In today's fiercely competitive economy if you are a manufacturer, in addition to whatever widgets you produce, you better add continuous improvement to your product list. Your long term success will very likely depend on your ability to continuously improve your productivity, product design, supply chain integration, cost controls, time to market, customer care, and all the other components relevant to your business. While the notion of continuous improvement is all the rage these days, some of us have been proponents of this approach for many years.
In the mid-eighties I had the opportunity to work with bankers from the largest bank in Puerto Rico and the Caribbean region. I was conducting a business development session for loan officers involved in the manufacturing sector. One of the assignments I gave was to describe the non-financial characteristics they looked for to identify high quality new prospects. The most creative response came from a veteran banker who said he only signed up clients who manufactured excellence. When I pressed him for more details, he said the salient characteristic that differentiated the world-class from the average manufacturer was their focus. The average manufacturer is focused on producing a great product, he said. The world-class manufacturer is looking to create a self-improving process that results in a great product - and he is always looking to improve the process. That, he continued, is the secret, because the product always gets improved and that product will always sell. The rest, he opined, takes care of itself. As you might expect, I repeat that story to every manufacturing group I get in front of.
While researching the state of the manufacturing this week, I came across an article in IndustryWeek's online newsletter that I thought neatly summarized the topic of continuous improvement and how manufacturer's are dealing with it. The article, 'Continuous Improvement - What's Your Biggest Headache?, was written by David Drickhamer. Mr. Drickhamer is IndustryWeek's Editorial Research Director. He also coordinates the IW Best Plants award program. Mr. Drickhamer has posited four categories of manufacturers:
They haven't yet begun their improvement journey but they know they have to change how they operate. All they're doing now is fighting fires. Market forces may even have pushed them to the brink of survival (at least as a U.S. concern), and they're casting about for ideas and direction.
They have achieved some success in a few isolated areas. They've hitched their wagons to Six Sigma or lean manufacturing, and they have begun to trumpet their achievements, but a lot of hard work remains before their businesses feel a real impact from their efforts.
About one in 20 manufacturers is beginning to build some momentum. Here a disciplined operations system has begun to infuse the entire organization, and the culture has begun to embrace change. They've opened Pandora's box; every improvement they make seems to lead to other opportunities. In some areas they've cut floorspace requirements and customer leadtime in half, not once but twice, and they're wondering where it will end. They've also begun to pass on what they've learned to others both within and outside of the organization.
The top 1% are tooling along like a perfectly balanced workcell; the people are moving in rhythm, nobody's stretching or straining but the productivity and customer service levels -- and profitability -- are unmatched in their industry. People have time to look up at the horizon and gear up for the next market challenge. Such a state can be fleeting. Once established, management's challenge is to nurture it along.
One of the most interesting findings in Mr. Drickhamer's article is that while many manufacturers may be attempting continuous improvement, very few are achieving it - one in twenty. The lesson here for you Mr. Manufacturer, is that continuous improvement isn't a trendy management consulting term, devoid of any practical application. Continuous improvement must be your mantra - your guiding principle - if you expect to succeed in the long term.
To read Mr. Drickhamer's article in its entirety, follow the link below.