Do Not Underestimate…

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:

  1. No technical ability to execute the manufacturing process resulting in massive backorders, equipment breakdowns, poor setups and operation, and defective product.
  2. Poor equipment maintenance practices resulting in significant equipment downtime while attempting to repair complex equipment which is not understood.
  3. 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.
  4. 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.

164lbs082018Michael 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.

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Value

In my last post, I mentioned the game-changing book Lean Thinking by James Womack and Daniel Jones.  They get right down to business with the 5 principles of Lean, the first of which is Specify Value.

Value can only be defined by the customer and it only has meaning when it is expressed in terms of a specific product that meets the customer’s needs at a specific price at a specific time. 

Value can only be created by the producer.  Womack and Jones state that this is the reason producers exist — to create value for the customer.  So, to restate this from a from a Lean perspective, in order to produce value it first has to be defined by the customer.

I have led product development projects that we, as the producer, defined the value to the customer and can say that the products and related services were, at the end of the day, off the mark.  Assuming we new best resulted in costly product feature changes and launch delays.  A couple of the lines never fully recovered and the 3-year life cycle was plagued with inefficiencies, delivery and quality issues, engineering mishaps, and ultimately, reduced margins.

Our most successful projects involved key customers in the features design process and subsequent service of our flagship products.  This allowed us to hear their definition of value and design a product flow that delivered that value successfully throughout the 3-year life cycle of the product.  The momentum of that success carried forward into the next flagship redesign, which proved to be more successful.

Once we understood the value as defined by the customer, we deployed lean methodologies in all areas of the organization and lo and behold, we had some pretty favorable margins as the result of the cultural shift.  It’s easy to speak in terms solely of the product, but we dug in to truly understand our customers’ business models which ensured timely invoicing and payments.

Value.

Up next: Muda

164lbs082018

Michael Bates has over 35 years’ experience as a lean practitioner, 30 of which while leading manufacturing, engineering, and service operations.  He holds numerous Lean certifications and is a Six Sigma Master Black Belt.  Michael is also certified in Project, Program and Portfolio Management.

Welcome

Welcome to my inaugural blog on the new site.  I’m sorry to say that I just took down my Bates Management Services website but found it to be a bit irrelevant for what I’m doing and I could no longer justify the time or the spend.  It was a site that I was proud of, it’s many iterations of my own design.  Nothing fancy, just mine.   It served me well, so long old friend.

So now Throughput – Michael’s Blog has migrated to this new blog site, where I will continue to post my thoughts, and other’s insights, into the areas of Operational Excellence, Lean Six Sigma, Project and Program Management, and General and Operations Management.

One thought as I close this brief introductory blog, is that I am still amazed, that as large and seemingly infinite as Google is, that their support is as adept as it is.  I’m in Nowhere, Iowa with some critical questions last night and within 10 minutes of initiating an online chat with support, I once again found them to be prompt , knowledgeable, and helpful in resolving my issues.

See you soon, thanks for dropping by.

Michael