Engaging the workforce in improvements

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Ask the expert, Source : TheManufacturer.com
Published : 24 Sep 2009 11:02

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Question: How do you engage the workforce in improvements when they can only see the result being lost overtime or even worst redundancy? Could you tailor your answer based on a company which has low margin products with low cost countries currently tooling up to compete in your market. You have minimal available investment in equipment. You have the advantage of being customer focussed and offer excellent lead times. You believe you have 2-3 years before major contracts come to an end at which time you need to be cost competitive with the low cost countries.

Let’s start by asking what the product portfolio looks like (Volume versus Margin) and what the customer expectations look like (Differentiations vs. Increasing Basic Expectations). If I understand your position it would suggest that the low margin your products offer mean your customer expectations are that they somewhat like a commodity – in this the product is ‘standard’ and can be sourced around the world and function in basically the same manner. This reduces their demand upon your for differentiation of the product but it does increase the demand for improving basic expectations such as quality and delivery and cost. Therefore you appear to be in a commodity type product arena. A bit like a utilities company really – we want to be able to turn our lights on or off and as a long as they work and then we are happy. This only changes is the price being offered for electricity from another company is cheaper then I am not happy. The only way to survive initially in a commodity product market where switching costs and entry barriers are low is through price and then through value add services.

The other area I have not touched on is volume and complexity. For a business to produce low margin products with high volume and low complexity is essentially through automation or very low cost labour. For a business to produce low margin products with low volume and high complexity is essentially through smarter and more flexible labour and systems. Often a business will find it very difficult to be good at both. So if you are dependant upon labour or lower levels of capital investment you need to understand 1. What is it that you are good at (High Volume / Low Complexity or Low Volume / High Complexity)? 2. What are your competitors positioning for on the volume / complexity map? 3. With the customers who are strategic and you have a good relationship with, find out what position you are best placed in to support them in the future (volume/complexity) against the emerging low cost suppliers? 4. Strategically can you provide some value add services for your customer when they start to source from low cost countries – perhaps you source for them, do some assembly and provide the logistics support front and back end?

But from an operational excellence environment – you need to know what you need to be good at in the coming period (volume vs. complexity) and how you can reconfigure your value streams to best support those. This will mean the order fulfilment cycle and order management cycles will be different if you are used to handling relatively simple and stable products. But for me it starts with the strategic question not an operational excellence question – where do we need to position ourselves then how do we reconfigure the business to get us there.