Target Practice

The company I was visiting was a component manufacturer, one of several divisions producing for the aftermarket.  Larry M., a dapper middle-aged gentleman and vice president of manufacturing for this firm,  had asked GBMP to propose improvements at their site. “Our margins are slipping and we can’t keep the right products on the shelf,” he explained.  “What can you do to help us?”

“What do you think are the reasons for these problems?” I responded.

“Too many low volume SKU’s,” Larry said, “and a less than motivated workforce.”

“Oh,” I said, “let’s go to floor to take a look.”

“I have a meeting now,” said Larry, but our foreman, Bob, will show you around.  We can talk after you submit your proposal.”

Off to the factory I went with Bob.  At a glance, I had a first impression:  Functional organization of small machines, large lot production,  stacks of raw material and semi-finished parts.

“We make a lot of different components on this floor,” Bob said.

“Can we just walk through the production of one of the higher runners?” I asked.

“I can show you the departments the parts travel through for this one,” Bob declared as he held up a small product about the size of my fist.  “We ship about 100 of these per day, but we won’t find any of the subassemblies being built on the floor for this right now.  They’re already built and in the stockroom.”

“Hmm,” I thought, “lots of opportunity here.”  “Okay, lets walk through the departments that build each part of that product” I said.

A combination of perhaps a dozen manual and mechanized fabrication and assembly operations were required to complete each product.  These were executed in what were almost the four corners of the plant.    I glanced at a work order in one of the subassembly departments: Quantity 2000.   “Why so many?” I asked.   “We try to keep at least a month’s worth on hand for the subs,” Bob replied.

“Goldmine,” I thought to myself, “these are pointless subassemblies.”  I was getting excited.  So many opportunities.   I watched production at each department long enough to guess at typical cycle times. I estimated a 50% productivity improvement just from layout changes and one-by-one production.   No more subassemblies, only finished products in stock.  These are the targets I put in my proposal together with the means by which they could be achieved.  I thought they were not only reasonable in this case, but probably low.

A week later, I met with Larry.  He had an amused expression on his face as I sat down at this desk.  “I’m willing to try a small pilot using the ideas you propose,” Larry said to me, “but I would never show these results to anyone.”  He laughed, “They’d think I left my senses.”   Scratching out the zero on the proposed 50% productivity result, he said, “We’ll just make this 5%.  My company will be pleased with that.”

“That’s not a very aggressive target,” I warned.  “Is that really enough?”

Larry responded with finality, “If we hit that, it will be better than we’ve ever done before.”

Dénouement

Six months later, productivity for the pilot had improved nearly 50%, subassembly production had given way to one-piece flow in assembly, and delivery from stock hit 100%.    I asked Larry, “Now, do you think the original targets can be achieved for other product lines?”

“Probably not,” Larry replied,  “I think this was a special case.”  (I suspect Larry never went to the plant to see the improvement.)

One year later the division was moved to Mexico.

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This scenario occurred a decade ago, but I see it repeated today.   How about you?  Are your organization’s improvement targets lukewarm?   Share a story.

O.L.D.