Active Leadership Leads to Increased Output and Profitability
When a $200 Million manufacturer of fabricated metal products contacted us about its inability to meet daily production requirements, as well as volume growth expectations, we jumped in. The product demand exceeded the current demonstrated capacity as well as the need to complete production orders on time in a predictable sequence. Utilizing our process, we diagnosed operational inefficiencies, implemented needed changes and helped the company increase profitability.
Active Leadership Leads to Increased Output and Profitability
When a $200 Million manufacturer of fabricated metal products contacted us about its inability to meet daily production requirements, as well as volume growth expectations, we jumped in. The product demand exceeded the current demonstrated capacity as well as the need to complete production orders on time in a predictable sequence. Utilizing our process, we diagnosed operational inefficiencies and helped the company increase profitability.
We found the company’s capacity problems were really symptoms of the root cause of the issues. The real problem was lack of leadership at almost every level. The absence of leadership was the root cause of the lack of execution including goals, measurements, and accountability in the organization. The condition of the company was a direct reflection of the lack of competence and involvement of senior leadership.
We met with the company’s president to understand his perspective of the issues and their perceived solutions. Then we performed an overall audit of the company’s leadership, functional processes, operations, and value-add proposition. We submitted a written report to the president with recommendations and a proposed implementation plan, including specific actions, timing, impact, and cost.
The week-long audit was performed with two experienced operational consultants. The output of the audit yielded recommendations for critical changes. The company needed to:
- Implement changes in two senior leadership positions, Mechanical Services and Operations leadership.
- Create process documentation for manufacturing operations.
- Develop inventory management systems.
- Implement a daily production planning system.
- Create a production measurement system.
- Adopt Lean concepts on the floor including, one-piece flow, process utilization, 5S and operator training.
- Institute quality control processes and systems.
- Address production bottlenecks in critical operations, including artificial production constraints of one shift production throughout the company.
- Implement preventative maintenance, PM, system for all equipment.
With the agreement, active involvement and support of the company president, we collaborated with respective leadership to implement the eight items outlined above over a one-year period of time.
The key to success was ensuring that every major change had a senior leader actively involved in its development and implementation. To ensure we did not introduce too much change, we agreed to an implementation plan and a measure of success for each step of the overall change process.
The implementation of the changes began with a companywide meeting conducted by the president. During the meeting, he outlined the issues being experienced as well as the expectations of changes and performance requirements going forward. This meeting ensured everyone was aware of the problems, the expectations and the fact that the president was actively involved. It also provided an opportunity for employees to ask questions and get clarification.
The next step was addressing the senior leadership issues and shortfalls. The president agreed to immediately replace the head of Mechanical Services and agreed to “resetting of expectations” for the Senior Operations Leader (within the year, this individual also left the company). These two modifications sent the message of “real change” coming throughout the company.
We mapped out the functional leader’s processes and made the necessary changes to ensure we had solid cross-functional involvement in product development, production planning and the launch of new products.
Next, we established a manufacturing engineering department to ensure that going forward, process documentation, workplace layout, equipment utilization, and employee training were an integral part of the overall process for the introduction of new products and processes. This area would be responsible for the overall implementation of Lean in the manufacturing operations, including the introduction of a PM program for all equipment.
Addressing the capacity requirements for the factory was in the short term very simple and effective. The factory had a long-standing practice of only running one shift. One shift is what they used to justify new equipment and staffing needs. After discussing the need to meet production requirements, the team agreed to add staffing and balance production across two shifts. A third shift would be added if needed in bottleneck operations. The next phase of this would be to measure and improve the utilization and output of each operation to ensure we ran efficiently before we ran additional shifts.
Implementing daily production meetings and production scheduling was the next area analyzed. We optimized the current scheduling system and introduced daily production meetings to optimize the process. We then installed a new production planning system. To complement this process, we implemented measurement systems throughout manufacturing operations. This allowed us to effectively measure and report out at daily production meetings. These changes stabilized production output by focusing on the issues interfering with daily output.
The results of the involvement and active commitment of leadership in the change process were dramatic. The company:
- Achieved production output requirements on a daily basis.
- Increased daily output in excess of 50 percent.
- Reduced excess inventory throughout the company by 25 percent.
- Improved quality, resulting in dramatic reductions in scrap, rework and customer returns.
- Improved factory appearance and workflow optimization.
- Reduced employee turnover and improved employee satisfaction.
- Improved annual profitability in excess of $10 million.
Interested in learning more about how TECS can help your company? Contact us for an initial consultation or read more of our success stories.