For people looking to run a marathon this year, which approach is the best bet toward effective execution for a strong finish?
a) Play golf five days per week until the marathon, then buy some top-of-the-line running shoes
b) Set a time goal, build a well-structured training program and religiously follow the program using a heart-rate or other performance monitor on a day-to-day basis, adjusting for injuries or sickness
c) Set a time goal and run based on what feels right using daily circumstances and experience as a guide
d) Train when it’s convenient and the forecast is accommodating
If you answered “a”, then I’m with you in spirit. However, we both know that without proper focus on key fundamentals, neither of us would likely get very far toward such a big endurance goal. The same holds true for annual operating plan (AOP) goals in a manufacturing organization. Of course, in manufacturing operations the equation for effective execution and success is infinitely more complex. Therefore, if you answered “b” your head is in the right place. On a basic level, success depends on running operations based on a targeted production or “heart rate” and the fundamentals of good communication and proper follow through every day.
By this time, all levels of your organization should at least understand the goals in your AOP. Let’s look at some of the reasons for why I regularly see manufacturers fall short of important goals, along with some best practices you can use to finish this year strong.
What’s broken and who’s fixing it?
Manufacturers fall behind or miss targets all the time for all kinds of reasons. Setbacks are simply a fact of life. That’s why your recognition of and response to setbacks—the how and when you respond to them—is so important.
Every hour of every day you lose toward a goal matters. Yet for many manufacturers, process or production issues often linger for days or weeks before they are even brought up in a meeting. For example, in some cases they may not be discussed until a weekly production meeting. In others, it could be a month or more before they are discussed by executives behind closed doors. In the meantime, the costs and impacts snowball, making it more difficult or even impossible to course correct and still come close to year-end targets. Imagine if you missed a month or more of a six-month marathon training program. You can’t simply double your efforts the next month and expect the same results.
Hitting annual goals—hour by hour, day by day
The reality is that effective execution toward annual targets is about making daily adjustments when needed across all levels of the organization. If you work with a coach when training for a marathon, he or she will likely continually adjust your training plan based on heart rate and how your heart is responding to daily workouts. In our experience, the fundamentals to achieving year-over-year success with AOP plans are based on a similar idea and include:
- Capturing and analyzing data about output and productivity
- Communicating shortfalls to the stakeholders at the point of impact (the work cell or machine)
- Taking quick corrective actions as needed
But even when manufacturers get this on some level, it’s still easy to make mistakes. Take the example of a manufacturer targeting massive cost improvements. The leadership team crunched the numbers and realized the company could potentially save millions through more effective management. To get on track, the team implemented some significant changes, including using anecdotal historical data to create hour-by-hour performance targets for select teams. But after a trial period, the company wasn’t seeing the efficiency gains it expected. It’s not that the company misunderstood the opportunities for improvement. Rather they focused on the wrong data; they should have been looking at process output targets across the entire company rather than using historical data for specific teams. What’s more, even when they missed targets based on the historical data, managers weren’t taking steps to pinpoint and address the potential causes.
Finish strong with effective business process management and execution
Understanding what you can do to avoid a situation like the one above is key to finishing strong in any given year. Here are three business process management essentials to keep in mind to effectively execute on, and align with, hourly and daily targets with year-end goals.
Mind the takt rate
First and foremost, you need to be producing at a rate to meet customer demand. In German the word takt means “beat.” In LeanSigma terminology that means you need to pace production to and keep a close eye on takt time. It’s a similar idea to a marathon runner keeping his or her heart rate in specific zones to hit a target marathon time.
Balance your takt rate with financial targets
Beyond hitting your takt rate, you also need to a plan to for hitting financial targets. For example, you may have options to produce faster, but driving ahead of takt time adds additional cost. And, while lower cost options may exist, if you cannot meet the pace of customer demand, the cost doesn’t matter. The challenge is finding the right balance between meeting customer needs and hitting financial targets. No matter what, it’s not going to happen without close monitoring.
Make sure you set realistic targets
When it comes to setting daily targets for AOP goals, averages are the enemy. Take the example of a manufacturer who makes two similar widgets and one that is different and requires a lot more work. In this case, an average number across processes means nothing. The manufacturer would end up working too slow for two of the products and too fast for the other product. That’s why it’s important to take the time to calculate real numbers instead of averages. When you miss the number, it’s a clear indicator you need to take immediate action. It’s your opportunity to avoid letting a 4% problem snowball into a 24% problem.
Relying on a proven methodology
Beyond focusing on the fundamentals above, the right technology can also make a huge difference. When you’re training for a marathon, you could stop and take your heart rate at set time points to make sure you’re hitting the right numbers. But it’s far easier and more accurate to rely on a good heart rate monitor.
At TBM, we know that the combination of focusing on the right numbers with good communication and follow through leads to success with AOP goals. For 25 years, we’ve helped many manufacturing clients of various types and sizes realign their processes, leveraging our consulting services and/or technology, at all levels of their organizations to achieve success. In other words, we’ve helped organizations tailor the heart rate or output at all levels of the organization so they could stay on track toward their goals hour-by-hour and day-by-day through the end of the year. Dploy Solutions, Business Process Management software makes it easier for you to capture hourly data and analyze it in real-time so you never get too far off track. So, if you are looking for a methodology and solution for finishing strong this year, drop us a line.
VICE PRESIDENT, NORTH AMERICAN BUSINESS DEVELOPMENT
TBM CONSULTING GROUP
A skilled business leader with experience in both process and discrete manufacturing, David is recognized for his ability to deliver results and for his 25+ years’ experience driving lean transformations, facilitating culture change and developing lean leaders.