is it acting as a disincentive. You may be surprised what you find. Make sure that in your assessment you consider the whole system. Look at the cost side and also look at what is gained by supporting for example, employees who may be suffering from allergies and with the correct medication are able to be fully productive.
7. Introduce health promotion programs. There is a litany of programs and you have to choose the most appropriate for your organization. For example, EAP, flu shots, blood pressure testing, exercising, smoke cessation, weight loss and stress management programs.
8. But before you lunge into any of these programs make sure you understand root causes of the disabilities in your organization. For example, how much are organizational practices and leadership behaviors contributing to stress, chronic back pain and depression. Although health promotion programs can be effective, their effectiveness is dramatically reduced if organizational causes are not addressed first. The use of a leading edge diagnostics such as the Entec&#8217;s Employee Engagement Survey that measures both organizational factors and employee health factors can be an invaluable first step to identify causes of employee ill-health and to create a framework for improving health and productivity.

Better management of employee health can lead to improved productivity and this in turn can create a competitive advantage. With scare resources you may discover that reallocating funds towards health from training dollars will achieve greater productivity gains.

Pricing For Profit

To improve your profitability you must either make a larger gross margin on each dollar of sales or sell more without increasing your fixed costs.  It goes without saying that the greatest improvement will be realised when you achieve both simultaneously.

Remember your gross margin is the difference between the price of your product and what it costs you to buy or make it.  Therefore, the only way to increase your gross margin is to sell at a higher price or buy at a lower price.

In most instances (but not all!) you will have limited scope to buy at a lower price.  For this reason your selling price is the critical variable.

Without doubt, the biggest single barrier preventing small business managers from making an acceptable profit is their refusal to charge a price which will enable them to achieve this.  You are not in business to match the price your competitors set, but you are there to service your customers.

In fact, studies of the factors people regard as important influences on their decision to deal with a particular business indicate that product and price are relevant in only 15% of cases.

It is the lazy manager's competitive strategy to try to hold or win market share on the basis of price discounting.  It is relevant and applicable only in the one situation where you have both a definite cost advantage (either variable or fixed) over your competitors and your product or service is one where customers are very price sensitive.

For example, if your gross margin is 30% and you reduce price by 10% you need sales volumes to increase by 50% to maintain your profit.  Rarely has such a strategy worked in the past and it's unlikely that it will work in the future.

The service you offer or the unique way that you add value to the clients you support are all sustainable ways to differentiate your business and support an ongoing pricing for profit strategy.