(Thisarticle reflects the personal views of the author)
Inthe pursuit of operational advantage, knowing what needs to be done is nolonger the challenge. The challenge is finding the right people to do it morequickly and more effectively than the competition.
Nottoo many years ago it almost always took a life-or-death crisis for managementto consider changing from a traditional command-and-control, batch-drivenmanufacturing company to a lean and agile one. Stacks of material sittingaround the factory meant that machines were fully utilized, and warehouses fullof finished goods inventory was the best way ensure that you could ship whatcustomers ordered. So the thinking went.
TodayI'm encouraged to find that there's near universal awareness that manufacturingcompanies can operate much more efficiently with fewer assets-equipment,f100rspace and inventory-and simultaneously serve customers better. It nolonger requires a crisis for companies to embrace lean production methods andtechniques. There are far too many success stories for any management team toignore.
What'sfar from universal is the dedication, energy and results that manufacturers reapfrom such initiatives, which are a direct correlation of management commitment.Ideally, such a commitment comes from the managing director or CEO, who mayeven be pushed by the board of directors or by investors who expect ongoingoperational improvements. Some companies have even recruited people with deepknowledge of lean production methods to serve on their board of directors.Walking through a factory or looking at a balance sheet, they can see theopportunities to streamline processes, reduce inventory, improve customerresponsiveness, lower costs and enhance customer value, and thereby grow salesand boost investor returns. And they are searching for and hiring topexecutives who can also see the same opportunities.
Severalyears ago the management board of one company that we work with recognized thatit was operating at a competitive disadvantage. They looked internally butdecided that bringing in someone from outside the company was the only way tomake a sharp break from the poor performance of the past. The board ofdirectors found and hired a new president and COO, and charged him with radicallyimproving operational performance.
Heimmediately introduced an enterprise-wide push to implement lean methods and acontinuous improvement mindset in all functional areas, not just the factories.They started with intense training and formed cross-functional teams thattackled areas with the highest potential returns. But the results were isolatedand progress was too slow. With many divisions and factories, it became clearthat breaking from the past would require major leadership changes at alllevels.
The company then launched a talent initiative to identify managers with the right abilities and character traits to lead a lean organization. Having a management team that "got it" attracted highly talented people from other organizations, which created its own challenges. New hires, who eventually added up to more than 150 continuous improvement managers, had to bring something more than thorough technical knowledge of process improvement tools.
"There are a lot of people who can say the words," the former president and COO once told me. He is now the CEO and chairman of the board of this company,. "But individuals who can really change a factory, or change a business process, are worth their weight in gold. They can move an organization to a level no one ever thought it would get to."
Six years later this company has improved on-time delivery by 10 percentage points and consolidated a large number of facilities while increasing revenues at a pre-recession compound annual rate of 20 percent. And the now CEO says they're really just getting started.
The challenge of course is to build an organization that adapts and improves every day. Daily incremental improvements add up to radical improvements after a few months. Even if every idea doesn't work out, by discovering what doesn't work people can more quickly move on to the next opportunity. The net result of such gains, when coupled with breakthrough projects, are significant cost advantages that boost profit margins, or that extend product or service level advantages-such as faster lead times-increasing sales and growing market share. Reaping the full financial returns from such advantages before your competition catches up in this non-stop race requires dedication, energy and results. And you have to keep getting there first.
Originally published in 'The Stitch Times', March, 2012.
The author, Anand Sharma, is associated with the TBM Consulting Group, Inc.