Tag: change management

5 Keys to Manufacturing Transformation

Almost every manufacturer we talk to these days is in the process of implementing (or planning to implement) some sort of change in the way they approach operations: Theory of Constraints (TOC), Lean, Six Sigma, just to name a few. Our focus on demand-driven manufacturing tools and applications has given us a front-row seat to their efforts.

Related post: Is Demand Manufacturing Lean?

While the devil may be in the details, the most successful initiatives all have a few high-level elements in common:

#1 Strong Executive Sponsorship. Executive sponsorship needs to be more than simply signing the invoices. CEO, CFO, COO…everyone in the C-Suite needs to show an understanding of the goals of the effort and what it’s going to take to reach those goals. While they don’t necessarily have to paint a happy face on the change required, they must take a “no turning back” attitude when talking to the troops, some of whom might be in a position to sabotage the initiative either knowingly or unknowingly.

#2 Clear Objectives and Governance. Everyone in the organization must understand the goals of the project and why it is important to the organization. This is especially true of team leads and departmental heads who may not be executive sponsors, but who will be instrumental in ensuring change happens at the execution level. Having strong executive sponsors can help ensure that the objectives of the program are communicated clearly and that the initiative has that next level of support.

#3 Understandable KPIs. KPIs must be measurable and actionable. They must also be understandable. This is easier said than done as some long-time KPIs will need to be replaced with KPIs that may not make as much sense to someone who’s not yet been introduced to the new philosophy. For example, when implementing Theory of Constraints, efficiency no longer matters except at the constraint. To the individual who is always been measured by how much they produce, this can be a disconcerting concept.

Related Video: Manage Manufacturing Constraints and Optimize Production Flow

#4 Early Training. To head off misunderstandings and speed up the adoption of new concepts, project leads and those responsible for ensuring execution need to be trained early and thoroughly. This includes not only the what but also the why as they need to be prepared to provide full-throated support when the initiative is rolled out. Training should also be offered to individual workers, especially when new processes need to be followed, but that training should be targeted and focused.

#5 Change Management. Many of the elements we’ve covered so far are part of any successful change management program, so if you’ve covered these bases, you’ve made a good start. However, the most successful manufacturers understand that change is more a fact of life than it ever has been, and they make change management as much a “center of excellence” in their organization as whatever initiative they’re hoping to implement.

Now it’s your turn. I’d love to hear your stories about change and how you have worked to ensure the success of transformative initiatives in your organization. What challenges did you overcome? What best practices did you develop along the way? Add your thoughts below!

January 15, 2018
Guest Blog: Real-world Advice for Getting Started on eKanban
by Jim Shore

Through this guest blog series, I’d like to share some of my experiences implementing supplier quality and Lean manufacturing initiatives by focusing on eKanban systems. This first entry offers advice for planning an eKanban rollout – suggestions that can also be applied across any Lean manufacturing project.

As a result, my hope is that you, too, will experience successful Lean results.

Leadership matters

My training as a U.S. Marine gave me many skills I carried over into civilian life and into my work as a Lean practitioner. First, I gained deep respect for strong leadership; and second, I’ve come to value a pragmatic approach to project execution.

Successful projects start with buy-in from the top and an eKanban initiative is no exception. At a minimum, recruit an executive sponsor to serve as the project spokesperson – someone who will fully support and clearly communicate with all stakeholders the rationale for the project. I know it sounds simple. Even though the benefits to the business are real (e.g., reduced inventory waste and carrying costs and more) asking people to change the way they work is also real. Let your leaders know project success is accelerated through gaining universal buy-in. (If you think about it, this is also a waste-reducing, Lean strategy!)

The reality is that sometimes change is welcomed and other times you may meet resistance. Efficiency programs, whether Lean, Six Sigma or Theory of Constraints (ToC), require that teams understand the impact change can have on an environment. Change management strategies stress over-communication of:
1. What the organization intends to accomplish;
2. Why the organization is undergoing the change;
3. What the change means to each individual;
4. How success will be measured;
5. How accountability will be measured.
From the plant floor to senior management, buy-in starts with a clear rationale and explanation of how the new eKanban process or Lean methodology will add value. Leaders must effectively engage all levels of the team; explaining how the new process is great for them, the company, the customer and suppliers (for those using supplier Kanbans). The last two bullets are extremely important. Ensure it is clear how success will be defined and how everyone will be held accountable for achieving it. In my experience, the best method is tying the annual bonus to the success of the project.

Overcoming barriers to create lasting change vs. “initiative-of-the-month” change

While rare, resistance can manifest as blatant sabotage of the new Lean initiative. More likely, resisters will remain quiet and hope the advocates of the new method will lose enthusiasm and the execution of the Lean project will fade, reverting to the status quo. To reverse this, make them part of the solution.

On an eKanban project I led for a materials testing and extrusion-control instrumentation manufacturer, the rollout of the new software involved multiple sites. Corporate leadership sponsored and evangelized the project, but we still needed buy-in at the local plant level. By involving outspoken resisters in the process, we ended up gaining some real advocates – it also helped that we were able to reduce the replenishment process from 66 to just 6 simple steps.

It goes without saying that for this – and any eKanban project – you achieve success through consistent communication and universal team buy-in. Depending on where your replenishment occurs, this principle extends beyond the four walls of an individual plant or enterprise, to your suppliers. (I’ll provide advice for engaging suppliers in the next post.)

As part of their advocacy for the eKanban initiative – or any modern demand-driven supply chain project – leaders need to distinguish the project as a serious, ongoing operating process, not an initiative of the month.

Drive the planning process with bottom-line facts

A significant part of the planning process is business justification. Automating replenishment with an eKanban system provides some highly quantifiable returns.

There is a real cost of carrying inventory and eliminating this cost frees up accessible cash that can be reinvested into the company. Consider the following:
- The cost of just carrying inventory at a component level adds 10% to the valuation of the actual part – and that valuation increases by 10% for every month the material is not transformed into sellable goods.
- On average, the cost of carrying finished goods is approximately 20% of its cost.
For manufacturers managing materials with expirations, these costs can be compounded through scrap.

These are just some examples of costs I help clients quantify as part of their business case for investing in an eKanban solution. Examine how these cost savings could impact your business. You can see how real-time inventory replenishment with an eKanban system can pay for itself fairly quickly.

In the next post, I’ll cover some best practices for eKanban implementations utilizing Kaizen events and value stream mapping.

Related resources:

Article: Going eKanban – Moving from a Manual to an eKanban system

Case Study: Continuous Improvement Immersion + the Right Tools Proves Profitable for Dynisco

White Paper: Common Barriers to Moving from Push to Pull Manufacturing

Jim Shore is the Principal of Quality Lean Solutions, a Consultant Firm that specializes in Medical Device companies, Supplier Quality and Lean Manufacturing principles. Mr. Shore is co-author of “Proactive Supplier Management in the Medical Device Industry” (2016: Quality Press). Jim has 25 years of quality and supplier management experience in medical devices, semiconductor, aerospace and defense for firms and organizations including Titan Medical, Nypro Healthcare, Boston Scientific, Aspect Medical, Brooks Automation, Raytheon and ACMI Gyrus (now Olympus). He is Six Sigma Black Belt and Quality Manager/Operations Excellence-certified by the American Society for Quality (ASQ), as well as an ASQ-certified Quality Auditor and Mechanical Inspector. A veteran of Operation Desert Storm, he served in the U.S. Marine Corps for more than 15 years.
October 30, 2017
How TOC Can Move Your World – and World View

Archimedes once said, “Give me a lever long enough,
a fulcrum, and a place to stand, and I shall move the world.”

Learn how production professionals use Constraints Management to meet negativity head – on to manage meaningful change

Here’s the last part of our three-part series about the Theory of Constraints (TOC). In the next couple of postings I’m going to dig right in to looking at what actually happens when I’ve used TOC at client companies. But there’s more gold to be mined from this topic—and I wanted to make sure I included in this series some common “fulcrums” –or common organizational assumptions that might sound familiar to you.

I also want to clear up some of what you might think. A common notion about constraints as they are viewed as a “negative.” However, constraints are neither good nor bad; they are just part of any organization. To clarify, try and picture an organization that has no constraints. What would you expect to see from this type of organization? The organization would produce with unlimited growth. In nature and in business, there aren’t any systems that produce at unlimited capacity and exhibit unlimited growth. So if there are no systems that produce at unlimited growth, then all systems have constraints.

As people working in systems, we can either acknowledge or deny that constraints exist. Regardless of the choice, constraints will have an effect upon the organization. If we want to grow our organization, then we might as well pay attention, right?

Too Many Places at Once

In my last blog posting, (Which Systems is More Complex?) I discussed the complex view of organizations, with the belief that change is incremental. Many changes will equal organizational improvement.

For contrast, I also discussed that with TOC in that there is only one or very few true constraints within any system. Improve the constraint, and you will make a significant impact upon the system.

What if you do not have a method to find the weakest link? Random chance allows that every once in a while, one of these actions will touch an organizational constraint and generate an impressive single-event, a growth-oriented action. The opposite might also happen: The same random choice may damage a constraint and produce a single, one-time negative result. If you think about the last 20 years of organizational history, I’m sure you can find a few such cases of one or the other, but more likely the latter. These events will be on the scale of urban legends within the organization. Like New Coke in the 1980’s, a disastrous merger like Daimler/Chrysler, or spinning off acquisitions to conserve cash.

The Cost Conundrum

Traditionally, most improvements are efforts to save cost. People think that if cost is removed from the delivery of a product or a service, it will result in higher profits. The vast majority of the U.S. Economy believes this to be true, and that, in conjunction with the high affinity for innovation, creates a compelling mix. But when we compare TOC with other improvement methods, its speed and accuracy bring about significant change – faster. We find our constraints and then we can react.

The TOC View of Problems

Traditional view: “A problem is something I don’t like”, or “Something that bothers me”, or the classic “Something that keeps me up at night.”

TOC view: “A problem is a conflict that prevents a system from reaching its desired objective.” With this definition, there is a second fundamental belief in physics that “There are no conflicts in reality.” There are only invalid assumptions about the conflict.

Assume Control

TOC translates conflicts as follows: If there is a conflict, then there must be an underlying assumption about that system that created the conflict. The solution comes from identifying the assumptions about the conflict, validating the existence of the assumptions, and eliminating the negative assumption about the conflict so that a solution can be built that will allow the system to reach its desired objective.

In every organization, managers face many issues on a daily basis. Typically, most of these issues stem from a single core problem (conflict) that the organization hasn’t been able to previously identify. Many managers are aware that these conflicts exist, however, these type of conflicts are very difficult to solve as most have conflicting objectives that result in compromises.

Does this sound like you?

The existence of conflict can be validated by looking back in time for periodic shifts in organizational philosophy. As an example, if in the past, your organization was emphasizing centralized management and now it is emphasizing profit-center autonomy, then these switches indicate the existence of an unresolved core problem. Efficiency is another example of an unresolved core problem. If at the beginning of any reporting period, organizational efficiency is emphasized, and then at the end of the month, all the rules are broken (forgotten) to achieve shipments and revenue targets. This again is a sure sign of an unresolved core problem.

TOC has a number of system tools that tackle the “new normal” head on. Next time, we’ll look at these tools as they applied to an automotive manufacturer—we’ll uncover their core assumptions and watch how their teams took control with TOC.

– Rick Denison

Rick is the “Dr. Who” of manufacturing operations and logistics. And while Rick doesn’t travel through time, he is adept at leading change – and saving time – in a diverse range of manufacturing environments through Lean manufacturing, Six Sigma, and TOC techniques. Rick’s posts address how demand-driven matters and draws from his background in process improvement, change management, project management, information systems implementation, and profitability analysis.

February 10, 2015

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