The Avoidable Fate of Old School Management and Change Averseness
I had the opportunity to visit several steel client prospects over the past week. I was fortunate to come across one that had experience with process improvement as delivered in a strategic perspective, or at least understood the tactical approach and its limited but effective results. Another was not so good. This is the story of the latter.
He is General Manager for a large machine shop who had been sustainable in an uncertain segment for many years. The company is privately owned and caters to some heavy hitters in the industrial market in Pittsburgh and beyond. He is an old-school manager who may be past his prime and seems content in the status-quo, but everywhere around him there are warning signs…
The Warning Signs
We started to listen to his description of operations and how “agile” they were in responding to customer scheduling changes and requirements. It seems this is a benefit to their clients. However, when I asked how on-time delivery was, he cringed and said, “Well… it’s on-time delivery”. Meaning it was bad…very bad.
This introduces us to the concept of the primary and secondary metric in Lean Six Sigma. We want to be responsive or “agile” and that is the primary metric per Old-school, but the secondary metric is On-Time Delivery (OTD) and we cannot sacrifice this.
All of the other customers suffer when he runs around with his hair on fire playing hero to schedule on the fly. Machine operators get frustrated and utilization goes way down. How do I know… well (a) I have seen it before, (b) I asked!! And yes, they have a person that does a weekly schedule that rarely lasts beyond the first hours of distribution and asset utilization is down. This means the corresponding financial metrics of Return on Fixed Assets (ROFA) and subsequently Net Income suffer.
Old-school wanted to look at reducing set-up times on the machines, but is that really the right thing to do? Yes, it sounds good and is a smart technique, but couldn’t schedule optimization be a first step, or coupled with SMED? What is the root cause? Digging further, it seems they have a Manufacturing Execution System (MES) deployed, but do not use the scheduling part of it. Why? Again, squirming and wringing of hands. It is averseness to change, technology, and the desire to be the hero. Companies cannot afford to have this mentality in place.
Ok it gets worse. He went on to describe how they document all of the things that they do. I thought standardization and documentation, great! “So, are you ISO certified?” “Well we were, but we lost it.” WHAT?? So now, this person is jeopardizing existing and future customer relationships by allowing the ISO cert to go away. When asked, he says that the Quality department does that. WHAT?? He is the General Manager and is clueless on the Quality Management System. Classic siloed operation with no cross-discipline knowledge.
It gets even worse. I mentioned Lean Six Sigma as a method that Advanced Process Optimization, Inc. uses to manage many of the issues that they may be experiencing. Again cringing. “Yea we tried that before, but it didn’t last”. I was about to tell him it was a management issue, but I refrained. He went on to describe how two of his “Major Customers” are huge proponents of Lean Six Sigma and had come in to his facility to help train his people. He still rejected the notion of Lean Six Sigma. ARE YOU KIDDING ME?? Now, two of your major customers are experiencing on-time delivery issues, you have no ISO certification which they desire and when they come in to train you to mitigate their risk and improve on-time delivery, you dismiss it. Where do you think the future of this company lies??
The Impending Doom
The bad thing is this is a private company that survived the steel and manufacturing downturn(s). This is not a tiny operation either. They employ 75-100 people. They feel entitled and complacent. Their quality and on-time delivery are deteriorating and they cannot get young people to come on board with the company. DEATH SPIRAL!!
The company and everyone working there suffer as Old-school settles comfortably into complacency. Many legacy steel and manufacturing industry managers seem to feel that since they survived the 1980′s and the more recent 2008 recession that their model is still good enough to compete. Not by a long shot. The new companies entering the market are driven and innovative enough to put you to bed forever, and it is coming. Customers also will not settle for mediocrity, uncertainty, variation, and basic lack of vision.
Do not have this happen to you. If you know someone that is in this position or you are in it yourself. You need to call Advanced Process Optimization to get back in the game ASAP!
Advanced Process Optimization provides Operational Analysis, Lean Six Sigma, Process Simulation Modeling, and Training for your staff in the techniques we use to help make others great! Let’s have a chat and discuss what opportunities lay in your processes!