Several years ago, in our report "Improving Your Profitability Pattern," (see FM&T, September 2002), we reported on a study of a cross-section of 427 Midwestern manufacturers, of whom 32 were foundries serving various markets - automotive, general industrial, valve, and pipe fittings and flanges. The report explored why some were more profitable than others. The response to that report led us to conduct follow-up interviews, to understand what the more successful foundries were doing that the less profitable ones were not.
Two significant differences were revealed. One was managerial inertia at the top levels within the organizations. This was exhibited in several ways: how executives approached problem-solving - whether they just talked about problems or took aggressive action to do something about them; whether they could differentiate between activity and effectiveness; and finally, whether they were aware of the importance of creating a clear and consistent system of internal communications. A report on those findings, "Problem Solving Leads To Deep Trouble," followed the earlier study (see FM&T, August 2005.)
A second difference separating the most profitable foundries from those in the "middle of the packs" was their approach to supervisory training. We were able to investigate that training in 28 of these 32 Midwestern foundries.
Differences in supervisory training
The supervisory training involved a variety of trainers and training techniques in each of the 28. Of these, the seven reporting top operating results - higher on-time shipments, less waste and scrap, lower turnover, and most important, a high return on sales - over 5% - attributed their records in part to a well-disciplined cadre of supervisors who ran a highly productive shop. The other 21 companies, with so-so financial results, said their supervisory training produced no measurable results. Why not?
The key difference is this: the seven foundries with good financial results spend their time training supervisors and management how to organize their employees' work efficiently in an environment of continuous improvement. Most of the other 21, with indifferent results spent their dollars training supervisors how to manage their employees' behavior.
Productivity is more than manpower
High productivity is much more than training supervisors to instill the proper behavior in front-line workers.
Employees can be trained to "behave properly" until their socks fall off. Then, these barefoot wonders will come to work on time, and maybe learn not to talk back to their bosses. They might be taught English, and learn how to run Hunters, but if their work is not properly organized by their managers their productivity will remain mediocre, as will their foundry's profitability.
High productivity means managing methods and materials as well as manpower. Somebody needs to be trained to manage the employees' work. Somebody needs to trained to devise new methods so shake-out conveyors won't jam, work-in-process can be cut, and working capital can be saved. Somebody needs to be trained to use modern production control systems so workers do not stand idle next to modern BMMs, waiting for cores, rather than putting them in patterns. In short: somebody needs to manage the overall process of turning raw materials into value-added items sought by cost-conscious customers.
Seven profitable foundries ...
In the seven foundries reporting top results, supervisory training was part of a constant effort to identify and resolve problems that keep the supervisors from achieving ever-higher company goals, and rewarding them when they do.
Consequently, supervisory training in each of these seven companies was tailored to the foundry's specific problems. The training in all seven had three goals: 1) teaching front-line managers better ways to organize their work; 2) showing them how to use an effective program of internal communications; 3) and teaching them how to use a compensation system to reward employees when their efficiency improves.
The never-ending training occurred in an environment of problem-solving and continuous improvement. Last year's results, no matter how good, were not good enough now. There was always room for the improvement needed to attract and keep the most demanding of customers, to the obvious benefit of the company's bottom line.
... and 21 "also-rans"
Because success has a thousand fathers and failure is an orphan, checking the 21 foundries with so-so results is more instructive than merely applauding success.
The goals of the supervisory training in these 21 were alike - to teach front-line managers how to manage their employees' behavior. The content was equally similar - how to deal with absenteeism, to discipline, to delegate, to distribute work, etc. Nothing was said about how to manage their employees' work. Apparently, they assumed that efficient organization of work would somehow just happen. What explains both the questionable profitability and poor supervisory performance at these 21 foundries? Several key conclusions became evident:
• First, at 18 of these foundries training focused on how to deal with hourly workers, but the organization of their work was ignored. Instruction and explanation of planning, problem-solving, simple use of Constraint Theory, root-cause identification, delegation, and analysis of production data (quality, productivity, on-time shipments) were lacking.
• Second, the training was "canned." In 15 of the 21, the training was an off-the-shelf course from some local institution or area association. Training of this kind is often inexpensive, but ineffective.
Because such courses are necessarily general, supervisors saw little connection between what was taught and their own situations. Effective training requires case materials from the supervisors' own facility. The instructor must dig for local case materials with relevant examples.
• Third, not all the proper personnel were included. In 16 of the 21 foundries with sub-standard performance, the training omitted support and technical staff - plant engineers, production schedulers, quality gurus, and others whose own jobs involved helping organize the work of front-line supervisors and employees.
• Finally, in 17 of the 21 foundries, internal communications were poor. Few efforts were made to monitor or remedy the problems of front-line supervisors, hence the irrelevant training. "Business as usual" prevailed, reaffirming what Peter Drucker famously observed: "Inertia in management is responsible for more loss of market share, more loss of competitive position, and more loss of business growth than any other factor."
While inertia is easier to spot from the ivory tower of academia than from the paper strewn desk of a busy executive, (see "Problem Solving Leads To Deep Trouble," FM&T, August 2005),) real-life inertia manifests itself as executive hope that problems will somehow disappear; that the status quo will not sink to the status woe. This seemed especially true in smaller casters where harried executives wear several hats simultaneously.
In the 17 foundries with poor communications, executives told us they wanted middle managers and supervisors to use modern techniques to solve operational problems and to motivate all workers toward a better bottom line. What were the root causes of this misunderstanding?
The root causes were management's lack of knowledge about the operational problems faced by middle managers, supervisors, and first-line employees, or the reasons for them. Because the top managers had not listened, it could not provide the proper information and systems to supervisors, nor the training and motivation to use them in order to achieve high productivity (see "What's Your ROI on Human Assets?," FM&T April 2003). As a result, many middle managers were demoralized, believing nothing would ever change. Supervisors felt that the middle managers wre deficient by maintaining the status quo.
"Top performance" initiatives
The failure of supervisory training to produce measurable results in the 21 foundries with subpar financial returns lay not with the supervisors but with higher management. Harried executives overlooked the need for interlocking systems to highlight the shop-floor realities faced by supervisors, to encourage problem solving, and to reward supervisory cooperation to meet company goals. Such deficiencies can be overcome if four initiatives are undertaken:
• The first initiative in dealing with reality is to identify it. This can be done by a Supervisory Audit to uncover the problems of first-line supervisors and middle managers. The most effective Supervisory Audits are conducted by knowledgeable outsiders to whom supervisors and middle managers will speak freely, and who have enough manufacturing experience to interpret their problems correctly.
• The second initiative is to address the problems preventing supervisors from being efficient. This involves training to show how work can be organized most effectively. It typically covers root-cause analysis, planning, problem solving, simplified Constraint Theory, delegation, effective use of quality and productivity data, etc. The trainer must undertake to distill these subjects into easily understood portions that supervisors can absorb and use daily.
• The third initiative is simple: hold supervisors and middle-managers responsible for results.
• The fourth initiative is for senior managers to reinforce the training by providing a compensation/motivation system, like a pay-for-performance Gainsharing plan, to reward supervisors and managers for the results they collectively produce (see "Meeting and Beating the Foreign Competition," FM&T, March 2005). Gainsharing provides financial rewards that are earned and re-earned as a foundry's performance improves. Well-conceived and properly implemented Gainsharing plans result in productivity and quality improvements averaging 17-22% annually.
Observations and conclusions
The United States did not become the global economic power that it is because of simple or obvious efforts. Our influence is built on visionary changes that have had far-reaching impact. We are the global economic power because Eli Whitney invented the idea of interchangeable parts in 1798, in order to fulfill a government order for muskets for American troops defending the Western frontiers. We are the power because Henry Ford devised the moving automotive assembly line in 1915. We became the Arsenal of Democracy because we could produce cast-steel turrets for General Patton's tanks to reconquer Europe. We are the economic power that was strong to liberate most of the world from Communism by 1989.
We invented the systems that makes it possible for anyone from the Andes to Afghanistan to buy affordable clothing, a well-designed vehicle, or even a quick burger and fries with the assurance that the carbs and calories are always the same.
These systems were invented by managers who learned how to organize the work and taught their first-line supervisors to do so. Foreign imports, now mainly from Southeast Asia, are nothing new. American foundries have endured imports in the past, and can do so again, if they will respond to foreign competitors with more than simplistic directions for employees to produce a little bit more.
Many foundries say their employees are their biggest asset, and they boast that they urge them to "work smarter, rather than harder." Yet, few of these companies provide the tools, the monetary incentives, the properly trained supervision, or the systems of work for them to do so. All are interrelated.
By training middle managers and first-line supervisors to organize the work in their areas of responsibility, by giving them tools to use the training to actually "work smarter rather than harder," and finally by delivering proper rewards when they succeed, "working smarter" becomes a daily reality that is passed on to the hourly workforce. And then, American ingenuity will again ensure a foundry's survival ... and even prosperity.
Isn't it about time to face reality?
That's what they told us ...
Of the 17 Midwestern foundries in the study with substandard financial performance, there was a common misunderstanding of the nature of the operational problems. First-line supervisors and technical staff at one company offered the following, revealing comments:
- "In inventory control, we have no employee problems, just management problems. They should sit down and work out workable solutions. We could solve all the problems if they talked to everybody, and decided on something. Get reasonable people together and come up with a workable solution that all can agree upon. Then hold them accountable."
- "The information on the production reports is often inaccurate. The rates are incorrect. We tell our manager, who tells Engineering, but nothing gets done."
- "We need more frequent meetings. Every week or two, we should make a list of problems, and try to eliminate them. We could discuss them in the meetings."
- "I have a problem with communications with Plant No.1. I order sand from there. I order it at 7:00 a.m. and they don't get it to me until the afternoon. How can I run a core room without sand?"
- "Every time a salesman gets an order, he calls the Pattern Shop, saying he needs it quickly. How can you make out a schedule that way? That's my big thing."
- "My department runs the same jobs every several days. The jobs are so close together, why not run them at the same time, and save change-over time?"
- "We need a decent quality-control person, instead of one who sits in the office, doing crossword puzzles."
- "Somebody needs to give us decent baskets for the cores. The baskets are all bent, because of the forklift drivers running into things. Sometimes, the cores don't fit in and so my people have got to jam them in."
- "Every two or three months, we will have a meeting. But there are no discussions in them on doing things better or asking for ideas."
- "We should take the time to monitor production rates. But what rates should be put into the system? Who puts them in and monitors them for accuracy?"
- "For us as foremen, a bottom priority is monitoring the rate sheets and following the scrap - porosity, burn-ins, etc. We don't have a system of accurate rates and scrap."
- "Maintenance robs the air cylinders from one core machine to put on another. They don't have them in stock. They keep rebuilding them, but they still leak."
- "My people need longer benches in finishing. When you get big cores, you can only put several on there at a time.
- "Defective cores? They are due to training and employee knowledge. Nobody checks them when they come down the belt."
Dr. Woodruff Imberman is president of the consultant firm Imberman and DeForest, Inc., and a frequent commentator on industrial management issues. For copies of the earlier reports and further information, contact him at [email protected]; or online at www.imbdef.com; or by phone at 847-733-0071.