For getting this point across, I am going to expose something about myself. I am going to tell the story of me, before I was me. The old me saw the world perfectly through a distorted lens. That’s right. I was an accountant. And not even a real accountant. I was a cost accountant.
I was good at cost accounting. I rose quickly through the ranks of a very large company. While I was extremely happy with my job, I always felt like something was wrong with my view of the world.
When I was moved from being controller of another large company into being a plant manager, I was a little off-balance. The move from being the guy that always beats on operations folks about cost to being the operations guy was a rough transition, in particular when our CEO constantly reminded me that as the former cost guy, I should have all the answers.
I loved the new job, though. I got to spend time on the manufacturing floor. I got to meet customers and vendors. I was in the heat of the action. And I was getting my ass handed to me.
Why was our plant the worst in the company? Partly because it was the worst before I was given the leadership role, partly because I wasn’t doing much to change the operation. I had studied batch sizes, staggering shifts, substitution of parts, redesigns to minimize touches. You name it, I had looked at it.
Then one day, I decided to get my team together and redesign our plant floor and our operations from bottom up. No more kaizen events or daily discussions about steps toward reducing cost. We were trying to make our raggedy old truck look better with new wheels and fake air intakes. It was time to strip her down, bang out the dents, weld up the rust and give her a shiny new coat of paint!
Well, she also needed a major rebuild on the drive train. Should we go for a nice little four cylinder that got great fuel economy or a giant V8 for speed. Maybe a torquey diesel to pull us through heavy demands.
I will spare you the rest of the truck analogy. I’ll also spare you from the gloating our team earned the right to. It was a spectacular success. We were soon the most profitable, highest quality, highest growth rate plant in the company.
This transformation happened and was successful because we decided to break the cycle of “best practice” and “incremental improvement”. While these are fantastic tools to continue success, there comes a time for even the best facility to rethink their business. There comes a time when improving upon today gets so little incremental impact because the business has changed. Often, lower efficiency is because what we are doing is ineffective. We keep trying to polish up a rust bucket. It is more applicable today than ever with distribution moving to a direct-to-consumer model and manufacturing using last millennium thinking to build new millennium products.
And we, as experts, are to blame! I see so many companies looking for “best practice” consultants. I see so many want ads looking for 20+ years’ experience in a particular space.
At some point, for companies to remain successful, they will go through this exercise. The exercise is this:
· Define who you want to be in three to five years
· Define what service proposition will get you there
· Build a simple model of what the most effective organization to meet that service proposition would look like
· Build out the simple model with operational processes that are as efficient as possible without risking your service proposition
· Remember to optimize the system, not the operations individually
This is the method we used. We found that many of the operations we were trying to optimize before our project weren’t an issue with the redefined overall business. We also found that by making ourselves more effective, we improved our quality and customer experience. We grew rapidly, 400% increase in demand in just over a year.
The whole process reminds me of partner’s comment “we don’t cut labor, we cut waste. If you cut someone that is adding value to the process, you’ve only hurt yourself. If you cut wasted steps and headcount is reduced, then you’ve cut waste”. And that sums up the idea here. Step back and look at the business or operation as a whole. Ensure you are ready to meet your service proposition for the foreseeable future. Then work on dialing in tasks for efficiency. Who knows, you may find some of those tasks aren’t even necessary.