Business Transformation: Questioning the Status Quo for Change

Imagine your manufacturing facility has been in place for over 30 years and has had its share of ups and downs. The employees have suffered through numerous programs of the year or -month in some cases, which have provided a few improvements to keep the business sustainable.

Through these ups and downs, your organization has done a fine job of employee retention, so kudos to you! But because the same group has been together for so long, how do you know if your plant or company is at the top of its game? Does your team need to improve or go through a business transformation in order to maintain a competitive edge? What would happen to your company if there was a market swing positive or negative for your product? Would it still be able to ride the ups and downs it has in the past?

If you listen to your front-line managers, you hear the following story:

Our business, product variations, and product options are very complicated and we do it better than anyone in the market.  It is not possible to make improvements, especially because of the poor market forecast we receive from our customers. Yes, our customer on-time delivery is poor but it is acceptable since our customers cannot get the same product technology or quality from any of our competitors.  It has always been this way, so why spend extra money to expedite the customer when they can work around our delivery?

The story at your facility may be similar or have slight differences, but the stories will all have something in common; poor excuses as to why nothing can be done to improve the facility's efficiency, delivery, and costs. A few small improvements can probably be pushed through if there is limited feather-ruffling, but not enough for a real business transformation that would be required for its long-term survival. I will use an example to help illustrate how to make a change, and also to illustrate the danger if a change is not made.

Business Transformation: A Hypothetical Case

Let’s use a hypothetical situation in that company XYZ has market analysis showing their demand doubling within 5 years due to a significant change in the business environment. For example, this could be because of a government edict for increased quality/ performance requirements. For various reasons the current facility (let’s call it Plant A) cannot be expanded upon to take advantage of the top-notch processes and people. So the company decides to build another facility (let’s get tricky and call it Plant B) within 12 miles of Plant A.  Maybe the complex “best in class, premier processes, most elite super-duper death-defying practices” will transfer mystically from Plant A to Plant B. Leaders want to push their employees slightly beyond perfect, so they give the Plant B startup team some extra vision and ask them not to bring over Plant A bad habits. There’s got to be a few, right?  It can’t be perfect, can it?

The Plant B startup team did not bring over the bad habits of Plant A. In fact, they seriously improved upon and simplified those complex best-in-class processes from Plant A.  How it was done will have to be left to another post. Here I will simply give you a taste of the Plant B startup team results (maintained over the next 3 years):

• Customer on-time delivery maintained at 98.2% (vs the 70% range at Plant A)

• Customer arrears no longer exist (vs the fluctuating levels between 2,000-4,000 FG units at Plant A)

• Inventory turns average 18 (almost triple that of Plant A)

• Inventory accuracy averaged 95% requiring physical inventory only once a year (vs Plant A quarterly physical inventories)

• An occasional premium freight shipment during the week (vs multiple shipments daily at Plant A)

Let’s add another hypothetical idea to our hypothetical XYZ Company and step into a Hollywood-style nightmare in which Plant B is not part of the same company but is actually a competitor of Plant A. Can you feel the danger Plant A Leadership & employees are in if they are unable to realize improvements can be made? Plant A employees would probably continue to refute the impossible and make excuses to challenge the need for changes. It would only be a matter of time before it is no longer possible for Plant A to catch up to the competition and would need to significantly cut operations or even close its doors.

Not Real Enough

This hypothetical scenario sounds very much like all those stories of a Lean Sensei walking into a manufacturing plant and guiding the people through an impossible reduction in machine change over time from hours to minutes.  For all the documented case studies, there are probably 10 more success stories we do not hear about.  So why did all these companies need a Lean Sensei to guide them through what seems to be common sense changes as documented in the case studies?  “They were all stupid” <Buzzer>, is not the correct answer. (Yes, I once received that very answer from a manufacturing plant Operations Manager.) You are probably thinking the same thing I thought about his response, we should move on and not go there.

Basically, these companies needed a Lean Sensei because there was no culture of continuous improvement. The organization’s employees had successfully survived for so long following the mindset “why fix what isn’t broken”. Over time everyone becomes convinced the processes are best practices and cannot be improved upon. There may have been attempts to make improvements, utilizing smoke and mirrors re-sequencing steps and re-naming steps for improving the process also known as “Putting lipstick on a pig”. Someone scored some points and moved up and out more than likely, but the results remained “Status Quo” thereby cementing the process as a best practice.

To grow your business, a culture of Continuous Improvement will be required.  In the majority – if not all – of those incredible case studies of successful leapfrog changes, someone from outside the company was required to kick-start the paradigm shift. Call them a Practitioner of Continuous Improvement, Sensei, dare I say Consultant, or your next-door neighbor’s cousin Ralph, you will need someone or a group from the outside with a different perspective to guide your employees onto the continuous improvement yellow brick road. I know I cannot accept all those people in the case studies as being “stupid”, they only needed a nudge at how to look at the problems in a different way. What if someone advised your company that you could have similar results as hypothetical Plant B? Would you believe them and act on them? I am guessing “no”. What if the person has a history of delivering results similar to Plant B, and promised to guide you and a project team to achieve this kind of breakthrough results?

Guess What… It is Not Hypothetical

Let me tell you a little about the situation we have created. It is not hypothetical and it is a lesson in the art of the possible. Plant B was not a competitor which was the good news. Plant A had plenty of improvement opportunities which was great news for the leadership to comprehend but some front line employees who preferred the status quo felt it was bad news. The Plant B start-up team had a sprinkling of people new to the organization with experience in other manufacturing environments. These people were capable of questioning the organization's current state processes and use of technology to create best practice processes and use of the upgraded ERP systems. The same Leadership support and outside influences in the form of consultants would have been required if the situation was not starting a new plant but turning Plant A around. The road would have been much rougher, but resulting in a similar outcome with the outside guidance and change management practices.

The lesson here: Don’t let your facility maintain the path it is currently traveling. Use this example and others that you find on the web to make your company “aware” that a deep dive inspection of itself is needed. Competitors can appear at any time. If you have not had the challenge of a competitor so far, consider yourself lucky, but also recognize that this creates a very dangerous false sense of security. In addition, customer demands and expectations are changing rapidly. Question the status quo now, and start your facility down the road to a culture of “continuous improvement/change”.