Introduction

The pandemic years may have taught us how changing set routines could be difficult to implement and sustain, but it also proved the remarkable adaptability of the human brain. In order to lead lean transformation in manufacturing and achieve operational improvements, we need to drive human behavioral change despite challenging conditions. Organizations need to embrace cultural changes to build consistent awareness of the required transformation, and this should start with the business leadership. It is also essential to translate KPI targets for each specific level to make them helpful in achieving improvements, while having the financial target in mind.

This article explores some of behaviors required for the successful implementation of lean strategies that truly impact bottom line whilst engaging the organization towards a new company-wide culture.

Approach for implementation

Companies with a long tradition in manufacturing can easily describe lean principles such as Kaizen, 5S, PDCA and PPS -- but this does not always translate into financial benefits. This is because the method offers guiding principles but its implementation is open to interpretation. Fighting employee resistance to ensure sustainable change is a major challenge. The key lies in identifying the cultural shift that needs to be addressed before starting a lean transformation. 

Step 1: Encourage feedback and address “red” data

Ambitious KPI targets that switch to red in case of deviation help trigger change

Process performance visualization, usually delivered through traffic light KPI-scorecards, provides a good status indicator of a manufacturing facility. Many managers have been conditioned to manage by exception through the use of red-amber-green (RAG) charts, focusing on areas or metrics reported as red. 

If the data shown is predominantly green, your targets are probably not ambitious enough or outdated. If the KPIs are too red, the targets might be unrealistic, and this can demotivate the team. One should also keep in mind that these operational scorecards work as an emotional barometer of the site’s leadership too, mirroring their behavior and engagement with employees.

In manufacturing situations, for example, an early indicator of a plant performance is how operators feel at the end of a shift. If performance or behavioral pain points are not highlighted and addressed by the leadership as soon as they appear, they cease to surface and are deposited at the bottom of the iceberg. 

Therefore leaders must focus on creating an environment where it is acceptable to talk about problems and ask for help. Fears of tough conversations with superiors around red results are not uncommon. That’s why leaders must encourage the reporting of red data so that the team is able to get to the core of a problem and eliminate root causes.  

Data is a good starting point for these conversations. The moment we start generating more data points, the more quantitative the discussions will be. 

Step 2: Avoid too many KPIs

Choosing optimal KPIs is of utmost importance. If you are always green on one KPI, it is likely that your measures are off or that you are focusing on the wrong areas. Continuously revisit your KPI visualization approach to get the best indicator of the performance of the plant. If you do not know how the KPI is calculated, or people do not trust the methodology, it is just as bad as having no measurement at all. 

We recently were engaged with a client in which a cross-site dashboard had been implemented, yet the actual measurements were not granular enough to improve performance at each factory. Plus, while the targets had been set and achieved over several months – meaning the dashboard was technically reporting green – the lack of new site-specific, ambitious targets were hindering success.
 
The client’s overall corporate underperformance combined with green reporting resulted in avoidable tension between the site and the company’s leadership. This is time and energy that could have been saved and redeployed towards cross-functional continuous improvement.

Step 3: Advance digitalization for the right reasons  

Digitalization helps advance lean transformation programs tremendously. In a matter of a few hours, one can set up business intelligence dashboards that are refreshed every millisecond. But the tricky part is to make sure people still own the KPIs, know how they evolve and what variances mean.

There is ongoing debate about whether to replace a paper-based KPI scorecard with large monitors mounted in various areas of the shopfloor or if an email-distribution would suffice. Whatever the choice, implementors should not forget that dashboards are ultimately a tool for operators to see variances of performance at their workplace and must be made available with ease of use and fast understanding.

Pre-crunched numbers provided on a dashboard are counterproductive if they do not “speak the language” of the operator, by being too complex or aggregated. For example, Overall Equipment Effectiveness (OEE) is a difficult measure to grasp; instead, number of good parts manufactured per shift is clear for everybody. 

Storing shopfloor relevant KPIs on a password-protected computer is not fulfilling the purpose. Calculating output on handheld calculators often proves more effective if the shift leaders are aware of the source of these numbers. Weekly scorecards can give department managers production records that would have not otherwise been available, helping them dig deeper into problems at an earlier stage. 

Conclusion 

Transparency is a massive mindset change. Understanding that showing and discussing performance that is below the established target is the way forward towards improvement of outputs and individual satisfaction is key for progress. Mistakes should not be punished but instead analyzed, with root causes identified with the help of cross-functional teams. This is crucial for organizations looking to increase maturity level and improve bottom-line. 

A good place to start is to involve the larger organization in communicating the approach and the new attitude of continuous improvement, transparency, cross-functional collaboration and multi-skilling. Ensuring senior leadership support is also a key success factor in lean transformation programs. Finally, achievement of targets should be celebrated and support continuously given to site operators so that transparency becomes the norm.

Key Messages:

• Remain curious and somewhat dissatisfied with stable performance over time
• Involve people close to the operation in determining hidden performance potential and ambitious target setting
• Challenge and engage in open dialogue with the people that have influence across the organization
• Actively engaging with the actual performance must be high priority for leaders looking to improve operations
• KPIs should be defined in a way to ensure that they help evaluate the actual performance of a shift/day/week at each level
• Targets for each KPI have to be defined and reviewed systematically. Targets need to be achievable but also challenging in order to foster improvement
• Consider continued automation and sophistication of performance management once the KPIs required are well understood; avoid digitalization for digitalization’s sake
• The pull for transformation and transparency from leadership has to be consistent and long-lasting; it has to become a new way of working for everyone

To learn more about the work A&M does in corporate performance improvement, visit our website.