COMPETITIVE KNOWLEDGE
NEWSLETTER
Let's get to it,
Featured in This Month's Edition of the CKN
I. Letter from our President
II. Production Control Solutions
III. Make Sure You Make a Difference
IV. Management by Walking Around
V. The 80/20 Principle
VI. Business Anecdotes and Famous Quotations
I. Letter From Our President
Dear CKN Subscribers:
In the New Year, it will take more than quick fixes, stock buybacks and
token downsizing for manufacturing companies to consistently exceed
earnings expectations. While these strategic options may yield temporary
financial relief, they are not the way to long term growth and
profitability. For manufacturers to consistently exceed profit
expectations, they will need to fight it out in the markets they serve by
providing higher quality products at competitive prices with shorter lead
times or lose market share. Best options? Speed up business processes,
improve product/service quality and reduce operational costs. A major
challenge to their success will be the need to upgrade the knowledge of
manufacturing people. The ability to learn faster than their competitors
may be the only sustainable competitive edge.
Steven Covey, Tom Peters and Peter Drucker agree that at the top of all
management's "must-do" list should be an agenda that provides
their people with on-going education. This is easy to say but hard to do
when faced with the day-to-day challenge of running a business. To this
end, Ann Dubois, our administrative manager, wrote each of you last week
about our E-learning tutorial that's helping companies increase their
manufacturing competitive knowledge with no need to send their people to
off-site seminars or commit
them to a disruptive training schedule. The tutorial is based on four
successful "business turnaround" experiences and is entitled
"Kaizen Based Lean Manufacturing (KBLM)." If you're thinking
about ordering it, I suggest that you take action now, simply e-mail or
fax your "ship to" address and a
purchase order number to Ann @ 413-502-2839.
In this millennium, linear production will separate the manufacturing
winners from the also-rans. Why---because nonlinear production is a
product's highest cost driver. Leading companies will be using KBLM not
MRP to control their factory floor operations and achieve linear
production---providing vital contributions to the company's bottom-line
results. If your manufacturing team is perplexed by the root causes of
nonlinear production and/or the end-of-the-month crisis, our lead article
on "Production Linearity" should help
them put in place a plan of corrective actions.
Teamwork is critical to proactive problem solving and achieving linear
production. Make sure that all your team members read Mr. Pritchett's
article on "Make Sure You Make a Difference."
I'm a strong advocate of the philosophy of management by walking around (MBWA).
I came across an old article on MBWA that I have condensed for you. I hope
the author, Peter Slosson, doesn't take offense. It's the third article in
this CKN issue.
Our final contribution comes from the book, "The 80/20
Principle" by Richard Kock. I extracted his application of the Pareto
Principle as it relates to career success.
We suggest that you both print and archive this newsletter for current and
future reference. Feel free to make copies and share with colleagues.
This newsletter has reached your desk because we share a common objective
-- to help key manufacturing people avoid "burnout" while
achieving their full performance potential.
Enjoy,
Bill Gaw, President
Business Basics, LLC
http://www.BBasicsLLC.com
760.930.1973
Production Control Solutions for winners.
II. Production Linearity
By Bill Gaw
Companies will never achieve their full growth and profit potential if
they produce more than 25% of their monthly shipment plan in the last week
of the month or more than 33% of their quarterly shipment plan in the last
month of the quarter. As companies struggle to remain competitive, one of
the strategies by which gains in speed, quality and costs can be achieved
is to form teams of employees to pursue and continuously improve linear
production.
Why is linear production so important? It's simple; "It's where the
money is!" Scrap, rework, overtime and poor quality are all
non-value-added costs that increased as a function of the famous
"Hockey Stick Syndrome." That is, as we delay our production
schedule completion toward the end of the month (or worse, to the end of
the financial quarter), there is a tremendous pressure put on
Manufacturing that produces shop floor chaos that generates significant
non-value-added cost. We usually end up making the production plan
and
financial forecast because the "Knights in shining armor" come
through with a last minute, heroic performance. But, at what cost? Some
companies actually give up 10 to 20% of their potential profit margins
because they have
developed and fostered a manufacturing team that perpetuates the
"Hockey Stick Syndrome."
Companies that continue to live with the end-of-the-quarter
"push" will never achieve their full growth and profit
potentials. How do you smooth schedules and achieve linear production? The
challenge is in how to keep daily pressure
on the critical path of scheduled achievement. We need to have the
visibility of all critical tasks and milestones from day one of the
quarter and create team awareness and commitment to their timely
achievement. Our manufacturing team must become sensitive and proactive in
the execution
of early production planning details and they must learn to apply their
creativity and energy in a linear style. To be sure, up front planning and
execution can yield amazing manufacturing results and lead to
profitability beyond expectations.
The most effective production manager I've ever known used a huge magnetic
board to schedule production planning details and monitor production
linearity. An early focus on details, corrective actions and recovery
planning was his management style. He would hold early morning meetings
every day to status yesterday's progress on the magnetic board and to
establish the daily challenges. He was an expert at team dynamics and his
people always new what they had to do and they were always provided the
tools to get the job done. The combination of the magnetic board, the
morning meetings and his team dynamics skills made this production manger
an effective leader and an expert in achieving linear production.
Today many production managers are still trying to solve their linear
production problem by pursuing a sophisticated computer software solution.
Most companies are now using MRPII/ERP manufacturing systems to control
their production environments. These systems do not provide a focus on the
detail, up front tasks and milestones that are critical to linear
production and consequently have not presented a solution to the
"Hockey Stick Syndrome." On the other hand, using an old
magnetic board in this day and age of computer sophistication may not be
an acceptable alternative. A good tradeoff might be to develop a simple
computer spread sheet specially designed to plan critical production
milestones and to measure/monitor production linearity.
Using this daily schedule as the "bible," the next step would be
to retrain the "Knights in Shining Armor" to gradually shift
their manufacturing paradigm from end-of-the-quarter "fire
fighting" to daily proactive problem solving.
Finally, it is important to differentiate between shipment linearity and
production linearity. In a widget, make-to-shelf manufacturing company
that builds substantial finish goods inventory and in highly engineered
capitol equipment manufacturing companies the two linearity measurements
will not be equal.
Shipment linearity may be more of a function of Sales' bookings and
customer's preference rather than nonlinear production. Consequently, the
measure of production linearity must be developed to measure the
performance of the manufacturing process and not be influenced by
Sales
bookings or customer related shipment delays.
Production Control Solutions for winners.
III. Make Sure You Make a Difference
By Price Pritchett
People who make the team are supposed to make a difference.
Just having your name on the roster doesn't mean you're earning your keep,
making a difference takes more than just showing up, doing only enough to
get by, or merely going through the motions. Staying "busy" is
no big deal
either. You need to do what counts.
Even if someone is gifted, talent alone doesn't guarantee that the person
will be a good individual contributor. Often the top performer is not the
most talented person on the team, but the person who puts out the most
effort. Others in the group may be blessed with more raw ability than you,
but when it comes to the "try" factor, everybody has equal
opportunity. Effort comes down to attitude, not talent.
If the team means anything to you---and if you're to mean anything much to
the team---you need to try. Invest yourself in the group. Make a
commitment, a personal effort that produces meaningful results.
Concentrate on giving the group what it needs at what comes easy…or what
you have been doing by habit. Contribute in such a way that you clearly
add value. Make enough of a difference that the tam would obviously miss
you if you weren't there.
Production Control Solutions for winners.
IV. Management By Walking Around--- It Never Goes
Out of Style
By Peter S. Slosson
In this age of fast-moving change, we are inundated with new management
fashions and fads. However, there is one method that is often overlooked
but has endured through generations of American business managers. It is
universal in application and works in all types of businesses. This
technique is commonly called "management by walking around."
Like many lasting and insightful ideas, it is simple in concept and
practice---get up from your disk and walk around the ship and the office.
While walking around, follow these simple steps.
Walk---slowly.
Take your time and be seen.
Listen---with all of your senses. As any shop
"old timer" will tell you, he can hear, or even smell, if a shop
is productive.
Talk---to everyone you see. Get to know them.
Ask about their families, hobbies and outside interests. Let them get to
know you and trust you. Ask about their job. What's good about it? What
would they like to see improved?
Test---your assumptions and ideas. While
walking around, look at product quality, systems and procedures. If you
see a problem, work with the people responsible, in a positive way, to
solve it.
Praise--- people. When you see them doing
something well, let them know you recognize and value positive
contributions. Emphasize positive performance and show appreciation.
Everybody likes to be told they are doing a good job.
Management by walking around is one idea that never gets old, never goes
out of style. Any manager can practice this technique in any type of
business. Although this is not the answer to all management challenges, it
should be fundamental in every manager's daily routine. Try it.
Production Control Solutions for winners.
V. The 80/20 Principle
By Richard Koch
The 80/20 Principle is the key to unlocking higher profits in your
business, greater rewards in your career, and deeper satisfaction in your
personal life.
Put simply, the 80/20 Principle asserts that a minority of causes of
effort usually lead to a majority of the results or rewards. This means
that 80 percent of what you achieve in your job comes from 20 percent of
the time spent.
The pattern underlying the 80/20 Principle was discovered in 1897 by
Italian economist Vilfredo Pareto. The concept has since been called by
many names, including Pareto's Law, the 80/20 Rule, and the Principle of
the Least Effort.
In his book, Mr. Kock gives us the following 6 Rules for Career Success:
- Specialize in a very small niche. It is better to
know everything about one tiny area than to have a superficial
understanding of many areas.
- Make sure the niche is something you enjoy and in
which you can excel. It's difficult to succeed in an area unless you
have the passion and enthusiasm to become obsessed with it.
- Realize that knowledge is power. Keep learning until
you know more about your area than anyone else.
- Identify your market and your core customers, and
serve them best. Your market is those who might pay for your
knowledge.
- Identify where 20 percent of effort gives 80 percent
of return. Look for ways to impress your customers with relatively
little effort.
- Learn from the best. Find out what their secrets are
that allow them to do 20 percent of the work and get 80 percent of the
results.
Production Control Solutions for winners.
VI. Business Anecdotes and Famous Quotes
In a pet store to shop for fish food, a man's attention is diverted to a
parrot in a nearby cage. In addition to being handsome, the parrot is
singing "Easter Parade." The man buys the bird, takes it home,
and dotes on it.
At Easter, the man has some visitors. Offhandedly, he remarks that he
has a bird that is able to sing, "Easter Parade." His friends
laugh at him. He's willing to bet money. His friends put up fifty dollars
against his fifty. Taking the bird out of the cage, he pets it gently and
says, "Sing." The bird doesn't open its beak. He asks it to sing
again. Not one note. No matter what he does, the bird won't sing. The man
pays off on his bet.
When the friends leave, the man grabs the bird and says, "I may cook
you tonight. Why, Didn't you sing?"
The bird says, "Take it easy. Just think of the odds we'll get this
winter with 'White Christmas'!"
- - - - Milton Berle
Inch By Inch, It's a Cinch
The person determined to achieve maximum success learns the principle that
progress is made one step at a time. A house is built a brick at a time.
Football games are won a play at a time. A department store grows bigger
one customer at a time. Every big accomplishment is a series of little
accomplishments.
- - - - Robert Fulghum
"You never know how a horse will pull until you hook him
to a heavy load."
- - - - Paul "Bear" Bryant
"The number-one reason why people leave their jobs is to pursue
personal development---the chance to learn something new. If you want to
hold on to your best people, you've got to make sure that they're
learning, growing and
changing."
- - - - Russell J. Campanello
