Now that I am back in the consulting game, I was invited to take a close look at a fast-failing operation to see if I can lead a turnaround and after a 3 week assessment, it is not clear that we can fix all that is broken under the same roof.
This particular outsourced operation was completely underestimated by the owners of the business that agreed to take on the product line. They assumed that this was a plug-and-play operation and it is anything but. They took on a business with absolutely no competence or understanding on the core process involved with this line.
Within a couple weeks after startup, required production volumes were a mere 10-20% of required output to satisfy customer demand. And the demand is growing.
Key issues leading to failure:
- No technical ability to execute the manufacturing process resulting in massive backorders, equipment breakdowns, poor setups and operation, and defective product.
- Poor equipment maintenance practices resulting in significant equipment downtime while attempting to repair complex equipment which is not understood.
- Leadership capability greatly underestimated resulting in the shop leader spread too thin to effectively learn the process, teach the process, perform effective setups and prepare raw materials, and instill a necessary sense of discipline.
- Management that is frozen in that they have no direction, no plan to get out of the hole with the ultimate result of the business calling in high priced consultants to try to salvage the customer orders.
Fortunately, we are able to mitigate the harm to the customers but at great expense to the business, nearly missing huge losses. And ultimately, we will find another source to manufacture these products since the current source failed badly.
It pays to recognize the competence required to effectively and efficiently execute seemingly simple manufacturing processes. These guys totally underestimated this process and it has cost them dearly. I am reminded daily of bad business decisions that can take place and create great damage that can result within a very short period of time.
Perhaps the most painful aspect of this, is the toll this bad decision has taken on the employees that show up every day and do battle to make this happen. Many thanked me profusely when I handed them copies of the manuals for the equipment they have been struggling with.
I found them sitting in boxes, untouched for months.
Their frustration trying to do well without training has been very painful to watch and through little fault of their own, they will never really get the chance to experience the success of this turnaround.
Stay tuned, we have some work to do.
Michael Bates has over 35 years’ experience as a Lean practitioner, including 30 years’ in operations leadership. He holds numerous Lean certifications and is a Six Sigma Master Black Belt. Michael is also certified in Project, Program and Portfolio Management and has led dozens of projects ranging from relocations, new product development, and turnarounds.