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Solutions

To replace silos with teamwork, four elements must be in place and working routinely: valid plans, adequate re­sources, correct measurements, and strong leadership:

• Valid Plans—There's a simple test to determine whether the plans are so good that everyone believes them, so good that they can follow them: do the plans correctly reflect the needs of the company? It makes no sense to execute a bad plan, one that does not represent what the company wants to do.

Only with valid plans can all departments work in a synchronized manner. What purchasing is doing fits with the factory; the factory is carrying out the sched­ules from the materials group; the plans from the materials group reflect the demands as determined by sales and marketing; engineering is working on the right priorities for new products and changes to exist­ing ones. Furthermore, strategic, operational, and financial plans are connected, each supporting the other two. When unavoidable problems occur, the "bad news" is delivered quickly so that the plans can be reevaluated and revised if necessary.

In short, the plans become the infrastructure of the business. Like highways of information, they deliver data to all users, keeping them up-to-date with what must be done.

Adequate Resources—Knowing what to do is only half the equation for excellent performance. Being able to do it is the other half. That means having the right tools and enough capacity.

Too often users are asked to execute impossible plans: plans that represent what management would "like to do." The informal system breeds this type of thinking. Without reliable facts, management keeps the pres­sure on to motivate the users. Typically this leads to overloading critical resources. This approach is guar­anteed to sabotage a potentially good system. Manage­ment needs to be aggressive while also being realistic. To achieve the maximum output, the input must be attainable. Otherwise, the users will revert to hot lists and red tags to answer the key question—"what do you want me to do next?"

Fortunately, a good planning system can help manag­ers judge how much capacity is available, how much capacity is required, and if there's a significant gap, what choices are available.

Measurements—What's important to the boss is im­portant to all those reporting to him or her. Ideally, everyone is measured and rewarded for good company behavior. Yet, in many companies there's a big differ­ence between what is said versus what actually occurs. For example, management almost always wants all customers treated equally; wants make-to-stock prod­ucts considered as critical as make-to-order products; but when the end of the month comes, the instructions are to chase those jobs producing the biggest bucks. Cherry-picking overrides the schedule.

With a formal planning system, measurements should also include the upstream activities in addition to the final one of shipments. If engineering is meeting their commitments, purchasing theirs, plus the feed­ing factory departments, then shipments will occur routinely and predictably. Each of these departments should hit their schedules 95% of the time, or higher.

Another prevalent problem is department measure­ments that conflict with company goals. At one com­pany, the distribution manager was held accountable for inventory turnover in his distribution centers. Many of the products were sold on a seasonal pattern. The factory could save money by leveling production but the distribution manager refused to accept the extra inventory in the off season, forcing the factory to rent outside storage space. Unfortunately the empha­sis on departmental goals disguised the total costs.

• Strong Leadership—Installing company-wide plan­ning systems, providing adequate resources, and es­tablishing company based measurements are chal­lenging tasks. They require a general manager deter­mined to run the business professionally, using a formal system. Even then, tenacity must be added because months of hard work by many key people must be invested.

Once implemented, the general manager must use these elements, especially when difficult decisions must be made. This sends a clear message to everyone else—it's how the company will run. Not only will they get the message, each will become a contributor to improving the new operating procedures.

If the general manager expects all employees to be active team players, his or her actions must be held up as a role model. Being a good listener, sharing infor­mation, making the extra effort, respecting the needs of others, encouraging people, rewarding outstanding performance, and helping poor performers become better are the attributes of an effective leader. These attitudes and behavior of the boss will be emulated by others.

To be Continued


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