Laying the right foundations
Many manufacturers seem to be putting the cart before the horse by selecting and applying an improvement tool before getting certain foundational elements in place that will assure each tool’s effectiveness and sustainability.
Essentially, all manufacturers are under intense pressure to improve and become ever more competitive. We live in a Darwinian world of capitalism, where price pressures are increasingly intense, induced by consumers that are ever seeking the lowest-cost goods, irrespective of the source. This competitive pressure is particularly intense in European and other Western countries where labour costs are substantially higher. It’s quite natural that manufacturers would be seeking methods or tools by which they can become more productive and competitive. This leads to the inevitable search for the tools to support this. Unfortunately, the data suggest that these tools are not nearly as effective as anticipated.
Bob Williamson, a noted expert in Total Productive Maintenance (TPM), estimates that the failure rate of TPM programmes is about 60%, and may be even higher since many TPM efforts were not ‘true’ TPM, but rather focused on one element of TPM-autonomous maintenance by operators. In his view, the biggest cause of these failures is poor leadership, that is, the leaders not understanding that TPM is really about Total Productive Manufacturing, not maintenance (and Nakajima, TPM’s original author, said so, according to Williamson).
Neil Bloom, an industry expert in Reliability Centred Maintenance (RCM), also estimates that over 60% of RCM programmes are never successfully implemented, with many of the rest only implemented in a superficial way. My own experience in reviewing Six Sigma programmes is similar, that is, no more than half are implemented and sustained successfully.
If these tools are so good, why do they fail to deliver so frequently? It’s most likely that the cart (the tool) has been placed before the horse (foundational elements for selecting and sustaining the use of the tools). Before selecting the tools, it is essential to have other foundational elements in place: leadership, alignment, teamwork, innovation, change management, and process mapping.
Experience and study of leadership throws up several common characteristics. First and foremost, leaders set the example and have the courage to support and defend their basic values and principles. Leaders are trustworthy – true to their word and principles – thereby creating a sense of trust. Leaders convey an overall vision and sense of purpose, while being firmly grounded in reality. Leaders have a passion for excellence, set high work and ethical standards, and create a caring, yet disciplined environment. Finally, and perhaps most importantly, leaders put people first, treating them with dignity, respect and appreciation. Put simply, leaders create an environment where others want to follow them. How many corporate leaders create this kind of environment? Very few, except for the best ones.
A recent employee survey by Harris Interactive Research found that: 20% of employees were enthusiastic about organisational goals; 20% saw a clear connection between their tasks and such goals; 15% felt the organisation enabled them to achieve their goals; 15% felt they were in a high-trust environment; and 13% felt there was a high-trust, highly cooperative working relationship with other groups or departments.
Even if the survey was wrong, and the numbers are twice as good as this, it still speaks poorly of most organisations’ ability to align their people to a common strategy and set of goals. Peter Wickens, author of ‘The Ascendant Organization’, had it right when he said that one of the most important things a CEO can do is to align the organisation. The best companies are much better aligned, and are better particularly at aligning employee personal interests with corporate interests.
In ‘The Flight of the Buffalo’, James Belasco and Ralph Stayer provided some simple and sound advice: you get teamwork by giving the team work to do. It is important for the team to have clear purpose and direction, including a sense of meaning aligned to corporate strategy. Boundaries for the empowerment are needed, but also self-determination within those boundaries. There should also be: openness and honesty in working as a team and rules of conduct for that; verification of skills to operate within the boundaries, or training needs thereto; measurement of effectiveness as to its impact on the business; continuing feedback and support from the team’s sponsor; and flexibility to address changing needs.
If you cover these issues reasonably well, the team’s results are more likely to be excellent. If not, there is a much greater risk in having an ineffective team. The best companies foster teamwork, applying these guidelines.
Many companies spend a lot of money and energy on ‘big’ innovation – the next big breakthrough in technology. While this is laudable, we should also be very concerned about ‘little’ innovation, that is, people on the shop floor coming in and making things just a tiny bit better every day. More importantly, the leaders of most organisations apparently don’t understand their role in removing the obstacles that would make it easier for the people to make these little improvements day to day. If everyone in the company made just one tiny improvement every day, think of the leverage this ‘little’ innovation would create in reducing costs and improving the gross profits that fund the ‘big’ innovation for creating new products and markets. Think of the impact this would also have in aligning the organisation.
A refrain in many companies is that “our people are our most important asset”. Yet those companies don’t seem to hesitate to dispose of those assets in an attempt to become more competitive. A mixed message results, demoralising the employees, reducing creativity and innovation, lowering expectations, and creating a downward spiral. Innovation and continuous improvement must permeate the organisation at all levels, and leaders must create an environment where this happens, removing the obstacles to the employees’ ability to make those day-to-day improvements.
Costs are a consequence of your practices and systems. Removing the people who understand the problems and can help solve them often only perpetuates the problems. The best companies routinely provide the appropriate tools that engage everyone in getting better, every day.
“People don't want to change; they're stuck in their old ways.” This familiar old phrase is easily used to describe organisations, but it is rarely the case. People are frequently ready to change, if there’s something in it for them, and if they participate in creating the changes. So, it’s up to the leaders of the organisation to articulate how the change is beneficial to the employees, and then to help employees create the changes.
Margaret Wheatley has said: “People own what they create.” They must be helped to create, with obstacles to their creativity removed, enabling them to solve day-to-day problems so that the organisation gets a little better every day. In principle, managing change is fairly straightforward:
- Articulate a compelling reason for the change, and how employees benefit from it;
- Communicate your strategy and desired goals frequently;
- Apply leadership and management principles: leaders like change, managers like stability – a process for managing both and getting the balance right is essential;
- Facilitate employee implementation of the change process – help them to create the changes and improvements;
- Measure the results: reinforce good behaviour; challenge bad behaviour;
- Stabilise the change/organisation in the new order through procedures, checklists, standards and audits; management stability is critical – changing plant managers every two years induces considerable instability;
- Repeat the process – change and improvement is a normal part of the organisation’s behaviour.
It is sometimes difficult to know where to start in the improvement process and in applying the appropriate tools. One simple method is to use a form of process mapping, or a Business Level Failure Modes and Effects Analysis (FMEA). This technique is an adaptation of a standard engineering approach to problem solving, but applies the technique at a business system level. How so? First, draw a block diagram of the production system of interest. Then assemble a cross-functional team for that system, or each major part of the system (it’s essential that it be cross-functional).
Next is the critical element in the analysis: define a functional failure of the system or production process as anything that results in the loss of production output, or in extraordinary costs. This is a measure of the waste in our process. Then analyse each of the functional failures in the system as to its frequency and consequence, typically estimated in its monetary value. It’s common that the biggest losses, or waste, are in changeovers, poor production planning, poor raw material quality or quantity, poor training and employee skills, and other factors. It’s rare that the biggest loss is due to poor equipment performance. Finally, give priority to the opportunities that present the most benefit for the least amount of investment or risk.
Hierarchy of tools
If we get these foundational elements or practices right, almost any tool will work. If we don’t, few tools will work, or our improvements will be transient at best. But, when it comes to applying the tools, where do we begin? My experience can be summarised in two phrases – we get the foundational elements in place first, and then we do all the basics really well.
In ‘The Toyota Way’, Jeff Liker captures these foundational elements very well. You begin with long-term thinking (even at the risk of short-term profits). This requires leadership, alignment, teamwork and innovation, discussed above. It’s essential that you understand your processes, and map them to identify all the non-value-add, or waste, in your system, and work hard to eliminate this waste.
To do this you must engage your employees and suppliers continuously in problem solving and improvement. This too requires alignment and teamwork, and cultural change comes about when people are routinely involved in creating the changes, taking ownership for them because they helped to create them. With these foundational elements in place, almost any tool will work.
That said, my recommendation is to begin with getting the basics right, applying so-called kaizen principles:
- Use 5S – get your plant clean, tidy, well organised, and sustain it through good systems; standardise all work (to minimise variability);
- ‘Go and see’ – it’s amazing how many managers try to manage processes that they don’t understand or regularly review first hand, on the shop floor;
- Solve problems to root cause first using 5 Whys (most problems can be resolved with this simple approach);
- Apply quick changeover (lots of waste occurs in slow, sloppy changeovers and poor start-ups thereafter);
- Routinely set up problem-solving sessions, or kaizen events.
This is not to say that you could not ‘jump ahead’ and apply a more comprehensive tool, e.g. Root Cause Analysis (RCA), Reliability Centred Maintenance (RCM), or six sigma. For example, RCM can be a very useful tool for optimising or setting up a Preventive/Predictive Maintenance (PM/PdM) programme. Six sigma can be very useful in determining the causes of process instability. You could, and should, apply the more advanced tools, if the problem is complex and requires applying a more sophisticated method appropriate to the circumstance.
Next, apply TPM principles. According to Bob Williamson, TPM is the original equipment-improvement side of the Toyota Production System. For example, measure your overall equipment effectiveness (OEE). More importantly, manage all your losses from ideal OEE. These losses are waste. They’re also a measure of your capital productivity – why spend more capital when you have unused capital available? Assure operational consistency (standard work) and operator care across all shifts, applying TLC – ‘tender loving care’, or ‘tighten, lubricate, clean’. Assure effective PM and PdM, and planning – ‘plan the work, and work the plan’. Restore your equipment performance to a like-new condition, or better (better is better). Strive for an environment for continuous improvement and learning.
Getting all this in place is difficult, and you must be tenacious about it, but my recommendation is that you follow this model, before being too quick to jump into the more comprehensive tools, such as Six Sigma, Root Cause Analysis and Reliability Centred Maintenance.
How do manufacturing plants get to be among the best? Certainly the tools help, but long-term success and sustainability begin with a focus on long-term thinking – even at the risk of lower short-term profits – and having the leadership, organisational alignment and teamwork that will support that; then understanding and mapping the processes used, and eliminating the waste in those processes; engaging employees and suppliers in problem solving, and especially avoiding threatening employees with layoffs; and then selecting the tools and practices that will best engage the employees in helping the company solve its problems and be more competitive.
I believe that the tools and strategies used in the general order presented above will provide you with the greatest likelihood of success.
*Please note: This article first appeared in the April/May 2007 of Manufacturing Engineer magazine