Organizational Opportunities from the Frontline Story 16: Challenging the Cost Reduction Mindset | Operational Excellence Quick Hits

In today’s session, we’re gonna continue on this organization. In today’s session, we’re gonna continue on a series of organizational opportunities, stories and lessons learned from the front lines. Today’s story comes to us from a manufacturing company, they’re made to order environment, they had a lot of pressure, dealing with production issues to meet customer demand. And when we started to look at the operation, I asked them where they thought the bottleneck in production was. And they said I was in our layout department.

So how do we go about challenging the status quo when we’re going out to that department to improve productivity? So first of all, when we look at process improvement, our belief is that everyone process can be improved and improved significantly. Also, in order to improve organizational performance, we need to improve every process. And to improve organizational performance, you need to understand where to focus. And if we focus, then the first step is to challenge the status quo in that area.

So in this case, they go oh, that’s our layout department. This company did huge forgings. So I said, Okay, let’s walk out to the layout department take a look at what’s going on. So we walk out there, and it’s like, I start looking at the different workstations in the lab department and only like one of the four working. I’m like, Well, what’s your utilization? Because I only see one resource on the for resources working, they’re like, Well, what’s utilization? I said, Well, utilization is how many hours you’re have available, working and how many actual parts are you working on during that time? They’re like, Oh, we don’t know. I said, Well, why is only one of the four stations working, they said, Well, part of the issue is we send this material out to a lab, because we have to take a core sample, the lab takes a core sample does a test to see if the the material is good. They send it back. And if the material is good that we start processing the material through layout. And so most of these forgings you see laying here are waiting for the material test to come back to determine if the material is good or not. And so I said to the plant manager, well, I only have one question. He’s like, what’s your question? I said, How many of the tests actually fail? He’s like, Oh, less than 1%. I’m like, so why are you holding them? He goes, That’s a good question. I go, every item has a serial number on it. If it happens to not meet the spec, you can find it downstream and pull it out of the system. But right now, because of this policy, it’s like oh, we wait for the material, get approved from the lab tests before we release it, is killing their productivity in that department.

Okay, so we got to challenge that status quo. So we’ll talk about what results we got by just doing this. So first of all, I want to talk about the chain analogy. So if we understand where to focus, we think about the chain, we can look at the chain and measure it two ways we can measure its weight, which acts like costs in a company. So if I know the weight of each link, and I want to determine a weightless chain, I just add them up. So wait acts like cost and accompany. And it follows the additive rule.

Okay, but if I want to know the strength of the chain, how much capacity there is in the system, that’s determined by the weakest link. So I went through the different capacities of these links. This chain is determined by this link that has a capacity of 950. So in this case, that Department of layout was their weakest link, because work was piling up there. And they weren’t getting much processed through that department on a daily basis, not even meeting customer demand. And so we need to challenge why is that happening? So when we challenge the status quo, all we want to do is we want to look at the process and understand why they’re doing it a certain way. And of course, the number one answer you got to get as that’s the way we’ve always done it. I probably get that answer 90% of the time.

Okay, so now we want to change that using the Socratic method. And be careful if you use the Socratic method to start asking questions, you might uncover a Bigfoot. So Bigfoot is a term that we coined working with another company. And the reason we call it Bigfoot is because everyone’s talking about it. But when I go look for evidence of it actually happening, we actually can’t find evidence that it actually exists. So there’s a lot of history in the company where some special cause event happened, that caused some process to deviate. They put some immediate countermeasure in place because of that, and that just became a standard for some reason, and nobody can explain why that is in place.

So what is the Socratic method? So the Socratic method is a way of creating a dialogue between individuals based than asking and answering questions to stimulate critical thinking, and to draw out ideas. And so one rule I have never tell the person that you’re speaking with that they’re wrong, or they don’t know what they’re talking about, because what they believe is that they’re correct. But they don’t understand that they might be using a false assumption or have false data that made them come up with that conclusion. So when we apply the Socratic method, prior to your conversation, what you want to do is you want to start to understand if there is a Bigfoot, and why it exists.

So then clearly define the cause. And then, so then clearly define the cause and effect thinking that is necessary to achieve the objective, which is we want to eliminate that big foot and change the mindset. So during the conversation, present the Big Foot Charles the person to explain why it exists. And you won’t really want to understand what their current belief is, are their false assumptions, then, from your investigation, give a counter example of why their logic does not hold true. And then ask them if they personally experienced the big foot and let them explain their experience. And so this case, it’s like, oh, we always wait for the lab results to come back. It’s like, okay, so why are you doing that? Well, that’s why we’ve always done it. Yeah. But if you look at the risk of that material being bad, and every material has a serial number, okay? What’s the negative that can happen if we just process that material? Well, we might have a little bit of lost capacity, like 1% loss capacity. But right now, it’s like 75% loss capacity. So the gain is huge, the risk is small.

So then, if we chose person to start articulating your cause and effect thinking, under the new paradigm, he can break away from that big foot and open the door for big opportunities for improvement.

So that’s our session for today. So in this company, what we did is we challenge that they started processing jobs, not having the material samples back, and actually opened the floodgates to increase productivity was huge. And then ended up creating the largest shipment month ever in the company’s history. Just by changing that mindset, and changing that big foot. It’s like, oh, we have to wait for the results to come back. to process it. It’s like, Nope, we don’t have to do that. Stop doing that. And it opens the door for huge productivity gains. So that’s our session for today. Again, visit us on our YouTube channel, visit our website, visit me on LinkedIn where we’re posting information about all types of mindset change necessary to get breakthrough improvement.