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Notes for a profitable New York!!

To kick off 1993, the seventh consecutive year that SDF International has written the "Profitable Manufacturing" column, Tom Schuler, Jay Frankenfield and Kay McLeod teamed up to share their experience on how to create a plan of action for success. Below is their five step plan.

1. "Benchmarking" - Where do I stand against the competition?

Just like an athlete, a manufacturer needs to know the score. Can you imagine playing any sport without knowing how you are doing versus your competition? Yet often in business, companies don't know their performance levels versus world-class competition.

One consulting firm, PA Consulting, defines benchmarking as "the search for the best practices that lead to superior performance." Effective benchmarking will not only tell you how you stack up against the competition. It will also highlight specific areas of your business that need improvement and identify how other companies achieve higher performance levels.

So, how do I develop "benchmarks"?

1. Determine what to benchmark. Don't try to benchmark everything or you will quickly overwhelm your organization. For starters, a manufacturer might benchmark operational performance (line speeds, efficiency, waste) and costs (direct labor and plant overhead) for their largest volume items.

2. Form a multi-functional team. Good benchmarking requires a diversity of skills and experience. In addition to technical skills, team members should be good communicators and have personal credibility. Also, outside experts familiar with benchmarking can facilitate the process, help the team stay focused and help look at data more objectively.

3. Understand your own company's performance. Defining your own performance may be the first challenge. Often, different plants or divisions use different methods to report their performance and costs, so it is necessary to establish "internal benchmarks" before moving on to the competition.

4. Collect and analyze industry information. Benchmarking should not be confused with industrial espionage. Rather it is a perfectly legitimate and legal way to find out how others are doing so that you can target your improvement. Typical resources for information include industry contacts, trade journals and publications, equipment suppliers, engineering firms, ex-employees, suppliers and customers. It's also important to point out that benchmarking often takes place well outside your industry base. For example, the best ideas and methods for warehousing or customer service improvements may come from companies whose primary focus are these areas, not your core business.

5. Summarize the benchmarking and recommend areas for improvement. Be careful to avoid the mistake of overloading people with numbers without identifying a course of action for improvement. Good benchmark data is "actionable," that is, it leads to business improvement and higher performance levels.

2. Why is it so hard to get anything done around here? Our organizational "response" is lousy!

Lack of organizational "response" to problems is so common a complaint from both managers and employees that maybe we should create a new "Response Department" to get people to focus on each other's needs (only kidding)!

Organizational response, when effective, quickly identifies problems and directs resources to the problem area without numerous meetings and discussions. It's an organizational "total task" mentality - people that can recognize when key performance data is a deviation from the expected norm and are willing to do something about it!

In organizations with poor response, getting things done is a painful, drawn-out process. One factory technician recently told me, "If we spent the same amount of time and energy fixing the problems as we did trying to determine who should do the work, we would become worldclass by accident!"

Organizational response is not pursuit of a ghost. It is a tangible, recognizable attribute that can be achieved through good management practices. It has at least the following elements:

* A world-class organizational structure: a composite organization of highly focused, functional groups. This can only exist if each department or function sees itself as part of the whole, not as a separate entity. This is accomplished through a "customer focused" role development process (see below), a shared vision of where the company is going and continuous improvement goals that point the way. Common terms to describe highly responsive companies include a "total task orientation," effective department "linkages" and excellent "alignment" of goals and objectives.

* Customer focused roles: a process that requires individuals and departments to focus on satisfying internal and external relationships, not their own needs. In some cases when we have taken a company through the process, it's the first time an individual has ever focused on anything but his/her own wants or desires. Describing why a functional group or department exists and what product or service is provided opens organizational doors and turns on the lights.

Organizational structure changes are not enough to create a total task orientation, linkage or alignment of goals. The "way of working," the process to define roles, must go hand-in-hand with efforts to streamline the organization and get people to understand that they are all wheels on the same organizational chassis.

3. Project execution is killing us. We have got to get better at managing technical change.

Since the mid-80's, the pace of change in this industry has been breakneck. Because of the rapid changes required, poor technology management practices may be the single biggest cause of outright company failure in the last six-seven years.

Poor technology management practices (defined as the work process used to modify or upgrade products or machines) are usually reflective of bigger problems in the company. If management has not created the environment or established solid project management expectations, poorly executed projects can cause enormous operational problems and financial hardships, wreak havoc on employee morale, destroy organizational relationships and create a continuing crisis orientation in the plant.

At a minimum, a company looking to improve its project execution process should consider the following:

* Get the people who will run and maintain the new process (operators, mechanics, etc.) involved in the project early in the game. Create a cross-functional team that will include key operational input into the design process.

* Develop specific project success criteria (measurable conditions that must be achieved when the project is completed). Get the project engineers, machine operators and mechanics to agree on installation timing, the run-in period, waste performance, etc. This will always improve implementation success and also minimizes the tendency to use critical production lines as prototype facilities.

* Educate/train factory workers on the project scope and success criteria in advance of the implementation. There is simply no excuse for surprising the night shift with new equipment or process requirements when a project has been in the planning process for months.

* Minimize major "in-house" process modifications unless you have a world-class engineering and design group. And if you think you have an internal world-class group, test your assumptions (benchmark) against outside vendors and "real world" performance criteria.

There are many facets to these important points, but let's look at just a few. First, many smaller companies try to overlay major machine design changes into their maintenance groups, which don't have the skills (or time) to do a world-class job. If they do redirect their focus towards projects, it often comes at the expense of line support assistance. Many companies often state they are "saving money" with in-house engineering work. This is almost never the case. The loss of line support focus, project delays and long term operational problems are usually not factored into the "real" costs.

Even the "big guys," who have dedicated process and design engineering groups, have learned that they can improve project execution and cost performance with highly focused outside vendors whose survival depends on quality engineering solutions.

4. Should our company be going to teams? What's the magic in "empowerment"?

I recently heard the president of a small midwestern company say that companies really have two choices relative to teams. "They can either go to a team-based orientation or they can stand by and watch their competition drive them off the business map with a team approach." Powerful words, no doubt. But he was looking back at improvements in company performance that were unparalleled in his company's history since he organized into work teams and started turning over responsibility to employees.

Teams are groups of employees who are responsible for a work process or service. Teams can be created and flourish in the customer service, warehouse and maintenance groups as well as in the production area. When given responsibility, support and training to meet expectations, empowered teams will out-perform a traditional plant hands down.

What's empowerment? It's the systematic and progressive "transfer" of power and decision making authority to factory workers to run the daily business. One company we work with calls it "igniting the passion for excellence" in its employees. Even in the early stages of empowerment in this company, management was astounded at the volume and quality of ideas that flowed from employees to improve the business. William Byham of DDI Consulting captures well the need for tapping into employee talent and potential. He states that in a world-class organization, "everybody in the company has to be thinking every day about ways to make the business better in quality, output, costs, safety and customer satisfaction."

Aaah, there's the magic of teams, in a nutshell. It's distributing the heavy "burden of improvement" in an organization among all the teammates, associates or technicians and making them part of the solution. Normally, this oppressive burden sits disproportionately on the shoulders of management and since ties have never been a good substitute for brains, managers will never have all the right answers.

How excited should you get about teams and empowerment? In one word, VERY! Consider the following success stories.

* A New York producer of disposable paper products is producing at 40% over historic levels after reorganizing into teams and developing necessary support systems.

* A European disposable diaper operation is currently operating at its highest quality and productivity levels in its history within seven months after going to a team orientation. This is in spite of a rigorous product upgrade and machine rebuilding schedule.

* A U.S. producer of disposables has completely turned over the daily running of the business to employee teams. The plant manager signs his official correspondence as "Team Coach" and leads a management "resource team," whose primary role is to help teams solve problems.

So, is the right answer to rush out and commission teams tomorrow? The answer is no, unless you're prepared for your worst management nightmare. Here, we can use another common expression..."be careful what you ask for, you might get it."

By this, of course, we mean that laying the foundation for a successful empowerment process is absolutely critical. In fact, commissioning process work teams is actually well down on the implementation methodology list if you're going to do it right. Employee backlash and frustration can reach crisis proportions in a company if the groundwork is not well prepared for teams.

Igniting the passion for excellence must be accompanied with at least the following elements if you expect to achieve the success described earlier:

* Management commitment and support

* A company vision that defines the purpose, values, team design and roles of organizational resources

* A results-orientation to provide organizational direction and identity to teams

* Training to link team capabilities to expectations

* A fundamental change in the roles of managers.

Ok, now you're ready to begin.

5. Where am I going to get the time to change things around here?

Managers across the industry face the daily challenge of how and where they spend their time. There never seems to be enough of this precious commodity called "time." Where do managers find the time to set priorities, solve problems and chart the future course of the organization? The answer is quite simple - move responsibility down in the organization. To accomplish this, a good manager must delegate responsibility for tasks which his/her subordinates or teams are capable of handling. The difficulty is that managers have been programmed (trained) for years to retain control of business tasks, not to give up control, even in the face of evidence that clearly demonstrates subordinate competence to handle the job.

This often creates a situation where leadership personnel in the plant (top management through supervisors) spend nearly all their time fighting fires (survival activities) or doing the things that just get them to tomorrow (maintain activities). Then it's the same scene the next day. No time is allocated to the critical business function of improvement (move-ahead activities). Therefore, plant improvement stalls and the business stays status quo. Figure 1 reflects the common allocation of management time in many plants.

In order to create a world-class orientation, managers need to delegate activities that compete with their move ahead time. This, again, forces managers to rethink their roles and the definition of control. In a world-class organization, the management time triangle looks like Figure 2. a major shift of focus for Mr. or Ms. Manager.

Tom Schuler Richard Ducote, Jay Frankenfield, Adrian Bridge and Kay McLeod, of the consulting from SDF International, write a series of bimonthly articles on "Profitable Manufacturing - Using Manufacturing Leverage To Gain A Competitive Advantage in the Nonwovens Industry." These "how to" articles feature practical operations and engineering applications from their years of combined experience with P&G and private label manufacturers. SDF's offices are located at 6855 Jimmy Carter Boulevard, Suite 2400, Norcross, G.A 30071; 404-447-9750; Fax 404-448-7722. Reprints of earlier NONWOVENS INDUSTRY columns referred to in any article are available from SDF.
COPYRIGHT 1993 Rodman Publications, Inc.
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:action plan for profitable manufacturing from SDF International
Publication:Nonwovens Industry
Date:Jan 1, 1993
Previous Article:1992 regulatory warp-up and 1993 outlook for nonwovens.
Next Article:Babies are always changing ... so are the diapers.

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