The journey from chaos to excellence in supply chain
Almost every manufacturing company strives to establish a world-class operation – highly efficient, extremely productive, with employees engaged and costs reduced year on year through well executed savings initiatives. Is this actually feasible or is this a mirage that we are all chasing? The proverbial search for the holy grail?
We all agree that cost reduction is a key factor to surviving in today’s business world, but many manufacturers end up making “cost-cutting initiatives” an end in themselves. Instead of this approach, an effort must be made to implement the right systems and processes, where cost reduction happens but never at the expense of quality.
Does this seem like hard work? Would it be easier to just implement the cost-cutting ideas? It may seem like that at the beginning, but with this thinking, what you are likely to end up with is a work culture that is not engaged and not willing to change. The improvement ideas will only come from the business leaders or owners – that’s you, I guess. Eventually you’ll get frustrated about spending too much time in the day-to-day issues and not focusing on the strategic initiatives.
So, what is the alternative? I believe an average mid-tier manufacturing business could implement a world-class operational excellence (OpEx) model in 18 to 24 months. This would set you up on a real continuous improvement journey and, yes, that means year-on-year cost reductions. Do this right and you should be able to stay ahead of inflation cost increases and your competitors. Below is the pathway that will take your business from chaos to excellence and, in turn, which will take you from exhaustion to exhilaration.
This is usually the blissfully ignorant phase, where you don’t know what you don’t know. Typically, it feels like you are fighting a losing battle. Your focus is time, and you wish you knew all the efficiency hacks to fold time. Your approach is to work long days, and the biggest concern is that you and your team are burning out.
Every issue is either urgent or critical, and the team creates its own chaos by having to follow up on each issue, distracting and interrupting everyone. You make multiple phone calls and send multiple emails to ensure that a particular urgent order is getting completed.
You feel like you never get to stand on the surfboard as you constantly get knocked down, wave after wave. The impact of all this is that you and your team are going backwards. If you don’t do something about it now, don’t expect to be in business for much longer.
You need to get some sort of order in place and you need to have visibility of all activities in your plant – like an air traffic controller watching all the airplanes. You do this by implementing a daily operations review process – a 20- to 30-minute stand-up meeting with all key stakeholders of the plant to review the status of the site.
Your focus should be to hold these individuals accountable for the parts they are responsible for. The meeting should be visually rich, with the right KPIs and the right triggers that inform everyone if those KPIs are red or green. And I don’t mean fancy LED screens – these should be simple whiteboard graphics that can be easily marked red/green.
The primary concern is having the right KPIs to tell you the full story or capturing the right actions when things aren’t right. This is vital as we try to focus on holding individuals accountable. You could implement this in one to two months and once it is embedded, you should feel like you’ve got some stability.
Now that the site is somewhat under control, your main focus is to improve that one area that is letting the team down. Find that kink in the hose that is restricting the water flow. It should be easy to find – it is area where the most overtime is on, the one department that all the products flow through, the one that you inquire about 100 times a day, the one that you wish you had a magic wand to fix – yep, that workcentre/process.
Work on this area for the next two to four months, and stay focused on it to transform its issues. You may have to conduct some basic root-cause analysis and prioritise the main pain points of the operators. With the right OpEx tools deployed, you should have this area transformed like on one of those backyard makeover TV shows. The concern is that you may work on the wrong area or try to do too much right away. In either case, you will not be able to get much more water flowing through that metaphorical hose.
You are ready for some serious activity now. The previous phases will provide you with some breathing space to take time out to analyse and identify the key losses and/or waste. Your focus is to develop capability of your team members to lead structured problem-solving sessions with cross-functional teams.
Be ruthless to prioritise the biggest wins. If implemented correctly, this phase will certainly put a smile on your finance manager’s face. The impact will be quite significant and finally you will feel like you have a systemised process that could continue to improve with little guidance from you. Starting too many initiatives or lack of governance of the projects will be the key problem areas.
You could stay on the propel phase, but this phase is the icing on the cake – the phase where you create your legacy, one that will set your business apart from the competitors. Build the capability of your frontline leaders to be the future business leaders.
This is where you are now implementing improvement initiatives across the company at the same time as the frontline leaders are starting to coach their teams to lift the team performance. Being impatient in this phase – and underestimating the effort required to coach the frontline leaders themselves – will be to your detriment.
I know that it is a fast-paced world that we live in, and 18 to 24 months may seem like a long time. Slow is fast and effective when it comes to operational excellence. So, can we establish a world-class manufacturing operation that continues to improve perpetually, that reduces costs year on year and where most day-to-day spot fires are placed under control by the frontline teams themselves? Does this seem like fiction or a feasible challenge? Connect on LinkedIn and let me know.
Ishan Galapathy is an operational excellence expert in manufacturing, a speaker and an author.