In manufacturing the greatest challenge is not particularly how much ‘stuff’ you make, but it’s the price at which you call sell that ‘stuff’, and the subsequent profit that is produced.
It comes down to simple math, how much can we produce a part for, and how much profit can we sell it for?
The simple nature of the manufacturing business model hasn’t changed in hundreds of years and is very unlikely to change in the next few hundreds of years.
What has change though is COMPLEXITY. It is now much more difficult and complex to produce these parts, with rising competition, global supply chains to manage, new technology constantly changing the game, and an entire workforce to manage. In simple terms manufacturing has never been as complex as it is today.
So then, how do you ensure you have an efficient shop floor which can help you create the biggest profit for your items?
Here are 3 quick ways to do that;
No 1. Spend more on maintenance.
Now this sounds counter to the maths of creating the most profit from the parts you make, why spend more when you could spend less and make more money?
The answer; short term pain for long term gain.
Put simply, if you keep your tools in order, they last longer. Therefore, you don’t need to buy new ones in the future.
Think about it like this, if you have a production line that makes you £2,000 per hour while its running, and you run it for 15 hours per day and 5 days a week, that equipment is making you £150,000 PER WEEK!
Is it not worth spending just 10% more on your maintenance budget to make sure you are keeping it going and continuing to make you that money?
Or as some factories do, spend less on maintenance and then realise you don’t have a spare drive shaft once it breaks and having to wait 4 days for it to be shipped from china? That little breakdown just cost you 4 days or £120,000!
No 2. Educate your staff about the impact they have on the business
They say, ‘knowledge is power’. If your operators know what the business is trying to achieve, and the part they play in achieving your goals, they are more likely to act autonomously in achieving those goals.
People inherently WANT to do a good job, and as leaders it’s our jobs to help them. The best way to help is to teach, not tell.
Create an environment in which staff can learn for themselves, and over time it becomes an environment where they can teach others.
For example, if you could explain to an operator their own individual impact on their line performance day to day and let them explain their understanding of that back to you, you might find that automatically their line performance starts to improve.
No 3. Create simple metrics for your operators.
I once work for a company where their key metric (or north start metric) was price per tablet. Seems simple enough doesn’t it? How much did it cost us to produce a part, couldn’t be simpler.
Except, that that calculation comprised of over 26 individual other calculations that then all rolled up. The only person who even understood how it was calculated was the global accountants…….how on earth was an operator going to understand how they can impact that?
If the price per tablet went up…not only did no one know why, no one could see how to improve it either.
It is our job as leaders to make things as simple as possible, in order to accurately measure performance across the board.
So rather than price per tablet (or whatever your current key metric is), think…. how does this truly measure performance, and if this metric was not used would it actually make a difference?
Make your KPIs as simple as you can possibly make them.
When I was a manager at that factory, my team were measured on ‘part per unit per hour’
Every hour I could measure their performance, both as a team and as individuals.
As sergei the meerkat would say “simples”