Beyond Lean Manufacturing: Value-Driven Business

Posted on 28/06/2012 by Andrew Nicholson

For many manufacturers – particularly those well advanced on their Lean Manufacturing journey – the burning question now is: “So what do we do next?”

Manufacturers have been applying “Lean” techniques across their production operations for many years now. Most of them have reduced their costs, most of them have increased their productivity, many of them have engaged their employees and some of them have sustained a culture of Continuous Improvement (CI). So far, so good. But what do you do next?

You’ve streamlined your manufacturing operations, you’ve created a good CI system, most employees are actively engaged, Lean has become part of the day job, and you’re confident that improvement activities will be sustained.

You know that Lean Thinking works, you know that it’s a journey not a destination, and you’re wise enough to steer clear of the latest “management initiative” (fad).

So what do you do next?

To answer that question, let me offer you three “next steps” to consider:

Apply Lean Thinking across all areas of the organisation, not just in Production or Operations. Train all employees (and I do mean all!) to understand the basic concept of “Lean” and how to apply it in their areas of the business. They’ll need a different approach – and some different tools and techniques – from “Lean Manufacturing” but the tools are there if you know where to find them. And the opportunities for improvement are usually much greater than in Production or Operations. Have a good look – you’ll be amazed at what you find! Some of our “World Class” clients have found rework levels of more than 90% in their “back office” and support functions – it’s not uncommon.
Work on the entire Value Stream / Demand Chain. Extend beyond Operations to cover all stages of the order fulfilment process (from “Quote to Cash”). Once you’ve done that inside your own business, extend outwards to include your suppliers, customers, agents, distributors, and end-users. If you can create your own unique Value Chain (even if none of the components are unique) then you can create a very valuable business. Some of our clients have created a unique competitive advantage for themselves by doing exactly that.
Focus on the “Value-Add” side of Lean – the part that most people ignore! Look for opportunities to add more value for your customers. See where you can “in-source” or “back-shore” your operations, and find out if you can do some of the things that your suppliers and customers currently do. Some of our clients have increased their turnover by more than 50% in less than a year by doing exactly that.

The three steps that I’ve just outlined are part of a much broader approach to business improvement, called Value-Driven Business. When it’s applied to manufacturing businesses – which is mainly what this blog is about – it’s called Value-Driven Manufacturing. You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk. There’s enough there to take you well beyond Lean Manufacturing!

World Class Manufacturing Leadership

Posted on 24/06/2012 by Andrew Nicholson

World Class businesses have world class leaders. So what does it take to lead a successful World Class manufacturing business in 2012? Here’s my view…

The leaders of World class manufacturers are highly driven; they need to be the best in the world at what they do. They have high expectations, they create a strong sense of urgency and they inspire the right people to join them on the journey.

They understand that you don’t have to invent anything new and different in order to be world class. What you have to do is configure a value chain that delivers unique value in a different way.

Here are some of the things that they do:

Purpose: they communicate the purpose of the organisation in a way that is meaningful

Performance: they inspire people to perform at their best and they do not tolerate mediocrity

Passion: they are personally invested in what they do – they get fired up and it’s contagious

Process: they create streamlined processes that deliver outstanding and unique value to their customers

People: they get the right people on the bus; they expect to make some people unhappy

These are just some of my own thoughts – what are yours?…

Motivation Made Simple – the Top Four…

Posted on 23/06/2012 by Andrew Nicholson

Allow people to do what they do best every day. Give them the tools to do the job right. Make sure they know what’s expected. Regularly recognise and praise good work. That’s it!

If you can provide a workplace that delivers these things then you’ve addressed the Top Four Motivators (*) for most people.

Here’s my simple take on employee engagement, motivation and world class manufacturing:

There’s no such thing as a world class plant without an actively engaged workforce.
The more employees who are engaged, and the fewer who are actively disengaged, the better the organisation performs.
Employee engagement can be measured.
There are 12 Top Motivators.
If you want to improve the performance of your plant, company or organisation, do as much as you can to address these, measure the results, and keep at it.

* The Gallup organisation (www.Gallup.com) has conducted more than thirty years of research into employee engagement, with nearly two million employees. They’ve boiled all of that down into the Top 12 Motivators and these are the Top Four. If you want the best motivated workforce in the world, try all Twelve! They’re at http://businessjournal.gallup.com/content/811/feedback-real.aspx and you can read about them in the book “First Break All the Rules.”

Too busy to improve? Try the Rapid Results Programme

Posted on 20/06/2012 by Andrew Nicholson

Warren Buffett does not invest in businesses with “busy” managers. Yet most successful business leaders I work with are very busy people. How come?

Buffett’s hard-won experience is that Managers who follow the latest fads, hop around from one great idea to the next and live in a state of perpetual “busyness” do not create long-term value for their owners.

Effective leaders know where they want to get to and however busy they are they always make time to do the right things. In other words they avoid the “too busy to improve” syndrome and they make time to save time.

I had another great example of this yesterday, which is what prompted me to return to this theme.

I was working with an engineering company that I first worked with ten years ago. In that time the Owner-MD and his team have doubled the workforce, doubled the factory and quadrupled their turnover. Their next milestone is a further 70% growth, and they’ll achieve it. The MD has a great team around him who have made it happen, and many of them have been there for more than ten years. They’re absolutely flat out and they turn down business they don’t want.

Yet yesterday each and every production employee took an hour out of their working day for “non-productive” work. What they did was get together in small workgroups to identify wastes, inefficiencies and barriers to progress, brainstorm improvement ideas and then use “Ease and Effect” to create a prioritised improvement plan.

By 4.30 pm we’d combined the ideas from all five workgroups (nearly 50 people) and created a prioritised factory-wide improvement plan. Over the next three months at least half of those ideas will be implemented and they’ll increase productivity by at least 10%.

And the easiest thing to do instead would have been what most companies do – spend all of their time working inefficiently and spend no time on improvement.

The moral of the story? However busy you are you’ve got to make time to improve. If you’re flat out, bring in some help and concentrate on short, sharp activities that will make you more productive and more efficient. Result: more productivity, more output, less effort and more time to improve.

So here’s the shameless “plug”: The company mentioned above is achieving these results by taking part in Nicholson Consultancy’s Rapid Results Programme. If you own or run a UK Manufacturing business and you think you might benefit from a short, sharp improvement project like this, follow the link to find out more about the Rapid Results Programme (opens in a new window), or email info at ImproveMyFactory dot com.

Andy Nicholson

Rapid Results Programme Leader

Leading the Value-Driven Business: Character

Posted on 16/06/2012 by Andrew Nicholson

People trust Leaders who demonstrate Competence and Character. In a previous post I talked about some of the fascinating Leadership research outlined in a recent series of HBR blogs. The most recent explains why Character is so important, and how effective Leaders should demonstrate this. I’d like to pick up on the main points here because they’re incredibly relevant to every owner-managed business, to every Continous Improvement approach, to every major change programme, and of course to every Value-Driven Business. Personally, I believe they’re so important to our day to day interactions that they’re intuitive – it’s how we behave, even without realising it. As you’ll see, they’re so common that they’re repeated and commented upon to the point of becoming cliches…

1. People need to know what you’re trying to achieve and why.

Whenever we first encounter a stranger we want to know: what is this person’s intent or motivation? Hence the cliched challenge: “Halt stranger! Friend or foe?” It’s why the first words of the alien in the 1950’s sci-fi movie, as it steps from its flying saucer, are: “I come in peace”. It’s probably why so many novels and films feature encounters between strangers – we become immediately engrossed and our natural instincts are instantly engaged.

It’s why the method actor asks his/her director : “What’s my motivation?” It’s why the question:”Who are your heroes?” tells us so much about a person. It’s why the best situation comedies are so funny – great actors develop well-defined characters, and we enjoy and come to anticipate how the different characters will interact, each seeing the world from their own perspective.

In a business context, many owner-managers vastly over-rate the mind-reading abilities of their employees. It’s important that you explain what it is that you’re trying to achieve, and why you do what you do. We all know how important it is for a business to have a clearly stated purpose, but it’s also important when it comes to the day-to-day decisions and actions of the leaders in the business. And talking of actions…

2. People hear what you say but they believe what you do.

Words are important but actions are what counts. It’s about leading by example and doing what we expect others to do. We cannot always understand a person’s motivation so we judge people by their actions and behaviours. Again, this is so well understood it’s part of our everyday language. We have phrases like “Walk the talk”. We understand the emptiness of “Do as I say, not as I do”. It’s one reason why stories and fables are so compelling. It’s why we tell “war stories” and we recount tales of key moments in people’s lives, and how they behaved.

3. Consistency is everything.

We act in accordance with our values and beliefs so one way that we can judge the extent to which others are sincere or genuine is by observing how consistent is their behaviour. If a person acts inconsistently or in a way that does not match their stated values and beliefs, we take that as a sign of falseness. To quote Marx (Groucho not Karl): “These are my principles. And if you don’t like these, I have others…”

To read more, the original HBR Blog is http://blogs.hbr.org/hill-lineback/2012/04/for-people-to-trust-you-reveal.html

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

VACANCIES NOW FILLED Vacancies in Sheffield for CNC programmer/setter/operators – turning and milling of special steels and alloys

Posted on 23/05/2012 by Andrew Nicholson

One of our Sheffield clients currently has a number of vacancies for CNC Programmer / setter / operators and CNC setter / operators, for both turning and milling.

They’re looking for self-motivated “can do” people to join a long-established but growing engineering business with a dynamic new management team. The company has ambitious growth plans, including investment in new plant and macinery, and operates in the aerospace, nuclear, sub-sea, steelmaking, earthmoving, petrochemical and general enginering markets.

Successful candidates will earn £12 per hour plus shift premium, and must meet the following requirements:

knowledge and experience of machining nickel-based superalloys, inconels, duplex, super duplex and general engineering steels

knowledge and experience of Solidworks and Solidcam

experience of programming with FANUC controls

willing to work shift patterns to cover 24-hr operation

No agencies please.

PLEASE NOTE: THESE VACANCIES HAVE NOW BEEN FILLED (June 2012)

How to Choose the Right Manufacturing Consultant – the Questions You Need to Ask…

Posted on 22/05/2012 by Andrew Nicholson

Consultants can be of tremendous help to your business – if you select them wisely! We’ve all heard the horror stories of what can go wrong so make sure you get your selection “right first time” and avoid any costly mistakes. “How to Choose the Right Consultant” explains the questions that you need to ask and is currently available as a free PDF download.

The Manufacturing Rapid Results Programme

Posted on 19/05/2012 by Andrew Nicholson

If you own and run a UK manufacturing business and you want rapid improvements but don’t have the time, resources or expertise in-house, the Rapid Results Programme from Nicholson Consultancy could be the answer.

Its a proven way to solve specific problems quickly and effectively – without holding up the day to day running of the business.

The core is a results-driven project that lasts between 1 and 12 weeks, depending on your business needs. An experienced manufacturing specialist works with you to identify the precise results that you are looking for and then manages the day-to-day implementation on site.

The programme offers exceptional value and a rapid payback – its all about results and return on your investment. The programme leader – Manufacturing Consultant Andrew Nicholson – agrees with you up-front the results that you can expect, so that you know exactly what the benefits will be and what return you will get on your investment. And limited funding is available for qualifying businesses, so you could double your return. To find out if you’re eligible follow the link to The Manufacturing Rapid Results Programme.

Value-Driven Manufacturing and Value-Driven Business

Posted on 21/04/2012 by Andrew Nicholson

Value-Driven Manufacturing is an application of Value-Driven Business, in the same way that the Toyota Production System is part of the Toyota Management System. For an outline of the main points there’s a free PDF download: What every Owner-Manager needs to know about Growing a Great Business

Leading the Value-Driven Business: Competence and Character

Posted on 04/03/2012 by Andrew Nicholson

“Your ability to eilicit people’s best efforts depends on their trust in you – their confidence that they can count on you to do the right thing” *. In a previous blog post we talked about the fact that this trust is earned by Competence and Character. Let’s look at how you can incorporate these principles into your Value-Driven Business System.

Firstly, the whole area of competence. For every role you need to need to know what skills and knowledge are needed to do the job well. Critically you need to understand the core competences – the things that make the difference between an average performer and an excellent performer. The Value-Driven Business System uses core competences as a key part of the “People” system. Painful Truth #1: in a small business you won’t have the time or the resources to develop these so recruit people who already have them. If you want excellent performance, recruit excellent performers. This is particularly important when it comes to management. When I started my management career in the 1980’s British Industry was blighted by “Happy Amateurs” at all levels of management. Sadly, little has changed since. Management is an area of expertise in its own right – it needs specific knowledge and skills, and these have to be developed. Painful Truth #2: managers have to take responsibility for their own development, particularly when times are tough. If they don’t, don’t retain them. Regularly assess the skills, knowledge and performance of key staff. Where there are gaps, take action to fill them quickly. Either provide the right training and development, or move the employee out of the role.

Secondly, character. This is about values, beliefs and behaviour. Value-Driven Businesses are successful because they have clear values and beliefs – everyone knows “how we do things around here”. Recruit, recognise and reward those who demonstrate the values. Painful Truth #3: if employees don’t live the values then you need to move them out of the company. Jack Welch, former CEO at GE, felt that any leader who did not live the values did not belong at GE. Bob Chapman, CEO of Barry-Wehmiller has a great phrase: “Some flowers grow better in someone else’s garden”!

The Value-Driven Business System incorporates a version of Jack Welch’s Performance-Values grid. Why? Because the Goal is to maximise the value of the business, and a large part of that value is based on the value of the company’s employees. It’s part of the Complete Balance Sheet, another component of the Value-Driven Business System.

[* Harvard Business Review (HBR) blog post – “Do your people trust you?”(http://blogs.hbr.org/hill-lineback/2012/03/do-your-people-trust-you.html ]

If you have any thoughts or comments on these topics, or if you’d like to know more about the Value-Driven Business System, please comment directly here or drop me an email at “an at nicholsonconsultancy dot com”