Leading the Value-Driven Business

Posted on 04/03/2012 by Andrew Nicholson

I’d like to share a couple of examples I’ve seen over the last week, that reinforce what effective business leadership is all about. They’re absolutely core to Value-Driven Business and Value-Driven Manufacturing. The first is from a 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) . “…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”. Tnat trust has two elements. Firstly, your competence – put simply, you know what you’re doing! Secondly, your character – “your intentions – what you’re trying to do, your goals and values as a boss”; whether you act in your own self-interest or you care about them, the group and the work.

At least the good news is that competence is learned. Character, on the other hand…

The second is from “The 100 Best Companies to work for” in today’s UK Sunday Times newspaper (www.http://bestcompanies.co.uk/). They picked out “some common ingredients shared by all the organisations with the most engaged workforces”, which include:

Having confidence in the leadership skills of your manager
Having senior managers who listen rather than just tell people what to do
Having faith in the leader of the company / being inspired by them
Having senior managers who truly live the company values
Managers who support their team members and help them to fulfil their potential
Having middle manager role models who care how satisfied team members are in their jobs

And remember, these are not theoretical – all of these examples are based on current research of real businesses.

In my next blog post I’ll show you how to take these principles and build them into your Value-Driven Business System.

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.

Increase factory output: Part 5 – Working Overtime

Posted on 18/02/2012 by Andrew Nicholson

OK – let me say up-front where I stand on this: I’m not a big fan of overtime working, as it’s often practised. In my experience it’s often the wrong solution to the wrong problem. I’ve seen too much regular institutionalised overtime and it’s something that I’ve always tried to eliminate in every factory I’ve ever managed. When it comes to individuals’ pay I’d far rather that production operators were far more productive and far better paid. In my view, low pay and low productivity go hand in hand and are not consistent with Value-Driven Manufacturing.

It’s a very complex issue, touching as it does on so many areas:

work-life balance
the written and unwritten contract of employment
power and politics
industrial relations

For these reasons, overtime working relates closely to the third principle of Value-Driven Manufacturing: Effective Leadership, based on strong values and beliefs. How and why overtime working is used (or not used) says a great deal about the culture of the organisation, its values and its leadership.

Don’t get me wrong – overtime working has its place. So when and how might overtime working make sense? Here are some thoughts –

1. When it’s a short term fix to provide valuable additional labour capacity. In other words, where it satisfies the basic principles of Value-Driven Manufacturing – it increases the value of the business and / or it delivers additional value to the customer.

2. When it makes more sense than the many alternatives, for example:

applying Lean principles to create additional capacity by reducing labour hours required
rescheduling / prioritising delivery dates
re-deploying staff from other areas (including Management and Admin)
employing additional staff (perhaps temporary, agency or subcontract labour)
flexible demand-based hours (eg annualised hours – but not “zero hours” please!)
automation

3. When it’s seen as part of a concerted effort to achieve an usually diificult / important / one-off challenge.

As always, this is my personal view – I’d be interested to hear of other people’s experiences and opinons on this, so please feel free to log on and comment…

Poor Activity

Posted on 16/02/2012 by Probe15

Hello all.

I’ve just registered on this site and am really disappointed to see that there really isn’t much activity on here. The posts which I’ve read are great but they’re very old and that is so disappointing. i am passionate about manufacturing, I know many of us are. We are hearing so much about the need for the Manufacturing Industry to lift this country out of the hard times and it’s fair to say that we are one of very few indusrties which are showing positive signs. Let’s get this blog more active. To be quite frank the decline in manufacturing which has happened over the past 30 years is something I could never understand, because as a young engineer I could only see that it would have an unhappy ending and I was right. So let’s get some cross sector chat going on this blog and let’s see if we can all do our little bit to use the industry, that we have worked in all our life, to make this country great again.

Value-Driven Manufacturing

Posted on 16/02/2012 by Andrew Nicholson

I had the pleasure earlier this week of meeting with a highly impressive Operations Director, as we toured his plant in preparation for hosting a best practice visit next week. As always, we got to talking about what makes an excellent manufacturing business, and it turns out that we share many common beliefs about this. Not surprisingly, they all revolve around concepts of value. I firmly believe that value is the key to business success, even more so in the current economic downturn. For manufacturers this translates into Value-Driven Manufacturing, which is based on three simple beliefs:

The Goal is to maximise the value of the business
This can only be achieved by delivering maximum value to the customer
Success requires effective leadership, based on strong values and beliefs

Those are pretty strong statements so if you’re still reading at this point, I’ll assume that you don’t entirely disagree! Let’s look at what this all means in practice:

1. The Goal is to maximise the value of the business

Anything else is either subsidiary, irrelevant or “nice but useless”. Maximising value requires an excellent operating / management system. We’ve all heard of Lean and the Toyota Production System but many manufacturers don’t realise that this is only one part of the Toyota Management System. Here’s a challenge for you – put yourself in the position of a potential purchaser of your business, and walk the plant, trying to see everything through their eyes. Of everything that they see, what would genuinely cause them to pay more for the business?

2. This can only be achieved by delivering maximum value to the customer

Let’s be controversial – too many manufacturers are still internally focused and cost-driven, led by accountants who “understand the cost of everything and the value of nothing”. They use Lean and Six Sigma primarily as cost-reduction techniques. Do you understand your customer’s business / market / industry as well as they do? Do you understand how they add value for their own customers? Do you fully understand their needs and wants and are all employees engaged in delivering value? Do you regularly undertake “value-add” visits to your customers, and do you take your engineers and operators with you?

3. Success requires effective leadership, based on strong values and beliefs

Great leaders are believers – they passionately believe in what they’re doing and they inspire others with their values and beliefs. They’re humble, keen to learn and they expect excellence where it matters. Great leaders are rare but they exist in all walks of life and in all areas of business, at all levels. They need to be encouraged, developed and trusted to excel.

New National Manufacturing Advisory Service – update…

Posted on 04/01/2012 by Andrew Nicholson

Just a quick note that the new national (UK) MAS website is at http://www.mymas.org/,

with a link to a new searchable Register of Consultants

http://www.masdirectory.org/mas/Manufacturer/index.php

New National Manufacturing Advisory Service (UK)

Posted on 15/10/2011 by Andrew Nicholson

14/10/11 Business Minister Mark Prisk announced details today of the new national MAS programme. Focusing on small and medium manufacturers who can innovate, grow and create high quality jobs, a range of support will be available, from free diagnostice reviews to company transformation programmes. The scheme will provide grant funding of up to £10,000 for eligible businesses.

http://nds.coi.gov.uk/content/Detail.aspx?ReleaseID=421601&NewsAreaID=2&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bis-news+%28BIS+News%29

Increase factory output: Part 4 – Increase labour productivity

Posted on 15/10/2011 by Andrew Nicholson

Let’s look at how we get more from our people – labour productivity. The first step is to apply Lean to eliminate or reduce all of the non-value-added activities that waste people’s time and effort.

Then we need to motivate and incentivise people to maximise their output.

We need to establish performance benchmarks. We do this by determining the rate at which a competent trained operator can perform a task, working at a level that they can maintain over a full working shift and a full working week.

In a future article my colleague Jeff Holt will be explaining this in more detail.

Once we’ve established standard times for key operations we can measure actual performance against these.

The first step is to record the hours attended by each production worker over a given period (usually daily) and record the standard hours of work/product produced over the same period (often called the “Hours Recovered”). dividing the hours produced by the hours attneded gives a measure of performance. This can be analysed at various levels – by operator, by work centre, by department, and so on up to factory / plant level. Often, a reasonable target is to expect an overall level of performance for a team, cell or plant of about 75-80%.

Keeping a cumulative / Year to Date figure will tell you exactly what your true labour costs are. Just be careful when you’re calculating this – don’t try to average percentages (it doesn’t work!) but always divide the cumulative Hours Recovered by the cumulative Hours Attended.

A number of clients that we’ve worked with recently found that they appeared to be achieving performance levels around this figure. BUT – and it’s a massive BUT – the standard hours used in the factory weren’t the same as the hours used for costing / estimating / pricing!

Sounds obvious but many manufacturers don’t have this properly nailed down.

It’s simple, really –

Make sure that you can cost / estimate labour hours sufficiently accurately. Build in the appropriate performance factor (eg 75%).

Set these times as targets for production staff so that they know what to aim for. Don’t fall for the trap of either not giving targets or of setting higher targets “so that they work harder”! (if you can’t work out why this is, you might just be in the wrong job).

MONITOR performance daily, provide feedback and take improvement action as required.

That way you can be confident that you’re in control of your labour costs, and that you can achieve the margins that you plan for.

If you’d like some simple free spreadsheets that you can use to perform these calculations, email me at andyfromnicholsons@gmail.com

Increase factory output: Part 3 – targets, feedback, recognition and reward

Posted on 09/07/2011 by Andrew Nicholson

In previous posts we’ve looked at the “technical” side of increasing output – the tools and techniques. Now let’s look at the “people” side of things – how to get more from employees.

Most of us want to know what’s expected of us, we like to have something to aim for and we like to feel we’re making progress towards a worthy goal.

Usually, it’s not difficult to provide all of those things in the workplace. But too many of us don’t. Here’s how:

Agree on two or three important objectives that are relevant to the work team – probably based around quality, productivity and service.
Find some simple ways to measure them.
Agree on regular targets – monthly, weekly, per shift, per hour.
Make sure they’re visible to everyone in the work area.
Display actual performance regularly and visually (electronic display or hand-written whiteboard).
Recognise good results immediately.
Train, help and encourage the team to solve any performance problems.
Find ways to recognise and reward those who contribute the most. Be creative!
Actively manage the performance of those who don’t contribute.
Lock in the improvements
Celebrate success
Keep at it!

The power of SMED – probably the best payback you’ll ever see

Posted on 06/06/2011 by Andrew Nicholson

I attended a great workshop session last week by EEF about the need to ensure that training is designed to produce measurable business benefits. Like all good learning activities it got me to thinking. Despite the economic downturn one question I’m rarely asked by clients is: “What tool is going to save me the most money most quickly?”

If you spend a significant amount of time on set-up’s and change-over’s the answer is very simple: SMED.

In my view SMED is one of the best Lean tools available, bar none!

I had yet another perfect example of this a couple of weeks back, with an engineering client. They make small batches of tubular steel frames for OEM’s of chair and bath products. Inevitably, batch sizes are getting smaller, lead times are getting shorter and they’re needing to develop – and prototype – more and more new products. So set-up’s and changeover’s are becoming more and more of a problem. They knew they had to improve and they were keen to learn how. The answer proved very simple: SMED!

I spent some time with the production manager and team leader planning a half-day SMED session.

Two weeks later we got together the team who worked in the production cell and they spent about 40 minutes learning about SMED in a practical workshop session. As always, I told them: “If you haven’t yet applied SMED then typically you can halve change-over times fairly easily”.

Then we had half an hour or so of prep. time to make sure we each knew exactly what we were going to do. We spent about half an hour video-recording an actual change-over then back to the training room. There we spent a further hour and a half analysing the video using a SMED spreadsheet, and brainstorming improvement ideas.

Result: the team immediately identified a series of low-cost / no-cost improvements. Some could be implemented immediately and others will take 3-4 weeks to complete fully. Reduction in change-over time: 52%.

Much as I’d love to, I can’t run these on-site SMED sessions for everyone who needs them. So a while back we took all of our training materials and put them together into a simple trainng package. It’s got the analysis spreadsheet, a 2-page “how-to” guide and a short video animation with voice-over showing you step-by-step exactly how to do the analysis. And you can download the whole package from our website for only £16.95 (USD 29.50): SMED Training Package. And if you don’t find that that’s the best payback you’ve ever had for a training product I’ll give you a full refund!

Whether you use our help or not I urge all of you with significant set-up and change-over times to start using SMED as soon as you possibly can. It’s quick, simple and the payback is tremendous!

Increase factory output: Part 2 – 5 money-saving tips for tackling machine bottlenecks

Posted on 17/05/2011 by Andrew Nicholson

It’s easy to assume that a machine is a bottleneck simply because work stacks up behind it. It seems obvious – the machine cannot keep up with the required pace of production. So the Capital Expenditure request gets written or the owner gets his or her chequebook out, the new machine arrives and everyone’s happy. Everyone that is except all of the folk who had better things to spend the money on.

No-one wants to be the party pooper but here’s the Painful Truth: sometimes you don’t really need to spend all that money. In reality, the machine can often produce enough to keep up with customer demand.

In previous posts we’ve talked about Overall Equipment Effeciveness (OEE) as a great way to measure how much good quality output you’re getting from a particular machine or process. In fact we recommend that you consider measuring OEE regularly on all critical / bottleneck machines / processes. But for the moment let’s just keep it simple and jump straight to some practical money-saving tips…

At this point if you’re well advanced with Lean and you’re regularly hitting OEE levels above 80% then you can stop reading now and instead go away and review progress against your policy deployment goals. For the rest of us, read on for some practical money-saving tips…

Money-saving tip #1: measure how much of the available time the machine actually performs value-added work, i.e. producing output that the customer will pay for. You’ll be amazed! You spent all of that money and the **** machine is only working half of the time! Measure all of that lost time and what it’s spent on. Things like break-times, set-up’s and changeover’s, break-down’s, scrap and defects, running at lower speeds, not producing right first time, etc, etc, etc. Sounds familiar? Pick the biggest ones and get the team looking at ways of reducing them. Here are some examples…

Money-saving tip#2: look at staggered break-times, improved production scheduling, effective materials supply. In other words, make sure that you always keep the machine running and you always keep it fed with work. If this is a problem area for you, it’s time to learn about Drum-Buffer-Rope: aim to maintain a buffer of materials to feed the machine and feed it at the rate required to keep up with customer demoand (the “drum beat”).

Money-saving tip #3: if the machine needs a warm-up / start-up period, where possible make sure this happens before the start of the working shift. For example – if employees are on site and raring to go (*cough*) at 7.00 am, arrange for someone to come in earlier to warm up the machine. Same applies at the end of shift.

Money-saving tip #4: if you’re losing too much time on set-up’s and changeover’s, you need to apply SMED. In my humble opinion SMED (“Single Minute Exchange of Dies”) gives the biggest, quickest payback of all of the Lean tools and techniques. It’s easy to learn, easy to do and often gives dramatic savings. The first time you apply SMED it’s common to halve the time taken, usually with little or no cost. Excuse the shameless plug here but you can download our SMED training package and learn how to do it in less than 20 minutes for less that £20 (less than $30).

Money-saving tip #5: crank it up! You’ll often hear lots of “reasons” why the machine can’t run at its full rated speed. “It keeps breaking down”, “Quality deteriorates”, “We can’t keep up”, etc, etc. Try it! Measure it! Often the anticipated problems are far less serious than expected. If you do get problems, you’ll then know exactly where you need to focus some improvement effort.

If you’ve already bought that new machine when you didn’t really need to, well at least you’ll know better next time. If you’re just about to buy it, then before you do have a look at these tips. They might just save you a fortune.

If you’ve any examples of your own please submit them here and I’ll post the best one’s (sorry about the delay for moderation but I’m afraid it’s the only way we can avoid being hijacked by spam).

In future posts we’ll be looking at yet more ways to increase factory output so watch this space – or better still, sign up to receive new posts automatically by email. Until next time – keep it Lean…….