How lean thinking helped weather the storm
A few years ago, many manufacturers were in the unenviable position of laying people off as demand for manufactured products declined. The more astute used the reduced production time to think differently, act differently and make the most of what they had. Some people were inevitably made redundant, but those that will weather the storm best, will be those that thought about future requirements in the business, looked at the skills and competencies they would need most in the next five years and ironed-out any inefficiencies within their operations.
By definition, market downturns have a direct impact on the results of a business. Traditional Key Performance Indicators such as sales and profitability will be affected. Such measures are of course vital, but they tend to tell us more about what has happened, rather than what is going to happen. To consider only KPIs may distract managers and directors towards actions that improve short term results, but in doing so remove the ability of the business to recover in the medium term. To focus on these also transmit negative messages to stakeholders, setting up a spiral of negativity which can drive the business deeper into problems.
Clearly KPIs cannot be ignored, but an organisation can create a more positive spiral if it also considers the drivers of the results. Improvements in these areas are generally predictors of future success.
Downturns do not always create bad news they provide organisations with opportunities as well. One company, that saw the recession as an opportunity for great change was Starbank, a leading fabricator of high pressure laminates and wood based panel products. In 2008, the company had grown organically, with an average growth of 20 per cent per-annum, nearly reaching £10 million turnover and employing 108 full time employees. It operates from a three-acre manufacturing base with more than 70,000 square foot of production floor space.
Towards the end of 2008, the recession started to bite for Starbank. The order book was substantially reduced, but instead of downsizing and economising, Starbank used the time wisely, to review its operations and processes and invest in training its people in leadership skills, sales and lean manufacturing.
Phil Darbyshire, managing director of Starbank comments, “During our period of rapid growth, we hadn’t time to really review our operations, we tended to add new buildings and machinery to cope with demand. To re-organise would have caused us too many production problems.”
Prior to the recession, the company was about to invest £250,000 into new machinery and additional factory space, but a reduced order book made them think again. “This was our opportunity to re-organise,” says Darbyshire. “Moving a piece of equipment can take up to a month, but we were in a position where we could constructively re-organise to place us in a better position going forward.”
With any kind of restructure, it is the attitude of the employees which can make or break a successful change. Bad news and negativity flows quickly through organisations and can have a serious affect on productivity and staff morale. Equally, those that are fully engaged in the change process understand what needs to be done, why and what their role is in getting there.
Starbank worked with Festo Training and Consulting, a training company with a significant track record in manufacturing and engineering, to deliver lean manufacturing training. The training included people from all areas of the organisation, not just production. The training focused on real-life examples and got employees thinking about their role within the organisation, how their role impacts on the business and how slight changes impact other departments.
This process provided a useful insight into Starbank’s business. For example, there was a perception that product machining was a bottleneck. In particular, there was one high value machine that produced product in a very short period of time that was seen as the culprit. Yet, on further investigation, it was found that the machine was only operating at half-capacity because there was no raw material available. The bottleneck was the transportation of raw material within the building, not the machine.
The training allowed all staff to have an input into changes within the organisation, making them more engaged with any changes that needed to be implemented.
In addition, Festo’s Strategic Management Development Programme helped management evaluate the company’s position in the marketplace, creating a strong vision for the organisation which could be aligned to individual goals and objectives.
Starbank took a brave approach to the recession and saw it as an opportunity to put in place not just systems and procedures for the operational side of the business, but also management and leadership development that would see them fit for future business needs.