CI DILEMMA MAY 2019
CI Dilemma
Downstream issues
Having seen the benefi t of a CI focus on the shopfl oor, a company realises that many of the
gains it has made are now being lost in the bureaucratic process elsewhere in the business
We have made good progress with
sorting out shopfl oor productivity
but many of the gains made there
are being eaten away by increased overheads.
Ever-more demanding customer QA
requirements for supply chain certifi cation
and product checks take up more and more
resources. Unfortunately, the penalties for
making mistakes here are severe.
There are also changes in statutory
regulations we need to keep on top of. With
Brexit looming we are expecting a wider
range of administration protocols, proof of
origin controls and national standards to
deal with. All of this requires skilled
oversight and checks.
In theory, new IT systems should help,
but our recently implemented ERP software
capture cost variances. Furthermore, the
new system doesn’t seem to have reduced
the number of spreadsheets we use to
support day-to-day operations. If anything,
there are more of them!
These factors result in an upward
pressure on headcount when we really need
to keep costs down.
The gains we have made in production
are being off set by increased overhead costs.
If we resist the pressure to increase
headcount, then we divert management
and support department attention away
from the job of developing our business.
Despite all we have achieved we seem to
be sleepwalking into a bureaucratic
quagmire – one that could become terminal.
CI Solution Dennis McCarthy, director, DAK Consulting
There are a number of ways that you could
deal with this dilemma but from what you
say it seems as if your organisation is
approaching a transition point on its
improvement journey.
Studying the path taken by others has
identifi ed three common transitions on
that journey. It appears that your company
is at the fi rst of these – the transition from
‘reactive’ to ‘stable’ management. Breaking
out of reactive management is achieved by
improving front line work routines, raising
standards and developing core skills. To
progress further, a change of emphasis is
needed. You should have noticed that as
performance improves, less management
time is needed to deal with day-to-day
problems. This presents the opportunity to
delegate more routine management tasks
to front line teams. This transition lays the
foundations for improved cross-functional
collaboration and the removal of silos.
As an example that I have encountered,
having made gains in improving shopfl oor
productivity, an organisation began to
invest some of the time saved in regular
cross-functional team improvement
sessions. These sessions took up around
5% of the team’s attendance time.
The team selected raw material controls
as one of the most troublesome areas with
regular time-consuming administrative
reconciliation problems and
production outages due to lack
of materials. In less than 20
minutes the team was able to
identify and apply a range of
improved processes.
Over the next two months
the improved manual stock
control process had eliminated
reconciliation problems and
production outages. It also freed up
cash by allowing lower stock levels without
impacting on ability to supply.
The payback period was measured in
weeks if not days. In addition, the team
became more engaged with other
improvement ideas as part of their routine
day to day activities. In most cases the
outcome included a merging of tasks and
increased front line team autonomy.
Communication across functions
improved and in many cases that resulted
in sharing knowledge and ideas. By using
set-up reduction ideas fi rst applied by
production, members of the accounts
function were able to reduce the resources
requires a lot of additional data input to
needed to close out processes to around
20% of what had previously been needed.
The transition also released management
and specialist time to work on higher
value issues. In the above case,
the leadership team was able
to channel this into actions to
increase market share and
raise capacity by 50%.
In your case, the time
released could be allocated to
anticipate likely changes in future
business drivers:
Customer strategies: which
customers do we want to retain, what
services might help to do that, which
customers are too disruptive/expensive?
Regulations and standards: how to raise
internal standards to future proof against
likely legislation. How to integrate this into
day to routines to reduce overheads.
Supply chain: how to work closely with
strategic suppliers to respond quickly to
changes in customer or legal requirements.
Work processes: what is the general
direction of increasing customer service
expectations and how can work processes
be enhanced to deliver that at minimal cost
or provide added value and improve profi t.
HAVE YOUR SAY: Do you agree with our expert? Have you rolled out a CI mindset outside of the shopfl oor? Has it had a positive e ect?
Send us your views and you could appear here next month. Email: chris.beck@markallengroup.com
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