Wall Street may be celebrating the financial system’s signs of recovery. But Main Street is singing a very different tune.
For one thing, unemployment remains high. This has led to an austerity mindset in consumers typified by increased saving, deferred consumption and trading down to value product lines. Consumers are now more willing to delay gratification. Not buying new stuff has become an entirely acceptable form of behavior and trading down is now not just acceptable but even cool and hip.
This is Main Street’s “new normal.” It’s an attitude that will prevail for years to come. And according to a growing number of analysts and economists, it will reshape the manufacturing landscape significantly.
For manufacturers across all industries, surviving and even thriving in this new environment also requires establishing a new normal that reflects Main Street’s new attitudes and reduced demand. It’s a model where success hinges on being a lowest-cost producer—and doing so without compromising quality or utility.
To attain this status, a growing number of manufacturers are letting go of old assumptions and taking a different approach to their performance improvement technology. Rather than implementing yet more data capture and analytics products and pilot engineering-led trials, these businesses are focusing instead on getting to the point: They are installing technology that helps them take action and actually do work differently to impact real costs each and every day, and also to find out what they can stop doing right away.
This means thinking differently about what improvement technology is going to do for you, and avoiding the pitfalls that many companies fall into when applying technology to factory improvement.
1: Don’t Lose Sight of the End Goal
The goal is to become the lowest-cost producer in the sector. It is not to capture all data from the plant. There are very specific areas to focus the use of data for cost reduction in operations, yet all too quickly the collection and analysis phase becomes obsessive goals in themselves, overwhelming the original objective.
In fact, studies have shown that in as many as eight out of ten initiatives associated with the use of new tools, techniques or technologies, supply chain managers find themselves focusing too much energy on the new tool or technology instead of on the goal. Concentrate instead on deploying action-focused capabilities for operators and supervisors to improve labor productivity.
2: Don’t Waste a Crisis
The new normal on Main Street presents a tremendous opportunity. It enables companies to use the current climate of fear and uncertainty to drive change. Organizational resistance is low, and the workforce is more willing to change daily work practices.
To be effective, however, leaders must craft a decisive action plan for specific cost improvements and how they will be achieved with the new action-based technology. When this is positioned correctly, both management and rank-and-file workers will unite to support the company’s leadership.
3: Don’t Assume All Answers Come from the Executive Suite
It’s time to face the fact that the real daily performance dials in today’s plants are moved by the workers, not by upper management. Manufacturers that focus attention and technology on factory-floor workers to improve their individual performance—so that the next two hours of work are more effective than the previous two—will see transformational results.
Ironically, this is not that difficult to accomplish. Workers are far more resourceful and capable than given credit for when they have the right targets and information in real time; then they can clearly see what actions they can take to improve their shift. Without the right information framework they cannot do this. This is not analytics; this is action.
4: Don’t Take Current Factory Metrics at Face Value
Studies have shown that most plants over-report their efficiency, often by as much as 10%. Their metric calculations are often flawed or too focused on plant rather than on operational causes of performance loss or waste. Yet management continues to set the bar for improvement against a spurious starting position.
The inflated ‘normal’ disguises a tremendous improvement opportunity which no one can even see until the newer “action-based” technologies are installed and show the true picture.
5: Don’t Assume Data Leads to Improvement
Executives at some manufacturing companies are now finding that data collection tools can often lead to a state of “analysis paralysis” as managers engage in an endless quest to get perfect or complete data for the entire plant. Manufacturers already know when a problem occurs; these solutions just help them recognize problems faster.
What these companies need is the new capability of a framework where the workforce can take action in real time to resolve the problem or improve the outcome.
6. Don’t Assume that Improvement Centers Only on Plant and Equipment
Research shows that the answer to improving production performance is not just on more equipment or equipment-focused initiatives, which have been the focus of many of the continuous improvement programs of the past two decades.
Rather, most rapid improvements challenge lie with people and process. It’s about implementing disciplined day-to-day review points, adherence to procedures, appropriate basic skills coaching, reinforcement and real-time feedback on the factory floor. The new wave of action-based technologies provides the frameworks for this to occur and be monitored at an executive level, consistently across many factories.
7: Don’t Avoid People Issues Because of Perceived Difficulty
Manufacturers should not avoid the human capital opportunity just because changing people’s prevailing attitudes and beliefs seems difficult. When operators and supervisors have real-time visibility into production performance, reduced administrative burden, and a mechanism that enables them to contribute their own ideas and knowledge and turn them into actions, that’s when real, sustainable change emerges.
8: Don’t Do a Trial; Do the Project (or Don’t Bother)
Tempting though it is, do not regard this as a trial; this is the main act, and an attitude which seems tepid, uncertain and experimental will lead to certain failure as this will be seen by the workforce. With any performance improvement initiative, momentum is key, and quick wins provide the fuel needed to gain that momentum early on. Early successes ensure that the organization’s focus remains fixed on the true objectives—to lower operating costs.
Be sure to work with a partner who has a high success rate and do not begin if you remain uncertain; go back around the selection process and become certain. Only then do you start. But when you do start, there is no going back, no trial. Your confidence will be felt by all the stakeholders and the project will already be well on its way to success.
9: Don’t Build Your Own Technology
In this economic environment, manufacturers cannot afford to try their hand at designing and building their own systems. Instead, they would be best served by finding packaged solutions that are specifically designed for their respective industries.
10: Don’t Assume That Major Improvements Take Years. Think 90 Days.
Finally, don’t assume that transformational improvements can’t be achieved in the short run. Such a short time to results is possible when technology is designed to support continuous improvement practices focused on the workforce impacting performance in real time.
Companies that react quickly to become the lowest-cost producers in this cutthroat environment will be able to pivot faster and redraw the market-share map. And it all starts by letting go of old assumptions, habits and behaviors that are not aligned with the new economic reality. This calls for a little less analysis and a little more action. LT
Mark Sutcliffe is president of the CDC Factory product line, with CDC Software, a vendor of various software solutions, including supply chain management, global trade management and enterprise resource planning systems.