Understand the manufacturing problems before selecting the right tool to fit it

Most all companies are determined to improve their performance and become ever more competitive. Most try various tools for improving their performance, but typically have only limited success. The tools applied may initially succeed, but then not be sustained. This article begins a discussion of this issue characterizing many companies’ performance and behavior.

01/01/2007


Most all companies are determined to improve their performance and become ever more competitive. Most try various tools for improving their performance, but typically have only limited success. The tools applied may initially succeed, but then not be sustained. This article begins a discussion of this issue characterizing many companies’ performance and behavior.

Beta International, a large manufacturing conglomerate, has made substantial progress in its operations and business performance. A few years ago, CEO Bob Neurath set forth a 10-point strategic plan for process improvement that focused on getting back to basics. After all, he reasoned, if we aren’t tenacious about getting the basics right, how can we expect to get anything else right?

Driven from the top, this focus has yielded substantial gains for the company. Asset performance has improved, unit costs are decreasing, safety performance continues to improve and market share is increasing in many markets, holding steady in others and only declining in a few markets that are on strategic watch. Profits have moderately increased in most business units and holding steady in almost all others.

But, performance is simply not good enough. Return on capital is only about average in most business units. Intense pricing pressures from foreign competition, particularly Asian manufacturers, are continuing to drive down prices and hold down margins. If downward pricing pressures are stemming from Asia, Bob mused, then there is no doubt that companies like Wal-Mart, with its guaranteed lowest-price strategy, will only further intensify those pressures.

The low margins resulting from these pressures limit Beta’s ability to invest in research and development for new product and process development, new capital projects that flow from this R&D, as well as strategic acquisitions better aligned to the company’s long-term strategy and business objectives. As a result, future market development and the growth that goes with it are likely to be hampered.

In summary, the good news is that Beta has returned from the brink of disaster to become at least a mediocre company, maybe even above average in some business units. The bad news is that Beta is still not much better than a mediocre company. Perhaps more importantly, many seem to be satisfied %%MDASSML%% even pleased, with this.

Bob Neurath is not. Having taken a step back from the abyss it faced a few years ago, Bob is now ready to move Beta forward more aggressively, creating a much more profitable future for the business.

Trying to be all things in all markets only dilutes management focus, thus leading to mediocrity. Bob’s expectation, like many corporate leaders today, is that Beta should be first or second in all of its markets or have a clear, measurable path for achieving that position. The company must now move from survival mode to growth mode.

Going beyond the basics

Bob’s response to this lack of consistency and purpose in applying these tools, beyond a certain amount of chagrin, was to form a senior-level steering team to review each tool and make a judgment about its efficacy and efficiency. Some questions being asked:

  • Under what circumstances do we apply each strategy or tool?

  • What are each tool’s advantages and disadvantages?

  • Are they compatible and/or supportive?

  • Do some require other related tools to be used in conjunction for maximum results?

  • When are they incompatible?

    • These fundamental questions need answers in order to develop a strategy for their application that could align the organization toward a common set of goals within all of Beta’s various operating units.

      Bob also demanded an annual market review to ensure proper alignment of the manufacturing plants’ strategy to the marketing and product mix strategy (and vice versa). The review needed to identify the major steps needed for assuring growth in all markets. Growing market share required Beta to do most, if not all, of the following seemingly straightforward activities:

      • Keep the customers that you already have by creating incentives for them to stay or obstacles to their departure

      • Take business from your competition by making your products more attractive

      • Go to where the growth is by anticipating those growth areas

      • Enter adjacent markets by adapting your products to those markets

      • Invest in developing new product lines, markets and customers.

        • These principles need to be applied at Beta, along with the models for rationalizing and optimizing products, customers and markets. The marketing department will manage product and customer mix and complexity within the product range. They will work with manufacturing to understand the implications of their decisions on the manufacturing function, particularly as it relates to quality, cost and delivery.

          This communication will be a two-way street with business decisions based on what is best for the business overall and not on a single given function. The plants work to improve quality, cost and delivery through improved reliability and stability as well as reduced variability and waste. This should increase capacity and gross profits and allow the pursuit of additional market share without having to make additional capital investment. We must fully understand our business’s external realities: Are we in a growing or declining market? What is happening to prices in those markets? What is happening to our customer base? Are we in the middle of a major structural shift?

          They also suggest that we understand our internal activities relative to our external realities. Is our strategy aligned with market realities? Are our operations efficient enough to address those? Are we as executives engaging our people in supporting our improvement? Is our organizational structure aligned to meeting our objectives? And, are we meeting our financial targets in light of all this, routinely iterating and improving our performance relative to the external realities and internal activities?


          <table ID = 'id3001574-0-table' CELLSPACING = '0' CELLPADDING = '2' WIDTH = '100%' BORDER = '0'><tbody ID = 'id3002510-0-tbody'><tr ID = 'id3002512-0-tr'><td ID = 'id3002514-0-td' CLASS = 'table' STYLE = 'background-color: #EEEEEE'> Author Information </td></tr><tr ID = 'id3001583-3-tr'><td ID = 'id3001585-3-td' CLASS = 'table'> Excerpted from the new book, “Selecting the Right Manufacturing Improvement Tools %%MDASSML%% What Tool? When?” by Ron Moore, published by Elsevier Books, Butterworth-Heinemann Imprint. Ron Moore is the managing partner of The RM Group, Inc. He can be reached at (865) 675-7647 or by email at RonsRMGp@aol.com . </td></tr></tbody></table>


No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
2016 Product of the Year; Diagnose bearing failures; Asset performance management; Testing dust collector performance measures
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me