Wednesday, June 5, 2013

Focus and Leverage Part 218

This blog posting is a continuation of Part 217, how I gotten started in TOC and more specifically an integrated Lean, Six Sigma and Theory of Constraints improvement methodology.  Let's start this posting by describing some specifics about the plant layout.
The plant itself had two distinctly different technologies attached to it, meaning that being skilled on one side of the plant, had nothing to do with the skills needed  to work on the other side.  On one side, we made fiberglass parts, bodies and hard tops for such noteworthy vehicles as the Dodge Viper, the BMW Z3, and even a few parts for the Corvette.  The Corvette assembly plant was only three miles away and I wondered to myself, with our close proximity to their plant, why we weren’t their primary supplier of parts.  On the other side of the plant we made convertible tops for the Camaro, the Mitsubishi Eclipse, and several other automobile types.  Scattered in between both sides of the plant we also made other small parts for a variety of automotive companies.

Because the plant had two distinctly different work environments, there were two Operations Managers, one for each side.  I was really happy to learn that since I had virtually no operation’s experience, at least I someone who had operations experience, or so I thought.  I would soon learn that just because someone had been an Operation’s Manager, didn’t mean that they knew what they were doing.  In fact, one of the Operation’s Managers had been at the plant for 10 years and the other one had been hired about the same time I was and his background was mostly from a small job shop.  I quickly came to realize that neither one of them would be much help, at least not in the short term.

I also had a plant Accountant that worked for me who was very much into traditional Cost Accounting.  He very much believed in using efficiency and utilization as primary metrics and truly thought that the key to profitability was based upon how much money he could save.  On my third day at this plant, he came to me with a list of people he thought should be laid off.  I just smiled and said, “No thank you….I have no intention of laying anyone off.”  He responded by saying something like, “But we just lost $600K….how are we going to reduce our losses?”  I told him I had an assignment for him tonight and that was to read the rest of the book I had given him.  I told him to meet me at 7:00 the next morning to discuss what he had read.  He swallowed hard and said that he had only read the first 50 pages and that he couldn’t possibly finish it by tomorrow morning.  He also told me that he knew how to make the plant profitable.  I asked him what he believed was most important to this plant, saving money or making money?  He was confused because in his mind they were one in the same.  After he left my office, I asked my secretary to schedule a meeting with my staff for 7:00 the next morning with the subject being, “To discuss what they had read in The Goal.

The next morning my staff arrived and I passed them each a folded piece of paper and told them not to open them just yet.  I asked them if they had finished reading the book I had given them and they all said that they had.  I told them that they should be prepared to begin running our plant just like Alex Rogo had done and that our ability to stay open depended upon it.  I then told them to open the folded paper I had given them which contained a single question inscribed on each piece of paper.  One by one I asked them to read their question for everyone to hear.

 Our fiberglass Operation’s Manager was the first to read his question which was, “What is the first of the five focusing steps?”  He pondered that question and finally said, “Find out where the constraint is.”  I followed up with a question for the group to answer, “And what is the definition of a constraint?”  The room was quiet until my Accountant said, “A bottleneck or something that limits the throughput of the process.”  I then selected my convertible top Operation’s Manager to read his question, which was, “What does it mean to exploit the constraint?”  He couldn’t answer the question, so I asked the group what exploiting the constraint meant.  Once again, my Accountant answered by saying something like, “To get the most out of the constraint.”  Apparently my Accountant had read the book.  I tried one last question this time from my Accountant which was, “What does it mean to subordinate everything to the constraint?”  He looked at me and simply said, “Sir, I think it means that I’ve been wrong trying to drive up efficiencies!”  And so the transformation had started, at least with my Accountant.
To be continued........
Bob Sproull

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