Brownfield transformations require not just commitment from senior management, but also ongoing financial and emotional support. The potential benefits are substantial, but not instantaneous. For instance, full implementation of a production system in a network of about 25 plants will take more than four years — and could cost as much as €15 million (US$20 million) in project and capital investment.
If everything goes well, for example, a program designed to increase capacity by reducing bottlenecks might produce a yearly volume increase of 10 percent after a period of time. And if a cost reduction program based on head count is effective, it might take up to two years to see any financial benefit after dealing with union restrictions and severance payments. These durations test the limits of patience of most senior corporate managers.
Measurement. What is the best way to ensure that benefits are measured, monitored, and managed?
A common problem faced by manufacturing companies is that once they have successfully formulated a production system and gained the required support, they have lost critical momentum. A primary reason for this phenomenon is that management is unable to gauge improvements and manage change. And typically, managers fail to communicate the benefits of the system to the thousands of practitioners across divisions and plants.
Many companies’ production systems become completely gridlocked at some point in the first two years because of basic dilemmas. For example:
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Do we roll out the system to the whole network simultaneously, or over time in a sequence of pilot schemes?
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Do we use trainers or directly reeducate the shop-floor personnel directly?
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Do we farm out implementation to the local branches, or centralize the scheme and manage the programs from one base?
Our research suggests the most successful approach is to:
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Use waves of deployment — don’t try to do everything at once. A successful pilot in one plant improves the chances that other plants will adopt it. It also helps senior management to ensure an ambitious yet realistic program.
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Reeducate shop-floor workers directly. Japanese-style “road show” approaches, in which a task force is dispatched to factories by corporate headquarters to train workers during a series of short sessions, look good and create a brief sense of excitement. But once the task force has left, the plant workers shrug their shoulders and don’t know what to do. Then they often drift back to the old ways of doing things. A constant training presence in the plant is needed, and this atmosphere of continuous training should be maintained by more than one or two dedicated people.
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Centralize — don’t disperse responsibility. Most attempts to install production systems follow the “set goals centrally, then leave the program to the plants” principle. This is easy to sell to the plant communities, but doesn’t allow for the constant juggling of disparate elements: quality, output, cost, and safety. Step-change objectives easily get lost among these daily variables. Pace is another issue. Many plant communities have become conditioned to incremental change. Ask a production manager what reasonable targets are, and the answer is unlikely to be more ambitious than “beating inflation: 2 to 4 percent per annum.” A central team is required to instill pace by setting higher targets and by pushing through initially unpalatable tasks that will serve the company better in the long run.
However plausible they may seem, in practice these recommended solutions are rarely found in combination. The simple fact is that they require more patience and more investment than is generally known. Lack of patience often prohibits management from properly implementing these solutions, except in companies that have clearly decided that manufacturing is essential to preserve or build competitive advantages. Confectionery and beverages giant Cadbury Schweppes, for example, decided that manufacturing success or failure should be viewed over a five-year rather than six-month term. Cadbury also ensured the right level of central support, and rolled out a well-thought-out and smartly sequenced set of methodologies. One of its first methodologies was to standardize the nomenclature of who did what in plant functions, which greatly facilitated cross-plant comparisons and best practice exchanges.
