In the face of inflation and a likely economic downturn, organizations are announcing potential layoffs and other belt-tightening plans. Regardless of industry, leaders are seeing a need for cost cutting, efficiency, and focused improvement. To wisely invest limited operational improvement resources, organizations often create a set of criteria to drive the selection of improvement projects and determine how best to allocate time, people, and financial resources. In doing so, beware of one common pitfall.
In the case of one manufacturing client, initially the criteria focused on the most costly “machine stops” in the process. Each manufacturing line was heavily automated with several robots in each line, and incidents of long periods of machine downtime received top priority. These projects went into the focused improvement project “funnel” to be tackled by focused improvement teams primarily made up of managers. Although this approach made sense, there was a downside to this practice: the focused improvement efforts were backlogged and weighed down with large, long-duration projects, and efforts had more or less stalled due to limited resources.
These practices were in place when our team arrived at the plant to conduct an assessment ahead of a potential, large operational improvement project. Our assessment involved interviews at all levels of the hierarchy, data review, and observations. Our observations focused on particularly complex manufacturing lines—lines that had been prioritized by the client as potential focus lines for the likely project.
Our observations and data review confirmed the “most costly” machine issues. However, it was impossible to ignore something more insidious. Highly skilled, high-morale production employees were assigned to each of the “target lines.” On the first day of the assessment, we noted a type of short-duration machine stop that occurred literally scores of times throughout the shift on a manufacturing line, driving employee frustration higher and higher through the day. Each machine stop was three minutes in duration or shorter. This repeated machine stop did not meet the criteria of being one of the location’s highest-cost stops. But by the end of the day, employees were burned out, frustrated, and angry. These process issues would occur daily and were common throughout the plant. At the time, the organization was also dealing with recruiting and retention challenges, and losing their best people was a non-starter.
The organization needed to focus on frequency of process problems, not just costs, to improve burnout and low morale. This manufacturing operation shifted criteria to revolve around most frequent stops over a three day period, rather than only the most costly over the period of a month. Because we were looking at smaller, more frequent stops, employees could become more engaged in observation, data collection and problem solving efforts. As weeks passed, operational performance improved, as did employee morale, because employees saw the organization addressing process issues that directly affected their day-to-day work lives. Employee churn was reduced. As time passed, more and more of the “low hanging fruit” was eliminated; and not surprisingly, within weeks, some of these smaller problem solving efforts addressed some of the causes of the larger opportunities for improvement that had been identified earlier. Within two to three months, more than 30% of the large, costly problems overlapped with and were uncovered by the new criteria. In the meantime, focused improvement triggers were revised, and a more streamlined process took hold.
The overarching, forgotten principle is this: identify opportunities for operational improvement that positively impact your people. This is not just an idea for manufacturing processes. It goes for administrative processes as well as tech, finance, healthcare, and professional services industries. For example, a recent HBR article reports that in recent years, in efforts to reduce costs and improve efficiency, many organizations invested in collaborative technologies; but the lack of planning related to integrating apps has resulted in “collaboration overload” and is driving employee burnout and turnover. The article goes on the say, “Recent research shows employees at three fortune 500 companies toggle between apps more than 1200 times a day on average.” This added inefficiency and stress is not uncommon. The operational improvement “solution” has exacerbated the problem. If an organization is cutting costs and improving operations, careful analysis and planning are required. Technologies should be carefully planned and integrated to truly improve processes for employees, rather than overwhelming them.
We say that people are our most important resources. Regardless of industry, during belt-tightening times, criteria for operational improvement efforts should focus not only on cost factors, but also on employee impact.
For a 60 minute strategy session to discuss how your organization can address operational improvement, please contact me or message me in LinkedIn.