Embedding results-driven improvement into your operating model
9 minutes read · 26th April 2022
Author: Rob Crawford, Associate Partner
Year-on-year productivity gains do not occur by chance. Here we look at the key elements of an operating model required to achieve repeated improvements in performance.
Does your business track top level production KPIs, showing key measures like output per labor hour, line capacity, and raw material yield over time?
• If so, are the month-by-month trends improving, or are they generally flat over time (or even declining)?
• If the trend is not consistently upwards, is there a widely held internal view that this is unacceptable and are there plans being implemented to address this?
If the answer to these questions was:
“Yes, we track those. No, we don’t see a continuous upward trend. And no, this is not widely seen as unacceptable”,
then our experience would put you in the overwhelming majority of manufacturing organizations.
Many management teams have accepted a steady state where performance does not improve, or even shows a slow decline. Phrases we often hear include: “the machine’s natural performance dips as they wear out. We’ve got a CapEx proposal in that will increase output when it comes through”.
In the face of changing business conditions, inflation and global competition, improvement is more important than ever, yet many businesses see CapEx programs as the only method to boost performance.
Working across manufacturing sectors, we have noticed this effect everywhere: in the highest margin industries and the lowest, in organizations heavily invested in big-data and those working with paper logsheets. We see this in businesses with internal Continuous Improvement (CI) teams, businesses paying for external CI teams and businesses with no investment in CI at all.
In every organization we work we see significant opportunity to improve without CapEx, almost always using only currently available data systems, and without the need to create new job roles.
The key to accessing this potential comes from building improvement right into the heart of your operating model – which in turn requires these four key business elements to be present:
1. A clear understanding of current performance and the room for improvement
2. Access to the right frontline data with the highest priorities clearly identified
3. Structures which generate accountability for delivering improvement
4. The right attitudes for improvement demonstrated across the business.
These elements don’t come about by accident and all of them are needed for success – which means an implementation program which doesn’t have a lot of perseverance, determination, self-confidence, high-level support, and a very clear vision of the end state can easily become derailed. A typical Chartwell model for building these elements into a system of self-driven improvement within 4-6 months is as follows:
SCAN – Understanding of current performance and the room for improvement (2 weeks)
This step is critical for establishing a high-level of urgency and setting appropriate and ambitious targets for improvement. However, there are a number of common pitfalls we observe that block this understanding. Do either of these sound familiar to you and your teams?
• Unhelpful high-level metrics and inaccurate data about maximum capacity hide opportunities to improve e.g. reporting OEE figures with certain loss categories backed out (e.g. cleaning time, speed losses, preventive maintenance), or outliers removed.
• Influential figures accepting constraints “The cycle time of the process is already as low as it can get, there is no headroom for improvement without investment”.
The practical steps we take to address these challenges are as follows:
• Chartwell perform a scan using a method called Zero Loss Analysis to assess the maximum capacity and available opportunity . This compares the current performance of a process to a “perfect world scenario”, where the critical assets are running at the theoretical maximum speed 100% of the available time.
• Following the scan, processes will be built to ensure that these metrics are freely available at all levels of the business and being reviewed regularly.
Once we know the current performance vs theoretical maximum – often in the 20-50% range depending on the industry – and achieved alignment that this is worth tackling, the next step is getting detailed information on what the losses are comprised of.
DATA – Access to the right frontline data with the highest priorities clearly identified (1-4 weeks)
Getting access to detailed information about what is happening in production and ensuring the data is being reviewed daily by the teams who can directly influence performance is fundamental. We see many reasons why this is not always the case. Challenges we commonly see include:
• Manual data systems are often not used reliably, input quality is low or lacking standardization. This is not seen as a problem because the data is rarely looked at anyway.
• Automated data systems are in place and collecting data, but it is not used on a day-to-day basis to understand yesterday’s performance.
• Presentation of performance data does not enable action – e.g. incomprehensible charts without baselines and targets, or losses ascribed to vague categories (e.g. “delays”)
There is a five-step process we use to enable access to the right data:
1. Identify the key metrics required to understand frontline performance
Typically this will be a time- / material-efficiency metric accompanied by a series of lower-level charts to show trends in the biggest losses
2. Build a visual representation of how time is being spent at the bottleneck asset
This can make understanding performance at a glance significantly easier
3. Work backwards from the desired set of visuals/metrics
The team will review the available data sources and work out how the necessary data can be gathered easily and quickly as part of a daily routine
4. Build the required systems
If the systems currently in place are not being used properly, or need to be built on to reach the minimum useful level of functionality, we will build these to the required level
5. Validate the data – critical
We use direct observations of the process to validate automatically or manually provided data e.g performing line studies of processes over an extended period of time (10 hours +). This gives confidence in the dataset, gives more detailed understanding of why/how problems occur, and provides an understanding of any blind spots in the data.
Following these steps should leave you and your teams with a set of tools from which it is possible to immediately see what the most significant causes of performance loss are, and in enough detail that actions can be taken against them. Once this is the case it is time to move onto building structures for ensuring that progress is made.
ACCOUNTABILITY – Building structures to generate accountability for improvement (2-3 months)
It takes determination and discipline to put in the required effort every day to improve. In an environment where everyone is busy and there are many urgent problems to resolve, it is extremely tempting to ignore the lower urgency work required to drive improvement. As a result of this we unfortunately often see that:
• Appropriate performance metrics are not being monitored at each level to drive performance
• Where structures do exist, these meetings are used to review performance and ensure it is not below target, but not to ensure that it will improve
It is therefore vital that structures are put in place to demonstrate that the necessary improvement work is being done – typically we do this in the form of a tiered review structure:
In order to prevent pushback and resentment it is important to set ambitious yet achievable timelines. Although it is tempting to try to implement a fully-formed system right at the start, a rollout plan that builds the team’s responsibilities gradually towards the final state over the space of 2-3 months and celebrating progress along the way is much more likely to be successful. We work with organisations to build these plans together and provide support every step of the way.
While having the right structures in place is a necessary part of the improvement process, the right attitudes are also needed across the business, or all improvement efforts can quickly grind to a halt.
MINDSET – Getting the right attitudes to improvement across the business (4 months +)
Improvement actions flow efficiently through a business where helpful improvement attitudes are widespread and grind to halt equally quickly in a business where they are not – getting this right is therefore not something that can be left to chance or worked around. Do the mindsets and attitudes of your teams sit further to the left or right of this table?
| Present in many businesses | Attitudes required for success |
|---|---|
| Departments spending time finger-pointing and blaming each other rather than trying to take action | Proactive cross-departmental attitude of cooperation – team members in each department feel responsible to actively contribute to resolving problems |
| Departments outside of production that lack accountability for problems affecting production | Commitment to trying to solve problems in the short term – “How can we fix this problem today, rather than in 6 months?” |
| No expectation of improvement within production means that improvement initiatives are only paid lip-service | High-level expectation of success – i.e. “if we know what our biggest problems are, and we are talking about how we’re fixing them every day, we should be seeing them decrease” |
By embedding ourselves in your business we can help to lead and encourage these behaviors using the following approach:
• Set out a clear vision for what improvement attitudes look like and communicate this right at the start of the project. This expectation setting needs to come from the top.
• Align this vision with everyone in the relevant departments alongside the message that these are the standards expected moving forward. Communicating this with an interactive training helps people to understand the context and importance of this.
• Establish which behaviors we expect to see in each of our tiered-review meetings and ensuring the chair is positioned to police those and hold people to account.
• Create scorecards to review the organization’s success at sticking to those behaviors across production and other departments, then reviewing these regularly with the relevant leaders.
With these four elements present, improvement should be seen to flow through to the top-level KPIs within months. Note that of the four elements, the first two are technical changes which can be accomplished in a matter of weeks – but the third and fourth require ongoing behavioral changes and consequently can’t be “switched on” immediately.
To get this these right, perseverance and determination are needed – alongside faith that the pain experienced in the first months as these new processes bed in and the team acclimatize to the new expected modes of behavior will pay off in the long-run.
None of this is easy, but nothing worth having ever is. If you want help or support in implementing this in your own business please give us a call.
Reach Rob via Email or LinkedIn 