Changed Market, Calcified Company
OUTCOMES
Successfully restructured from a traditional hierarchy to customer-centric.
Created effective and powerful customer partnership teams.
Developed customized high margin products and services with its customers.
Regained industry leadership.
The Challenge
A leading electronics manufacturer had a distinctive competitive advantage until customers no longer perceived the company as having a value-added product suite. The manufacturer had a very strong and innovative R&D staff that had kept the company competitive and very profitable by incremental product improvement over time.
Facing stronger competitors, changing customer preferences, and technological changes, the company needed to change its strategy to continue its success. The company executive team worked with a renowned consulting firm to craft a new direction. Leveraging its R&D strength, the new strategy was to partner with its customers to co-create new products designed specifically for their needs.
The executive team rolled out the strategy throughout the company in town halls, functional and cross-functional teams, and up and down the hierarchy. The strategy was well received by most employees. Everyone understood the need for a new strategy and was invested in partnering with their customers. This new strategy required that R&D staff work in teams with their customers’ marketing and engineering teams. The executive team believed that cross-functional information flow was the key to transforming the company.
For the next eighteen months the company also tackled implementing an ERP system. Executives’ expectations were that once the ERP system became viable the transformation would be complete. The ERP worked as expected, but nothing else went as expected. Staff morale plummeted, key technical staff left, and customers were not buying.
Solution
The executive team was unclear as to precisely what was wrong. Their metrics showed very little other than poor performance. So they needed a way to determine four key steps in organizational transformation:
Understand who the organization really is – Organizational Self-Awareness.
Identify the key change levers in the system – Strategic Transformation Points.
Develop, sequence and synchronize interventions to transform – High Touch, Minimally Invasive Impact
Engagement of many as possible employees in developing and implementing interventions – Connection and Involvement.
The executive team decided to seek help from a well known training and consulting firm who recommended Strategia Analytics’s Organizational Strategic Alignment™ (OSA) assessment. The OSA provided the executives with a clear picture of the company’s alignment with the new strategy. The OSA enabled them to see the interplay among all their performance drivers.
The Results
The OSA results showed a company caught in functional silos with weak processes that were focused on internal needs more than customer needs. The executive team coalesced around their new collective perspective. They rapidly identified their leverage points and created cross-functional, cross-hierarchical teams to develop and implement interventions. Within eighteen months they were seeing positive results.
Lessons Learned
You can only transform yourself if you know who you are and where you are going.
Results
The manufacturer successfully shifted from a traditional hierarchical structure to a horizontal customer-centric one. Its redesigned customer teams effectively partnered with customers to create specialized, high margin products and services. The manufacturer regained its leadership in the industry.
Recovering Market, Need for Capacity
OUTCOMES
Successfully transformed into a Lean Enterprise.
Improved safety, quality, and productivity.
Built a pipeline for internal leadership development.
The challenge
Bouncing back from the 2009-2011 recession, a mid-size home furnishings manufacturer faced an exciting challenge: meet increased demand, improve quality and reduce costs. Corporate encouraged each plant management team to address this problem as they saw fit. One of the company’s four plant managers decided to implement a Lean manufacturing process to meet these goals.
Lean’s approach and proven results would increase the plant’s capacity, reduce costs and minimize temporary seasonal help. The plant manager knew that Lean required a significant shift in his organization’s culture, from a top-down driven, only management makes critical production decisions, to a flatter, more inclusive and participatory culture. He had helped lead this type of change in his former company and knew that culture change was a difficult but achievable goal.
He engaged a Lean consultant to guide the change by training the staff in Lean and advising him on best ways to manage the required culture change. The Lean consultant recommended that the plant manager assess the culture to identify the roadblocks to achieving this major shift. He recommended the Organizational Strategic Alignment™ (OSA) assessment as a way to measure both the present culture and progress as the program continued.
The OSA results showed that the team members had high trust in their managers and a strong affinity and loyalty toward the organization. They also showed a strong bias toward being experimental in their approach to solving problems and willingness to find non-standard ways to make things work, instead of just trying to do better with their current tool set. It also helped that the plant had an innovative HR approach.
After review of the assessment results, all but one of the management team members supported the decision to change the culture using a Lean philosophy. To begin the transformation, the plant manager personally communicated the ideas and rationale for change to all employees and asked for their help, while promising to provide the training needed and to share the benefits of the change.
The Solution
The plant manager dedicated a resource to teaching Lean principles to the entire workforce while enhancing the supervisory skills of his leadership team. Training was not once and done; new hires were trained as they came in. Everyone was rotated through classroom and hands-on training at least annually.
Continuous Improvement Teams were created, each led by a management team member to start, and more leaders were recruited from the workforce and given extra training. Temporary employees were trained in the principles as they came into the company.
The mantra for all became Safety=Quality=Productivity.
The Results
Safety improved. The company’s “Mod Rate,” the multiplier applied to Workers Comp insurance, dropped steadily from 1.8036 in 2013 to 0.909 for 2018, and is projected to be lower than that at the end of this year.
Quality improved. The value of product returned due to manufacturing errors in August of 2013 was $20,800. The value of product returned in August of 2019 was $11,700, a reduction of 44% without even accounting for price and volume increases.
Productivity improved. The very first production line adopting a Lean approach showed a 40% increase in productivity within three weeks, from 20 assemblies per hour with 6 people to 27.5 assemblies per hour with 5 people.
Subassemblies are now made-to-order in-house without additional people; all operators involved in this process were freed up by making existing lines Lean. Now, instead of being purchased complete to a forecast, these items are made on-site as needed, saving inventory dollars, warehouse space and in-bound transportation costs.
More importantly, the factory has added five production lines within its original footprint to produce the new product lines the company has introduced.
The plant manager put a succession plan in place to continue to grow the talent of future in-house leaders.
Over time, the other three plants became significantly less profitable and were closed; all manufacturing for the corporation is now done in this location.
Lessons Learned
Empowering employees and developing managerial skills enhance a culture of respect and cooperation. As attitudes changed, behaviors changed, a key factor in the improvements noted above.
As enthusiasm and engagement built, the normal pace of operations picked up. The people learned to take responsibility for their own work areas and output; they joined cross-functional teams to solve problems, remove delays, and reduce wasted effort.
Supervisors learned to become team leaders and quality assurance inspectors became active problem-solving team members. Most importantly, team members showed that they thrived in the changed culture by willingly showing new employees and the seasonal influx of temporary employees the new norms of how the team took care of THEIR line and handled THEIR product.
An overlay of the plant’s 2013 OSA with the 2018 OSA shows a significant increase in employee empowerment, supervisory and employee engagement, and an increased understanding of the plant’s and the company’s strategy.
What does the future hold? A current survey of the management team’s future goals expresses desires to see even greater employee development and empowerment.
Postscript: COVID-19 Impact and Actions
The company was declared an “essential” business and required to stay open. The company’s Lean philosophy worked in its favor in a crisis. The plant manager met with the entire workforce – in small groups! - to explain what was expected and what was going to happen. No one was pressured into coming to work, and all were encouraged to stay home when sick. The employees quickly put the following in place:
The building and all equipment were scrubbed down and sanitized, easily accomplished because of the company’s Lean organization of the shop. Housekeeping was already a major component of every job description and is taken very seriously.
Because of the strong culture of safety, PPE was not in short supply initially and all employees had been trained in its proper use. There was one hiccup - when PPE couldn’t be replenished from normal supply chains, the company’s Chinese vendor air-freighted a 40-day supply of masks.
Their flexible approach to working allowed quick establishment of social distancing rules, for example, stand 6 feet apart in line for the time-clock; wear masks at all times indoors; wash hands frequently and thoroughly before starting the shift, before and after break periods and lunch; workstations, even those on assembly lines, are spaced apart and limited to one operator at a station. Transparent panels separate most stations.
Lunch time and break times are divided into three different periods to allow social distancing in the lunch room.
A temporary second shift has been established to further separate groups of operators and material handlers.