Episodios
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Most of us hire people to fill a slot -- a given role. That happens all too often because we hire in a reactionary mode, to someone leaving or to sales growth.
We talk about cross training, but often don't provide it for a number of reasons: no time, will have to pay person more, or not sure what we will need are just a few.
If your company talks about sales mix impacting productivity or other measures like on-time delivery, it often reflects a lack of flexibility or agility with our work force.
Cross training employees can be expensive, but can pay for itself every day. Random or time-filling cross training will likely be expensive and not pay for itself, ever.
Operations leadership are well served by creation and maintenance of a widely visible cross training matrix. The matrix starts with a picture of each employee on the Y axis, and the names of the various relevant skills on the X matrix. Where the picture and the skill intersect is the information about that person's level of mastery of that skill.
Now review what that list of relevant skills should include. Some simply name machines, but often there are subsets of skills for a given machine that are important and not equally mastered by all. Rather than worry about perfect, create the list of skills that seem to make sense at the start.
Now, it's time to indicate who (the pictures on the Y axis) has which skills (the X axis entries). Most find it helpful to define categories, like "run with supervision," run without supervision," "perform setups," and "train others to operate." These classifications will vary depending upon your business and staffing models.
It is time to fill out the matrix. You can look across and see who is capable of what, and look vertically to see who all is skilled in a specific machine or task.
You've created the "current state" matrix. That tells you what you currently have. What's next?
How will you keep this accurate? The fact that John Doe ran a machine a year ago doesn't mean he is still qualified at the same level to do so again. How does your re-verification effort work?
Similarly, you don't need everyone cross trained in every machine or skill. How many do you need for flexibility and to support growth?
Each column should indicate a number for the goal skilled personnel. You may need 3 trained on Machine 1 and 6 trained on Machine 2. These numbers are based on product demand, engineering intentions, the number of shifts, and other factors.
Your current state matrix, combined with the target number for each skill, makes visible the needs of the organization for appropriate cross training. This is a live document, as new skills are added, people lose skills over time, and our expected needs change.
Operations is responsible for capacity planning and management of people, equipment, and processes. The cross training matrix I have just described to you is a simply and important tool in that effort.
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When I worked for TRW in the 1980's, the company required everyone with purchasing responsibilities to take the Chester Karrass negotiating course. At that time it was 100% focused on the assumption of a zero sum game, where whatever the other "side" got came directly from you. Win-lose. Since then companies have come to understand that successful suppliers are required by successful customers, and vice versa. Win-win became the order of the day.
Unfortunately, that understanding itself often ebbs and flows with near-term earnings, and for too many companies it has yet to extend beyond the commercial supply chain.
Every business has five constituencies: customers, suppliers, employees, investors, and the community at large. The concept of community extends into the future. Every responsible company considers all five when making major decisions. Too many leaders focus first on investors, and then on customers, and then perhaps on suppliers. If there's money "left over" the employees may get a raise or a bonus. The community? Well, if there's still money left over, maybe we'll donate to something or fix that fence.
Managing costs is integral to long term success. Managing costs is not the same as stretching payments to vendors, taking discounts not earned, or laying off highly skilled employees when times are tough. Poor processes, guestimate specifications, slow time to market and unverified products, ineffective onboarding and training, accepting bad orders or customers, staying with suppliers uninterested in improving your success, firing suppliers without investing in their success, ignoring local schools — these, and more, are all significant contributors to poor financial performance.
Consider what it takes to be a company that the best want to work for, suppliers energetically support, customers seek out, long term investors chase, and that the community is thrilled to have. You can't get there without being profitable. But being profitable doesn't put you there either. Profits are important. They can and should be derived from well considered decisions, not short term ones to maximize today's numbers.
As you consider significant decisions, I encourage you to ask yourself: 'what is the impact likely to be on all five of our constituencies?" If all five benefit, now and in the future, it's an easy decision to make. If not, consider both the short and long term impact on each of them. Then make the right decision, which might well not be the one that maximizes profits.
To focus solely on maximizing profits is a strategic mistake that few of you can afford to make.
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Phil Spector was a very successful music producer and songwriter, who was also convicted of murder and serving a long sentence when he died in prison.
Talented people can be bad people.
Talented bad people can also do good things.
Phil Spector produced the famous Ike and Tina Turner song "River Deep - Mountain High." He knew how controlling Ike was, so he created a unique contract for this work, paying Ike Turner $20,000 to stay away while giving credit to both Ike and Tina Turner. That seems like a talented bad person doing a good thing.
We all know the story of Ike repeatedly beating Tina, until she escaped one night with no money and no where to go. Working long and hard at low-end jobs to keep herself and her children fed, she knew that she was a really good singer. Still under contract with United Artists she released solo albums, none of which succeeded.
The UAR contract ended; she signed with EMI in the early 1980's, and as they say, the rest is history.
It is easy to be impressed by talent, even when that talent is covering significant character flaws, ergo Ike Turner and Phil Spector.
It is easy to overlook world-changing talent when it pushes a mop bucket, like Tina Turner.
How much talent do you reject because it doesn't look like the talent you normally hire? How much talent do you keep, despite toxicity, because it can hit the high notes?
We all know, whether we like it or not, that culture eats strategy for breakfast.
So why do we live with toxic workers? Not one of them anywhere in any role for any organization is worth it. Many of us choose to be optimistic, hoping that the person will improve.
How long is enough? One day? One month? One year?
Every minute you accept toxicity as acceptable behavior you are driving away everything that is good about your organization. No level of skill can outweigh that.
Your organization may be filled with Tina Turners looking to escape because of the Ike Turner or Phil Spector you choose to retain.
What's love got to do with it?
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Why would a senior employee keep tricks of the trade secret from others? For one reason only: a lack of confidence.
Someone who acknowledges his own talent and thinking skills would not be intimidated by others having the same abilities. Someone committed to team success would ensure knowledge is public -- that is, known and available to many -- and not private -- that is, known only by himself.
In this podcast I provide examples of how and why to ensure the knowledge of your organization is not lost when someone walks out the door for the last time.
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A few years ago I volunteered to support the Continental Cup activities in Cleveland. This is an international sporting event that included 2500 youngsters from ages 8 to 18 from 12 countries competing in a variety of sports.
My first day, I was an electronic scorekeeper / clock operator for basketball games, seated next to a young man who was to keep track of individual statistics, team fouls, and team time-outs on paper. I received 2 minutes of training on the equipment; not sure he received any on his role. We did have experienced refs.
Unfortunately, the court we were assigned was in the middle, with fans at one end and the scoring table (us) and the players at the other. With whistles blowing on courts on both sides and required to look at the far end of the court for half the activity, ours was not an easy assignment.
I had to rely on the scorekeeper to know when to light the bonus and double-bonus indicators for the refs. He needed nothing from me. We were individuals, not a team, in tracking the score. As is not surprising, during one game our scores were different. Additionally, he was confused on individual fouls and team fouls, which understandably frustrated coaches. He wanted silence, except when he asked me a question, so he could concentrate. I wanted to verbally verify which team scored so we could stay aligned.
That volunteer and I never became a team. We went through the forming and storming stages, but never reached norming or performing. The refs had the same challenge. They were to perform as a team, but were thrown into the game together just as my fellow volunteer and I were.
All 4 of us should have been a single team, but instead we behaved as 4 individuals each trying to do a good job. No one with bad intentions.
My second day I had the paper detailed scorekeeper job. My "table-mate" for that day and I had about 5 minutes before our games started. We talked about how to work together, she trained me on my new job, explaining "little tricks" that make it easier. Our team of refs had worked together before. We talked with the refs about how they could help make our jobs easier, and vice-versa.
While far from perfect, the four of us were a fairly effective team. When creating a small team to accomplish a task, plan time for them to get to know one another, discuss roles and responsibilities, and agree on operating guidelines.
No matter how smart, how experienced, or how caring they are as individuals, they will not suddenly become a team just because the game has started.
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A majority of adult Americans do not vote in our elections. Why is that? Simply because they don't believe their vote matters. They believe nothing will change anyway.
Voting within your company happens. Any idea what the participation rates are? They are 100%, regardless. Some votes are simply more visible than others.
Why do some not vote in other countries? One recent Russian immigrant told me he never voted in Russia because he didn't want to vote to support the existing government and he didn't want to be caught voting for anyone else.
Voting in your company can be accomplished by leaving, or by staying.
The vote of staying may well be that of the Russian man or our unregistered and nonparticipative voters. If staying is a real vote it includes speaking up and the belief that input and ideas will be considered.
In elections we want to believe that our side may not win, but our vote counts. In companies, it's the same thing.
How long is the line to vote within your organization? If turnout appears low, you know why.
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An effective operation may have bad days, but they are a rarity.
When you walk through operations, is the angst palpable? Clearly that swamp monster environment should be prevented, but it may happen anyway. How many times and for how long do you find that operational stress acceptable? How many times and for how long do your employees tolerate it?
Is meaningful progress being made and are employees involved in that? Manhandling a mess may shape-change the mess, but it won't replace it with effective operations. Throwing resources at a problem may feel good but won't get to root cause.
With an intention to "do something" executives can be tempted to dig in with their pre-leadership topic expertise. But seriously, does that make anything better for tomorrow? Leaders must successfully transition their thinking from tactical to strategic. Brainstorming is one thing; relying on leaders to provide tactical solutions in another entirely.
You can't be sucked into the swamp monster without your permission. If you are expediting, something is dreadfully wrong. If you're doing nothing long term of substance to kill the monster and prevent his return, something is dreadfully wrong.
Your job is not to expedite, not to do the jobs of others, nor to hope things will get better. Your job is to anticipate, invest, and ensure others have what they need for success.
It is routine for every employee to be aware of both problematic patterns and desirable patterns in effective operations. It is routine for those same employees to develop and implement fixes, prevent re-occurrence, or reinforce positive patterns through root cause problem solving.
When, for whatever reason, that is not happening, leadership has failed.
Or has not yet succeeded.
With that description as the objective, leadership must prioritize observing patterns and the processes to succeed within them: processes that exist, those that are not functioning well, those that should exist but don't, and those that exist but shouldn't.
If you can't bring greater value to your organization by thinking, guiding, providing course correction, and giving the team what it needs than you can by taping boxes or carrying paperwork, your business needs a new leader.
Thinking may not look or feel like work, but it is usually the most important work a leader can do.
Arm wrestling the swamp monster is not work, but it is exhausting.
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Even the best of us can benefit from cold water to the face occasionally.
In mid-2022 I finally quit making excuses and enjoyed a 3-week trip to Greece, Türkiye, Montenegro, Croatia, Italy and Slovenia. What shook me out of my "I don't want to contract Covid" inaction was a friend's story that he had recently returned from the Polish-Ukranian border assisting refugees.
Fully vaccinated and masked, why was I sitting on my hands? If I drive a car, walk across the street, and eat indoors at restaurants, what was my excuse for not “risking” travel? My colleague’s matter-of-fact response to my “done anything interesting lately?” query was cold water in my face.
I have since taken several trips and enjoyed each. Thank goodness for that cold water in my face.
It is easy to become complacent, over-estimate our current mastery, or let the potential downside of an action corner us into inaction. Those are rarely the mark of leadership we want to follow.
Your supply chain was never a fully visualized well-oiled machine.
Pre-Covid, you struggled to attract the workforce you want and need.
Customer expectations were never stagnant.
Investing in building muscle is an ages old demand. Details may be different now but taking decisive action to make giant leaps forward is an ongoing requirement of any business.
Consider these questions:
Supply Chain – What specific steps have you taken:
to simplify?to increase responsiveness and resilience?to rationalize products, parts, and suppliers?to enhance multi-level visibility?People – What specific steps have you taken
to remove toxic employees, regardless of their skillsets?to capture and teach knowledge of departing workers?to respect employees as individuals with individual needs and goals?to emphasize characteristics rather than years of experience in new hires?to speed the effective onboarding to the company and to new roles?to develop training skills in knowledgeable employees?to gather and leverage diverse backgrounds?Strategy – How have you redefined yours to reflect current realities in
supply chainpeopleglobal socioeconomicstechnical advancesconstituent expectations regarding ESG?I could ask each of you hundreds of questions specific to your industry, size, and market position. I could help you develop and implement decisions.
But it is most important that you know it’s time. Time to quit making excuses, quit reacting like a pinball, and quit waiting for “normal.”
It’s here.
Your future is yours to create. It’s time.
Now dry that cold water off your face and start moving.
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Excerpted From: © 2021 Manufacturing Mastery: The Path to Building Successful and Enduring Manufacturing Businesses; Taylor & Francis, Author: Rebecca Morgan
"I have long advised clients that together we will identify and implement new strategic capabilities as quickly as they can handle. One of those strategic capabilities is always the ability to effectively create and integrate value-adding change more and more rapidly. Why would any business choose to improve its competitive position more slowly than it could? Changing faster than it can risks breaking the company. As leaders we must master walking that fine line as we advance it.
"What does breaking look like?
"In the 1990s, Toyota decided to significantly expand its geographic footprint and number of operations. Unfortunately, it did so faster than it could effectively embed its business operating system, extraordinary design thinking, and expectations of working towards perfection in the new operations. That growth-oriented decision diluted those critical aspects of the company’s success worldwide. Its internal process performance standards effectively fell. Quality problems arose and other challenges, though less obvious to the customer, continue. Breaking doesn’t have to mean close up shop, but it certainly means a turn for the worse...
"Reacting with an on/off mindset–changing everything or changing nothing–fails without exception. Go fast, but not too fast. It is the leader’s responsibility to ensure that the organization responds smoothly to the requirements of change. At any point, an organization has a maximum rate of healthy velocity and then acceleration. To prevent breaking, leaders must establish a governor to ensure it is not exceeded. As the organization gains agility, the cap increases, and the business changes to reach the new capability. Finding that sweet spot is a requisite skill for leaders to constantly build and adapt."
https://www.mfgmastery.com
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Your people are no doubt working hard to do a good job. The question is: Have you given enough structure for them to know what a good job really means?
Usually the weakness in that is a lack of sequenced priorities from leadership. How do they even know if they're working on something that matters?
Employees cannot make good decisions if management cannot sequence the list of multiple priorities. Giving employees a list of more than one priority, without sequencing, abdicates responsibility.
If you can't decide what's important, how can they?
It is typically the unreasonable fear of leaders that nothing other than Priority #1 will be worked on if we let them know it's most important.
Let me ask you: Would that be so bad? If every single employee can make #1 move closer to the finish line right now, why would you want them to work on something else right now?
I've yet to see an organization in which every single employee could positively impact the top single priority at all times. Have you?
By providing all employees with a sequenced list of a handful of priorities, each is positioned to make better decisions every single day.
If I can't move #1 along, I should work on #2; if I can't move #2 forward, I should work on #3; etc.
The fear that employees will do absolutely nothing if they can't work on Priority #1 is silly. Think how powerful it is for your leadership team to help each employee see how their work supports priorities.
The goal is not for all of your employees to stay busy. The goal is for each employee to contribute to organizational and personal success by working on what matters most.
Isn't that the purpose of strategy?
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While the worst of the supply chain fiasco of 2020-2022 is behind us, elements certainly continue to challenge us daily. What we should have done then and what we can do now is communicate the truth among our supply matrix.
We call it a supply chain, but the reality is all players in it service other customers and many of them serve other markets. The increasing number of variables due to that fact makes coordination even more critical to effective capacity management.
Supply chain personnel have been expediting since before it was called Materials Management. In early 2020 most of us fell into one of two camps: the first faced a precipitous decline in demand which mean de-expedite everything; the second saw skyrocketing demand, which we chose to address by expediting everything.
Strong supply chain competency is like beautiful choreography. It leverages what each participant does best, blending together variables to create something beautiful. Every choreographer knows it only detracts to have dancers enter the stage before they are needed.
Yet in most supply chain efforts, we continue to fall back on expediting -- getting parts and materials before we need them -- when the going gets tough. It is a perfect example of confusing motion with results.
Dancers must trust one another and the choreographer; the same is true of the best supply matrices. Honesty enables better decision-making by all of us.
Coordinated conversations with suppliers that are struggling to provide materials when you want them can determine what the group can actually do.
Which part/supplier is the key to getting this all moving? Knowing that is crucial to wisely leveraging capacity. Understanding what other parts can then be delayed -- even though we wish we had everything right now -- until that key part can be received from that supplier helps prioritization throughout. Demanding more or earlier hurts supplier prioritization with no offsetting benefit.
The hesitation in doing this is a lack of trust. We're not sure we actually know what we need when and that our own production planning is that precise. We don't trust all our suppliers to actually ship "our" material to someone else right now and replace it to us at the agreed-upon date.
When everyone is lying we're all hurt. When everyone is telling the truth but we don't trust them, we're all hurt.
Supplier selection and development is an integral part of operations management. Done well, coordination and communication the last few years has been strong, even if not what any of us wanted to hear. We could jointly plan, and execute.
Not done well, expediting is your strategy. Your dance floor is cluttered with excess dancers who have no current role.
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Wouldn't you love to see an organization that was fully aligned across all functional arenas?
We talk about specific excellence, like Nordstrom and service or Amazon and speed, but do you know of any organizations in which every single person in every corner of the company is aligned on organizational priorities and strategies? Do you think Nordstrom and Amazon are fully aligned internally?
The "town hall" meeting in which you communicate the current strategy via PowerPoint slides is ineffective in describing the strategy, as well as ineffective in generating alignment. After you leave that room employees will still be operating at cross purposes. Not because they are bad people, but because the work and decisions that their jobs require are not integrated.
Ask each member of your leadership team to separately use one side of one piece of 8-1/2" X 11" paper to specify the following headings:
Summary of your businessMission/VisionCore ValuesKey Elements of Current StrategyTop Current Functional Challenges/DecisionsHow This Year Will Be Different From LastUntil they can do that and agree on the responses, alignment is impossible for the rest of your organization.
Next, verify that the responses to #4 are consistent with #1, #2, and #3. If they are not, silos are the least of your problems.
Now, agree on how #5 integrates with #4.
Lastly, to make this actionable and aligned, agree on the bullet points under #6 that are the expected result of executing #4 and #5. If you and your team cannot do that, it's time to change the strategy.
You and each individual on your leadership team should be able to complete the above assignment before your first coffee break.
With each leader referring to this "charter for the year" daily as discussing priorities, actions, and decisions with their staff, alignment is possible. Using it without exception will create alignment.
Silos are not the problem.
Unaligned leaders are.
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In the late 1970s, Ken Olson, co-founder of Digital Equipment Corporation (DEC), and Bill Gates, founder of Microsoft, had very different predictions for the future of computers. Mr. Gates gave his new company the mission of "every desk, every home" while Mr. Olson said there was no reason for a home to ever have a computer.
How could two leaders of the early computer hardware and software industries see the future so differently?
The art of the possible is indeed an art, not a science. While science may well be the enabling factor, it is a different thinking process to envision possibility.
Drones are not brand new. The underlying technologies of drones have rapidly advanced as enclosed and tight spaces coupled with long distance and larger payloads have made the possibilities economically significant.
We hear about drones being a lower cost option for the last mile as we see them mapping power company right-of-ways and blowing up buildings in real war. IKEA uses 100s of drones in its European operations, many to record inventory during off-hours.
Your manufacturing or distribution company can no doubt leverage drone technologies; the question is "should it?" Is your view of the potential of drones more Bill Gates or more Ken Olson?
Unless you are in the drone business, it's not your job to envision all the possibilities drones offer. It is your job to assess internal and supply chain work and understand where automation could improve safety, speed, quality or cost. Drones are simply one technology.
To prod your imagination, it is time well spent to read business articles on how various organizations are using technology. Drones are no longer toys, nor is virtual or augmented reality. They can reduce or eliminate key challenges for you.
The possibilities are endless. Current drone technologies may offer amazing improvement to your business operations. Or not.
Always lead with the business question, not with the technology answer.
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In my lifetime the US economy has experienced bank and savings and loan failures, inflation and full employment, a 20% prime rate and a Fed Funds rate of 0.0%, multiple recessions, and wild political swings in tariffs, tax rates, and regulations.
In my lifetime, my country has participated in many wars, eradicated some diseases, had a pandemic, and experienced thousands of large protests for various causes.
In my lifetime, travel became common, gadgetry a life requirement, and our lives have assumed those of the Jetsons. Most industry business models have changed significantly.
Those examples include evolution, the exceptional, and revolution.
And I'm not all that old!
Creating the culture and context for successfully navigating all types of external jolts is a requirement of building an enduring business.
Clear mission, vision, and core values are integral to the process. So too is alignment. Clear roles and responsibilities for anticipating and addressing or creating these various types of change is required.
What types of risk assessment are the responsibility of your top management? Your mid-level management? Your individual contributors?
Each of your employees has a different perspective, a different view, and a different ability to foresee, address, or create change.
We don't expect the CNC operator to advise leadership of potential supplier failures or interest rate hikes; we don't expect the CEO to anticipate power or water outages.
Does your risk management process reflect those realities?
Reactionary is better than uniformed. Prepared with thinking and context for reactions is significantly better still.
Regardless of what you do, the hits will just keep on coming. You might as well learn how to duck.
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As fast as the world turns these days, it is not easy to stay abreast of the latest concepts and management trends. While it is important that you not let the world pass you by, it is also valuable to leverage some tried-and-true tools.
TWI (Training Within Industry) and the Coaching and Improvement Katas are behavioral tools that can increase the effectiveness of your entire team quickly and safely.
If you've ever taken a martial arts class, you've been introduced to the concept of kata. The term itself refers to a process repeated reliably to enhance mastery. The same is true for the coaching and improvement katas.
While deceptively simple, as with any of the martial arts, detailed regular practice under the watchful eye of an expert is integral to proficiency. Both of these katas share the same thinking, but the detailed steps are different. That's the same as the katas for two varieties of the martial arts.
TWI is a tool developed by the US federal government at the early stages of WW2 to get the new female workforce productive quickly and safely. The men experienced in manufacturing had gone to war, and women had to step into those roles. Rosie the Riveter was born.
There are multiple aspects of TWI, each consistent with the other and each designed for specific purpose. Again, conceptually, this is similar to kata. It is worth investing some time watching a few YouTube videos and reading summaries of the distinct purpose of each form of TWI.
While TWI is fully in the public domain, reading the original government documentation is not fun nor particularly helpful. That's why I recommend searching for more modern overviews.
Other than training, neither TWI nor Kata requires a financial investment. Both can rapidly enhance the safety and quality of your workforce as they work to master and improve your business operations.
Yes, innovation is crucial to success. But, no, that does not mean jettisoning the already-existing and proven tools.
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You've all heard that great strategy with poor execution is no better than poor strategy with great execution. Operational effectiveness requires excellence in both levels.
My writings and podcasts have long focused on the strategic aspects of operations, specifically how to build a manufacturing business that endures. This episode reminds the listener of the laws of math and physics that impact near term execution.
The book Factory Physics was written about 30 years ago, and updated several times since. Its primary intent continues to be for undergraduate and graduate students in Operations Management.
To overlook its value for production leaders, plant managers, and financial leaders in manufacturing operations is a mistake.
Most of you are likely familiar with multiple order quantity formulas, from EOQ to Kanban, even if you've only seen them as options in your ERP system. Any order quantity formula impacts operational effectiveness, as it is designed to determine inventory levels and scheduling.
It can be overwhelming, and seem to require great judgement, to determine what to do next on what machine or with which supplier. The more inventory you see the uglier it gets.
There are laws of math and physics that are true whether or not recognized. Those fundamentals can help you make better decisions, lowering costs and increasing throughput and on-time delivery.
Batch size, equipment utilization, and work-in-progress inventory are all integrated. When the boss insists on high utilization because he wants to absorb overhead, he may not understand the secondary impacts on inventory, throughput and lead-time.
You should. And a good boss does as well.
As someone who worked her way up through shop floor operations to plant and divisional operations, I've found understanding the details required by operational execution to be of great value in setting strategy. No, I can't write out most of the equations without help anymore, but I know the concepts and what drives them.
If you want to enhance the quality of your operations strategy thinking, don't turn your back on Factory Physics.
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Partner. Relationship business. It all sounds so good. But then reality slaps you up the side of the head.
In a true partnership, can one company unilaterally change the terms of the contract?
Well, no. But then few espoused partnerships are true partnerships.
The larger company always has more money for lawyers, if it comes to that. The money they use to pay those lawyers may well be yours, which only makes it worse. The smaller company can also have a finger on the trigger. While meeting at high noon in front of the saloon is never the intention, it can happen. That's why fact-finding and intention-testing up front is a fundamental first step to enabling a trusting relationship to develop.
Automotive has a bad reputation for harming small suppliers because the OEMs feel free to make unilateral demands and contract changes with abandon. Toyota and Honda are well-known exceptions to that and Hyundai has a history of being pretty honorable also. But the "big 3?" Keep your hand on your wallet.
Those are hardly the only companies and automotive is hardly the only industry where the voiced commitment to a partnership that reflects a commitment to relationship is Vanilla Ice.
But small suppliers or customers do not need to be as vulnerable as they often choose to believe and act.
Don't get sucked in by the allure of business-altering volumes, because they may well alter your business in ways you don't intend.
Before signing a contract, discuss with the potential supply chain partner scenarios that range from somewhat likely to probable. Ask how they have behaved in the past when those situations have arisen, and then talk with their other partners to see how well the two descriptions match.
You, too, must open the kimono, and share what scenarios have challenged you to comply with your commitments and how you've handled those scenarios.
If your large company potential partner has a track record of using its "relationships" to finance its cash flow, or to reduce its cost of goods sold by whatever number its CFO demands by pushing that responsibility down to you, there's trouble in River City. And that's trouble with a capital T. Teamwork starts with a very different T.
Every business runs into challenges, sometimes severe. Pretending it won't happen is silly. Developing a common understanding of how you will treat one another, what kind of actions you'll each be willing to take if needed to help the other, being transparent about how you each define integrity and ethics -- those conversations are fundamental to any opportunity to build a true partnership.
The fear of laying cards on the table indicates a problem from the beginning. Maybe you'll both be served well by a few short term purchase orders -- and yes that can impact costs for both of you -- before making the long term agreement.
As Ronald Reagan said about Russia, "trust, but verify."
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I've invested the vast majority of my long career in operations. I find it fascinating.
Regardless of industry, operations includes the technologies, processes, materials, and procedures that delivering value on each order involves. Many would look at those words and see no similarities between making mac and cheese for millions of consumers and making aerospace parts for a limited number of engines.
Yet my transition from operations of the first to the second was fast and easier than you might imagine.
I am NOT a technologist. Making frozen prepared foods I worked with food scientists. Making aerospace parts I worked with metallurgists and ceramicists.
I AM a business and operations expert. Both food and aerospace industries, and I could give many more examples, must obtain and keep customers, must know what materials are needed when, what critical steps are involved in converting those materials to the end product sold to the customer, and must comply with regulations while delivering cost effective quality reliably.
The choreography of information, materials, equipment and decisions is one giant puzzle to be solved. The production system is what solves that puzzle.
Many manufacturing businesses see the complications and distinctions that can make their operations difficult. The better ones focus on the similarities, simplifications, and apply lessons from everyone in their improvement processes.
Both leaders and shop floor employees of the majority of, for example, tool and die companies believe that they are job shops, that every order is unique, and that because of those two facts there is no production system that makes delivery times reliable. Internal scheduling for them is one reaction to the last customer call after another.
That thinking is simply wrong, and contributed heavily to outsourcing tool and die production to cheap labor markets.
While the intricate details of the metal removed from the block of steel to create the specific shape required by the customer do differ, that is a very small part of the program that controls cutting.
The production systems of tool and die shops are basically buy metal, write program(s) for the specific equipment that will cut the metal to shape, set up the machine, run the program, perhaps do a few secondary operations, and get it to the customer.
I have helped many job shops, including tool and die, incorporate visual factory concepts and simple scheduling easy to follow, resulting in 50% reductions in lead-times and doubling of on-time delivery to customers. And of course profits skyrocketed.
How? By seeing the similarities and not being controlled by the distinctions.
Restaurants, hair salons, and tool and die shops are all job shops. All of them do the same things over and over, with the intricate details changing but not the overall production systems.
As someone in operations, it is crucial that you understand the questions the system must answer, the challenges it must overcome, and the repetitive nature of the vast majority of both. The 80/20 rule is powerful, especially when we learn widely from the 80% that you share with the rest of the world.
If you like putting together a puzzle, designing beautiful choreography that is easy for all the dancers to follow, or generally making it easy for others to do their jobs well, operations is for you. Don't let the varieties of production systems in existence become confusing. Take the best from each and create operations in your business that are the best you can make them, as of now.
Tomorrow is a new and better today if we respect important differences, while we focus on similarities and learning.
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We manufacturers know that we are responsible for the outputs of cost, quality, product performance and delivery; we also know that many others in our organization impact those as much as we do.
Being outstanding in those four outputs is necessary but not sufficient for our futures.
In recent years we've come to realize that the definition of outstanding for each of those outputs is more demanding than previously. And yet, they are still not enough.
The three additional outputs of your operations to consider today are flexibility, innovativeness, and resilience.
Flexibility does not mean jump through hoops to respond to the latest customer call. It no longer is limited to volume and mix changes in order patterns. It means your production and operational systems are designed to be flexible in meeting market needs and expectations.
Consider the flexibility those who shifted from making airplane parts to ventilator parts in a matter of days.
Innovativeness does not mean bringing more products to market each year than your competitor does. It means a culture that exudes problem solving mastery in every aspect of the business. After all, innovation is, at its core, problem solving for the future.
Resilience does not mean reactionary. It means identifying and preparing for the risks that matter most and being positioned throughout the organization to rebound from whatever happens.
Each of these three outputs requires systemic thinking, processes designed to deliver them, and a culture that does not question their importance or the changes they require.
We've all heard "raise the bar." That isn't limited to raising required scores on what you've always measured.
Sometimes it means changing the bar entirely.
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Why are some manufacturing businesses a hot mess, while others are a great place to work as you provide exciting value to the market?
A business is a living organism, and as such, understanding what makes them healthy and what makes them sick is instrumental to success.
Here are seven levers that apply within all manufacturers; each is addressed as part of the operations strategy, which is in place to execute the business strategy. The business is impacted by each, both individually and collectively.
The first is Human Resources. What is the strategy for how many, what backgrounds, what key characteristics? An effective HR strategy is not reactive, but rather reflects the quality of the organization you are building.
A second lever is organizational structure and role clarity. While we're all familiar with the one box at the top, with a few under it and a handful under each of those, going on down, that is hardly the only potential structure. Even if that is the best one for you right now, that structure unsupported by clarity for each role will fail you. Titles mean different things to different people; providing common understanding of expectations of specific roles and among roles cannot be overlooked.
A third lever is production planning and control; this is the near-term management of inventories and resource utilization, and drives costs, time, and performance.
Sourcing is another impactful lever in your manufacturing business. The decisions to outsource or insource, off-shore or near-shore, leverage supplier expertise or not require strategic guidance.
Both process technology and facilities are structural levers that are often difficult to change, impact cash availability, and can add costs and time that are difficult to assess.
Product design is the 7th lever addressed today. Product design was once a matter of meeting customer specs. The long term impact of that design has been recognized, resulting in design for manufacturing, design for service, design for re-use, and additional DFX.
Those manufacturers that are a hot mess don't manage or strategize these levers well; they may not even recognized their existence beyond daily headaches.
Outstanding high quality manufacturers think strategically about each of these levers, never considers the position of any of them optimal forever, understands that each has an individual impact, and recognizes that the collective impact of mastering each of these creates the foundation of a high quality business.
No manufacturing business can afford to overlook the consequences of the position of these seven decisive levers.
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