Culture change

Posted on 9 Jan 2009 by The Manufacturer

Toby Arnold of Lean Business Solutions, MAS Y&H Practitioner, reveals how companies are diversifying from lean to continuous improvement

Let’s be clear on this – there’s a difference between ‘doing’ lean and ‘embracing’ lean. The former suggests piecemeal actions that are taken to fire fight problems or issues within the company which, if implemented with the appropriate gusto, is fine in the short-term, but difficult to sustain in the longer term due to the lack of a co-ordinated strategy. The trouble with only concentrating on ‘islands of improvement’ is that a company’s culture will never really change and, subsequently, the same issues inherent in one area are likely to remain in another. Truly ‘embracing’ lean injects best practice manufacturing tools and techniques into the whole company and in making small but frequent improvements – continuous improvement or kaizen – reforms and regenerates the business, bringing tangible benefits to the bottom line.

I continue to come across companies who are desperate to implement lean techniques into their manufacturing operations which, at first glance, is great. They know what lean is and they know that it will benefit them.

Fine, but many struggle to get to grips with what is actually needed, while others introduce elements of lean quite successfully, with short-term improvements in productivity levels and waste elimination, but then struggle to sustain the good work completed and soon slip back into bad habits, and others often find it hard to replicate their small successes in other areas of the company and so allow overall performance to be pulled down by the organisation’s weaknesses.

One company that MAS has helped along the continuous improvement journey is Pegler, a leading manufacturer of advanced plumbing, heating and engineering products. With an annual turnover of £60 million, Pegler is one of the largest employers in south Yorkshire, with approximately 530 people at its 21-acre site in Doncaster. When it comes to driving improvement within its business, Pegler would be the first to admit that over the years it had encountered more than a few false starts when it comes to lean.

As so many manufacturers have done, it tried to implement lean through blanket training employees in a number of tools and techniques, and adopting the latest improvement fad, but this simply resulted in a number of ‘islands of improvement’ and never brought the sustainable bottom line benefits hoped for. As Pegler found out, adopting one or two lean tools and techniques as breakthrough activities is fine, but by not getting to the root cause of manufacturing problems and simply smoothing them over superficially, sustainability is not achieved. To maintain a lasting change, any and all improvements need to be positioned as part of a continuous improvement strategy.

Working with Pegler in reviewing the reasons why this approach had not worked, we identified the need to begin laying the foundations for a culture of continuous improvement across the whole business and to use this as a base from which to build.

The key to ensuring ongoing success has been to embed lean as a requirement within everyone’s role and to ensure line management responsibility and accountability for gradually implementing the appropriate tools and techniques that support it. This approach has not been easy, nor has it been quick, changing the culture in what has been a very traditional industry.

Over the past two years, a five per cent year-on-year improvement on budgeted efficiency has been achieved and overall equipment effectiveness of the extrusion plant (equipment that is in excess of 30 years old) has improved from 62 per cent to 75 per cent. This has not been through large step change improvements – as business unit manager Barry Ward comments: “If there were any large improvements to be had we would have had them well before now.” But improvements have been achieved through many small, localised, often shopfloor-generated improvement ideas.

At the core of any continuous improvement compliant company, three activities will be prevalent. These are: innovation, continuous improvement and standardisation. Innovation is necessary to grow the business, concentrating on tomorrow’s products.

Continuous improvement refines processes and improves products, and standardisation allows for best practice approaches to be maintained (that is, until a better process is found through further continuous improvement activities).

The division of labour and levels of commitment to these approaches will predicate the success of any continuous improvement strategy. For example, top managers would be expected to drive the majority of innovation, with some input into continuous improvement and less time on standardisation. Middle managers will concentrate on continuous improvement and delivering standardisation, while operators spend their time on standardisation and continuous improvement, with some small input into innovation.

What is important is that time and resources are distributed and monitored so that the programme is delivered effectively.

And this is where role definition is important – everyone must know what they should be doing. Naturally, there should be space to be flexible as over-rigid structures do not foster the right working atmosphere – flexibility is necessary to facilitate market fluctuations. But a company-wide support structure is absolutely vital and should be developed through high performance HR practices. The UK Aerospace People Management Audit has indicated that adoption of such practices increase value added per employee by between 20 and 34 per cent. These high performance practices are centred largely around team working, appraisal systems, personal development plans, structured training and individual responsibility for work and quality. Pegler has restructured its manufacturing team to facilitate better communication and to foster a more joined-up approach to improvement within each of the business units, where
there is now a planner, a quality engineer, a production leader, a maintenance leader and a production engineer working together as a focused team. Each role has been
clearly defined and now includes detailed responsibilities for driving and supporting improvement activity. A more robust appraisal process has been developed that identifies the skills of all employees, deploys objectives through the business right down to individual level and identifies, through an action plan, the training and support that is needed to ensure achievement. If a company is to be successful, it is important that it continuously develops and improves the skills of its employees to meet everchanging customer demands.

At shopfloor level skills matrices have been developed to help monitor the teams’ skills and to highlight both strengths and weaknesses. Each individual is rated against job skills, support skills and CI skills, from the level of untrained to fully-trained. Skills required within the business unit are also identified and areas of skills shortage are then used to inform training decisions. Considering all of this, Graham Fawcett, production director says: “We believe that we now have a structure within the business that can not only deliver what our customers demand today but will develop and improve our business for the future.”

So far, I’ve neglected to mention measurement – not because it isn’t important, but because it is so important and merits due attention. Measurement is the first step that leads to control and eventually improvement: if you cannot measure something, you cannot understand it, if you cannot understand it, you cannot control it, and if you cannot control it, you cannot improve it. Effective measurement not only identifies where improvements can be made but also shows the results of these improvements. By understanding that knowledge is power and the need for a balanced scorecard of measures, Pegler has reviewed how it uses its metrics and has identified KPIs that are displayed within the business units on their communication and information boards. These measures include the financials, quality, cost, efficiency, people and improvement activity. BU teams use these measures to understand their processes, process issues and opportunities to continuously improve. Regular meetings around the board not only identify improvement opportunities, but also allow the team to celebrate and be recognised for the successes they have achieved.

Having the right measures can also focus the team on using the appropriate tools and techniques on their continuous improvement journey, health and safety and efficiency measures can for example be tackled through applying 5S workplace organisation techniques. By following the systematic order prescribed by 5S (sort, set in order, shine, standardise, sustain), realistic and sustainable improvements can be achieved. 5S audits provide a simple way to measure performance against targets, results being displayed on the communication and information board, which in turn leads to further continuous improvement activity.

As Pegler has became more passionate about its continuous improvement journey it has been keen to share its experience and so has become involved in MAS Yorkshire and Humber’s Inside Industry programme that gives manufacturers the opportunity to visit other successful businesses, benchmarking their performance and gaining insight into what it takes to succeed in a wide range of disciplines including continuous improvement, lean manufacturing, resource efficiency, workforce empowerment and manufacturing strategy. Pegler not only hosts events but also takes the opportunity to visit other companies. Shane Jefferson, business improvement co-ordinator, explains: “It is good to be able to visit other manufacturers to see what progress they are making, and to see if we can pick up any tips – there are always new ways to improve.”

It is heartening to be able to say that we’re seeing more and more manufacturers visiting each other’s shopfloors, discussing what’s working for them and, importantly, what isn’t, so helping each other to make continuous improvement a way of life. This is the best way for manufacturing to stay strong – sharing best practice.

It’s a sad fact that most change initiatives are abandoned outright or fail to deliver the expected or needed results, if you really want to succeed in your improvement efforts, try not to simply think of tools and techniques – these at best will result in islands of improvement – instead, like Pegler, put your efforts into developing a continuous improvement culture, and take every opportunity to identify new ways to improve.