Organizational Opportunities from the Frontline Story 12: Sustainability | Operational Excellence Quick Hits

In today’s session, we’re going to continue on the series of organizational opportunities; stories and lessons learned from the front lines. Today’s story is about sustainability, and it comes from a company that’s a manufacturer. They were dealing with several issues such as long lead times, poor delivery performance, and inconsistent shipments from month to month. And they were suffering from the end of the month syndrome where a bunch of the shipments, more than 50% of the shipments were being shipped in the last week of the month. And so they worked with Future State Engineering to make significant improvements. So our improvements, we cut lead time significantly from 18 weeks to eight weeks, on time delivery from 40% to 92%, eliminated the end of the month syndrome. So things were shipping consistently throughout the month. We implemented these improvements. The project ended. And then the company was to continue on the road of continuous improvement.

But what happened was they slowly started to transition back to old practices. So that transition back to old practices, they started to deteriorate. They went back to long lead times, their delivery performance wasn’t great. They weren’t shipping consistently throughout the month. And all the issues that they were dealing with before came back. So what do we need to do to prevent the backsliding? So let’s talk about the necessary conditions in order to achieve sustainability. So first of all, our belief is if the process improvement is not sustainable, it’s not an improvement. And again, process improvements need to translate into improved business performance.

So we’re not talking about cost reduction initiatives that are paper cost reductions. We’re talking about initiatives that actually translate into improved business performance. And of course, ensuring that the process improvement doesn’t backslide is what’s necessary to maintain that sustainability. And if we look at the process of improvement, so I use the plan, do, check, act cycle.

So we’re planning what our improvement’s going to be, we actually implement it. We put in the check to see if we actually achieve what our objective was. And then we put the sustainability pieces in place. And a lot of times people struggle with that. So what happens is we get a stepwise improvement. And then to prevent the backsliding, we need to put the wedge in place to prevent the backsliding.

So what is that wedge? So what are the techniques to put that wedge in place so we prevent backsliding? So let’s talk about that. So the necessary conditions, first of all, we need timely feedback on our KPIs. So of course we got to have the right KPIs that represent the vital signs for the company. And then we got to have that timely feedback. So timely feedback means that for short periods, I like weekly, we’re monitoring what those KPIs are. And we want that short management window. So the time between when action is taken, until we understand the effect of that.

Then we want to reinforce the correct mindset for the employees. So we need to do continuous training for the existing employees on flow based concepts. Also, we need to do extensive onboarding training for new managers on flow based concepts. So one of the issues was one of the managers that they’d hired to put in the position didn’t go through the initial training. He was trained in other companies. And then when he came in here, he started to put in the beliefs that he had. And that’s what created the backslide. So it’s very important that we train new managers on the concepts of flow. And understand the key performance indicators and how the actions that they take from day to day affect those KPIs. And of course, we got to have the correct process metrics that are aligned with the KPIs.

So our processes are also being monitored to their performance on the system performance and linked to those KPIs. And again, to reinforce the concept of management window, management window is the time between when action is taken until we understand the effect of those actions, positive or negative. And what we want to do is we want to reduce that management window, the time between action until the effects are known.

So if we have several process steps in our system here, we want immediately after that first process is performed, we want immediate feedback on the process. Was it performed correctly? If yes, that’s great, move on to the next process. But if no, we need to take the immediate corrective action to correct that issue. And just by doing this, you eliminate a lot of chaos. And we can also build accountability into the process by doing that. Next necessary condition is improve workforce capability and flexibility.

So we need to implement a skills matrix to show where we are baseline for our skills for our employees. And then what we want to do is we want to put our training plan in place to increase the constraint capacity and increase the protective capacity of the system so we can flex resources when needed, when we have shifts in demand or shifts in mix. Next is focused improvement initiatives.

So we want to have those focused improvement initiatives, and that means that we tie each initiative to the KPIs. And if it doesn’t move the needle on the KPI, then don’t do it. So remember, our definition of focus is doing what should be done and more importantly, not doing what shouldn’t be done. So don’t be doing those initiatives that don’t move the needle on the KPIs. You’re just wasting resources time.

Next, use cross-functional teams as an opportunity to provide more training. So when we do these focus initiatives, get cross-functional teams. And provide training, and there’s another opportunity to provide training to the workforce to reinforce the concepts. Then, develop a process for systematic capacity expansion. So I’ve never seen a company that’s done this well. So what does that mean? We were looking at our demand rate. We’re looking at our flow rates. And we’re understanding when demand starts to exceed our flow. And we’ve exhausted all of our improvement initiatives, where we can increase capacity with no investment. And now we’re starting to estimate the time that we need to invest to expand capacity. So we need the process in place to estimate the time, the need to expand capacity, and then establish a full kit process for a capacity expansion so that when we are ready to pull the trigger on the capacity, everything is in place to do that.

We don’t have to wait months for the new machine to come in or somebody to do the analysis or whatever. All that stuff is done up front. So I’ve written a white paper on, I’m estimating time to need. If you’d like to see that white piper, send me a message and I’ll send you the white paper. So that’s our session for today. Thanks for listening, hope you learned something. And if you have any other necessary conditions that you’ve seen in companies to sustain the change, then I’m willing to listen, always looking to learn new ideas and new concepts.