How To Fix A Factory

Take-Aways
⦁ Repairing a troubled factory is a five-stage process.
⦁ Stage one: Lay the groundwork.
⦁ Stage two: Identify the factors undermining performance.
⦁ Stage three: Adjust stakeholders’ expectations.
⦁ Stage four: Make sure the factory’s 10 central processes function well.
⦁ Stage five: Put the change plan into action.
Summary
Repairing a troubled factory is a five-stage process.
At some point, every factory hit rough waters. Problems may accumulate gradually or explode into a crisis. The symptoms of a troubled factory can include an increase in missed delivery dates and customer complaints, a decline in worker engagement, or a surge in reactive “hot list” scheduling.
Many leaders try to right the ship with Lean production tools. But Lean principles require a baseline of health. They won’t do much for an enterprise that’s struggling or broken and may even exacerbate problems.
“Creating a great manufacturing facility isn’t complicated, but it’s hard.”
Saving a troubled factory means building a robust, durable platform. Look honestly at the situation, prepare possible solutions and win the support of your workers. Once leaders institute new practices, monitor their progress and adjust activities accordingly. You can implement the fix in five stages.
Stage one: Lay the groundwork.
A turnaround can occur only when everyone – from workers on the floor to top executives – recognizes the need for change.
“Change will only happen if the leadership team and the workforce are ready to embrace change and unite toward a common goal.”
Motivate your workforce to support the repair effort and accept changes. Take action in three areas:
⦁ Rallying the troops – Persuade the people in your workforce that their participation will produce tangible improvements. Inspiring them will require more than a speech or memo. Repeat your message through a variety of venues, including staff meetings and company newsletters. The messages must strike a delicate balance, offering optimism about success while providing a clear-eyed assessment of the current realities. Sustain your workers’ commitment by updating them on the company’s progress and reassuring them that you understand the difficulty of the goals the factory is pursuing.
⦁ Unifying the leadership – Senior leadership must support workforce efforts. Some executives may try to find individuals or departments to blame, but that’s not productive. Bringing in an outside expert on leadership can be helpful.
⦁ Managing in a turbulent environment – Managing a healthy enterprise and repairing a dysfunctional one require distinct styles of leadership – like the difference between piloting a crewing boat on a placid river and steering a rubber raft through rapids. In a racing boat, the leader sets the rhythm for the skilled rowing team to move straight ahead with grace and speed. In the turbulence of the rapids, a guide leads novices through a chaotic environment. He or she cares less about achieving excellence than about getting through the rough water safely.
Factory leaders need one indispensable trait: genuine, demonstrated respect for their workers. People who feel appreciated will, in turn, respect the ideas you try to implement and strive to make them work. 
“Companies that demonstrate a deep respect for people have a tremendous advantage when it comes time to fix the factory.”
Honestly assess your attitude toward your employees. If you find you engage in disrespectful behavior, such as pinning the blame for poor performance on the workers, train yourself to notice when you use language that devalues employee attitudes or effort. Ask a few people to give you feedback. Hiring a leadership coach to help the executive teamwork with these issues can pay dividends.
Take concrete actions to cultivate respect and mutual trust. Align your executive decisions with your personal values. Keep the plant clean. Maintain the equipment and make sure it is up to date. Ensure safe working conditions. Share information with your employees, and create opportunities to listen to their concerns, ideas, and solutions. Learn and use every employee’s name. 
Stage two: Identify the factors undermining performance.
Problems such as poor on-time delivery are symptoms. Find the underlying glitches. Discover the root causes.
“We’re going to question and explore until we have insight into what is really happening – not what we think should be happening or what the manual says.”
People know where the bugs are but tend to avoid acknowledging them. Bring these buried issues to the surface. Diagnose the situation by using these steps:
⦁ Prepare an environment for productive listening – Set the tone for openness and listening by announcing that you will temporarily relinquish decision-making to welcome other perspectives and ideas without critiquing them.
⦁ Hold “listening sessions” throughout the organization – Convene a meeting in which each participant writes a list of what he or she thinks works in the factory and what doesn’t. List the items on a whiteboard, and have the participants vote on 10 issues to modify and 10 items to maintain as they are. Prioritize hearing from a wide spectrum of people rather than from a large number.
⦁ Collect data – Seek evidence to support your personal impressions from the listening sessions. For example, if the whiteboard participants agree that the factory misses too many delivery dates, find real numbers to attach to the issue.
⦁ Look for central themes – Analyze the hard data you gathered and soft data from listening sessions, and identify no more than three issues that appear to underlie the plant’s problems. For example, you might trace a problem with quality to a high turnover rate that resulted in having more inexperienced workers. At this point, don’t expect solutions to these issues.
⦁ Brief the senior leadership – Gather the leadership team and present your findings. Avoid assigning blame. Focus on the need to find fixes. Dissuade them from getting too hands-on in formulating and instituting fixes. Remind them that the workers closest to the problems are in the best situation to develop solutions.
During the exploration stage, watch for these pitfalls:
⦁ Paradigm bias – A paradigm is a conception of how a system operates. While useful, paradigms increase the risk that you will ignore information that doesn’t fit their framework. Seek a diverse range of viewpoints.
⦁ Dodging the issues – People can fail to acknowledge certain topics to avoid dealing with a problem that seems too formidable.
⦁ Concealing personal complicity – You may deny acknowledging a problem to avoid owning your role in creating it, perhaps because you fear repercussions.
⦁ Relying on the wrong numbers – Managers run into trouble when they lack relevant data. For example, they may rely on financial data alone when they measure performance or set goals when it would be more useful to use other metrics as well – like the number of products you make per month or per year and the number of products customers purchase in the same period.
Stage three: Adjust stakeholders’ expectations.
Reach out to your stakeholders. Customers will be unhappy with missed due dates, and shop-floor workers probably feel overwhelmed and bitter. They need to hear from the people in charge.
“We need to provide some hope, and to do this we’re going to open up, be vulnerable, and hit the reset button.”
To achieve your long-term goal, establish a series of smaller goals. Aiming for a 98% rate of on-time delivery is admirable, but you can’t achieve it until you have a fully functional factory. When a plant falters, ambitious goals feel unreachable and dispiriting. Reset them to focus on achievable goals, instead. As an example, a factory that has fallen behind in on-time delivery should reset expectations in four areas.
⦁ Customers – The percentage of late shipments inches up inexorably. The factory can catch up only by boosting production beyond its current capacity. Be candid with your customers and give them revised delivery dates. They won’t be happy, but they’ll appreciate having accurate information. Being honest opens the possibility of landing more jobs with them in the future.
⦁ Production – When a factory contends with backlogs, the production schedule grows increasingly chaotic, with a flurry of emails, “expedite” orders, and hotlists. Reset the schedule to align with your reset of customer expectations. Either introduce a new schedule or institute a gradual changeover, letting current orders move through the production process, but tailoring the flow of new orders to match actual capacity.
⦁ Staff scheduling – Overtime can be useful in surges, but over the long term, it will prove counterproductive. People will burn out. If you rely on more than 10% over time in any stage of the process, add more people. 
⦁ Metrics – Reset your performance measurements to register small wins. Celebrate each incremental victory.
Stage four: Make sure the factory’s 10 central processes function well.
These 10 processes affect your core functions:
⦁ Talent – Start your recruiting process by spelling out your company’s attitude toward employees in your employment ads. Your onboarding program must give new hires the knowledge they need to thrive.
⦁ Cleanliness and safety – Cleanliness and safety protocols signal that the company expects workers to be disciplined and conscientious, and it demonstrates that management respects workers.
⦁ Management – Populate the ranks of shop-floor management – plant manager, production manager, supervisors, and leads – with people who know their jobs. Avoid overloading managers with too many workers to supervise. The production manager should oversee 100 to 200 people, the supervisor 20 to 30, and the lead eight to 10.
⦁ Equipment – Assembling data on your equipment’s reliability can be difficult because experienced operators adapt to finicky equipment and accept short delays. But downtime adds up.
⦁ Quality – Identifying and fixing the three top issues undermining quality will make a significant difference. 
⦁ Suppliers – Your factory and its suppliers should be in sync. Establish appropriate strategies for dealing with different suppliers. For example, you may rate some as “commodity” suppliers, from whom you want only the lowest price. With others, you may opt for a partnership relationship.
⦁ Inventory – During the repair process, having ample inventory cushions against a range of production hitches.
⦁ “Sales and operations planning” – Create a three- to five-month plan to align sales expectations with the production schedule.
⦁ Numbers – You need precise data: financial data; process data, which helps you assess how your procedures are functioning; and transactional data providing daily updates on various areas including sales, scheduling, and invoicing.
⦁ “Operating system” – This concerns how your corporate values define your strategy and influence how you carry it out. 
Stage five: Put the change plan into action.
Executing the repair plan and making the changes stick can bring its own challenges.
“As a leader, it’s your job to get people through the journey and to the other side where they see the success.”
You can address workers’ concerns by paying attention to three areas:
⦁ Setting priorities – Embrace the “90-day cadence.” Leaders set priorities for a 90-day period, assess progress, and then set new priorities for the next 90 days.
⦁ Making changes last – Choose the right pace of change according to your assessment of your workers’ mood and their openness to change.
⦁ Modifying attitudes and behaviors – Persuade people to change the way they do things. Aim your efforts at the minority who are open to or excited about new ways. A small percentage may remain unhappy, but they will leave the company or learn to live with the changes.
About the Author
Rob Tracy has worked in manufacturing for more than 30 years, including several terms in senior executive positions.

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