"But we're not going to bother dealing with detailed numbers in today's meeting. What I would like to do today is mention a couple of examples, show a video of another one, and then make three recommendations, followed of course by our usual discussion regarding your acceptance or otherwise of the recommendations and/or of any alternatives you may prefer. And, also as usual, whether you wish to handle the implementations yourselves directly or whether you would prefer me to do that."
I certainly had their interest already, and with only a few words shown on the screen. They probably had their misgivings at this stage, at least with regard to the size of the obtainable benefits I was claiming but, have no doubt, that would change by the time the meeting was over.
I clicked to the next image.
Mystery headlines. Get their interest. And plenty of skepticism too. What on earth is he going to be waffling about?
"These days, as you know," I went on, "many machines can be set up more or less electronically. But we have no such machines, nor do we have the resources at the present point in time to invest in any. What we do have, is we have 154 old machines of which well over half require regular set-ups, and as you can see from the schedule handed out just now, these set-ups amount to a total of around 34,000 hours per year. We are going to halve that at least, maybe more."
There were disbelieving looks, what an overstatement, what an exaggeration. Very well guys; just wait, just wait and you will see.
"Let me mention the smallest example first. I was chatting to an employee last week while watching him set up a small piece of equipment involved in a new production run. He had to dismantle the housing, then unbolt some surrounding components so that he could reach far enough inside and downwards to enable him to make the necessary adjustments to the machine, which he did, basically, using a screwdriver. Having done this, he had to reassemble the whole thing again. I asked him how long this usually took and he said about half an hour. I asked him how often he performed this task, and he said twice per day on five similar items of equipment. 'But, Mr. O'Donoghue,' he said, 'it really need take only five minutes.'"
I paused. They were now mildly interested. What was coming next?
"'Oh really?' I said. 'Yes', he replied, 'I just need a screwdriver with a handle about three feet long so that I can reach far enough inside without having to disassemble anything. You can't apply as much pressure with such a long handle but you don't need to, it's enough.' 'Well, why don't you put in a request to your supervisor for that?' I asked. 'I did,' he said. 'Twice. Three years ago. I heard nothing. I lost interest. If they don’t care, then that's their problem. Why should I care?' And so, folks, I did a quick mental calculation. With 230 working days per year, gentlemen, he is spending 1,150 hours performing work which, for the sake of a long screwdriver, should only be taking him about 190 hours. Nearly 1,000 hours of wasted labor cost, lost time—and therefore lost production—just on this one small item. Every year. Number 45 on your schedule, gentlemen."
Nobody said anything, there was just a rustling of paper as they searched out the item.
"Example number two," I continued, "are the Vatomats. We have ten of these and they are used, as you know, for mixing certain types of ingredients to produce a certain number of different types of glue…sorry, sorry, adhesive."
There was some chuckling at this; after four months I still had difficulty remembering to use their preferred term.
"As you know, the big blades which hang down into the vats to do the mixing have to be cleaned whenever a different product blend is needed in order to avoid contamination from the previous batch. Production is of course halted while the blades are unbolted and removed and then cleaned. This takes place on average once every day for each Vatomat and it takes about two hours of hard scraping and cleaning. At the same time, the vats themselves are scraped clean in similar fashion. Now…the solution in this example is simple. We buy up to ten spare blades, we spend fifteen minutes replacing them each time, and production restarts immediately, no need to wait. That would mean we would lose only 575 hours production time each year instead of the current 4,600 hours. In my view, this example alone is indicative of the fact that an overall savings target of at least 17,000 hours annually - for the whole company - is eminently achievable."
"There is something I don't understand," said Ron Frisby, the production boss, "how can you restart production before you've finished cleaning the vats?"
"Good point Ron, you can't. This job is at present done by hand. But using industrial grinders, the vat-cleaning job would also only take about fifteen minutes. Cleaning the blades is admittedly a more complicated task, intricate you might say due to their shaped design, but industrial grinders could also be used for that and overall I estimate it would take about an hour per blade. That means that in addition to the saved production time, you would also save a few thousand labor hours cleaning the blades. Then all you need to decide is whether the surplus hours can be productively used elsewhere, or whether it is simply better to reduce headcount."
"But Peter, this really wouldn't be possible. These adhesive leftovers are highly inflammable, just a single spark from an electric grinder could cause a dangerous explosion."
"Yes Ron, I understand that. But not if we buy the specially protected ones. The ones used, for example, to perform unusual or specific cleaning tasks on ships' tanks. Such tools are on the market, or you can even have them custom-made if your requirements are extremely exceptional ones, if there awkward angles to be dealt with and so on. I see no problem there."
I looked at him to see if he had anything to add, maybe I had missed something—it certainly happens on occasion—but he didn't and presumably I hadn't.
“And,” I finished, “we might also need to look at whether we can save even more money, for example by increasing the batch volumes and thereby reducing the number of times the equipment needs to be cleaned throughout the year.”
"Peter," said Charles Goodridge, the CFO, "The idea sounds like it could be a good one but I seem to recall that those blades cost something in the range of £10,000 each and we just don't have the money to buy one, let alone ten. As you know, we have to scrape everything together every month just to meet our wage bill."
"Charlie, it's good to have the finance guy always thinking about the money," I said with a smile. "But I think you will agree with me that for the past two months we haven't exactly had to scrape any money together. We're not making losses any more. The last two monthly P&Ls show a profit and we have a positive cash flow as a result of that. But…if necessary…with a first year payback for you of, let's say at least 400%, I could personally arrange financing for you or maybe even lend you the money myself for a cheap interest rate of, say, 5% perhaps?"
He smiled back at me. "Point taken, Peter, point taken."
Ron spoke up. "Tell me, Peter, how did you come across this subject?" Aha, looking to find out why one of his guys would have talked about it to me, but not to his supervisor. Or alternatively, why the supervisor had never mentioned it to Ron.
"Well, I was just doing one of my walkabouts on the shop floor and I happened to see somebody cleaning a blade. And so I stopped, and I watched, and I started having some thoughts, possibly very naïve ones I thought to myself at the time. But asking never hurts anybody and so I started asking the guy some questions. And I found out that my thoughts were not necessarily naïve at all. I then discussed them with the foreman, and he couldn't find anything stupid about them either. And I then worked out the numbers. That's it."
Ron didn't say anything. He looked a bit embarrassed in fact, not surprising with his boss sitting there. But in reality, he had nothing to be embarrassed about at all. It's easy when you are a guy from the outside, you start querying everything, some of your questions are amateurish or even downright stupid, and on the other hand some of them are not. More proof that consultancy is easy, if you ask me. Just walk around, look, ask questions, and listen.
"Gentlemen,
I am only giving us a couple of examples here today and it may well be that we need to look more closely at everything in my list. All of the listed items appear at first sight to be clear cut cases. But some might not be. The simple question today is whether you think they need looking into. And here is the last item I wish to show today. It is a video of another set-up. I had the video made six weeks ago after obtaining agreement from the works council and the employee himself and guaranteeing in writing that we would only make one copy and return it to them after we have finished with it. Mind you, I told them they might want to keep it instead of destroying it, use it for group training purposes. We will see in which way they could do that when I get to my recommendations."
I switched on the video. It showed an employee starting to do a machine set up. After about ten minutes the employee suddenly straightened up and walked away, going off-screen.
"What's happening?" asked Fred Staples, CEO, his first words in today's session.
I stopped the video. "Well, Fred, he can't find a tool he needs and so he's gone off to find it." And yes, I knew what the next question was going to be.
"But if he knew you were going to video him," said Fred, "why didn't he make sure he had the tool with him?"
"Ah," I replied, "that is the point. That tool is supposed to be hanging up on a tool board a few feet away. Look, there it is in the video, quite a few empty spaces on the board. The problem is that other guys often take the tools they need for something they're doing and then they are supposed to bring them back and hang them up in their proper place again."
"But they don't," said Fred.
"But they don't," I replied, "at least often enough they don't. Our guy is now hunting for the tool in several of the different factory areas where he knows from experience it might be."
"From experience?" Charlie this time.
"Oh yes, this happens to him quite a lot," I said, "but this time he got lucky. As you will see, he'll be back in another two minutes."
I retriggered the video and, sure enough, our guy eventually reappeared on the screen and continued working until his set-up was complete. It had taken him forty minutes. He turned and waved at the camera and strolled off in the direction of a coffee machine. I stopped the film again and told them that we had then formed a small group with this guy, two of his colleagues, and a lady from administration, just to analyze this single set-up operation.
“Why a lady from administration?” asked Ron immediately. ”Because ladies can have good ideas just as often as men, and sometimes better ones too,” I said, “and because people working in other areas might also see the woods that the others can’t see because of the trees.
They met twice a week for one hour—no more time available—with the goal of introducing improvements to reduce the time needed for this set-up operation. The costs of the improvements were not to exceed £4,000 maximum. We placed a factory floor office at their disposal for the meetings, and made sure that coffee, tea and biscuits were available.
And after only four weeks they had not only come up with a lot of ideas but they had also implemented them.
"This, gentlemen," I continued, "is how the set-up looks now." And I triggered the video again.
The set-up took about eight seconds. Unscrew, slide into place, lock, screw.
"Miss it?" I asked, "I'll show it again."
Eight seconds.
"That's it. They had some clever ideas and they hardly cost any money. One of the ideas was to create a forced locking point for the measurement gauge, no more need to keep adjusting it until it's right and," I added meaningfully, "the additional benefit is improved quality, which not only means happier customers, but also less scrap or rework. This gauge is now accurately placed to the millimeter, automatic each time, no trial starts to a production run, no re-feeding, no throwing defects away. Want to see it again?"
I showed it to them again. Eight seconds. Nobody said anything.
"And now to my recommendations, gentlemen. You may wish to consider setting up small groups of employees, each group being tasked with reviewing a single operation from the schedule I have given you. They will only be able to meet for an hour or so each week but, believe me, they will be really motivated, they will enjoy it, they are being asked to do something requiring a lot of thought, and they are away from their routine tasks. It's creative, and it is also pleasant for them to be able sit in an office once a week and have the company supply them with refreshments."
I paused, waited for comments or questions. There were none, so I continued again.
"My second recommendation is that we also study which of these set-up operations can be performed outside of production hours, i.e. either before or after production hours. That would further add to our production volumes and at the same time we wouldn't have a lot of employees hanging around doing nothing until someone has set up their machines for the next production run."
I paused again but nobody was saying anything.
"And my third recommendation is—remember the example of the guy and his screwdriver—that we set up an employee suggestion scheme. A permanent one. But a permanent scheme must be properly managed. Every employee must always receive an immediate answer to his or her suggestion, and be regularly informed of the situation until a decision is taken. And if the suggestion is accepted, he or she must be informed of its completion. With a big thank you. You may also wish to create a prize for the best suggestion or two each quarter, or once a year if you prefer, nothing expensive, perhaps a weekend for two persons in Paris via the Eurostar—or whatever. But, frankly, a prize is not necessary. Money is not the real issue here, money is not why most people make suggestions. Most of us make suggestions because it makes us feel we are contributing something, it makes us feel useful, and like everybody else, we like to know that we are at least being listened to, and we also enjoy receiving a small show of recognition from time to time."
Nothing could be truer. I paused and looked at each one of the attendees, whose own particular enjoyment of recognition was usually to be found in the receipt of bonuses, stock options and so on.
"But a word of warning," I continued, "most employee suggestion schemes eventually collapse, and sometimes fairly quickly. The schemes slowly cease to be managed and controlled properly. Management interest declines or wasn't sufficient in the first place, employees note the disinterest and the logical result is that the schemes just simply fade away. If this you think this might happen here at Clark's, if you are not convinced of the value of such a scheme, if you are not going to commit yourselves and some of your personal time on a continuous basis, then I recommend you do not even start. You would avoid the resulting loss of respect and confidence in management."
I looked around me, smiled and added, "As and when our profitability is such that we can afford to invest in more modern machinery, then obviously a significant portion of this particular issue will resolve itself. In the meantime, we first of all have to create that kind of profitability, and this is just another of those areas in which, in my view, we can do some work to achieve that."
I was finished, took a long swig of water.
"Thank you gentlemen, I have kept it short, and now your comments, thoughts and criticisms would as usual be very welcome."
There was some stirring around the table and a few sidelong glances at Fred.
"Ron?" said Fred.
"Hmm…well it certainly seems to be something we should take a look at. I'd like to discuss it with my shop floor supervisors. I'm not so sure about the employee suggestion scheme. As you know we tried that about five years ago. It took up a lot of our time and it didn't work."
I'll believe that, I thought to myself. Like 80% of all companies they probably had no idea how to run it, and nowhere near enough top management involvement to ensure its ongoing success. I would have to help them on this one, tell them what needs doing, how to organize it, who has responsibilities for what, and make it clear that they had to devote some p
ersonal time, no matter how busy they were.
"Go ahead and talk to your guys, Ron," said Fred, "but do it quickly please. It seems to me that this is something we should get moving on fast. Peter's examples appear downright convincing to me."
He looked meaningfully at his production boss and then turned to me.
"Peter," he said, "Many thanks for the presentation. I recall your first one, about three or four months ago I think, when we were all wondering what this 'consultant' with no experience in our industry could possibly bring to the table. Your subject on that occasion was product mix. That had us scurrying around checking up on your statistics and confirming what you had already told us: namely, that these were our own sales and marketing people's opinions in the first place. And, as you know, we took some important decisions as a result."
Thus proving that yet another definition of consultant was alive and well. A consultant is a person who is paid a lot of money to tell management what their own employees have been trying to tell them for years.
"Since then you have made several presentations and recommendations, and although we have not chosen to implement everything," and here he paused for a moment and grinned, "we have certainly chosen to implement almost everything. And you have also done a lot of the implementing for us."
He paused again and looked around the table. There came an 'indeed', a 'hear, hear' and a couple of nods. Oh we're all the same, I love the recognition too, exaggerated or not, don't we all? Good for the soul if, as I always say, you happen to know what a soul is.
"And," continued Fred, "regarding today's subject matter, I think we will pursue your recommendations ourselves. I believe there are one or two other items you are still working on?"
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